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Week In Review


Nonfarm payrolls fell by 33,000 in September.  The unemployment rate fell from 4.4% to 4.2%.  Labor force participation rose to 63.1%, while average hourly earnings rose 0.5%.

Our Take

Both recent and upcoming economic releases, including today’s employment report, will be difficult to interpret due to hurricane-related anomalies.  Reading too much into the numbers may result in an inaccurate view, either positively or negatively, of true economic strength.

ISM Indexes

The September ISM manufacturing index increased to 60.8 from 58.8.  The non-manufacturing index also rose, moving from 55.3 to 59.8.

Our Take

While both ISM readings indicate an economy in solid expansionary territory, rebuilding after the hurricane most likely played a large role in the increases.  Higher readings in the near term due to rebuilding may reverse as resources spent to rebuild now are unavailable to fuel growth in the future.


Spanish Federal authorities intervened to prevent Catalan citizens from voting in an independence referendum, which would be invalid under Spain’s constitution.  The central government indicated that it may invoke a clause of the Spanish constitution that would allow it to suspend the Catalan regional government’s authority.  Yields on Spanish bonds rose relative to Bunds, and several Catalonia-based banks indicated that they may shift their headquarters out of the region in response to the instability.

Our Take

Catalonia has almost no chance of full independence.  However, the calling of the referendum is a further indication of widespread dissatisfaction with the current political arrangements and institutions in the EU.


President Donald Trump visited hurricane-damaged Puerto Rico on Tuesday and on Tuesday evening, told Fox News that Puerto Rico owes “a lot of money to your friends on Wall Street and we’re going to have to wipe that out.”  On Wednesday, Mick Mulvaney, the director of the Office of Management and Budget stated that he spoke with the President after the comments were made and said “I wouldn’t take it word for word.”

Our Take

Many analysts released statements after Trump’s comments indicating that the President does not have the authority to wipe out debt and that his words should not be taken literally.  Nevertheless, President Trump’s comments rattled the municipal bond market and the stocks of municipal bond insurers.  Any move toward the ability of municipal entities to expunge debts through bankruptcy could have far-reaching effects on the entire municipal bond market.


All expressions of opinions are subject to change without notice in reaction to shifting market conditions.  All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.  Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice.