Next week’s release of the initial second-quarter US GDP data is widely expected to be a horror show. Is relief on its way in Q3?

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Three vaccine developers report encouraging initial results: NY Times
US bars 11 Chinese firms from buying American technology products: NY Times
Trump may send more federal law enforcement officers to major US cities: BBC
UK ends extradition treaty with Hong Kong: CNN
European Union agrees on $859 billion coronavirus recession stimulus: BBC
Chevron will buy Noble Energy–biggest US energy deal since oil crash: CNBC
Turkey overtakes Russia as world’s top buyer of gold: Nikkei Asian Review
S&P 500 edged higher on Monday, closing above previous post-correction peak:

Equities outside the US in developed markets topped last week’s widespread gains for the major asset classes, based on a set of exchange-traded funds. Rising nearly 2% for the trading week through July 17, the rally in this corner lifted prices to a level that’s close to a post-correction high.

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Trump suggests he may not accept 2020 election results: CNBC
Trump administration seeks to phase out funding for coronavirus testing: ABC
Protein treatment trial called ‘a breakthrough’ for Covid-19: BBC
Controversial Fed nominee, Judy Shelton, faces Senate vote this week: NY Times
Economic recovery depends on success in fighting pandemic flare-ups: WSJ
Government spending expected to rise to support businesses, says analyst CNBC
Managers look for opportunity in battered landscape of small cap stocks: Reuters
Gold headed for new record high, Citigroup analysts predict: Bloomberg
Consumer sentiment in US retreated in July due to coronavirus worries: UoM
US housing construction continued to rebound in June: CNBC
5-Year Treasury TIPS real yield falls below -1% for first time since 2013:

● Underwater: How Our American Dream of Homeownership Became a Nightmare
Ryan Dezember
Review via The New York Times
It is certainly worth debating whether homeownership should be something every American strives for. But it’s not a change that should be imposed by companies that see profit in forcing this dramatic change on people who would otherwise be able to buy their own homes. As Dezember notes, “If homeownership falls out of fashion for even a generation, there could be dire economic consequences unless renters become diligent savers and prudent investors.” In other words, bring on the retirement crisis.

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The Smart Beta Mirage
Shiyang Huang (University of Hong Kong), et al.
June 2020
We document sharp performance deterioration of smart beta indexes after the corresponding smart beta ETFs are listed for investments. Adjusted by aggregate market return, the average return of smart beta indexes drops from 2.77% per year “on paper” before ETF listing to −0.44% per year after ETF listing. This performance deterioration cannot be explained by strategic timing in ETF listing nor explained by time trend in factor premia. We find evidence of data mining in constructing smart beta indexes as the post-ETF-listing performance decline is much sharper for indexes that are more susceptible to data mining in backtests. Our results caution the risk of data mining in the proliferation of ETF offerings as investors respond strongly to the stellar performance in backtests.
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New US Covid-19 cases for July 16 surged to a record high: 77,000-plus: Reuters
Fauci says new Covid treatment may arrive as early as this autumn: Bloomberg
Western nations say Russia is trying to steal coronavirus research: CNN
Hong Kong demands Taiwan officials sign ‘one China’ document: Reuters
Sliding real yields are key factor in boosting prices of risk assets: WSJ
Weekly US jobless claims continued rising last week by 1-million-plus: CNBC
US home builder sentiment rebounded in July to pre-coronavirus high: CNBC
30-year mortgage rate (US nat’l avg) falls below 3.0% for first time: NY Times
Philly Fed Mfg Index continues to reflect growth in July: Philly Fed
US retail sales rose for a second month in June but at much slower pace: Reuters

It’s old news that’s forever relevant: rebalancing is the worst choice for managing risk… except when compared with everything else. Granted, it’s not a silver bullet (nothing is) and in the hands of an amateur it can lead to trouble. But when paired with a reasonable asset allocation and a schedule of periodically resetting weights, rebalancing remains the first choice for managing portfolio risk.

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White House orders hospitals to send Covid-19 data to Washington: CNBC
Trump signs law sanctioning Chinese officials: Politico
China will stick with US trade deal despite new pressure from Washington: Reuters
US retail sales expected to rise for second month in today’s report: CNBC
Evidence strengthens that mask-wearing slows Covid-19 spread: VOX
Hacker hijacks high-profile Twitter accounts in cryptocurrency scam: TC
UK labor market continues to shed jobs but at slower rate in June: Reuters
China reports economic rebound from coronavirus: Q2 GDP up 3.2%: CNBC
Former Fed Chairman Bernanke: Congress should ‘save the states’: NY Times
US industrial output surged in June after dramatic decline in May: Bloomberg

Shares of technology companies continue to hold a wide lead in the US sector race this year, followed by a battle for second place in communication vs. consumer discretionary stocks, based on a set of exchange traded funds as of July 14.

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