After a modest loss in 2023, shares in the healthcare sector are enjoying a market-leading rebound so far in the new year. No one knows if it will last, but the early results certainly look encouraging after this slice of the market has pulled ahead of the rest of the field year to date, based on a set of sector ETFs through yesterday’s close (Jan. 17).

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* Pakistan launches retaliatory airstrikes on militants in Iran
* Commercial real estate market braces for record amount of maturing loans
* US homebuilder sentiment rises for second month in January
* Fed Beige book reports mixed US economic activity in recent weeks
* Business inflation expectations fell “significantly” to 2.2% in January: Atlanta Fed
* Industrial output in US ticks up slightly in December
* US retail sales rise more than forecast in December:

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The sharp drop in the New York Federal Reserve’s Empire State business-conditions index in January triggered a wave of warnings. Soon after this monthly survey data was released yesterday (Jan. 16), social media and beyond lit up, warning that this was a smoking gun for the US economy’s imminent descent into recession, assuming output hadn’t already turned negative. But like most single-indicator releases, the crowd rushed to judgment and allowed the headlines du jour to overwhelm more thoughtful analysis.

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* US spending bill clears first hurdle in Senate to avoid government shutdown
* Fed’s Waller expects rate cuts this year
* China Q4 GDP growth annual growth ticks up to 5.2%–slower than expected
* Population in China fell for second straight year in 2023
* Fund managers are bullish on small cap stocks: BofA managers survey
* NY Fed Manufacturing Index plunges in January to lowest level since 2020:

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Reviewing 2023 results for the major asset classes reflects a long list of winners, with one conspicuous downside outlier: commodities. Amid widespread gains in global markets last year, the red ink in raw materials stands out. Does that create the setup for a rebound in 2024?

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* Trump wins big in Iowa caucus, first GOP vote of 2024 election campaign cycle
* Houthi rebels continue to attack shipping in Red Sea
* Iran launches missile strikes on northern Iraq and Syria
* Taiwan election raises fears of greater tensions with China
* US economy on track for more stimulus if Congress OKs tax deal
* Tax cuts worth trillions of dollars are on the line in this year’s elections
* Progress on taming inflation expected to slow, predicts Atlanta Fed chief
* US producer prices fall for third straight month in December:

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“True peace is not merely the absence of tension; it is the presence of justice.”
–Martin Luther King, Jr.

● Beyond the ESG Portfolio: How Wall Street Can Help Democracies Survive
Marcos Buscaglia
Summary via publisher (McGraw Hill)
How to be confident that your ESG investments serve your clients’ needs—and take Democracy into account. It is easy to unintentionally finance autocrats by using benchmark indices, which often include bonds and stocks of countries slipping down the democracy rankings. Despite best intentions, an investor may be investing in Russia’s invasion of Ukraine or supporting a leader like Hugo Chavez without realizing it. Marcos Buscaglia, a Latin America economist, emerging markets expert, and an emerging voice on the relationship between democracy and markets, argues that the current ESG criteria has brought environmental and social standards into investment decisions, but its approach to democracy needs to be refined.

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The US 10-year Treasury yield continues to fall, which is narrowing the gap between the higher market rate and a lesser “fair-value” estimate, based on the average of three models run by CapitalSpectator.com.

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* US and UK launch retaliatory air strike on Iranian-backed Houthis in Yemen
* US government shutdown risk is rising ahead of Jan. 19 deadline
* China deflation persists: consumer prices fell for third straight month
* US credit card delinquencies rise to highest level since 2012
* Some firms on Wall Street block new bitcoin ETFs on their trading platform
* Hope for 2024 revival in value stocks springs eternal… again
* US consumer inflation’s 1-year change ticked up in December, but…
* Core CPI eased below 4% year-over-year for the first time since May 2021:

US housing costs continued to post the biggest impact on consumer inflation in December, but as Yahoo Finance reports: “There seem to be some hopeful signs in the latest data, experts said.” Meanwhile, “On a year-over-year basis, shelter inflation remained high — up 6.2% over the last year. The optimistic take: that’s lower than November’s 6.5% year-over-year figure and March’s peak of 8.2%.” Omair Sharif, president of Inflation Insight, predicts: “We’re on the cusp of another step down in shelter inflation.”