● A Brief History of Motion: From the Wheel, to the Car, to What Comes Next
Tom Standage
Review via The Wall Street Journal
Tom Standage, the deputy editor of the Economist and one of our best writers of nonfiction, has cultivated a special niche: exploring the history of technology with an eye on both the past and the future. When he finds the right subject—such as the roots and repercussions of digital communication in his 2013 book “Writing on the Wall”—his work is both thought-provoking and scintillating. “A Brief History of Motion: From the Wheel, to the Car, to What Comes Next” isn’t quite in the class of its predecessor, but like all of Mr. Standage’s books, it is rewarding: the product of deep research, great intelligence and burnished prose. Moreover, he always comes up with offbeat and intriguing facts that I, for one, never knew.

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• Europe shares are catching the bull-market bug
• US stocks end the week at another record high
• All our strategy benchmarks enjoy solid gains this week

The Continent’s hot: And we’re not just talking weather. Yes, temperatures are sky-high in several regions across Europe. Sicily stands out by setting a new record high for Europe this week — a fiery 119.8 degrees Fahrenheit.

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Decomposing Momentum: Eliminating its Crash Component
Pascal Büsing (University of Muenster), et al.
July 15, 2021
We propose a purely cross-sectional momentum strategy that avoids crash risk and does not depend on the state of the market. To do so, we simply split up the standard momentum return over months t-12 to t-2 at the highest stock price within this formation period. Both resulting momentum return components predict subsequent returns on a stand-alone basis. However, the long-short returns associated with the first component completely avoid negative skewness since momentum crashes are entirely driven by the second component.

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* Supreme Court won’t block Indiana University’s vaccine mandate
* UK defence secretary: Afghanistan at risk of becoming a ‘failed state’
* US home prices surged in nearly every part of country
* Economists predict Fed will unveil tapering plan in September
* Disney reports better than expected earnings for Q3
* Severe weather events trigger second-highest ever first-half losses for insurers
* Growth forecasts cut for China as Delta variant spreads across the country
* US jobless claims fell for a third straight week:

The US Macro Trend Index (MTI) measures the strength of the directional bias of US economic activity. MTI reflects analysis of two business cycle indexes:  ADS Index, published by the Philly Fed, and the Weekly Economic Index (WEI) via the New York Fed. Each index takes a different approach to monitoring US economic activity in real time, using a variety of indicators, some of which are published at daily and weekly frequencies. The goal with MTI is to quantify the degree of deceleration and acceleration in the overall macro trend via ADS and WEI. As such, MTI is not a measure of growth or contraction per se; rather, MTI is an index quantifying the strength or weakness of the overall trend.

MTI is a tool for developing context for assessing the overall strength or weakness of the current economic trend and quantifying the trend’s evolution.

MTI is designed as follows:

1. Calculate the mean of the 1-, 2-, 5- and 10-period differences for ADS.
2. Calculate the mean of the 1- and 2-period differences for WEI.
3. Calculate the mean for 1 and 2; transform to Z-scores on a rolling 1-year basis.

Yesterday’s July report on US consumer inflation suggested that the recent surge in pricing pressure may be peaking. That’s also the message in revised data for CapitalSpectator.com’s Inflation Trend Index (ITI).

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* Census Bureau data expected to show US population diversifying at record rate
* Afghan capital could fall to Taliban within weeks
* US stimulus tapering could begin as early as this year, says Fed’s Daly
* US budget deficit narrowed to $2.5 trillion in first 10 months of fiscal year
* China says crackdown on businesses will go on for years
* Delta variant has pinched oil demand, IEA says
* UK GDP rebounded in Q2
* Eurozone industrial output fell again in June
* US consumer inflation slowed in July:

I recently outlined two models for estimating the US stock market’s return for the decade ahead. Let’s add a third model to the mix with the plan to take the average as a relatively robust forecast.

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* Senate narrowly passes budget for $3.5 trillion spending plan
* N. Korea warns of ‘crisis’ over US-S. Korea military exercises
* Taliban take control of another provincial capital in northern Afghanistan
* Minimal impact on global economy so far from Delta variant of coronavirus
* Tropical Storm Fred formed Tuesday night with US in its path
* US productivity slowed in Q2; labor costs weaker than previously expected
* US small business sentiment fell in July as labor shortages persist:

The strategy of holding stocks with the highest beta risk have stumbled recently, but remain comfortably in the lead year to date for US equity factors, based on a set of exchange traded funds.

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