It’s been a rough ride in recent weeks, but trend data still leaves room for debate on the prospects for maintaining bullish bets. Using a set of ETFs shows that most of the major asset classes in 2024 through Friday’s close (Aug. 9) are posting gains.
Macro Briefing: 12 August 2024
* US sends more forces to Middle East, reacting to “escalating regional tensions”
* Is the recent surge of market volatility over? Not yet, predict analysts
* Increasingly price-sensitive consumers will help lower inflation rate
* Nouriel Roubini–“Dr. Doom”–doesn’t expect a hard landing for US anytime soon
* US inflation likely held stead in July, RBC predicts
* Despite market volatility, US large caps (SPY) still lead small caps (IJR) this year:
Book Bits: 10 August 2024
● Making Sense of Chaos: A Better Economics for a Better World
J. Doyne Farmer
Summary via publisher (Yale U. Press)
We live in an age of increasing complexity—an era of accelerating technology and global interconnection that holds more promise, and more peril, than any other time in human history. The fossil fuels that have powered global wealth creation now threaten to destroy the world they helped build. Automation and digitization promise prosperity for some, unemployment for others. Financial crises fuel growing inequality, polarization, and the retreat of democracy. At heart, all these problems are rooted in the economy, yet the guidance provided by economic models has often failed. Using big data and ever more powerful computers, we are now able for the first time to apply complex systems science to economic activity, building realistic models of the global economy. The resulting simulations and the emergent behavior we observe form the cornerstone of the science of complexity economics, allowing us to test ideas and make significantly better economic predictions—to better address the hard problems facing the world.
Research Review | 9 August 2024 | Crisis Risk
The CNN Fear and Greed Index as a Predictor of Us Equity Index Returns
Hugh Farrell and Fergal A. O’Connor (University College Cork)
July 2024
We assess whether the CNN “Fear and Greed” Index can be used to predict returns on equity indices and gold using hand-collected data. We find that the Fear and Greed Index Granger causes returns on the S&P 500, Nasdaq Composite and Russell 3000 in the first sample period (2011-2020), but not gold returns. Analysis from 2021–2024 indicates the Fear and Greed index Granger causes S&P 500 and Russell 3000 returns, but the relationship is weaker. No significant relationship is found between the VIX and stock indices, indicating that the Fear and Greed Index is a better predictor of equity returns.
Macro Briefing: 9 August 2024
* JP Morgan lifts US recession odds to moderate 35% for this year
* US mortgage rates fall to lowest level in over a year
* US government will offer loan to S. Korean firm build solar plant in Georgia
* China inflation picks up, but remains low–just 0.5% vs. year-ago level
* US jobless claims fall more than expected, offering upbeat labor market news:
Markets Take A Hit, But A Clear Risk-Off Signal Is Still In Dispute
From the vantage of the past week of trading the case looks clear for calling recent market volatility a sign of a risk-off pivot. But if your time horizon is longer, there’s still room for debate, based on a set of ETF pairs for gauging the broad trend via prices through Aug. 7.
Macro Briefing: 8 August 2024
* Consumers trimmed their borrowing in June, according to Fed data
* Post-pandemic surge in travel appears to be ending
* US not currently in recession, says JPMorgan Chase CEO Jamie Dimon
* ‘Covered call’ ETFs fail to deliver protection from volatility in sell-off
* US 10yr-2yr Treasury yield curve is flat for first time in two years:
Utilities Lead US Equity Sectors This Year After Market Turmoil
Utility stocks have taken the lead in 2024 among US equity sectors following the market sell-off in recent days, based on a set of ETFs through Tuesday’s close (Aug. 6).
Macro Briefing: 7 August 2024
* Consumer spending will be a key factor for gauging US recession risk
* Markets expect Fed to head off a recession with rate cuts
* US trade deficit narrowed in June as exports outpace imports
* Americans continue to rack up credit card debt, which rose to a new high in Q2
* Sahm Rule-creator doesn’t recommend emergency Fed rate cut
* US stock market (S&P 500) claws back some of the loss after 3-day sell-off:
US Isn’t In Recession Now, But Downturn Risk May Be Rising
Judging by the current numbers, the US expansion almost certainly endures. There are well-founded concerns that the tide may be turning, but that’s still a speculative call. By comparison, published numbers to date, overall, speak clearly: growth still has the upper hand. That’s not written in stone, of course, but for this specific point in time it’s the odds-on favorite for describing current conditions.