While the debate rages over whether the global economy is careening towards a recession, our call of the day from Goldman Sachs, suggests investors steer towards some reasonably-priced stocks that can see them through a downturn.

Stable growth stocks “fare best in environments of slowing economic growth and rising uncertainty,” say a team of Goldman analysts led by Ben Snider.

Over the past two years, those companies with a history of growth stability have returned 22% vs. 16% for the S&P 500. That compares to a return of 1% for stocks with the most volatile historical earnings growth.

“In addition to the uncertain macroeconomic backdrop, volatile growth companies are currently growing earnings at a rate only marginally faster than stable growth companies, an unusual dynamic that further reduces their appeal to investors,” said Snider and the team, in a note to clients.

As a reminder, growth stocks are those that tend to see faster-than-average earnings and revenue growth, but carry some risk. The popularity of these stocks has been ebbing lately as investors fret over the economy, trade, etc., favoring instead perceived safer-havens.

Goldman says better news on the global economy would be a potential headwind for these equities, though that’s offset by political uncertainty stemming from a 2020 U.S. presidential election. Another thing to consider is that these stocks have also grown in popularity, therefore they can command more of a premium.

Goldman has picked through its basket of stable stocks to find those that they say are most reasonably priced. Such factors include shares that aren’t too volatile, those with growth that’s steady and a reasonable price earnings multiple — share price relative to per-share earnings.

On that list: financial services technology group Fiserv, autoparts retailer Autozone, software group Amdocs, media group Omnicom, Johnson & Johnson, and Walmart.

The Economy

September U.S. payrolls rose 136,000, which was below forecasts, though prior months’ levels were revised higher. The unemployment rate dropped to 3.5%, the lowest since 1969 and average hourly earnings also dipped. Elsewhere, data showed the foreign trade deficit widening.

We’ll hear from lots of Federal Reserve officials Friday, with conferences in Boston and Washington. Fed Chairman Jerome Powell will appear at the latter.

The Market

The Dow, S&P, and Nasdaq are rising at the start of trade after jobs data, which also triggered a drop in gold prices, though the dollar isn’t budging much. Oil is higher.

Europe stocks are also rising. Asia finished mixed. Hong Kong stocks fell 1% on news of a ban on protestors’ masks that some fear could trigger more unrest.

The Chart

Our chart of the day from Bank of America Merrill Lynch points out what it sees as a “big top” , or peak, coming for the Dow industrials, which they see happening “in coming quarters.”

The Buzz

Apple is up after a report that the company has asked suppliers to boost production owing to stronger demand for the iPhone 11. Some European tech stocks have also lifted on that news.

HP shares are dow after the PC and printing company announced a restructuring that will include up to 9,000 job losses in the next few years. Will another revamp boost shares? Maybe not.

Shares of Costco are down after the big-box retailer’s revenue fell short of forecasts.

Emails released by the House Intelligence Committee appeared to show U.S. diplomats pressed Ukraine’s newly-elected president to probe Joe Biden’s family in exchange for a visit to Washington with President Donald Trump. The White House, meanwhile, reportedly plans to formally object to the Democrat’s impeachment inquiry.

The Quote

“At some level, no one deserves to have that much money.” — That was Facebook CEO Mark Zuckerberg, telling employees what he thought about a recent comment from Sen. Bernie Sanders, who wants a tax on extreme wealth, that billionaires shouldn’t exist. Forbes currently puts Zuckerberg’s current net worth at $66 billion.

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