Tomorrow’s initial estimate of US economic activity by the government for the second quarter (scheduled for Thursday, July 27) is expected to report that a moderate expansion continues, based on the median estimate via several sources compiled by CapitalSpectator.com.
Macro Briefing: 26 July 2023
* Federal Reserve expected to raise interest rates today to 22-year high
* Fed still at risk of doing too little to tame inflation, says SF Fed president
* IMF lifts global growth forecast despite slower momentum in China
* China announces new central bank governor at critical juncture for economy
* US faces “significant” shortage of tech workers in semiconductor industry
* US house prices rise for four months through May but dip vs. year-ago level
* US Consumer Confidence Index rebounds to two-year high in July:
Gold Still Looks Pricey Based On A “Fair Value” Model
The price of the world’s favorite precious metal remains near its upper range of the past three years, but for gold bulls this is disappointing. The surge of inflation in the wake of the pandemic should have by now pushed the price much higher than the current $1962 per ounce, its more zealous supporters complain. But while inflation is, or at least, can be a factor in gold’s price, real (inflation-adjusted) interest rates and the US dollar tend to dominate pricing. By that reasoning, the spike in real rates in recent years explains a lot. No wonder, then, that CapitalSpectator.com’s “fair value” gold model, which uses the greenback and real rates, still advises that the precious metal’s valuation is lofty.
Macro Briefing: 25 July 2023
* Heatwaves around the world likely triggered by climate change, study finds
* Decades of rising global debt levels starts to bite as borrowing costs increase
* US economic boom possible due to productivity boost: head of Yardeni Research
* When will the drop in US personal savings threaten the expansion?
* Federal Reserve expected to lift interest rates tomorrow (Wednesday, July 26)
* Chicago Fed Nat’l Activity Index: US growth remains below trend in June
* US economic momentum slows in July via PMI survey data:
US Stocks Lead Global Markets In 2023 As Various Risks Simmer
American shares remain firmly in the lead for the major asset classes year to date, based on a set of ETF proxies through Friday’s close (July 21). Markets generally are posting solid gains in 2023 but various risk factors will pose a stress test for the bull run in the second half.
Macro Briefing: 24 July 2023
* A “momentous week” ahead for Fed and other central bank
* Fed isn’t set to declare victory on inflation
* Positive Q2 earnings surprises for S&P 500 firms in line with recent averages
* Decade-long rally in US home prices may be ending: Professor Robert Shiller
* Eurozone economy contracts at steepest rate in 8 months in July via PMI survey
* Is the regional banking crisis over? Investors think so:
Book Bits: 22 July 2023
Carol Roth
Interview with author via Hidden Forces
The argument that Carol makes in the book is that we are on the precipice of a new financial world order, one that will fundamentally change the fortunes of hundreds of millions if not billions of people across the western world. How this new financial world order is being brought about and the role being played by international organizations, governments, and multinational corporations in facilitating it forms a large part of today’s conversation. The second part of the episode examines the deeper technological, socio-cultural, and spiritual forces that are driving peoples awakening. This part of the discussion focuses on how to differentiate betwen the fear-mongering misdirection of many media entrepreneurs and other, more credible sources of information, as well as what we can do to fight back by regaining control over our finances, over our lives, and over the narratives that define our reality.
Research Review | 21 July 2023 | Forecasting Markets
Betting on War? Oil Prices, Stock Returns and Extreme Geopolitical Events
Knut Nygaard (Oslo Metropolitan U.) and L.Q. Sørensen (Storebrand Asset Mgt.)
July 2023
We show that the ability of oil price changes to predict stock returns is largely limited to five extreme geopolitical events: the 2022 invasion of Ukraine, the 2003 invasion of Iraq, the 1990/91 Persian gulf war, the 1986 OPEC collapse, and the 1973 Arab-Israel war. In the counterfactual scenario where these events did not occur, the t-statistics are reduced on average 75% as compared to that reported by Driesprong, Jacobsen, and Maat (2008). We also find that a market-timing trading strategy based on oil price changes typically generates insignificant abnormal returns, contradicting previously published results. Our findings serve as an example of how a significant predictor in a time series forecasting regression does not necessarily constitute a useful or profitable market-timing signal.
Macro Briefing: 21 July 2023
* US Treasury Sec. visits Vietnam to strengthen ‘friendshoring’ of supply chains
* Damaged Pfizer plant will “likely lead to long-term shortages” of medicine
* US Leading Economic Index continues to issue warning for economy
* Federal Reserve launches instant payments services
* US existing home sales fell in June to slowest pace in 14 years
* Philly Fed Mfg Index continues to reflect weak sector activity in July
* US jobless claims fell last week, holding near multi-decade lows:
Desperately Seeking Yield: 20 July 2023
Are we at or near peak yields for risk assets? The possibility is looking more likely these days.