The gap narrowed in July between the expected return for the Global Market Index (GMI) and its trailing 10-year realized performance. Today’s revised long-run forecast for GMI, a global, multi-asset-class benchmark, ticked up to an annualized 6.5% from last month’s estimate while its trailing 10-year return edged down to 6.7%. The forecast is based on the average estimate for three models (defined below).
Macro Briefing: 2 August 2023
* US credit rating downgraded to AA+ from AAA by Fitch Ratings
* Global manufacturing downturn continues in July at faster pace
* Resilient US economy suggests US stocks can still run higher, strategist advises
* Job openings in US ease to 2-year low in June
* US construction spending rose sharply in June
* US ISM Manufacturing Index continues to indicate sector’s in recession:
Major Asset Classes | July 2023 | Performance Review
Most of the major asset classes continued to rally in July, led by a surge in commodities, based on a set of ETFs. US bonds, by contrast, remained the outlier, posting a third straight monthly loss.
Macro Briefing: 1 August 2023
* Bidenomics seems to be working for the US economy
* Do lackluster earnings projections threaten stock market’s rally?
* America’s first new nuclear reactor in decades becomes operational
* China’s manufacturing sector contracted in July, rippling across Asia’s factories
* China’s new metals export controls will reverberate in global chip industry
* Prices charged for eurozone goods fall at quickest pace since 2009
* Chicago PMI up less than expected in July, continues to indicate contraction
* Texas manufacturing activity continues to contract in July
* US banks expect to tighten loan standards in second half of 2023
All The Major Asset Classes Now Posting Gains Year To Date
Commodities have joined the party. After last week’s rally that lifted a broad measure of commodities, all the major asset classes are now posting gains for the year to date through Friday’s close (July 28), based on a set of ETFs.
Macro Briefing: 31 July 2023
* S&P 500 profits get a boost from weaker US dollar
* Stock market rally showing signs of broadening as…
* Equal-weighted S&P 500 ETF (RSP) leads cap-weighted ETF (SPY) over past month
* US economy remains “resilient”, says Minneapolis Fed President Neel Kashkari
* 3 reasons why America may avoid a recession
* China’s factory activity for July contracts for the fourth straight month
* Eurozone growth picks up in Q2 and inflation eases
* Crude oil headed for biggest monthly price gain in more than a year
* Yellow, a major US trucking firm with 30,000 employees, is shutting down
* US consumer spending rose as inflation eased in June–‘sweet spot’ for economy:
Book Bits: 29 July 2023
Peter Cappelli
Review via Publishers Weekly
Misguided bean counting leads businesses to mistreat their workers to the detriment of profits, according to this incisive treatise. Wharton professor Cappelli (Why Good People Can’t Get Jobs) pillories financial accounting rules set by the nonprofit Financial Accounting Standards Board that regard wages, benefits, and training as costs to be minimized, resulting in the undervaluation of employees. These perverse incentives, he explains, lead to outcomes that are bad for business, as when the costs of increased turnover outweigh nominal savings from layoffs and pay cuts, and when the outsourcing of labor to “reduce costs in the ‘employment’ accounting category” ends up costing the same as employee wages would have.
Looking For Market Signals With Extreme Price Changes
Predicting is hard, especially about the future, but sometimes it’s a bit easier for financial markets when prices are at extremes. The challenge is defining “extreme.”
Macro Briefing: 28 July 2023
* US government-shutdown risk may be brewing… again
* US pending home sales index rose in June–first increase since February
* Japan 10yr bond yield jumps to 9yr high as Bank of Japan eases yield control
* German economy posts slight loss in GDP for second quarter
* US jobless claims fell more than expected last week
* Durable goods orders in US rose more than forecast in June
* US GDP posts strong upside surprise, increasing 2.4% in second quarter:
Tech Stocks Still Lead Market By Wide Margin This Year
This year’s rally in US stocks continues to rely heavily on a handful of red-hot sectors, based on a review of ETFs through yesterday’s close (July 26). Shares in technology, communications and consumer discretionary are well ahead of the broad market, providing strong upside support.