All the major asset classes scored gains last week, delivering more relief from widespread losses in 2022, based on a set of ETF proxies through Friday’s close (Jan. 13).
Macro Briefing: 16 January 2023
* Treasury Sec. Yellen says US will reach its debt limit within days
* China’s reopening could boost the world economy
* US Treasury Secretary Yellen will meet Chinese vice premier this week
* Economists still see elevated US recession risk via Wall Street Journal survey
* Earnings expected to take center stage for stock market in coming weeks
* Warm winter reduces bite of Russia’s energy war on Europe
* US Treasury market yields fall so far in 2023, in contrast to last year’s start
* India’s head of central bank asks for ban of crypto
* Richest 1% accumulate nearly two-thirds of new wealth created in last 2 years
* US Consumer Sentiment Index rebounds in January to 9-month high:
Book Bits: 14 January 2023
Nathan Vardi
Review via Scientific American
“Finding new therapies that target only cancer cells and did not kill healthy cells had become the holy grail of cancer drug development,” writes Nathan Vardi, a managing editor at MarketWatch and former editor at Forbes. For Blood and Money follows the path of one class of such products (“targeted small-molecule drugs” designed to fight blood cancers) that ultimately pits two biotech companies against each other in a race to market—and to an unimaginable payday. Readers are introduced to scientologists, restless entrepreneurs, clinical experts and the machinations of magnate financiers searching for the next billion-dollar blockbuster. In the middle of that friction of ambition and greed are the patients, desperate for cures and more time.
10-Year Treasury Yield ‘Fair Value’ Estimate: 13 January 2023
The Federal Reserve is expected to lift interest rates again at the next FOMC meeting on Feb. 1, but the futures market is pricing in high odds that the increase will be trimmed to a relatively mild 25 basis points. Animating the softer outlook for monetary policy changes is yesterday’s encouraging news on inflation.
Macro Briefing: 13 January 2023
* IMF expects world economy will start to rebound later this year
* Fed officials signal softer rate hike ahead but no cut
* Attorney general appoints special prosecutor to investigate Biden documents
* Europe’s mild winter softens economic blowback from Ukraine war
* China exports fall less than expected in December
* Germany’s economy slowed less than expected in 2022
* UK economy unexpectedly grew in November
* Many of the largest stock and bond index funds have underperformed recently
* US jobless claims edge lower in kick-off week to new year
* US consumer inflation continues to cool in December:
Is The Labor Market’s Resilience Poised To Fade?
Recession forecasts are flying left and right lately, but the main pushback is the labor market. The growth rate for nonfarm payrolls is slowing, but gradually and the latest numbers for December continue to show a solid gain. Yet recession fears persist, thanks to warnings from other economic and financial indicators. Will the labor market soon give way and confirm the dark forecasts? Yes, or so it appears via the slide in temporary workers – considered a leading indicator for payrolls generally.
Macro Briefing: 12 January 2023
* Will Biden’s document problems spiral into a political crisis?
* US debt-ceiling fight brewing for later this year
* US and Japan strengthen military alliance to deter China
* Analysts expect corporate profits to fall for first time since pandemic’s start
* China consumer inflation picks up to annual 1.8% pace; still below 2% target
* Recent economic pessimism may have been too extreme: JP Morgan’s Dimon
* European stocks may outperform US shares this year, analysts advise
* Business inflation outlook continues to ease in January via Atlanta Fed survey:
Looking For Risk-On Signals
Mr. Market doesn’t explain himself, but he does drop clues about preferences. Interpretation is mostly art, but it can be worthwhile when there are clear signs of trend changes. One approach for monitoring such events is comparing ETF pairs.
Macro Briefing: 11 January 2023
* World Bank sharply lowers growth outlook for world economy in 2023
* Powell says Fed may need to make unpopular decisions to stabilize prices
* West’s war on Russia’s oil revenues is starting to take toll on country’s finances
* US and allies preparing new sanctions on Russian oil industry
* Cryptocurrency exchange platform Coinbase is laying off 950 employees
* Narrower measures of core inflation are in focus for tomorrow’s CPI report
* First AI-powered robot lawyer to make debut in a US court
* Policy-sensitive 2-year US Treasury yield remains relatively steady at ~4.2%:
The US Dollar’s Influence On The Stock Market Isn’t Trivial
How many factors influence the equity market’s performance through time? It’s a long and variable list and no one’s ever sure about the exact inventory in real time, except for Mr. Market, who never speaks on such things. But through the process of reverse engineering we can guesstimate what’s relevant, and what’s not. Among the factors that deserve to be on the short list: the ebb and flow of the US dollar.