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

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        <p>The Global Market Index (GMI) saw a continued upward movement in October, building on the positive trend from the previous month. The latest long-term forecast for this benchmark— a market-value-weighted portfolio that encompasses all major asset classes, excluding cash and utilizing various ETF proxies—now anticipates an annualized return of 6.9%.</p>

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<div class="entry-content"> * The Federal Reserve has maintained interest rates <a href="https://apnews.com/article/inflation-interest-rates-prices-economy-federal-reserve-63f5a7ed041d6b55c7aa773d071a05fb" data-wplink-edit="true">unchanged</a> for a second consecutive time. * Another pause from the Fed <a href="https://www.wsj.com/finance/stocks/global-stocks-markets-dow-news-11-01-2023-0470a33b">provides</a> support to stocks and reduces Treasury yields. * The Treasury <a href="https://www.cnbc.com/2023/11/01/treasury-details-plans-to-step-up-size-of-bond-sales-to-manage-growing-debt-load-and-higher-rates.html">announces a plan</a> to increase bond sales to tackle the rising debt burden. * US private sector payrolls <a href="https://www.cnbc.com/2023/11/01/adp-jobs-report-october-2023.html">increased</a> less than expected in October, according to ADP. * The ISM Manufacturing Index <a href="https://www.advisorperspectives.com/dshort/updates/2023/11/01/ism-manufacturing-index-contracts-12th-straight-month">reflects</a> its twelfth consecutive month of contraction for October. * US construction spending <a href="https://www.capitalspectator.com/page/127/aspx">has risen</a> for nine consecutive months as of September. * Job openings in the US <a href="https://www.bloomberg.com/news/articles/2023-11-01/us-job-openings-unexpectedly-rise-a-second-month-to-9-6-million">increased beyond expectations in September.</a>

<div class="entry-content"> October proved to be yet another challenging month for global markets. With the exception of cash, all major asset classes declined last month — marking the third consecutive month of losses for nearly all markets, according to a range of ETF proxies.

<div class="entry-content"> * The UAW victory <a href="https://news.yahoo.com/united-auto-workers-victory-shawn-fain-united-states-labor-movement-uaw-180119515.html">signifies</a> a milestone for the labor movement. * China's factory activity unexpectedly <a href="https://www.cnn.com/2023/10/31/economy/china-pmi-october-economy-intl-hnk/index.html">contracted</a> in October. * Europe <a href="https://www.cnn.com/2023/10/31/business/europe-economy-q3-gdp-recession-risk/index.html">faces</a> potential recession as Q3 GDP shows slight decline. * The US Consumer Confidence Index <a href="https://www.cnn.com/2023/10/31/economy/us-consumer-confidence-october/index.html">declined</a> for the third consecutive month in October. * US employment costs <a href="https://finance.yahoo.com/news/us-employment-costs-increase-1-124205819.html">increased in Q3</a> as wage growth accelerates. * Chicago PMI still indicates <a href="https://www.advisorperspectives.com/dshort/updates/2023/10/31/chicago-pmi-practically-unchanged-in-october">business contraction</a> for October. * US home prices <a href="https://www.bloomberg.com/news/articles/2023-10-31/us-home-prices-set-new-record-with-seven-month-streak-of-gains#xj4y7vzkg">rose</a> for the seventh consecutive month in August.

<div class="entry-content"> The US stock market has maintained a steady year-to-date gain, largely driven by strong performances in the communications and technology sectors. Both areas of the market continue to enjoy substantial growth through the latest closing date (October 30), based on a selection of ETFs.

<div class="entry-content"> * The UAW <a href="https://apnews.com/article/general-motors-ford-stellantis-uaw-strike-34f6f0d7ca32a671783594722b20fb24">finalizes an agreement</a> to conclude the autoworkers strike. * China's manufacturing sector <a href="https://www.cnn.com/2023/10/31/economy/china-pmi-october-economy-intl-hnk/index.html">contracted</a> during October. * Germany's economy <a href="https://www.cnn.com/2023/10/30/business/germany-economy-q3-gdp/index.html">decreased</a> in the third quarter, signaling potential challenges for Europe. * Eurozone inflation <a href="https://www.bloomberg.com/news/articles/2023-10-31/euro-zone-inflation-sinks-to-two-year-low-as-economy-contracts#xj4y7vzkg">has dropped</a> to a two-year low in October. * US commercial real estate lending <a href="https://www.wsj.com/real-estate/commercial/the-money-has-stopped-flowing-in-commercial-real-estate-43c003d3?mod=hp_lead_pos8">has fallen</a> to historic lows. * The manufacturing recovery in Texas continues as reported by the Dallas Fed <a href="https://www.dallasfed.org/research/surveys/tmos/2023/2310#tab-report">for October.</a> * Oil prices may <a href="https://www.cnbc.com/2023/10/31/oil-could-hit-record-high-of-157-if-israel-hamas-war-escalates-world-bank.html">surge</a> to $150 per barrel if the Middle East conflict escalates, according to the World Bank.

<div class="entry-content"> Last week's uneven performance across global markets provided a slight relief, but the overall trend remains bearish, as indicated by a wide array of <a href="https://www.capitalspectator.com/major-asset-classes-september-2023-performance-review/">major asset classes</a> examined via a series of ETFs.

<div class="entry-content"> * Israel's ground operations in Gaza <a href="https://apnews.com/article/israel-palestinians-hamas-gaza-war-news-10-30-2023-131e9537aaad8e74586cc114d2668e5a">intensified</a> on Monday. * Markets <a href="https://www.bloomberg.com/news/articles/2023-10-29/mideast-market-reaction-subdued-as-israel-begins-gaza-ground-war#xj4y7vzkg">remain calm</a> despite the potential for a wider Middle Eastern conflict. * The initial <a href="https://www.atlantafed.org/cqer/research/gdpnow">GDPNow nowcast</a> for US Q4 GDP is predicted at +2.3%, a revision down from Q3’s robust +4.9%. * US consumer spending <a href="https://apnews.com/article/spending-consumers-inflation-economy-growth-federal-reserve-b1d34bc43a0da960a152911b7c230881">increased</a> by 0.4% in September. * <a href="https://www.wsj.com/economy/consumers/5-things-us-economy-8a588781">Multiple factors</a> are bolstering the current surge in US consumer spending. * A recent poll indicates Americans believe household expenses are outstripping income, <a href="https://apnews.com/article/inflation-debt-poll-personal-finance-economy-dd4c88e2076d1fd3f85c51f">as indicated by the findings.</a> * Some forecasts <a href="https://www.wsj.com/economy/central-banking/higher-bond-yields-could-end-the-feds-historic-rate-rises-f54b65d3?mod=hp_lead_pos2">suggest</a> that recent increases in bond yields may correlate to two or three Federal Reserve rate hikes. * Gold prices are nearing <a href="https://www.bloomberg.com/news/articles/2023-10-27/gold-hits-2-000-as-israel-hamas-clash-raises-safe-haven-allure">$2000 per ounce</a> amid global tensions as the Israeli ground offensive proceeds.

<div class="entry-content"> <a href="https://www.amazon.com/Ours-Was-Shining-Future-American/dp/0812993209?keywords=Ours+Was+the+Shining+Future%3A+The+Story+of+the+American+Dream&qid=1698332300&s=books&sr=1-1&linkCode=li2&tag=thecapitalspe-20&linkId=755754fe79320e1f27bb4d5501610789&language=en_US&ref_=as_li_ss_il" target="_blank" rel="noopener"><img decoding="async" class="alignleft" src="https://ws-na.amazon-adsystem.com/widgets/q?_encoding=UTF8&ASIN=0812993209&Format=_SL160_&ID=AsinImage&MarketPlace=US&ServiceVersion=20070822&WS=1&tag=thecapitalspe-20&language=en_US" border="0"/></a><img loading="lazy" decoding="async" style="border: none !important; margin: 0px !important;" src="https://ir-na.amazon-adsystem.com/e/ir?t=thecapitalspe-20&language=en_US&l=li2&o=1&a=0812993209" alt="" width="1" height="1" border="0"/>● <a href="https://amzn.to/475E1xv">Ours Was the Shining Future: The Story of the American Dream</a> David Leonhardt (Author) <a href="https://www.nytimes.com/2023/10/24/books/review/ours-was-the-shining-future-david-leonhardt.html">Review</a> via The New York Times According to a compelling analysis based on census and income tax data by Harvard economist Raj Chetty, the author argues that while most Americans once held an expectation to earn more than their parents, this likelihood has since dwindled to half. Despite some nuances regarding inflation and the impact of smaller household sizes, the central issue remains critical. Previously, economic growth symbolized the American experience; now, Leonhardt observes a “stagnation in nearly every reliable measure of well-being.” While he may occasionally exaggerate the current state—such as noting that median household income continues to increase—he undeniably identifies a real and pressing concern.

<div class="entry-content"> Yesterday’s significant rise in US economic growth for the third quarter delivered surprising results, particularly for analysts who have been forecasting an impending recession. However, the ongoing hints of a slowdown in Q4 might finally garner attention as the warnings take hold.

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Capital Spectator: Investing, Asset Allocation, and Economics Insights