The long-term expected return for the Global Market Index (GMI) remains moderately below the index’s trailing realized 10-year performance through July, based on the average of three forecasting models (defined below). The key takeaway: it’s still prudent to manage expectations down for multi-asset-class strategies, relative to the past decade.
Macro Briefing: 2 August 2022
* US House Speaker Nancy Pelosi expected to visit Taiwan despite China warnings
* China warplanes fly close to dividing line in Taiwan Strait ahead of Pelosi visit
* US construction spending tumbled in June amid sharp decline in homebuilding
* Global Mfg PMI falls to 2-year low but still indicates growth
* US Manufacturing PMI at lowest for two years but still above neutral level
* US ISM Mfg Index ticks lower in July but continues to indicate growth:
Major Asset Classes | July 2022 | Performance Review
The majority of the major asset classes rebounded in July, providing relief from an extended run of red ink, based on a set of proxy ETFs. The challenges that triggered widespread selling in global markets this year remain in force – the war in Ukraine, high inflation, rising interest rates and stumbling economic activity. This toxic mix will continue to create headwinds for markets, but for one month, at least, gloomy sentiment took a holiday.
Macro Briefing: 1 August 2022
* Pelosi starts Asia trip amid warnings not to visit Taiwan
* US deploys military assets near Taiwan as Pelosi considers visit
* First grain ship leaves Ukraine under Russia deal
* Factory outlook weakens in Asia and Europe
* China factory output unexpectedly contracted in July
* Emerging markets suffer record streak of withdrawals by foreign investors
* German retail sales fell nearly 10% in June–biggest annual decline since 1994
* US home price gains cooling rapidly, real estate data firm finds
* US consumer spending and personal income rose more than expected in June:
Book Bits: 30 July 2022
Scott M. Moore
Summary via publisher (Oxford U. Press)
In China’s Next Act, Scott M. Moore re-envisions China’s role in the world, with a focus on sustainability and technology. Moore argues that these increasingly pressing, shared global challenges are reshaping China’s economy and foreign policy, and consequently, cannot be tackled without China. Yet sustainability and technology present opportunities for intensified economic, geopolitical, and ideological competition–a reality that Beijing recognizes. The US and other countries must do the same if they are to meet ecological and technological challenges in the decades ahead. In some areas, like clean technology development, competition can be good for the planet. But in others, it could be catastrophic — only cooperation can lower the risks of artificial intelligence and other disruptive new technologies.
Arguing Over Recession Definitions – The New New Thing
US gross domestic product (GDP) fell 0.9% in the second quarter, the Bureau of Economic Analysis reports. The slide in real (inflation adjusted) output, calculated at an annual rate, follows a 1.6% decline in Q1. The back-to-back decreases immediately triggered calls that the US is in recession. But there’s also pushback from some analysts, advising that there’s room for debate. The militant wing of recessionistas quickly cried foul, and in the blink of an eye both sides are attacking the other as delusional.
Macro Briefing: 29 July 2022
* China President Xi warns Biden on interference with Taiwan
* Biden and China President Xi, after call, plan to meet in person
* China signals no big stimulus planned to support slowing economy
* Is the US in a recession? Answer depends on the analyst you ask
* Inflation in Eurozone in July reaches record-high 8.9% for past year
* Eurozone GDP growth picked up to +0.7% in Q2, but…
* German GDP ground to a halt in Q2
* Big tech looks resilient as economy weakens
* US jobless claims edge lower but remain near 2022’s highest level
* US Q2 GDP declines, marking second straight quarterly loss:
Peak Inflation Watch: 28 July 2022
The inflation battle continues. The Federal Reserve yesterday raised interest rates by a hefty 75 basis points, again, in a renewed effort to tame inflation’s recent surge. The key question: When will we start to see results?
Macro Briefing: 28 July 2022
* Federal Reserve raises interest rates 75 basis points… again
* Senator Joe Manchin, key Democrat vote, agrees to climate legislation
* Senate passes $52 billion bill supporting US semiconductor production
* North Korea returns to saber rattling with new threat
* CBO predicts sharp increase in US public debt burden and deficit
* Eurozone economic sentiment falls sharply in July, signaling recession is near
* US 10yr Treasury yield holds below 2.8% after another Fed rate hike:
Energy Holds On To Hefty Lead For US Equity Sectors In 2022
Energy stocks have stumbled in recent weeks, but this sector is showing signs of regaining its mojo. It could be noise or even a last gasp after an extraordinary bull run. But for the moment, shares in this corner remain the clear leader year to date, based on a set of sector ETFs through Tuesday’s close (July 26).