The week ahead of November 2018. The S&P 500 Index in the US is now slightly below the level at which it began the year. In other words, all the gains thus far in 2018 have been wiped out. More worryingly, the fall from the 2 931 peak on Sep 20 to the current level of 2 659 represents a percentage drop of 9.3%, or just a whisker away from being in a correction phase.

And the fact that the S&P 500 hasn't gone lower and into correction territory is all thanks to the US retail investor. Retail investors have been piling into stocks, whereas their institutional and hedge fund counterparts a have been cautiously avoiding the market. This confidence is reflected in record lows for cash holdings at brokerages such as Charles Schwab. Bank of America Merrill Lynch is seeing a similar pattern among its retail investors. This unbridled enthusiasm for stocks indicates that retail investors believe the good news coming out of the US economy will carry on for a long time yet and are shrugging off concerns associated with rising interest rates and incipient trade wars.

Retail investors are a skittish bunch and it wouldn't take much to spook them but for the time being, they are the only thing that's keeping the S&P 500 and the other major US stock indexes going. This is the longest bull market in US equity market history. Although it corrected in Feb this year, it kept making new highs until this month. It is probably time for a healthy correction.

The JSE All Share Index finished the week at 50 838. Since the 25 Jan, it has fallen by 17.6% and is flirting with bear market territory. However, it is nowhere near the levels seen between 11 May 2008 and 16 Nov 2008, when it fell by 45%.

New finance minister Tito Mboweni delivered his maiden medium term budget policy statement (MTBPS) last week in fine style, though he failed to allay the fears of economists and, more importantly, the ratings agencies. Moody's, the only ratings agency that still has SA on investment grade rating, has voiced concern that the increasing debt to GDP percentage coupled with the higher than anticipated budget deficit were ratings negative.

Cyril Ramaphosa's much-anticipated Investment Summit took place in Sandton last week amid much fanfare. Companies and institutions pledged approximately $20bn to help kick-start the moribund SA economy and most, if not all participants left the event in a very upbeat mood. Ramaphosa is held in extremely high esteem by the local and international business community and is seen as a man with whom they can do business. But this economy cannot just run on the back of promises made by one individual, no matter how charismatic he may be. In order to break out of recession and get back onto a sustainable growth path, the economy needs profound structural reform including, if necessary, partial or wholesale privatization of state-owned assets. Hopefully, we will miss a downgrade by Moody's but as 2019 progresses and the general election looms ever closer, SA will remain under the microscope of all of the ratings agencies.

Company reporting this week;

29 October 2018: Famous Brands - Interim

29 October 2018: Raubex - Interim

31 October 2018: Cartrack - Interim

1 November 2018: Afrimat - Interim

1 November 2018: Lonmin - Final

Economic related events this week;

29 October 2018: SA Private Sector Credit Extension & M3 Money Supply Sep

30 October 2018: SA Unemployment Rate Q3

31 October 2018: SA Trade Balance Sep

1 November 2018: NAAMSA New vehicle Sales Oct

1 November 2018: Absa Manufacturing PMI Oct

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