Key Events: War
Hamas launched a surprise attack on Israel, which is being met with a massive response. Tensions in the middle east remain high.
Disfunction continues in Washington as Republicans have failed to elect a Speaker of the House.
Market Review: Flight to quality
Tension between recession and strong earnings resulted in flat returns for Large cap stocks. Small caps’ exposure to recession resulted in losses.
Despite middle east tensions, international stocks performed well. Bonds experienced extraordinary volatility but ended the week with gains amidst a flight to quality.
Outlook: Earnings season preview
The third quarter earnings season kicks into high gear this week, and estimates have improved. The index is expected to show 0.4% earnings growth, the first quarter of year-over-year growth since the third quarter of 2022..
Strong earnings are being driven by an increase in profit margins, a significant improvement from 6 quarters in a row of declining margins. While this has driven stocks higher, the increase in bankruptcies highlights margin pressures, dulling our optimism for future profits.
As we begin to look towards 2024, we continue to be focused on diversification, maintaining exposure to areas of the stock market where valuations give us a greater margin of safety.
Fed hikes pushing bankruptcy filings higher
Navigator Outlook: October 2023
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 Source: FactSet
 Source: FactSet
 Source: Apollo Investments Bankruptcies Rising Because of Fed Hikes – Apollo Academy
 Source: Market Returns reference the following indices: Large Cap – S&P 500, Mid Cap Growth – Russell Midcap growth, Mid Cap Value – Russell Midcap Value, Small Cap – Russell 2000, Developed – MSCI EAFE, Emerging – MSCI Emerging Markets, Aggretate – Bloomberg US Aggregate, High Yield – Bloomberg High Yield