The stock market is showing some bounce lately, but on a year-to-date basis red ink still dominates. Looking at equities through a factor lens, however, continues to show a wide variety of losses in 2022. Notably, the softest setbacks are (still) in high dividend and value strategies, based on a set of proxy ETFs through yesterday’s close (Aug. 3).
Yearly Archives: 2022
Macro Briefing: 4 August 2022
* China conducts live-fire military drills around Taiwan
* US Senate approves adding Finland and Sweden into NATO
* US factory orders post solid growth for June
* Global economic growth slows to 2-year low in July via PMI survey data
* OPEC agrees to small increase in oil output
* S&P US Services PMI shows contraction in July, but…
* ISM Services Index indicates slightly stronger growth in July:
US Personal Income Barely Recovered In The Economic Expansion
US economic growth is slipping and a new recession may be near. If the current expansion ends at some point in the near future (assuming it’s still alive), the “recovery” in personal income will be the weakest by far among business cycles since 1970.
Macro Briefing: 3 August 2022
* House Speaker Pelosi’s visit to Taiwan raises U.S.-China tensions
* China’s planned war games appear to be defacto military blockade of Taiwan
* China Composite PMI, a GDP proxy, eased in July but still shows solid growth
* Eurozone survey data show currency bloc slipped into recession in July
* Turmoil looms for global semiconductor market as US eyes new China chip curbs
* Household debt rose above $16 trillion in Q2 for the first time
* US gasoline prices continue to ease, nearing $4 a gallon
* US job openings fell to nine-month low in June:
Total Return Forecasts: Major Asset Classes | 2 August 2022
The long-term expected return for the Global Market Index (GMI) remains moderately below the index’s trailing realized 10-year performance through July, based on the average of three forecasting models (defined below). The key takeaway: it’s still prudent to manage expectations down for multi-asset-class strategies, relative to the past decade.
Macro Briefing: 2 August 2022
* US House Speaker Nancy Pelosi expected to visit Taiwan despite China warnings
* China warplanes fly close to dividing line in Taiwan Strait ahead of Pelosi visit
* US construction spending tumbled in June amid sharp decline in homebuilding
* Global Mfg PMI falls to 2-year low but still indicates growth
* US Manufacturing PMI at lowest for two years but still above neutral level
* US ISM Mfg Index ticks lower in July but continues to indicate growth:
Major Asset Classes | July 2022 | Performance Review
The majority of the major asset classes rebounded in July, providing relief from an extended run of red ink, based on a set of proxy ETFs. The challenges that triggered widespread selling in global markets this year remain in force – the war in Ukraine, high inflation, rising interest rates and stumbling economic activity. This toxic mix will continue to create headwinds for markets, but for one month, at least, gloomy sentiment took a holiday.
Macro Briefing: 1 August 2022
* Pelosi starts Asia trip amid warnings not to visit Taiwan
* US deploys military assets near Taiwan as Pelosi considers visit
* First grain ship leaves Ukraine under Russia deal
* Factory outlook weakens in Asia and Europe
* China factory output unexpectedly contracted in July
* Emerging markets suffer record streak of withdrawals by foreign investors
* German retail sales fell nearly 10% in June–biggest annual decline since 1994
* US home price gains cooling rapidly, real estate data firm finds
* US consumer spending and personal income rose more than expected in June:
Book Bits: 30 July 2022
Scott M. Moore
Summary via publisher (Oxford U. Press)
In China’s Next Act, Scott M. Moore re-envisions China’s role in the world, with a focus on sustainability and technology. Moore argues that these increasingly pressing, shared global challenges are reshaping China’s economy and foreign policy, and consequently, cannot be tackled without China. Yet sustainability and technology present opportunities for intensified economic, geopolitical, and ideological competition–a reality that Beijing recognizes. The US and other countries must do the same if they are to meet ecological and technological challenges in the decades ahead. In some areas, like clean technology development, competition can be good for the planet. But in others, it could be catastrophic — only cooperation can lower the risks of artificial intelligence and other disruptive new technologies.
Arguing Over Recession Definitions – The New New Thing
US gross domestic product (GDP) fell 0.9% in the second quarter, the Bureau of Economic Analysis reports. The slide in real (inflation adjusted) output, calculated at an annual rate, follows a 1.6% decline in Q1. The back-to-back decreases immediately triggered calls that the US is in recession. But there’s also pushback from some analysts, advising that there’s room for debate. The militant wing of recessionistas quickly cried foul, and in the blink of an eye both sides are attacking the other as delusional.