It’s been a year of trading places for performance outliers in the US equity sector space. The formerly high-flying tech sector is now the laggard while energy stocks continue to hold the lead, based on a set of ETFs through May 11.
Macro Briefing: 12 May 2021
* Israel-Palestine conflict continues to escalate, sparking fear of new war
* Today’s US inflation report for April is expected to show sharp increase
* Signs of panic buying of gas along East Coast after pipeline shuts down
* Major US fuel pipeline moving closer to reopening
* US detentions at border rose to highest in two decades in April
* UK economy fell 1.5% in the first quarter but rebounded in March
* Small business optimism rose in April but report trouble hiring workers
* US job openings soared in March, but hiring remained relatively subdued:
Estimating Fair Value For The 10-Year Treasury Yield
The world is awash in efforts to model a theoretical value for the stock market – the CAPE ratio, for example. But while the equities hog much of the attention on this front, similar analytics for the world’s most important interest rate are no less valuable.
Macro Briefing: 11 May 2021
* Republicans set to remove Liz Cheney from House leadership position today
* Israel unleashes airstrikes on Gaza for second day
* US ship fired warning shots at Iranian boats in another encounter in Persian Gulf
* China’s factory gate prices rose at fastest rate in over three years in April
* Will progressive groups derail a second term for Fed Chair Powell?
* China’s population grows at slowest pace in decades
* Pipeline shutdown triggers worries that gasoline prices may surge
* Gasoline price mostly steady as key fuel pipeline in US remains offline:
All Major Asset Classes Rose Last Week, Except REITs
Rallies broke out across nearly all the major asset classes last week, based on a set of exchange traded funds. The lone exception: US real estate investment trusts (REITs), which posted the only setback for the trading week through Friday, May 7.
Macro Briefing: 10 May 2021
* Major US fuel pipeline closed for third day after cybersecurity attack
* Consumers feeling pinch of higher prices for goods and services
* Weak jobs report creates challenges for Biden’s policy agenda
* GOP set for week of fierce leadership battles in House
* Cryptocurrency industry hires lobbyists as regulations loom
* US dollar’s share of world’s foreign reserves fell for fifth straight year in 2020
* US payrolls post sharply weaker-than-expected gain for April
* US dollar dropped to lowest level in more than two months on Friday:
The ETF Portfolio Strategist: 9 May 2021
Markets were fired up last week and so were our three proprietary strategies. The top performer: Global Managed Volatility (G.B16.MVOL), which jumped 1.5%. That was enough to beat the benchmark, Global Beta 16 (G.B16), which rose 1.2% for the trading week through Friday, May 7.
Book Bits: 8 May 2021
Campbell R. Harvey, et al.
Interview with co-author (Sandy Rattray) via HedgeWeek
Rattray – who has co-authored a new book on strategic risk management along with Man Group strategy advisor Professor Campbell Harvey, and Otto Van Hemert, director of core strategies at quant-focused Man AHL – believes the upheaval of the past 12 months have rendered tail event predictions “nearly impossible.”
Their new book, titled Strategic Risk Management: Designing Portfolios and Managing Risk, explores how risk management should be incorporated into the core design of investment portfolios, and examines how portfolio balancing and balanced return streams can be achieved through volatility targeting of higher-risk asset classes, and which defensive strategies offer capital protection.
The ETF Portfolio Strategist: 7 May 2021
In this issue:
- Big miss for US payrolls today, but it spurs widespread rallies
- Across-the-board gains for the portfolio benchmarks
Will Treasury Term Premiums Signal Higher Inflation Risk?
There’s no shortage of indicators to monitor for deciding if the expected runup in inflation is a temporary affair or regime shift that signals a longer-term rise in pricing pressure. I recently considered several of the usual suspects, including core inflation and the Treasury market’s implied forecasts, for tracking this risk. But this only scratches the surface of possibilities. Considering options for what might be labeled alternative metrics, the Treasury term premium deserves to be on the short list.