Book Bits | 24 February 2018

It’s Better Than It Looks: Reasons for Optimism in an Age of Fear
By Gregg Easterbrook
Summary via publisher (Public Affairs)
Is civilization teetering on the edge of a cliff? Or are we just climbing higher than ever? Most people who read the news would tell you that 2017 is one of the worst years in recent memory. We’re facing a series of deeply troubling, even existential problems: fascism, terrorism, environmental collapse, racial and economic inequality, and more. Yet this narrative misses something important: by almost every meaningful measure, the modern world is better than it ever has been. In the United States, disease, crime, discrimination, and most forms of pollution are in long-term decline, while longevity and education keep rising and economic indicators are better than in any past generation. Worldwide, malnutrition and extreme poverty are at historic lows, and the risk of dying by war or violence is the lowest in human history. It’s not a coincidence that we’re confused–our perspectives on the world are blurred by the rise of social media, the machinations of politicians, and our own biases.
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Tech Sector Momentum Still Dominates After Market Turbulence

The surge in market volatility earlier this month took a toll far and wide, but tech’s leadership endures, based on a set of sector ETFs. A fund that holds a diversified mix of technology shares is trading below its recent highs, but the sector has largely bounced back from the early February correction and continues to dominate in the year-over-year column vs. the rest of the field.
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Macro Briefing: 23 February 2018

US set to impose more sanctions on N. Korea: Reuters
Blackrock says it will talk with gunmakers about Florida shooting: Reuters
FCC officially publishes regs that will repeal net neutrality rules in April: Engadget
US jobless claims last week fell to 2nd lowest level since the recession: MW 
Leading Economic Index for US rose in Jan, signaling “robust” growth: Conf. Board
US inflation trend probably ticked up in Feb, according to alt-data estimate: WSJ
Private data suggests China’s economic growth is slowing: Asia Times
Avg college endowment fund lagged stock/bond mix over last decade: NY Times
S&P 500 forward earnings estimates surging in 2018: Yardeni Research

Macro Briefing: 22 February 2018

Trump favors arming teachers to prevent school shootings: Reuters
Air strikes by Syrian regime and Russian allies kill more than 300 since Sun: WaPo
Fed minutes: officials say growth, inflation make case for more rate hikes: The Hill
Fed’s Quarles: US economy in “best shape” since financial crisis: Bloomberg
US existing home sales post biggest year-over-year drop in 3 years in Jan: Reuters
Signs of slower US growth are on the horizon: MainStay Investments
Larry Swedroe: research shows that combining factors can outperform: ETF.com
Small-biz sentiment indicators are no silver bullet for investors: Barry Ritholtz
Southern Poverty Law Center: hate groups in US are proliferating: Reuters 
Composite PMI: US output in Jan rises at fastest rate since Nov 2015: IHS Markit

Trend Behavior: Comparing US vs. Emerging Markets Stocks

Standard finance theory tells us to select weights for stocks and other asset classes based on market value. By that standard, emerging markets deserve a relatively light touch in portfolios. But this strikes some investors are misguided. As Frontera, a research shop, noted last year, “Emerging Markets Account for 80% of Global GDP Growth But Only 10% of World Equity Market Cap.”
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Macro Briefing: 21 February 2018

Supreme Court rejects challenge to waiting period for gun purchases: Reuters
Shocking new corruption charges leveled at Israel’s Netanyahu: LA Times
Obama’s chief economist: Trump’s economic projections are “absurd”: Vox
Weak sales growth for Wal-Mart rattled investors on Tuesday: USA Today
How will the US safety net for workers fare in the next recession? NY Times
Venezuela launches crypto currency; reports raising $735 million: Reuters
Study projects world’s oceans rising 3 feet by 2300: Nature Communications
Treasury auction sees 3- and 6-mo bills sell at rates unseen since 2008: Bloomberg
2-year Treasury rate continues rising, setting another 10yr high on Tues: 2.25%

There Are (Still) No Shortcuts For Estimating Recession Risk

The St. Louis Fed last week pondered the question: “Is the U.S. Due for a Recession?” In a blog post the bank advised that after a long expansion “there is a concern that, even though the economy looks good right now, the next recession may be lurking just around the corner.” On the short list for possible smoking guns, the post continued, is the low unemployment rate, which is currently at 4.1%, which is near a two-decade low.
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Macro Briefing: 20 February 2018

Iran responds with a warning of its own after Israel PM’s fiery speech: CNN
Will Iran’s “axis of resistance” trigger another war in the Mideast? NY Times
Senate seeks to roll back bank regs put in place after 2008 crash: Politico
Gun-control push finds new traction after Florida shooting: WaPo
Diversification may be challenged this year as a risk-management tool: Bloomberg
The case for global small-cap stocks is strenghtening: Fortune Financial
Ethereum’s co-founder: digital currencies could “drop to near-zero”: MarketWatch
Americans are starting to view the GOP tax plan more favorably: NY Times