Last Friday saw the largest outperformance for the tech-heavy Nasdaq vs. the S&P 500 since 2009. The Dow Jones Industrial Average gained just 0.1 percent. The S&P 500 gained just 0.8 percent. But the Nasdaq 100 added a blistering 2.9 percent.
Seeking perspective? The rally on Friday added a combined $185 billion to Apple, Alphabet, Microsoft, Amazon and Facebook. That's the equivalent of giving birth to a company the size of General Electric in a single day.
Furthering buoying animal spirits was a very strong initial Q3 GDP report. Growth clocked in at 3.0 percent, beating the consensus estimate of 2.5 percent and representing only a slight pullback from Q2's 3.1 percent pace.
D.C. continues to toss the tax-cut ball back and forth. Though a reform plan will likely be presented this week. One annoyance? Journalists keep asking GOP tax planners how they're going to "pay for tax cuts." Will someone tell the media that "paying for tax cuts" is not a tax cut, but the re-allocation of that tax burden from one constituency to another. Why doesn't the media ask politicians where they plan to cut spending in order to account for less tax revenue? Isn't reduced government spending the endgame?
Very frustrating, to say the least.
In Iraq and Syria, ISIS has been largely defeated. Having abandoned their Raqqa-based caliphate so they might live to fight another day. With one problem out of the way, another has emerged. As the Kurds and the Iraqi army -- former erstwhile allies - have turned on each other to determine which victor might keep the spoils. The better equipped and battle-hardened Iraqis forced the Kurds to abandon the oil-rich region of Kirkuk. Without which Kurdish dreams of autonomy do not likely see the light of day.
For the record, ISIS also lost control of Marawi, a Philippine city under its control since May. Like every city ISIS manages to occupy, the city was largely left in ruins. On average, each city occupied by ISIS sees its regional GDP drop by an average of 23 percent. Hopefully Middle Eastern chambers of commerce take not.
Spain's Catalonia region, comprising over seven million people and nearly 20 percent of the Spanish economy, declared its independence. Upon which Spain's prime minister dissolved the Catalonian parliament and sacked the regional government. Insisting that the referendum under which independence was declared was illegal.
Chinese President Xi Jinping was re-elected to a second five-year term and elevated to a status in the Communist Party not granted since Chairman Mao held the position. Xi spoke of a "new era," that by 2050 would result in the country becoming "prosperous, strong, democratic, culturally advanced, harmonious and beautiful. Of course, he wasn't referencing democracy as you and I might. Nor does the greater governmental control he also referenced lend itself to any of the aforementioned qualities. Yet, Chinese GDP grew by 6.8 percent year over year. And we believe the equity market continues to present solid upside.
In 1939, Winston Churchill famously described Russia as "a riddle wrapped in a mystery inside an enigma." Well, I'd like to know what Sir Winston would have to say about Robert Mueller's ongoing investigation into collusion between the Trump campaign and the Russian government. One year in, Mueller has managed to indict a low-level former advisor and a convention-floor vote whip employed by the campaign for three months... on non-related business activities ten years before the election.
If this investigation doesn't turn up some majorly debauched, campaign-related political crimes? There had better be hell to pay.
How effective has artificial intelligence become? DeepMind's game-playing algorithm, AlphaGo Zero, began from nothing but the rules of the ancient and lovely Asian board game Go. Within a month, it had played four million games against itself and reached a superhuman performance level that would take humans decades to reach. Moreover, the algorithm easily dispatched two of Asia's foremost Go experts. And left almost zero probability that any living Go player could come close to beating it.
Recall that some years ago, IBM's Deep Blue beat renowned chess master Gary Kasparov in a contest that was among the first to feature the advancements made in machine learning.
So, with machines now regularly beating us in our favorite strategy games, what remains? At some point, will the machines care to match their wits against us in a more profound game of strategy and tactics?
At some point we'll stop calling it "artificial" intelligence. As A.I. has begun to make us look extremely pedestrian.
Finally, I hope you're watching what could be one of the most exciting World Series ever. Sunday's bottom-of-the-tenth, walk-off hit culminated a stunning come from behind win for the Astros. Their second such victory, in extra innings, in three games.
Tonight, they'll be back in Los Angeles. Where the Astros will seek to close out the series. And I like their chances. As Houston's pitcher, Justin Verlander, was brought in for this very situation. Big, post-season games. Verlander has never lost a post-season game. Leaving the Dodger's mighty lineup to figure out a way to win tonight, and send the series to a decisive game seven.
Major indices finished mixed last week. The DJIA gained 0.45%. The S&P 500 rose 0.23%. The Nasdaq climbed 1.09%. While small cap stocks lost 0.06%. 10-year Treasury bond yield rose 3 basis points to 2.41%. Gold closed at $1,272.99, down $7.51 per ounce, or 0.59%.