In recent posts I looked at the power of asset allocation to capture average returns (or slightly better) and manage risk in portfolio design. Several tests show that this tool is robust for a variety of standard portfolio mixes. Let’s take the analysis up a notch by creating an ill-advised portfolio as a stress test.
Macro Briefing: 23 April 2021
* Biden seeks higher taxes on wealthy to pay for child care, education
* Russia orders troops to pullback from Ukraine border after buildup
* Eurozone economic growth picked up speed in April, survey data shows
* PMI survey data points to strong economic revival in Apr for UK
* Japan’s economy is growing again–first time in over a year via survey data
* US Leading Economic Index rose in March, signaling stronger momentum
* Existing US home sales fell for second straight month in March
* US jobless claims fell to new pandemic low last week:
Is The Rise In The 10-Year Treasury Rate Noise Or Signal?
If your historical perspective is defined the last several months, the recent jump in the benchmark 10-year Treasury rate looks significant. But a longer term view suggests otherwise. That will change if rates continue to rise, but at the moment the backup in yield still looks like one more installment of a long-running trend of fluctuation within a sliding trend.
Macro Briefing: 22 April 2021
* US reaches 200 million vaccinations–vaccinating the rest may be tougher
* German Foreign Minister: de-coupling from China would be a mistake
* India reports new world record for highest rise in daily Covid-19 infections
* Pfizer-BioNTech Covid vaccine scientist says third shot is needed
* Russia arrests 1000-plus people during protests supporting Alexei Navalny
* Biden will propose 50% cut in emissions cut for US by 2030
* Analysts consider the risk of a US housing market crash
* 10-year Treasury yield down for second day, near lowest rate in over a month:
The ETF Portfolio Strategist: 21 April 2021
The 10-year Treasury yield ticked down for a second day, settling at 1.57% (Apr. 21). That’s close to the lowest rate in over a month. If the 10-year rate closes lower on Friday vs. the week-ago yield, the slide will mark the third straight weekly decline.
Will The Rebound For Small-Cap Value Stocks Endure?
It’s been a year of revival so far for the previously trailing small-cap value space in the US stock market. Deciding if the party can last may depend on how stocks overall fare in the months ahead and whether the consensus forecast for a strong economic recovery is accurate.
Macro Briefing: 21 April 2021
* Former police office Derek Chauvin convicted of murdering George Floyd
* S. Korea exports — proxy for the health of global commerce — surge in April
* Pandemic reshuffles ranking of world’s largest economies
* Supply-chain disruptions taking heavy toll on small businesses in US
* China’s digital currency is new tool for striking back at critics
* Twelve states urge Biden to phase out gas-powered vehicle sales by 2035
* Property management is hot as demand for vacation rentals surges
* Bubble indicator for S&P 500 looking frothy again:
Desperately Seeking Yield: 20 April 2021
The recent rise in Treasury yields is on hold for the moment. So is the normally shifting sands of trailing yields for the various components of the major asset classes, based on a set of exchange traded funds. You can still find yield premiums in risk assets compared with government securities. But we’re now in a world of pondering the potential for higher inflation and higher interest rates, which further complicates the always precarious search for higher payouts.
Macro Briefing: 20 April 2021
* China President Xi calls for fairer world order as tension with US rises
* US risks falling behind China on capitalizing on climate change, says Blinken
* Energy-related carbon emissions set to surge nearly 5% this year, predicts IEA
* Solving the global supply shortage of computer chips won’t be easy
* Wall Street sees central bank digital currencies as next big disruptive force
* If inflation rises, many investors are poorly prepared, says adviser
* US Dollar Index fell sharply on Monday, slumping to 2-1/2 month low:
All The Major Asset Classes Posted Gains Last Week
It was hard to lose money last week as global markets rose across the board for trading through April 16, based on a set of exchange traded funds. Led by foreign and US real estate shares, all the major asset classes advanced over the previous week’s closing prices.