Monthly Archives: April 2019

Major Asset Classes | Correlations Profile | 30 April 2019

Do lower and negative correlations between markets enhance diversification for building diversified portfolios and (potentially) earning higher risk-adjusted returns? If the answer is “yes,” Mr. Market has become moderately more generous in spots in recent months by expanding the opportunity set of relatively low and negative correlations across asset classes.
Continue reading

Macro Briefing: 30 April 2019

Trump sues banks to block congressional subpoenas: USA Today
N. Korea issues new warning to US for denuclearization talks: CNBC
Rod Rosenstein, US deputy attorney general, submits resignation: Reuters
China’s mfg sector expanding at slower-than-expected rate in April: CNBC
Eurozone GDP growth accelerated in first quarter: RTT
Climate change is a rising factor in choices for US farming: NY Times
Will US small-cap stocks benefit from a stronger dollar? WSJ
Texas factory growth accelerated in April: Dallas Fed
US consumer spending 1yr growth picked up; disposable income trend weakened:

Macro Briefing: 29 April 2019

Trump’s revisions to Nafta face uphill battle in House: WSJ
Treasury Secretary: US-China trade talks in ‘final laps’: CNBC
US Navy warships sailed through Taiwan Strait on Sunday: Reuters
Spain’s governing Socialists win country’s 3rd election in 4 years: BBC
Ag and mfg firms among hardest hit from tariffs in US-China trade war: The Hill
US stock mkt closed at record as Q3 GDP rose more than expected: MW
US Consumer Sentiment Index fell less than expected in April: Bloomberg
10yr-2yr US Treasury yield spread rises to 23 bps — highest since late-Nov:

Book Bits | 27 April 2019

Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly
By John Quiggin
Summary via publisher (Princeton U. Press)
Since 1946, Henry Hazlitt’s bestselling Economics in One Lesson has popularized the belief that economics can be boiled down to one simple lesson: market prices represent the true cost of everything. But one-lesson economics tells only half the story. It can explain why markets often work so well, but it can’t explain why they often fail so badly—or what we should do when they stumble. As Nobel Prize–winning economist Paul Samuelson quipped, “When someone preaches ‘Economics in one lesson,’ I advise: Go back for the second lesson.” In Economics in Two Lessons, John Quiggin teaches both lessons, offering a masterful introduction to the key ideas behind the successes—and failures—of free markets.
Continue reading

US GDP Growth Accelerated In First Quarter

Economic activity increased in the first three months of this at a substantially stronger pace than expected. Most models and analysts underestimated the 3.2% advance in output in Q1, which marks a strong improvement over the 2.2% rise in last year’s Q4. Today’s update effectively puts to rest the fear that recession risk for the US economy was rising in the early months of 2019.
Continue reading

Junk Bonds Continue To Lead US Fixed-Income Rally In 2019

Bloomberg’s Nir Kaissar is no fan of high-yield bonds. He warns that this slice of fixed income “is likely to be a drag on growth” for the risk portion of portfolios “while including them in non-risk undermines safety. Neither option is appealing.” Even worse, junk bonds don’t offer much diversification “because they’re highly correlated with stocks,” he charges.
Continue reading

Macro Briefing: 26 April 2019

US growth expected to post solid gain in today’s Q1 GDP report: WSJ
Survey of economists: Fed on hold through 2020, no rate cut: Bloomberg
China’s president outlines plans for nat’l economic reform: CNBC
N. Korea’s Kim Jong Un: US acted in ‘bad faith’ at Hanoi summit: CNBC
Mfg activity slows in Fed’s 10th district in April: KC Fed
US jobless claims rose sharply last week but trend still healthy: CNBC
Final GDPNow estimate for Q1 GDP ticks down to +2.7%: Atlanta Fed
Core US durable goods orders for March accelerated to 5.3% 1yr increase:

Macro Briefing: 25 April 2019

Trump vows to fight ‘all the subpoenas’ issued by the House: The Hill
N. Korea’s Kim and Russia’s Putin discuss nuclear stalemate: ABC
Measles cases in US rise to highest since 2000: CNN
Former VP Joe Biden plans to launch run for White House today: Reuters
World’s major insurance firms see US recession by 2020 or 2021: FN
Survey: gov’t and immigration are biggest US challenges: Gallup
Effective Fed funds rate holds at 11yr high of 2.44% for third day: Fed Reserve