Trump advisers struggle to explain president’s trade deal with China: Bloomberg
OPEC working on plan to cut oil output: Reuters
Congress moves to delay threat of a gov’t shutdown: Politico
French gov’t reportedly set to suspend controversial fuel-tax hike: CNBC
EU lawyers: UK gov’t can unilaterally halt Brexit process: CNN
Parts of Treasury yield curve invert: MW
Global Mfg PMI indicates subdued growth in Nov: IHS Markit
Construction spending in US slipped for third month in Oct: TT
US Mfg PMI ticks down to moderately firm growth pace in Nov: IHS Markit
US ISM Mfg Index increased in Nov after touching 5-month low: MW

November brought relief for several asset classes after October’s rout. Red ink was far from banished, but there was a welcome upside bias in last month’s trading.
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Trump tweets that China agrees to cut tariffs on US-made cars: Bloomberg
China says it’s working with US to remove all tariffs: Reuters
Trump plans to leave NAFTA before Congress OKs its replacement: NY Times
Qatar announces it’s leaving OPEC: CNN
Eurozone mfg growth slips to weakest pace in more than two years: IHS Markit
Eurozone y-o-y inflation slipped to 2.0% in Nov after a near-6yr high: Reuters
UK mfg activity ticked up in Nov but sector growth remains ‘subdued’: IHS Markit
Chicago PMI popped to 11-month high in November: Chicago PMI
10yr-2yr Treasury yield spread falls to 21 basis points — lowest since mid-Sep:

● The Model Thinker: What You Need to Know to Make Data Work for You
By Scott E. Page
Essay by author via Harvard Business Review
Without models, making sense of data is hard. Data helps describe reality, albeit imperfectly. On its own, though, data can’t recommend one decision over another. If you notice that your best-performing teams are also your most diverse, that may be interesting. But to turn that data point into insight, you need to plug it into some model of the world — for instance, you may hypothesize that having a greater variety of perspectives on a team leads to better decision-making. Your hypothesis represents a model of the world.
Though single models can perform well, ensembles of models work even better. That is why the best thinkers, the most accurate predictors, and the most effective design teams use ensembles of models. They are what I call, many-model thinkers.
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Factor Investing: Get Your Exposures Right!
François Soupé (BNP Paribas Asset Management), et al.
October 26, 2018
This paper is devoted to the question of optimal portfolio construction for equity factor investing. The first part of the paper focusses on how to make sure that a given equity portfolio has the targeted factor exposures, even before imposing any constraints. We show that such portfolios can be derived from mean-variance optimization using stock expected returns as inputs provided these are built in a robust way from information about the factors. We propose a framework to build those robust stock expected returns and show that the targeted factor exposures are retained by the portfolios both before and after applying realistic constraints, e.g. long-only. Other more simplistic approaches fail. In the second part of the paper we illustrate the application of the framework to a practical case where the objectives are, first, to decide about the risk budget allocation to factors in some pragmatic way; and second, to construct a long-only constrained portfolio that retains the targeted exposures to four factors from well-known asset pricing equity models, namely High-minus-Low (HML), Robust-minus-Weak (RMW), Conservative-minus-Aggressive (CMA) and Momentum (MOM).
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Trade-war risk is top priority at G20 meeting: BBC
Russia-Trump link becomes clear after Michael Cohen’s guilty plea: Bloomberg
Trump cancels meeting with Putin, citing Ukraine confrontation: CNN
PMI shows China’s mfg sector continues to weaken in Nov: Bloomberg
Falling oil prices are putting pressure on junk bond market: NY Times
Fed minutes: policymakers expect a rate hike in December: MW
Pending home sales in US tumbled to four-year low in October: MW
US consumer spending rose sharply in Oct as inflation eased: Bloomberg
Survey: women more pessimistic on US economy compared with men: Axios
US jobless claims rose to 6-month high last week: CNBC

Despite a turbulent run for the US stock market over the past two months, the growth factor’s edge is intact by a solid margin relative to value, based on a set of ETFs. Although year-to-date equity returns generally have been trimmed recently, the growth-value divide remains stark, with the former still posting a healthy gain in 2018 while the latter has deteriorated to a slight loss.
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Senate votes to punish Saudis for Khashoggi death: LA Times
Ukraine minister: Russia blocking Ukrainian Azov Sea ports: Reuters
Democrats nominate Pelosi as Speaker of the House: NY Times
Brazil backs out of hosting next year’s UN climate summit: The Hill
Morgan Stanley’s chief US economist: Trump can’t fire Fed chair: CNBC
US life expectancy fell in 2017: Bloomberg
Fed Chair Powell calls for gradual rate hikes: MNI
New US home sales fell to 2-1/2 yr low in Oct: CNBC
US trade deficit widened in October: MW
Fed’s 5th district mfg activity grew at moderate pace in Nov: Richmond Fed
Revised GDP data: US economy expanded at 3.5% in Q3: MW

University of Michigan professor Scott Page reminds us that more is better for using models in the art/science of forecasting. Writing in the Harvard Business Review, he advises that “with an ensemble of models, you can make up for the gaps in any one of the models.”
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Russia says it will deploy new missiles to Crimea as Ukraine tensions rise: Reuters
Kudlow: US and China have re-engaged in trade talks ahead of G20 meeting: CNBC
Trump may cancel meeting with Putin at G20 after Russia-Ukraine clash: The Hill
Trump threatens to end GM’s electric car subsidies over factory closures: CNN
US gov’t shutdown risk rising over battle to fund border wall: Politico
Federal Housing Finance Agency: US house prices rose slowly in Q3: Housing Wire
US Consumer Confidence Index eased in Oct, but remains elevated: MW
US home price gains decelerate to slowest pace since Jan 2017: CNBC