The Capital Spectator: Investment Strategies, Asset Allocation, and Economic Insights

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    <p>When determining the allocation of stocks and bonds in an investment portfolio, one of the key aspects to evaluate is relative yield. Based on this criterion, the recent rise in the 10-Year Treasury yield compared to the dividend payout rate of U.S. equities, particularly the S&P 500, appears appealing, especially when viewed against the backdrop of recent trends.</p>

    <p><a href="https://www.capitalspectator.com/10-year-treasury-yield-surges-over-stock-markets-dividend-yield/#more-20363" 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/10-year-treasury-yield-surges-over-stock-markets-dividend-yield/" title="7:41 am" rel="bookmark"><time class="entry-date" datetime="2023-06-16T07:41:06-04:00">June 16, 2023</time></a>
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    <p>* U.S. Secretary of State Blinken <a href="https://www.cnbc.com/2023/06/16/china-blinken-to-beijing-for-high-stakes-diplomacy-after-spy-balloon-saga.html">is traveling</a> to Beijing for critical diplomatic discussions.<br/>* Is the bull market back? Perhaps, but there are still <a href="https://www.nytimes.com/2023/06/16/business/bull-bear-market-investors.html">risks to weigh</a>.<br/>* Recent indicators suggest that China's economic recovery is losing momentum <a href="https://www.cnbc.com/2023/06/16/chinas-economic-recovery-is-stalling-heres-what-to-expect-next.html">.</a><br/>* Beijing is <a href="https://www.wsj.com/articles/china-cuts-rates-to-prop-up-flagging-recovery-6fe3ec72?mod=hp_lead_pos3">planning</a> significant measures to stimulate the economy.<br/>* BlackRock is <a href="https://www.morningstar.com/news/marketwatch/202306151201/blackrock-is-applying-for-a-spot-bitcoin-etf-heres-why-it-matters-to-the-crypto-industry">seeking</a> to introduce a spot bitcoin ETF.<br/>* U.S. industrial production <a href="https://www.morningstar.com/news/dow-jones/202306155440/industrial-production-fell-in-may-manufacturing-output-edged-higher">declined</a> in May, but manufacturing output showed a slight increase.<br/>* In May, U.S. import prices <a href="https://money.usnews.com/investing/news/articles/2023-06-15/us-import-prices-drop-in-may-on-energy-food">decreased</a>, alleviating inflationary pressures.<br/>* The manufacturing indexes from the <a href="https://www.newyorkfed.org/survey/empire/empiresurvey_overview">NY Fed</a> and <a href="https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/manufacturing-business-outlook-survey">Philly Fed</a> showed mixed signals for June but hinted at optimism.<br/>* U.S. retail sales exceeded expectations and <a href="https://www.bloomberg.com/news/articles/2023-06-15/us-retail-sales-unexpectedly-rise-in-sign-of-consumer-resilience">rose for a second consecutive month</a> in May:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/06/retail.sales_.16jun2023.png"><img fetchpriority="high" decoding="async" class="alignnone size-full wp-image-20360" src="https://www.capitalspectator.com/wp-content/uploads/2023/06/retail.sales_.16jun2023.png" alt="" width="1003" height="564"  /></a></p>
    <p><a href="https://www.capitalspectator.com/macro-briefing-16-june-2023/#more-20359" 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-16-june-2023/" title="5:52 am" rel="bookmark"><time class="entry-date" datetime="2023-06-16T05:52:22-04:00">June 16, 2023</time></a>
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    <p>The Federal Reserve announced that interest rates will remain unchanged, marking the first pause in the rate-hiking cycle that commenced in March 2022. However, Fed Chairman Jerome Powell cautioned that additional rate increases may still be necessary.</p>

    <p><a href="https://www.capitalspectator.com/will-sticky-core-pce-inflation-ease-in-months-ahead/#more-20354" 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/will-sticky-core-pce-inflation-ease-in-months-ahead/" title="7:47 am" rel="bookmark"><time class="entry-date" datetime="2023-06-15T07:47:10-04:00">June 15, 2023</time></a>
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    <p>* Fed Chair Powell <a href="https://apnews.com/article/interest-rates-inflation-federal-reserve-economy-f6318be5023f6e50afc115778c9ec174">observes progress</a> in controlling inflation but indicates that more hikes could occur.<br/>* The U.S. housing market remains tight <a href="https://finance.yahoo.com/news/housing-market-tight-because-90-220204642.html">due</a> to many homeowners holding onto low mortgage rates.<br/>* China's industrial production <a href="https://finance.yahoo.com/news/chinese-industrial-production-disappoints-may-221641049.html">grew</a> less than anticipated in May.<br/>* The Chinese central bank <a href="https://www.cnbc.com/2023/06/15/china-cuts-a-key-policy-rate-for-first-time-in-10-months-as-economic-rebound-cools.html">reduced</a> its key medium-term lending rate.<br/>* The EU <a href="https://www.theverge.com/2023/6/14/23759094/european-commission-google-antitrust-advertising-market-antitrust">proposes</a> breaking up Google's advertising business in a preliminary antitrust ruling.<br/>* U.S. wholesale inflation <a href="https://www.reuters.com/markets/us/us-producer-prices-fall-more-than-expected-may-energy-costs-2023-06-14/">decreased</a> more than expected in May.<br/>* The Fed has maintained interest rates but <a href="https://www.nytimes.com/2023/06/14/business/what-to-know-about-the-feds-meeting-today.html">anticipates</a> further hikes:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/06/ff.15jun2023.png"><img decoding="async" class="alignnone size-full wp-image-20353" src="https://www.capitalspectator.com/wp-content/uploads/2023/06/ff.15jun2023.png" alt="" width="793" height="686"  /></a></p>
    <p><a href="https://www.capitalspectator.com/macro-briefing-15-june-2023/#more-20351" 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-15-june-2023/" title="6:50 am" rel="bookmark"><time class="entry-date" datetime="2023-06-15T06:50:08-04:00">June 15, 2023</time></a>
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    <p>The market continues to evaluate the U.S. 10-year Treasury yield, which remains at a significant spread above its estimated “fair value”, as derived from a combination of <a href="https://www.capitalspectator.com/10-year-treasury-yield-fair-value-estimate/">three models</a> created by CapitalSpectator.com for May 2023.</p>

    <p><a href="https://www.capitalspectator.com/10-year-us-treasury-yield-fair-value-estimate-14-june-2023/#more-20344" 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/10-year-us-treasury-yield-fair-value-estimate-14-june-2023/" title="7:42 am" rel="bookmark"><time class="entry-date" datetime="2023-06-14T07:42:33-04:00">June 14, 2023</time></a>
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    <p>* The Federal Reserve <a href="https://apnews.com/article/interest-rates-inflation-federal-reserve-economy-f6318be5023f6e50afc115778c9ec174">is expected</a> to refrain from raising rates in today’s policy meeting.<br/>* A rising stock market <a href="https://www.wsj.com/articles/stock-market-to-fed-you-havent-done-enough-45c7a23e">suggests</a> that current monetary policy may not be stringent enough to curb inflation.<br/>* According to fund manager Tom Lee, the U.S. economy might be “heading into an expansion” <a href="https://finance.yahoo.com/news/wall-street-biggest-bull-called-213737048.html">.</a><br/>* Treasury Secretary Yellen claims that decoupling from China would be “disastrous” <a href="https://www.barrons.com/articles/decoupling-from-china-would-be-disastrous-yellen-says-790b793b">.</a><br/>* The IEA predicts that global oil demand will peak around 2028 as the energy transition progresses <a href="https://www.cnbc.com/2023/06/14/iea-global-oil-demand-to-peak-before-the-end-of-the-decade.html">.</a><br/>* Eurozone industrial output <a href="https://think.ing.com/snaps/eurozone-industrial-production-up-in-april-but-with-lots-of-underlying-weakness/">recovered</a> in April, but the outlook remains cautious.<br/>* The UK economy <a href="https://www.bloomberg.com/news/articles/2023-06-14/uk-economy-regains-pre-pandemic-level-of-output-with-april-rise#xj4y7vzkg">expanded</a> by 0.2% in April, bouncing back.<br/>* Small business sentiment <a href="https://www.nfib.com/surveys/small-business-economic-trends/?gclid=CjwKCAjwp6CkBhB_EiwAlQVyxVX5K3dVDWtbnv2j-LafUcvjWHDmJsfZq0vUW6v_5ep4j_I5pSTdyxoC-3gQAvD_BwE">inched up in May</a>, but remains close to a multi-year low.<br/>* Consumer inflation in the U.S. <a href="https://apnews.com/article/inflation-prices-interest-rates-economy-federal-reserve-4c0ea8315ab90c1b832ef6fa67dc0c7a">eased</a> to a 4% annual rate in May, the lowest level in over two years:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/06/cpi.14jun2023.png"><img decoding="async" class="alignnone size-full wp-image-20342" src="https://www.capitalspectator.com/wp-content/uploads/2023/06/cpi.14jun2023.png" alt="" width="691" height="404"  /></a></p>
    <p><a href="https://www.capitalspectator.com/macro-briefing-14-june-2023/#more-20341" 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-14-june-2023/" title="6:45 am" rel="bookmark"><time class="entry-date" datetime="2023-06-14T06:45:07-04:00">June 14, 2023</time></a>
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    <p>As investors express optimism over what many believe to be a <a href="https://www.wsj.com/articles/stock-market-bulls-see-room-to-run-e71a2fdd?mod=hp_lead_pos1">new bull market</a> for U.S. equities, commercial property stocks are still facing significant challenges.</p>

    <p><a href="https://www.capitalspectator.com/bear-market-persists-for-commercial-real-estate-stocks/#more-20337" 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/bear-market-persists-for-commercial-real-estate-stocks/" title="7:49 am" rel="bookmark"><time class="entry-date" datetime="2023-06-13T07:49:14-04:00">June 13, 2023</time></a>
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    <p>* China has unexpectedly <a href="https://asiatimes.com/2023/06/chinas-surprise-rate-cut-may-be-just-the-beginning/">reduced</a> a key interest rate due to concerns about slowing growth.<br/>* There has been a sharp increase in U.S. junk loan defaults <a href="https://www.ft.com/content/84c7f8a2-9e93-4f42-a8b8-bf5d225d8ca8">as</a> rising interest rates take effect.<br/>* Japan's Nikkei 225 stock index <a href="https://www.cnbc.com/2023/06/13/asia-markets.html">has surged</a> to its highest point since 1990.<br/>* A significant downturn in commercial real estate could <a href="https://www.americanbanker.com/news/big-commercial-real-estate-downturn-could-sink-300-banks-report">pose risks</a> to large banks.<br/>* U.S. regulators aim to <a href="https://www.bbc.com/news/business-65888228">block</a> Microsoft’s acquisition of Activision.<br/>* Consumer inflation expectations for the upcoming year <a href="https://www.newyorkfed.org/newsevents/news/research/2023/20230612">declined</strong> in May.</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/06/inf.exp_.13jun2023.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-20335" src="https://www.capitalspectator.com/wp-content/uploads/2023/06/inf.exp_.13jun2023.png" alt="" width="742" height="543"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-13-june-2023/" title="6:32 am" rel="bookmark"><time class="entry-date" datetime="2023-06-13T06:32:36-04:00">June 13, 2023</time></a>
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    <p>Buyers have driven up prices across most major asset classes over the past week. U.S. bonds, however, were the exception, as evidenced by a set of ETFs evaluated through the close of trading on June 9.</p>

    <p><a href="https://www.capitalspectator.com/risk-assets-rallied-last-week-as-us-bonds-eased/#more-20327" 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/risk-assets-rallied-last-week-as-us-bonds-eased/" title="6:43 am" rel="bookmark"><time class="entry-date" datetime="2023-06-12T06:43:03-04:00">June 12, 2023</time></a>
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    <p>* Inflation forecasts indicate that pricing pressure is easing <a href="https://www.morningstar.com/markets/markets-brief-may-cpi-forecasts-show-little-slowdown-inflation">slowly in May</a>.<br/>* Bond investors <a href="https://www.bloomberg.com/news/articles/2023-06-11/biggest-bond-managers-say-us-recession-is-inevitable-bucking-goldman-s-call?srnd=premium#xj4y7vzkg">disagree</a> with Goldman Sachs' low-recession forecast for the U.S.<br/>* Despite warnings of a looming recession in critical indicators, U.S. stocks <a href="https://www.forbes.com/sites/greatspeculations/2023/06/10/the-data-says-recession---equities-continue-to-climb-something-has-to-give/?sh=2f8a02685ae5">continue their upward trend</a>.<br/>* China is facing economic challenges as it <a href="https://www.wsj.com/articles/fueled-by-long-credit-binge-chinas-economy-faces-drag-from-debt-purge-e4621859?mod=economy_lead_story">accelerates debt repayment</a>.<br/>* Manufacturers globally are <a href="https://www.cnn.com/2023/06/11/economy/global-manufacturing-sputtering-economies/index.html">experiencing</a> diminishing demand for their goods.<br/>* The U.S. House of Representatives is <a href="https://thehill.com/homenews/senate/4043199-senate-gop-alarmed-conservative-revolt-paralyzed-house/">stalled</a> due to a conservative conflict.<br/>* In Silicon Valley, the conversation is turning to whether technology has reached the <a href="https://www.nytimes.com/2023/06/11/technology/silicon-valley-confronts-the-idea-that-the-singularity-is-here.html">point of singularity</a>.<br/>* The U.S. stock market closed at a ten-month high on Friday:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/06/sp500.12jun2023.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-20326" src="https://www.capitalspectator.com/wp-content/uploads/2023/06/sp500.12jun2023.png" alt="" width="700" height="312"  /></a></p>
    <p><a href="https://www.capitalspectator.com/macro-briefing-12-june-2023/#more-20324" 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-12-june-2023/" title="6:07 am" rel="bookmark"><time class="entry-date" datetime="2023-06-12T06:07:37-04:00">June 12, 2023</time></a>
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