The Capital Spectator: Investing, Asset Allocation, and Economic Insights

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    <p>As we navigate the complexities of the current economic environment, many factors call for caution regarding the short-term outlook for markets. Nevertheless, an analysis of various ETF pairs reveals a continued positive trend for risk assets as of yesterday’s close (January 8, 2023).</p>

    <p> <a href="https://www.capitalspectator.com/still-waiting-for-a-clear-risk-off-signal-at-2024s-start/#more-21405" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/still-waiting-for-a-clear-risk-off-signal-at-2024s-start/" title="7:22 am" rel="bookmark"><time class="entry-date" datetime="2024-01-09T07:22:53-05:00">January 9, 2024</time></a>
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    <p>* The deal to prevent a US government shutdown <a href="https://thehill.com/homenews/house/4396151-right-wing-opposition-spending-deal/">faces a precarious path</a><br/>* Investors <a href="https://www.ft.com/content/33f85fd6-55ec-45a1-a1b6-69a845726d58">caution</a> about soaring levels of public debt<br/>* China has emerged as the <a href="https://www.wsj.com/world/china/china-vehicle-sales-rise-further-boosted-by-stimulus-policies-sales-promotions-3452cca1?mod=hp_lead_pos1">world’s leading exporter,</a> largely due to increasing sales to Russia<br/>* US small business owners <a href="https://www.nfib.com/surveys/small-business-economic-trends/">remain</a> “very pessimistic about economic prospects”<br/>* The labor market <a href="https://finance.yahoo.com/video/labor-market-clues-feds-next-213540124.html">will serve as</a> “the first and most important clue” for the Fed’s upcoming decisions<br/>* US consumer credit has <a href="https://www.bloomberg.com/news/articles/2024-01-08/us-consumer-borrowing-surges-on-jump-in-credit-card-balances">surged</a> in November, marking the largest increase since March 2022:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2024/01/credit.09jan2024.png"><img fetchpriority="high" decoding="async" class="alignnone size-large wp-image-21403" src="https://www.capitalspectator.com/wp-content/uploads/2024/01/credit.09jan2024-1024x576.png" alt="" width="500" height="281"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-9-january-2024/#more-21402" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-9-january-2024/" title="6:34 am" rel="bookmark"><time class="entry-date" datetime="2024-01-09T06:34:00-05:00">January 9, 2024</time></a>
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    <p>The rise in yields for most <a href="https://www.capitalspectator.com/major-asset-classes-december-2023-performance-review/">major asset classes</a> seems to have reached its peak, as indicated by the trailing one-year payout rates from a selection of ETFs up to Friday’s close (January 5, 2024). This is hardly surprising, given the recent decline in government bond yields. It serves as a reminder that the opportunity for relatively high yields may be diminishing.</p>

    <p> <a href="https://www.capitalspectator.com/desperately-seeking-yield-8-january-2024/#more-21400" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/desperately-seeking-yield-8-january-2024/" title="7:47 am" rel="bookmark"><time class="entry-date" datetime="2024-01-08T07:47:50-05:00">January 8, 2024</time></a>
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    <p>* House and Senate leaders <a href="https://www.cnn.com/2024/01/07/politics/congress-spending-deal/index.html">announce</a> an agreement to prevent a government shutdown<br/>* A projected <a href="https://finance.yahoo.com/news/easing-us-core-inflation-seen-210000223.html">decline</a> in US core inflation for December aligns with expectations of Fed easing<br/>* China’s shadow bank Zhongzhi <a href="https://www.cnbc.com/2024/01/08/zhongzhi-latest-casualty-of-chinas-deepening-debt-and-property-crisis-.html">files for bankruptcy</a><br/>* Is Xi’s new economic strategy for China <a href="https://financialpost.com/pmn/business-pmn/xis-solution-for-chinas-economy-risks-triggering-new-trade-war">about to spark</a> a new trade conflict?<br/>* US payrolls <a href="https://www.cnbc.com/2024/01/05/jobs-report-december-2023-payrolls-increased-by-216000-in-december.html">increased</a> beyond expectations in December<br/>* S&amp;P 500 earnings growth is projected to <a href="https://www.wsj.com/finance/stocks/earnings-reports-stock-rally-2024-10e24ece?mod=hp_lead_pos2">slow significantly for Q4:</a></p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2024/01/earnings.08jan2024.png"><img decoding="async" class="alignnone size-full wp-image-21397" src="https://www.capitalspectator.com/wp-content/uploads/2024/01/earnings.08jan2024.png" alt="" width="830" height="635"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-8-january-2024/#more-21396" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-8-january-2024/" title="6:41 am" rel="bookmark"><time class="entry-date" datetime="2024-01-08T06:41:11-05:00">January 8, 2024</time></a>
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    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2024/01/hr.04jan2024.png"><img decoding="async" class="wp-image-21385 alignleft" src="https://www.capitalspectator.com/wp-content/uploads/2024/01/hr.04jan2024.png" alt="" width="177" height="262"  /></a>● <a href="https://amzn.to/48qgbxB">Any Happy Returns: Structural Changes and Super Cycles in Markets</a><br/>Peter C. Oppenheimer<br/><strong><a href="https://www.goldmansachs.com/intelligence/pages/book-excerpt-opportunities-in-the-old-economy.html">Excerpt</a> via Goldman Sachs</strong><br/>Each era presents unique problems and opportunities. As we enter the Post-Modern Cycle, significant challenges await humanity. Geopolitical shifts, the future of work, aging populations, and environmental concerns are likely to dominate the agenda for the foreseeable future.<br/>From an investment standpoint, the journey toward a zero-carbon world is exhilarating. Achieving this transition could yield notable health benefits and enable energy consumption at near-zero costs—financially and environmentally.</p>
    <p> <a href="https://www.capitalspectator.com/book-bits-6-january-2024/#more-21324" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/book-bits-6-january-2024/" title="1:04 am" rel="bookmark"><time class="entry-date" datetime="2024-01-06T01:04:00-05:00">January 6, 2024</time></a>
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    <p>This month, the official report detailing the US economic activity for the fourth quarter is set to be released on January 25. Estimates suggest that output will have grown at a moderate pace, according to the nowcasts compiled by CapitalSpectator.com.</p>
    <p> <a href="https://www.capitalspectator.com/us-q4-gdp-growth-expected-to-support-soft-landing-outlook/#more-21379" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/us-q4-gdp-growth-expected-to-support-soft-landing-outlook/" title="7:36 am" rel="bookmark"><time class="entry-date" datetime="2024-01-05T07:36:07-05:00">January 5, 2024</time></a>
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    <p>* Americans achieved a new <a href="https://www.investopedia.com/consumers-set-new-online-holiday-shopping-record-8422285">record in online holiday shopping</a> for 2023<br/>* The global economy <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/d9004f7eb47e4583bf2ef2890977cbef">showed</a> modest growth in December, as indicated by PMI survey data<br/>* The US Composite PMI, a proxy for GDP, <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/e4be95d7e9414d3584d825a10fc9362c">suggests</a> modest expansion during December<br/>* Eurozone headline inflation <a href="https://www.cnbc.com/2024/01/05/euro-zone-inflation-rebounds-in-december-fueling-rate-cut-debates.html">rebounded</a> in December<br/>* US jobless claims <a href="https://apnews.com/article/unemployment-benefits-jobless-claims-layoffs-labor-d0c029590a524133ab596fd5ed3ad6bd">declined</a> last week, remaining near multi-decade lows<br/>* US private payrolls <a href="https://www.cnbc.com/2024/01/04/private-payrolls-added-164000-in-december-beating-expectations-adp-says.html">increased</a> more than <a href="https://www.bloomberg.com/news/articles/2024-01-04/us-firms-add-more-jobs-than-forecast-in-december-adp-data-show">predicted</a> in December, based on ADP estimates:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2024/01/adp.05jan2024.png"><img loading="lazy" decoding="async" class="alignnone size-large wp-image-21387" src="https://www.capitalspectator.com/wp-content/uploads/2024/01/adp.05jan2024-1024x576.png" alt="" width="500" height="281"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-5-january-2024/#more-21386" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-5-january-2024/" title="6:41 am" rel="bookmark"><time class="entry-date" datetime="2024-01-05T06:41:38-05:00">January 5, 2024</time></a>
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    <p>Amidst the uncertainty surrounding the year ahead, there seems to be a growing consensus that the Federal Reserve will begin to cut interest rates soon. Although <a href="https://www.cnbc.com/2024/01/03/bond-yields-surging-to-highest-level-in-decades-jim-bianco.html">some analysts caution</a> that expectations for dovish policy changes may be overly optimistic, many believe that a decrease in the Fed funds target rate is likely in the coming months.</p>

    <p> <a href="https://www.capitalspectator.com/markets-and-fed-minutes-see-path-for-rate-cuts-in-2024/#more-21380" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/markets-and-fed-minutes-see-path-for-rate-cuts-in-2024/" title="7:24 am" rel="bookmark"><time class="entry-date" datetime="2024-01-04T07:24:33-05:00">January 4, 2024</time></a>
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    <p>* A recent explosion in Iran has <a href="https://apnews.com/article/iran-us-soleimani-explosion-kerman-2524cfed1d040370bf98000e2b53ad5a">heightened tensions in the Middle East</a><br/>* Fed officials anticipate rate cuts in 2024, according to the <a href="https://www.cnbc.com/2024/01/03/fed-minutes-december-2023-.html">minutes from their December meeting,</a> yet…<br/>* They also mentioned that rates could remain elevated “for some time”<br/>* US manufacturing <a href="https://www.investopedia.com/manufacturing-slowed-in-december-capping-off-a-lousy-year-8422014">slowed</a> in December, concluding a challenging year: ISM Manufacturing Index<br/>* China’s services sector growth <a href="https://tradingeconomics.com/china/services-pmi">improved in December</a><br/>* The Atlanta Fed’s nowcast model <a href="https://www.atlantafed.org/cqer/research/gdpnow">projects</a> US growth at a moderate 2.5% for Q4<br/>* Job openings in the US continued to <a href="https://www.bloomberg.com/news/articles/2024-01-03/us-job-openings-eased-further-in-november-to-8-79-million">decline</a> in November:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2024/01/jobs.04jan2023.png"><img loading="lazy" decoding="async" class="alignnone size-large wp-image-21377" src="https://www.capitalspectator.com/wp-content/uploads/2024/01/jobs.04jan2023-1024x576.png" alt="" width="500" height="281"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-4-january-2024/#more-21376" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-4-january-2024/" title="6:24 am" rel="bookmark"><time class="entry-date" datetime="2024-01-04T06:24:44-05:00">January 4, 2024</time></a>
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    <p>In December, the long-term return forecast for the Global Market Index (GMI) dipped slightly, now estimated at 6.7% in annualized total returns. This figure is based on the average of three separate models (details below). The GMI is a market-value-weighted portfolio that encompasses all <a href="https://www.capitalspectator.com/major-asset-classes-december-2023-performance-review/">major asset classes</a> (excluding cash) through a selection of ETF proxies. The recent performance estimate for this benchmark is marginally lower than <a href="https://www.capitalspectator.com/total-return-forecasts-major-asset-classes-4-december-2023/">last month’s outlook.</a></p>
    <p> <a href="https://www.capitalspectator.com/total-return-forecasts-major-asset-classes-3-january-2024/#more-21372" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/total-return-forecasts-major-asset-classes-3-january-2024/" title="7:07 am" rel="bookmark"><time class="entry-date" datetime="2024-01-03T07:07:41-05:00">January 3, 2024</time></a>
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