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<p>This year has shown that diversifying equity portfolios by risk factors can bring some benefits, albeit not in absolute terms. Analysis using a variety of ETF proxies reveals that while 2022 has been tough for equities overall, the level of losses differs significantly based on how risk exposures are managed within portfolios.</p>
<p> <a href="https://www.capitalspectator.com/factor-diversification-offers-relief-but-only-in-relative-terms/#more-18285" 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/factor-diversification-offers-relief-but-only-in-relative-terms/" title="7:42 am" rel="bookmark"><time class="entry-date" datetime="2022-07-05T07:42:28-04:00">July 5, 2022</time></a>
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<p>* The macroeconomic outlook <a href="https://www.cnbc.com/2022/07/05/h2-market-outlook-strategists-on-how-to-weather-the-market-storm.html">remains unclear</a> due to inflation risks and the ongoing Ukraine conflict.<br /> * China's economic activity <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/fe564b773e9846068e8fb87a7ce8f7a8">surged</a> in June as indicated by PMI survey results.<br /> * The Eurozone shows <a href="https://ihsmarkit.com/research-analysis/eurozone-pmi-signals-growth-in-june-but-downturn-risks-rise-Jul22.html">modest economic growth</a> for June, again according to PMI data.<br /> * Germany <a href="https://">noted</a> its first trade deficit in over 30 years.<br /> * The euro has hit a <a href="https://www.barrons.com/news/euro-hits-20-year-low-against-dollar-01657011607?refsec=topics_afp-news">20-year low</a> against the US dollar amid rising recession fears for the Eurozone.<br /> * A slowdown in growth is <a href="https://www.bloomberg.com/news/articles/2022-07-02/us-jobs-report-seen-showing-resilient-labor-demand-eco-week?srnd=premium">projected</a> for US payrolls in June.</p>
<p><a href="https://www.capitalspectator.com/wp-content/uploads/2022/07/payrolls.05jul2022.png">
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<p> <a href="https://www.capitalspectator.com/macro-briefing-5-july-2022/#more-18277" 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-july-2022/" title="6:49 am" rel="bookmark"><time class="entry-date" datetime="2022-07-05T06:49:14-04:00">July 5, 2022</time></a>
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<p>When exiting Independence Hall after the Constitutional Convention in 1787, Benjamin Franklin famously responded, “A republic, if you can keep it,” when asked what the outcome of their deliberations had been. Fast forward 235 years, and this phrase remains just as relevant today.</p>
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By James Picerno | <a href="https://www.capitalspectator.com/a-republic-if-you-can-keep-it/" title="7:50 am" rel="bookmark"><time class="entry-date" datetime="2022-07-04T07:50:58-04:00">July 4, 2022</time></a>
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<p><a href="https://www.amazon.com/Illusion-Control-Financial-Crises-Happen/dp/0300234813?keywords=The+Illusion+of+Control%3A+Why+Financial+Crises+Happen%2C+and+What+We+Can+%28and+Can%E2%80%99t%29+Do+About+It&qid=1656598943&s=books&sr=1-1&linkCode=li3&tag=thecapitalspe-20&linkId=4c04b6601b2fca7c0c01f07afc3e7c40&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=0300234813&Format=_SL250_&ID=AsinImage&MarketPlace=US&ServiceVersion=20070822&WS=1&tag=thecapitalspe-20&language=en_US" border="0"/>
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<img 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=li3&o=1&a=0300234813" alt="" width="1" height="1" border="0"/>● <a href="https://amzn.to/3bHGAOM">The Illusion of Control: Why Financial Crises Happen, and What We Can (and Can’t) Do About It</a><br/>Jon Danielsson<br/><strong><a href="https://www.foreignaffairs.com/reviews/capsule-review/2022-04-19/illusion-control-why-financial-crises-happen-and-what-we-can-and">Review</a> via Foreign Affairs</strong><br/>“Not another book about financial crises!” might be a common thought; however, this work offers a unique and engaging perspective on the topic. Danielsson draws on historical data to explain why regulators have struggled to mitigate financial instability. He argues that they often prioritize external risks—those emerging from outside the financial system—while overlooking the internal risks associated with market participants' responses to these shocks and regulatory efforts. Furthermore, he emphasizes that regulators' reliance on quantitative measures of financial risk, which are adept at predicting past crises, may not be effective for future predictions due to the evolving nature of the financial landscape.</p>
<p> <a href="https://www.capitalspectator.com/book-bits-2-july-2022/#more-18254" 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-2-july-2022/" title="4:11 am" rel="bookmark"><time class="entry-date" datetime="2022-07-02T04:11:00-04:00">July 2, 2022</time></a>
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<p>In June, market signals presented a clear “risk-off” sentiment. Losses impacted all major asset classes, based on various proxy ETFs. Even cash faced slight declines, illustrating the pervasive nature of the downturn.</p>
<p> <a href="https://www.capitalspectator.com/major-asset-classes-june-2022-performance-review/#more-18274" 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/major-asset-classes-june-2022-performance-review/" title="7:15 am" rel="bookmark"><time class="entry-date" datetime="2022-07-01T07:15:11-04:00">July 1, 2022</time></a>
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<p>* The Supreme Court <a href="https://apnews.com/article/supreme-court-epa-ruling-2e893673819a1b6c6aa272a5e814f0b0">has limited</a> EPA regulations aimed at reducing power plant emissions.<br />* Consumer spending in the US <a href="https://finance.yahoo.com/news/us-consumer-spending-softens-prices-124209114.html">slowed in May,</a> raising concerns about the economy.<br />* Jobless claims in the US remain stable, <a href="https://www.wsj.com/articles/u-s-jobless-claims-edged-lower-last-week-11656593630">indicating</a> a resilient labor market outlook.<br />* Manufacturing activity in the Eurozone <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/393fc1e5fe83458897d91fafee2d434b">continues to decelerate,</a> dropping to a 22-month low in June.<br />* Eurozone inflation <a href="https://www.cnbc.com/2022/07/01/euro-zone-inflation-8point6percent-in-june-ecb-to-hike-rates-for-first-time-in-11-years.html">reached a record high</a> in June.<br />* The US dollar <a href="https://www.wsj.com/articles/it-was-a-lousy-second-quarterexcept-for-the-u-s-dollar-11656667800?mod=hp_lead_pos2">gained</a> against most assets during Q2.<br />* The Atlanta Fed’s revised GDP nowcast <a href="https://www.atlantafed.org/cqer/research/gdpnow">indicates a negative outlook</a> for Q2:</p>
<p><a href="https://www.capitalspectator.com/wp-content/uploads/2022/06/gdpnow.01jul2022.png">
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-18271" src="https://www.capitalspectator.com/wp-content/uploads/2022/06/gdpnow.01jul2022.png" alt="" width="650" height="508" />
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<p> <a href="https://www.capitalspectator.com/macro-briefing-1-july-2022/#more-18270" 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-1-july-2022/" title="6:41 am" rel="bookmark"><time class="entry-date" datetime="2022-07-01T06:41:56-04:00">July 1, 2022</time></a>
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<p>Determining when it is “safe” to invest in stocks after market corrections is complex and varies based on individual definitions of safety. Each investor has distinct risk appetites, investment objectives, and time horizons. What feels safe for one individual might induce anxiety in another. Nevertheless, we can start dissecting the probabilities by looking at historical data during previous market downturns.</p>
<p> <a href="https://www.capitalspectator.com/when-is-it-safe-to-invest-in-stocks-after-corrections/#more-18266" 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/when-is-it-safe-to-invest-in-stocks-after-corrections/" title="7:45 am" rel="bookmark"><time class="entry-date" datetime="2022-06-30T07:45:00-04:00">June 30, 2022</time></a>
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<p>* Putin has stated that Russia will <a href="https://www.wsj.com/articles/russia-will-respond-in-kind-to-nato-expansion-putin-warns-11656582672?mod=hp_lead_pos3">react accordingly</a> to NATO's expansion.<br />* US economic shrinkage was <a href="https://www.cnn.com/2022/06/29/economy/gdp-first-quarter-final/index.html">slightly greater</a> than previously estimated.<br />* Fed Chair Powell <a href="https://www.cnbc.com/2022/06/29/powell-vows-to-prevent-inflation-from-taking-long-run-hold-in-the-us.html">reasserts</a> commitment to controlling inflation.<br />* China's manufacturing sector <a href="https://www.cnbc.com/2022/06/30/chinas-factory-activity-expands-for-first-time-in-four-months-.html">grew</a> in June—marking the first increase since February, as per PMI data.<br />* The US is <a href="https://oilprice.com/Latest-Energy-News/World-News/US-Could-Release-Even-more-Oil-From-Strategic-Stockpiles.html">considering</a> additional oil releases from its Strategic Petroleum Reserves.<br />* Grayscale <a href="https://finance.yahoo.com/news/grayscale-sues-sec-over-bitcoin-012504720.html">is suing</a> the SEC due to its rejection of the company's bitcoin ETF.<br />* The US stock market still shows signs of being in bear territory as Q2 closes:</p>
<p><a href="https://www.capitalspectator.com/wp-content/uploads/2022/06/sp500a.30jun2022.png">
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-18263" src="https://www.capitalspectator.com/wp-content/uploads/2022/06/sp500a.30jun2022.png" alt="" width="700" height="312" />
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<p> <a href="https://www.capitalspectator.com/macro-briefing-30-june-2022/#more-18261" 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-30-june-2022/" title="6:34 am" rel="bookmark"><time class="entry-date" datetime="2022-06-30T06:34:39-04:00">June 30, 2022</time></a>
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<p>While it is impossible to predict with certainty, history serves as a useful lens for comparing the current shift towards tighter monetary policy with previous episodes.</p>
<p> <a href="https://www.capitalspectator.com/how-long-will-interest-rates-rise/#more-18257" 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/how-long-will-interest-rates-rise/" title="7:48 am" rel="bookmark"><time class="entry-date" datetime="2022-06-29T07:48:59-04:00">June 29, 2022</time></a>
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<p>* Finland and Sweden <a href="https://apnews.com/article/russia-ukraine-nato-biden-turkey-madrid-0441ed4a13ea31aad5df316572f082bf">are set to join NATO</a> following Turkey's withdrawal of its veto.<br />* US home prices moderated in April but continue to <a href="https://www.cnbc.com/2022/06/28/home-price-increases-slowed-slightly-in-april-says-sp-case-shiller.html">rise</a> at an annual pace exceeding 20%.<br />* Cleveland Fed President Mester <a href="https://www.cnbc.com/2022/06/29/feds-mester-backs-75-basis-point-hike-in-july-if-conditions-remain-the-same.html">supports</a> another rate increase of 75 basis points in July.<br />* Expectations of rising inflation and economic slowdown are growing in Europe, said an ECB economist <a href="https://www.cnbc.com/2022/06/29/ecbs-lane-sees-double-sided-risk-of-spiraling-inflation-and-economic-slowdown.html">recently</a>.<br />* The Richmond Fed manufacturing index <a href="https://www.marketwatch.com/story/u-s-mid-atlantic-factory-activity-contracted-again-in-june-richmond-fed-271656425817">reported another contraction</a> in June.<br />* The US Consumer Confidence Index <a href="https://www.conference-board.org/topics/consumer-confidence">has dropped</a> to its lowest level since February 2021:</p>
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By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-29-june-2022/" title="6:22 am" rel="bookmark"><time class="entry-date" datetime="2022-06-29T06:22:47-04:00">June 29, 2022</time></a>
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