Do lower or even negative correlations between market segments contribute to better diversification when constructing investment portfolios? If the answer is “yes,” the market has recently become somewhat more accommodating. There are now more opportunities available that feature relatively low or negative correlations across different asset classes.
Trump sues banks to block congressional subpoenas: USA Today
N. Korea issues new warning to US over denuclearization talks: CNBC
Rod Rosenstein, US deputy attorney general, resigns: Reuters
China’s manufacturing sector expands at a slower-than-expected pace in April: CNBC
Eurozone GDP growth accelerates in the first quarter: RTT
Climate change increasingly influences decisions in US agriculture: NY Times
Will US small-cap stocks benefit from a rising dollar? WSJ
Texas factory growth accelerates in April: Dallas Fed
US consumer spending growth over the year increased, though disposable income trends weakened:
The key asset classes reflecting global markets displayed mixed results last week. However, US assets experienced considerable gains, as evidenced by a variety of exchange-traded funds.
Trump faces challenges in passing revisions to NAFTA in the House: WSJ
Treasury Secretary states that US-China trade negotiations are in the “final stages”: CNBC
US Navy warships transit the Taiwan Strait: Reuters
Spain’s ruling Socialists secure their third election victory in four years: BBC
Agriculture and manufacturing sectors are among those most affected by tariffs in the US-China trade conflict: The Hill
US stock market reached a record high as Q3 GDP exceeded expectations: MW
US Consumer Sentiment Index fell less than projected in April: Bloomberg
10yr-2yr US Treasury yield spread increased to 23 basis points — the highest since late November:
By John Quiggin
Summary via publisher (Princeton U. Press)
Since 1946, Henry Hazlitt’s bestselling Economics in One Lesson has popularized the belief that economics can be reduced to one simple lesson: market prices reflect the true cost of everything. However, this one-lesson approach only tells part of the story. While it explains the efficiency of markets, it fails to address their failures — or what should be done when such failures occur. Nobel Prize-winning economist Paul Samuelson famously remarked, “When someone preaches ‘Economics in one lesson,’ I advise: Go back for the second lesson.” In Economics in Two Lessons, John Quiggin offers insights into both lessons, providing a comprehensive introduction to the successes and shortcomings of free markets.
Economic activity surged in the first quarter of this year, advancing at a significantly stronger pace than anticipated. The 3.2% growth rate in Q1 represents a notable improvement from the 2.2% increase observed in Q4 of the previous year. This update effectively alleviates concerns regarding rising recession risks for the US economy during the early months of 2019.
Bloomberg’s Nir Kaissar expresses skepticism regarding high-yield bonds. He warns that this segment of fixed income “is poised to hinder growth” related to the risk portion of portfolios, while their inclusion in low-risk categories compromises safety. Moreover, he argues that junk bonds offer limited diversification due to their high correlation with stocks.
Expectations for solid growth in today’s Q1 GDP report: WSJ
A survey of economists predicts the Fed will remain unchanged through 2020, with no rate cuts expected: Bloomberg
China’s president outlines national economic reform plans: CNBC
N. Korea’s Kim Jong Un claims US acted in “bad faith” at the Hanoi summit: CNBC
Manufacturing activity has slowed in the Fed’s 10th district during April: KC Fed
US jobless claims jumped last week, but the overall trend remains healthy: CNBC
Final GDPNow estimate for Q1 GDP revised down slightly to +2.7%: Atlanta Fed
Core US durable goods orders for March increased by 5.3% year-over-year:
The US economy demonstrates signs of stabilizing at a slower growth rate, as indicated by a broad array of economic and financial indicators. While the potential for a recession in the latter half of 2019 cannot be entirely dismissed, the immediate risk of economic contraction remains low.
Trump announces he will contest all subpoenas issued by the House: The Hill
N. Korea’s Kim and Russia’s Putin discuss the stalemate in nuclear negotiations: ABC
US measles cases reach the highest level since 2000: CNN
Former Vice President Joe Biden announces his presidential campaign: Reuters
Major insurance firms predict a US recession by 2020 or 2021: FN
A survey indicates that government and immigration are the top issues facing the US: Gallup
The effective Fed funds rate remains at an 11-year high of 2.44% for the third consecutive day: Fed Reserve
In the rewritten article, the content has been structured to maintain its original format while enhancing clarity and readability. This allows readers to engage with the topics presented more effectively.
