Tailwinds in most global markets continue to favor risk-on investing, but our proprietary strategies are still struggling to keep up with their unmanaged benchmark — Global Beta 16 (G.B16), which is up 12.8% so far this year (see table at end for fund composition).

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● Shutdown: How Covid Shook the World’s Economy
Adam Tooze
Review via Reuters
Confronting the crisis forced governments to discard old orthodoxies, many of which were already under attack. Politicians who had previously sought to rein in public spending deployed vast sums to support citizens stuck at home and businesses which had been forced to close. Central banks hoovered up government bonds and backstopped a range of financial markets. Commitments to free trade and private enterprise were discarded in the rush to secure face masks and vaccines, and support crisis-struck industries.

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• Solid gains lift most global markets this week
• Another week of strong gains for our portfolio strategy benchmarks

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Risk-adjusted performance continued to rise in August for the Global Market Index (GMI), an unmanaged, market-value-weighted portfolio that holds all the major asset classes (except cash). GMI’s Sharpe ratio increased for a sixth straight month, reaching 0.93 – the highest in over two years.

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* Millions of jobless Americans are about to lose federal unemployment benefits
* Japan’s prime minister announces he’ll quit after a year in office
* Looking for clues for predicting how the Taliban will govern Afghanistan
* China Services PMI: sector contracted in August for first time since April 2020
* US jobless claims remained strong in August
* GM to halt most production at North American plants due to chip shortage
* One of biggest hedge funds agrees to pay up to $7 billion to settle tax dispute
* US rent inflation will accelerate, predict two Fed economists predict:

The expected risk premium for the Global Market (GMI) ticked up in August, reaching an annualized 6.1%, slightly above the previous month’s estimate. That’s a relatively elevated level compared with recent history. The forecast relates to the long-run outlook for GMI’s return over the “risk-free” rate, which is based on the yield for a 3-month Treasury bill.

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* Hurricane Ida’s remnants bring widespread flooding to US Northeast
* Global mfg growth slipped to six-month low in August via PMI survey data
* US construction spending ticked up to 9.0% annual gain, a pandemic high
* Will ending eviction protections harm the economic recovery?
* The outlook for merger arb trades looks encouraging, predicts GMO
* US manufacturing posts slightly stronger growth in August
* US private payrolls grew faster in August, but less than forecast via ADP data:

Is it risk-on again for emerging markets? It’s an intriguing question that resonates a bit more these days, courtesy of rallies in several of the leading EM nations.

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The winning streak for American shares rolled on in August. US stocks rose for a seventh straight month and posted the strongest gain for the major asset classes.

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