It’s time once more to look back on CapitalSpectator.com’s weekly Book Bits column and pluck a few of the more memorable titles from the archives. Per the usual routine, as each year draws to a close, we revisit ten books from 2023’s travels — titles that, for one reason or another, caught your editor’s eye and deserve another look before New Year’s celebrations commence. We’ll start with five today, followed by the balance in a week. Happy reading!
An Early Start To A Long Christmas Weekend
Visions of sugar plums aren’t yet dancing in my head, but I thought I heard the laugh of a right jolly old elf. Or was it the neighbor’s cat? No matter — the world headquarters of The Capital Spectator is now closed, reopening on Tuesday, Dec. 26. Meanwhile, excuse me as take my leave like the down of a thistle. Cheers!
Research Review | 21 DEC 2023 | Portfolio Design & Risk Factors
Factor Zoo (.zip)
Alexander Swade (Lancaster University) et al.
October 2023
The number of factors allegedly driving the cross-section of stock returns has grown steadily over time. We explore how much this ‘factor zoo’ can be compressed, focusing on explaining the available alpha rather than the covariance matrix of factor returns. Our findings indicate that about 15 factors are enough to span the entire factor zoo. This evidence suggests that many factors are redundant but also that merely using a handful of factors, as in common asset pricing models, is insufficient. While the selected factor styles remain persistent, the specific style representatives vary over time, underscoring the importance of continuous factor innovation.
Macro Briefing: 21 December 2023
* Small group of Wall Street economists still see US recession lurking, but…
* Fear of recession is starting to fade for Americans
* Warner Bros in merger talks with Paramount
* 5 portfolio lessons from 2023, including: Don’t Fight the Fed
* US existing home sales rise in November–first gain in 5 months
* US Consumer Confidence Index rebounds sharply in December:
Confidence Rising In Markets For Rate Cuts In 2024
Markets are becoming increasingly confident that the Federal Reserve will start cutting interest rates in 2024. The first cut is expected at the March 20 monetary policy meeting.
Macro Briefing: 20 December 2023
* Red Sea chaos will cause shipping delays, drive up goods prices
* Democrats urge Biden to follow Europe’s lead and require stricter tech regs
* Canada to require all new autos to be zero-emission by 2035
* 44% Of US office loans underwater, which suggests high bank-failure risk
* US housing starts rise sharply, beating expectations by wide margin in Nov:
Is The Stock Market’s Breadth Improving?
The S&P 500 Index’s rise in recent weeks puts it within shouting distance of its record high, set in January 2022. Yet some analysts warn that the narrow leadership of Big Tech stocks leaves the market vulnerable.
Macro Briefing: 19 December 2023
* Red Sea attacks threaten global supply-chain disruption
* Is the appetite for rising US debt near a limit?
* Overtightening risk suggests rate cuts needed, says Fed official
* Poll finds renewed demand for stocks fueled by expectations for rate cuts
* Bank of Japan maintains ultra-easy policy amid ‘extremely high’ uncertainties
* Goldman Sachs lifts S&P 500 forecast on high confidence for rate cuts
* US home builder sentiment rises in December for first time in 5 months:
Are Commodities A Compelling Contrarian Trade For 2024?
It’s been a profitable year for the major asset classes, with a glaring exception: commodities. The general slide in prices of raw materials stands out in an otherwise rising tide for global markets, based on a set of ETFs through Friday’s close (Dec. 15).
Macro Briefing: 18 December 2023
* Declaring victory over inflation is premature, says Chicago Fed chairman
* Major central banks have different plans for initial rate cuts
* Regional bank stocks surged after Fed hints at rate cuts in 2024
* Corporate bankruptcies rising at double-digit rates in most advanced economies
* Oil prices unlikely to rebound to $100 a barrel in 2024, analysts forecast
* US business activity picked up in December via PMI survey data:
