An extraordinary run of low risk persists for the Global Market Index (GMI), an unmanaged, market-value-weighted portfolio that holds all the major asset classes (except cash). After the benchmark posted another monthly gain in July, risk-adjusted performance ticked higher once again.
Macro Briefing: 4 August 2021
* Biden administration issues new national eviction moratorium
* Delta variant poses biggest challenge for China since pandemic’s start
* Bond yields remain under pressure due to worries about Delta variant
* Businesses have record amounts of unused credit from US banks
* China economic growth accelerated in July via Composite Output Index
* Eurozone economy expanded in July at fastest rate since 2006
* UK inflationary pressures reach record high in July
* US factory orders rose more than expected in June:
Risk Premia Forecasts: Major Asset Classes | 3 August 2021
Correction: Data table below is incorrectly labeled as June 2021; should be July 2021. Apologies
The projected risk premium for the Global Market (GMI) held steady in July at an annualized 6.0%, unchanged from the previous month. That’s a comparatively elevated level vs. estimates in recent history. The forecast reflects the long-run outlook for GMI’s return over the “risk-free” rate, which is proxied with the yield on a 3-month Treasury bill.
Macro Briefing: 3 August 2021
* Fed faces increasingly uncertain autumn due to Delta variant of coronavirus
* Asia’s economic recovery is increasingly vulnerable to Delta variant
* SEC chairman considers tougher regulations for crypto investing
* Global chip shortage that’s bedeviled car industry expected to continue
* Global Mfg PMI slipped in July but continues to indicate solid growth
* US mfg growth slowed for a second month in July via ISM survey data
* US construction spending edged up in June but trend still moving sideways
* US 10-Year Treasury yield fell to 1.20% on Monday–just above 6-month low:
Major Asset Classes | July 2021 | Performance Review
Most of the major asset classes continued to rise in July, led by US real estate investment trusts (REITs). Only stocks in emerging markets lost ground last month.
Macro Briefing: 2 August 2021
* Bipartisan Senate group finalizes text on infrastructure bill
* Dems ask White House to extend eviction ban
* US and UK say Iran responsible for deadly tanker attack off Oman’s coast
* Pandemic-driven slide in interest rates unleashes global boom in house prices
* World’s biggest pension fund cuts US bond weighting sharply to 35%
* Millions of jobless in US are set to lose support in a month
* Will the Fed change monetary policy due to soaring house prices?
* Revised Eurozone Mfg Index for July reflects ‘resilient’ output reading
* India Mfg Index returned to growth in July after brief contraction
* US 10yr-3mo Treasury yield curve continues to flatten:
The ETF Portfolio Strategist: 1 August 2021
The economic and financial headlines swirled last week, but the net result was essentially no change to a slight downside bias for performance with our proprietary strategies. As usual, the relatively calm surface activity at the strategy level masked a fair degree of turbulence in some corners for the underlying 16-fund opportunity set.
Book Bits: 31 July 2021
Kent Jones
Summary via publisher (Oxford U. Press)
Around the world, populism has weaponized anxieties over globalization and other forms of cultural, social, and economic change. Many populist leaders have succeeded in conflating trade concerns with apprehensions over immigration, thereby creating potent campaigns to overturn existing trade agreements and the multilateral cooperation they embody. In the United States, avowed protectionist Donald Trump set out not only to raise tariffs, but to dismantle the system of global trade embodied in the World Trade Organization. In the UK, the Brexit referendum resulted in that country’s withdrawal from the European Union, ending its commitment to trade integration with the continent.
The ETF Portfolio Strategist: 30 July 2021
- US Small-cap stocks rebound, but the outlook is still mixed
- US bonds continue to edge higher as interest rate slip further
- Equal-weight global asset allocation leads our strategy benchmarks this week—and this year!
Signs of life in small caps: For a second straight week, small-cap shares rallied. The iShares Core S&P Small-Cap ETF (IJR) rose 1.7% for the week (through July 30), posting the strongest gain for our standard global opportunity set.
Personal Income’s Weak Rebound Clouds US Economic Outlook
Economists are expecting another decline in today’s June report on US personal income. That’s worrisome because this key indicator has been a relative laggard vs. the strong rebounds in employment, consumer spending and industrial production – collectively known in some circles as the Big Four economic indicators that capture the core of US macro activity.