US economic activity is expected to post a modestly firmer increase in the second-quarter, based on the median estimate for a set of nowcasts compiled by CapitalSpectator.com. More than half of the quarter’s data sets have yet to be published, but the early clues continue to skew positive.
Category Archives: Uncategorized
Macro Briefing: 22 May 2024
* Fed’s Waller wants ‘several months’ of good inflation data before rate cuts
* Biden to release 1 million barrels of gasoline from reserves to reduce prices
* US single-family rent overall edged up again in March vs. year-ago level
* AI will be a bullish factor for stocks for the next decade: former Cisco CEO
* Rally in junk bonds reflects bets for soft US economic landing:
Is The Yield Curve Still Relevant? An Economist Clarifies
When the US Treasury yield curve inverts (short rates rise above long rates) the shift is widely viewed as a reliable forecast that a recession is near. But this time has been different, or so it seems. The curve has been inverted since July 2022, the longest inversion on record, but a recession has yet to arrive.
Macro Briefing: 21 May 2024
* US should join with Europe to combat cheap Chinese exports: Yellen
* Target announces price cuts on 5,000 items
* Electricity grid under strain from growing use of AI
* There’s no “urgency” to adjust interest rates, says SF Fed president
* China is a key factor driving the rally in gold:
Commodities’ Performance Lead Widens Over Markets In 2024
Last week’s strong rally in commodities expanded the performance lead for the asset class over the rest of global markets, based on a set of ETFs through Friday’s close (May 17).
Macro Briefing: 20 May 2024
* Iran’s president dies in helicopter crash
* Gold rises to record high in early Monday trading
* Copper hits record high in anticipation of deepening supply shortages
* Do the new Biden tariffs mark the end of cheap Chinese goods for US?
* US Leading Economic stays negative in April as growth persists:
Book Bits: 18 May 2024
● A Map of the New Normal: How Inflation, War, and Sanctions Will Change Your World Forever
Jeff Rubin
Adapted essay from book via The Globe and Mail
The world is engulfed in an ever-escalating global trade war. Virtually every day, new sanctions are being imposed, triggering reciprocal actions against Western goods.
Where will this lead? Can the West still win such wars, as it has done before? If not, what are the consequences of losing?
Along with sanctions has risen a new world order in which the United States and its NATO allies can no longer use their economic and military power to unilaterally dictate terms to the rest of the world.
Research Review | 17 May 2024 | Market Analytics
Regime-Based Strategic Asset Allocation
Eric Bouyé and Jerome Teiletche (World Bank)
April 2024
What should investors do in the presence of economic regimes? Researchers and practitioners usually address this topic from a tactical asset allocation point of view. In this article, we depart from the literature by tackling the issue strategically and analytically. Modeling economic regimes as a mixture of distributions, we first investigate what happens to moments of the distribution of returns. We next deduct the implications for portfolios built under popular asset allocation methodologies (mean-variance-optimization, risk budgeting). Using these analytical results, we define new portfolio construction methodologies seeking to exploit the information in macroeconomic (macro) regimes through the composition of optimal portfolios for each regime, the risk structure of these portfolios, and the long-term probability of the regimes. We empirically show that macro regime-based portfolios can outperform traditional asset-based portfolios, for both multi-asset and equity factor universes, over a sample of more than fifty years.
Macro Briefing: 17 May 2024
10-Year US Treasury Yield ‘Fair Value’ Estimate: 16 May 2024
A ‘fair-value’ estimate of the US 10-year Treasury yield was steady in April while the market level for the benchmark rate continued to rise well above the theoretical level. But trading activity this month suggests the trend may be shifting. Yesterday’s sharp fall in the 10-year yield (May 15) substantially narrowed the spread, which implies that the market’s premium over fair value had become extreme.