Downside risk for Emerging Markets continues to lurk: Two weeks ago (Mar. 24) the potential for an extended haircut in Vanguard FTSE Emerging Markets (VWO) appeared to be bubbling. The financial gods, however, laughed at the idea and the ETF subsequently bounced. Game over? Not yet since the rally looks unconvincing.
US GDP Nowcasts Continue To Anticipate Stronger Growth For Q1
The upcoming first-quarter economic report for the US is expected to post a strong acceleration in growth, according to a set of nowcasts. The projected gain in gross domestic product (GDP) has been steady recently, suggesting a relatively high reliability that the Apr. 29 release from the Bureau of Economic Analysis will reflect a faster expansion in Q1 vs. the previous quarter.
Macro Briefing: 7 April 2021
* Global middle class shrank last year–first time since 1990
* Brazil’s Covid-19 deaths set to exceed worst of US wave
* Markets pricing in a Fed rate hike for 2022
* Debt and climate change are rising risks for dozens of countries
* IMF raises 2021 growth estimates for US and global economy
* Eurozone economy rebounded in March via PMI survey data
* US job openings rose in February to two-year high:
Will The Fed Be Forced To Raise Rates Earlier Than Expected?
It will be gradual, with ample advance notice. And it’ll only begin once the economy has “fully recovered.” That, at least, is the plan for raising interest rates at some point in the future, Federal Reserve Chair Jerome Powell explained late last month. The key question: Will the economy cooperate?
Macro Briefing: 6 April 2021
* EU and UK pledge support for Ukraine after Russian military buildup
* China says military exercises near Taiwan will become routine
* US to attend talks in Vienna aimed at reviving Iran nuclear deal,
* Treasury Sec. Yellen wants a minimum global corporate income tax
* Fed will face criticism with easy money policies if economy soars
* GOP Leader McConnell says ‘consequences’ await companies wading into politics
* Tens of thousands of stores at risk of closing, UBS warns
* China is first major economy to create a digital currency
* China service sector expanded at a stronger pace in March
* US ISM Services Index rose sharply in March, reflecting accelerating growth:
US Stocks Led Gains In Last Week’s Risk-On Rally
Shares in US companies topped returns for the major asset classes last week, based on a set of exchange traded funds through April 1. The rally in American stocks unfolded in a week when global equities overall posted solid gains.
Macro Briefing: 5 April 2021
* Wall Street eyes higher corporate taxes in Biden’s new stimulus plan
* Veteran pension consultant recommends simplifying portfolios with indexing
* Is worker productivity at long last set to rise?
* Some states try to derail Biden’s clean energy agenda
* US payrolls surged in March, well above forecasts
* Goldman Sach reverses its bearish dollar forecast as Treasury yields rise
* US Dollar Index rose for third straight week after strong payrolls report:
Book Bits: 3 April 2021
Justyn Walsh
Review via The Wall Street Journal
When Keynes died in 1946, his net assets totaled some $30 million in today’s money. While his books had sold well, he had made the bulk of his fortune by investing smartly, often from his bed in the mornings after digesting the news. During his 25 years running the King’s College endowment, he generated an annual return of 16%, adapting his investment style to flourish even during the Great Depression and World War II.
Mr. Walsh, a former investment banker and the chief executive of an asset-management firm, explains how.
The ETF Portfolio Strategist: 2 April 2021
Keeping up with beta remains challenging this year. All three of our proprietary strategies are still trailing the Global Beta 16 benchmark (G.B16). That’s not to say that the prop strategies don’t add value – they do, but not in raw performance, at least not so far this year. The risk-management edge, by contrast, remains intact, albeit in varying degrees and on different fronts across the trio of prop strategies. For details on strategy rules and risk metrics in the tables below, please see this summary.
Risk Premia Forecasts: Major Asset Classes | 2 April 2021
The expected risk premium (return above the “risk-free” rate) for the Global Market Index (GMI) continued to edge higher last month, rising to an annualized 5.7% — up slightly from the previous estimate. That’s still well below the trailing realized performance for the benchmark, but it represents a relatively elevated estimate compared with forecasts in recent history.