Big Banks Kick Off Earnings as AI Theme Drives Markets
In the third quarter, markets absorbed higher rates, rising oil prices, and renewed inflation concerns, and continued to advance. Strong earnings, consumer spending, and sustained AI-related investment kept growth intact, although that CAPEX may also be reinforcing a higher-for-longer rate environment. The result for investors is a broader opportunity set, highlighted by improved income in bonds, continued support for risk assets, and a greater premium on selectivity.
Economic Commentary: Deficit Attention Disorder
US exports increased in August, but not nearly enough to counter surging imports. Energy played a role on both sides of the equation. As has been much discussed, diesel and LNG are exported in significant volumes. Less commonly highlighted are the imports of crude oil required by Gulf Coast refineries which are not configured to use the type of crude produced domestically; continued conflict in the Straits of Hormuz have kept the price of that imported crude high. Capital goods imports, especially tech imports such as semiconductors, were also strong and at higher price points.