Capital Spectator: Investing, Asset Allocation, and Economic Insights

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    <p>* President Biden <a href="https://www.cnn.com/2022/03/08/politics/russian-energy-import-ban/index.html">declares</a> a ban on Russian oil imports into the United States.<br/>* Putin's objective seems increasingly geared towards <a href="https://www.bloomberg.com/news/articles/2022-03-09/vladimir-putin-s-ukraine-invasion-stares-down-brutal-endgame?srnd=premium">devastating Ukraine</a>.<br/>* Leaders from Saudi Arabia and the UAE <a href="https://www.wsj.com/articles/saudi-emirati-leaders-decline-calls-with-biden-during-ukraine-crisis-11646779430">indicate</a> they are unwilling to assist in reducing oil prices.<br/>* Analysts predict an increased risk of a U.S. recession if oil prices persist in their upward trend, as <a href="https://www.cnbc.com/2022/03/09/analysts-on-inflation-recession-after-russian-oil-bans.html">forewarned</a>.<br/>* Venezuela <a href="https://www.cnn.com/2022/03/08/americas/citgo-6-prison-release-venezuela-intl-latam/index.html">frees</a> two Americans, possibly indicating a warming of relations with the U.S.<br/>* Inflation in the U.S. could approach 10%, as <a href="https://www.bloomberg.com/news/articles/2022-03-08/gundlach-warns-u-s-inflation-may-hit-10-forcing-fed-s-hand">predicted</a> by DoubleLine Capital’s Jeffrey Gundlach.<br/>* The U.S. trade deficit <a href="https://www.wsj.com/articles/higher-vehicle-energy-imports-push-january-u-s-trade-deficit-to-new-record-11646748299">hits</a> an all-time high in January.<br/>* Consumer inflation in China <a href="https://www.scmp.com/economy/economic-indicators/article/3169764/china-inflation-factory-gate-price-growth-cools-further">remains stable</a> as factory-gate prices ease.<br/>* Small business confidence in the U.S. <a href="https://www.nfib.com/surveys/small-business-economic-trends/">continues to decline</a> as inflation weighs heavily on sentiment.<br/>* Implied inflation forecasts in the U.S. Treasury market are rising significantly:</p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-9-march-2022/" title="6:23 am" rel="bookmark"><time class="entry-date" datetime="2022-03-09T06:23:24-05:00">March 9, 2022</time></a>
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    <p>The U.S. stock market finds itself in yet another lengthy correction. Is this the beginning of a protracted bear market, or is it merely a brief and typical correction? The uncertainty ahead is palpable, especially in light of the global repercussions of the ongoing war in Ukraine.</p>
    <p><a href="https://www.capitalspectator.com/sp-500-drawdown-profile-8-march-2022/#more-17607" 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/sp-500-drawdown-profile-8-march-2022/" title="7:27 am" rel="bookmark"><time class="entry-date" datetime="2022-03-08T07:27:53-05:00">March 8, 2022</time></a>
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    <p>* The president of Ukraine continues to <a href="https://www.nbcnews.com/news/world/live-blog/ukraine-russia-war-live-updates-ukraine-s-defiant-leader-vows-n1291128">stand firm</a> amid the ongoing Russian invasion.<br/>* The U.S. is <a href="https://www.politico.com/news/2022/03/07/russia-oil-ukraine-biden-00014873">moving closer</a> to banning imports of Russian oil.<br/>* Russia <a href="https://www.bbc.com/news/business-60656673">threatens</a> to cut gas supplies to Germany if the West enacts a ban on Russian oil.<br/>* Five potential <a href="https://www.cnbc.com/2022/03/08/how-will-russias-war-with-ukraine-end-here-are-5-possible-outcomes.html">outcomes</a> of the war in Ukraine are being debated.<br/>* A global food crisis <a href="https://www.ft.com/content/02095093-329b-4b66-9f80-13d07350014c">may emerge</a> as a consequence of the conflict.<br/>* The UK faces the possibility of a recession if energy prices remain elevated, according to research <a href="https://www.bloomberg.com/news/articles/2022-03-07/u-k-heads-for-recession-after-surge-in-energy-costs-niesr-says?srnd=economics-vp">advisors</a>.<br/>* Biden is set to sign an executive order regarding the <a href="https://www.politico.com/news/2022/03/07/biden-executive-order-crypto-00014885">regulation of cryptocurrencies</a>.<br/>* U.S. gasoline prices <a href="https://www.wsj.com/articles/gasoline-price-hits-record-high-11646730771">reach record highs</a>.<br/>* Can China assist in rescuing Russia's economy? <a href="https://www.nytimes.com/2022/03/07/opinion/china-russia-sanctions-economy.html">That remains a significant challenge</a>.<br/>* Despite the rise in oil prices, Russia’s oil sector <a href="https://www.nytimes.com/2022/03/08/business/russian-oil-industry.html">faces difficulties</a> ahead.<br/>* Germany’s industrial production <a href="https://think.ing.com/snaps/german-stong-industrial-production-paints-picture-of-how-economic-rebound-could-have-looked">observed a spike</a> in January, just before the war commenced.<br/>* The U.S. Dollar Index is at its highest level in nearly two years, driven by a flight to safe assets:</p>
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        <a href="https://www.capitalspectator.com/wp-content/uploads/2022/03/usdollar.08mar2022.png"><img decoding="async" class="alignnone size-full wp-image-17606" src="https://www.capitalspectator.com/wp-content/uploads/2022/03/usdollar.08mar2022.png" alt="" width="700" height="312"  /></a>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-8-march-2022/" title="5:50 am" rel="bookmark"><time class="entry-date" datetime="2022-03-08T05:50:45-05:00">March 8, 2022</time></a>
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    <p>Last week, commodities were the top-performing asset class among the <a href="https://www.capitalspectator.com/major-asset-classes-february-2022-performance-review/">major categories</a> assessed, based on a selection of ETFs concluding on March 4. The ongoing conflict in Ukraine is driving this trend, and it appears likely that this trajectory will continue in the near future.</p>
    <p><a href="https://www.capitalspectator.com/commodities-continue-to-soar-as-ukraine-war-rages/#more-17600" 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/commodities-continue-to-soar-as-ukraine-war-rages/" title="6:54 am" rel="bookmark"><time class="entry-date" datetime="2022-03-07T06:54:32-05:00">March 7, 2022</time></a>
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    <p>* Officials in the U.S. and Europe are <a href="https://www.cnn.com/2022/03/06/politics/ukraine-government-exile-us-europe/index.html">in discussions</a> regarding a potential Ukrainian government in exile.<br/>* The U.S. is engaging with allies about banning Russian oil imports, <a href="https://www.nbcnews.com/politics/national-security/us-active-talks-allies-banning-russian-oil-imports-blinken-says-rcna18893">according to</a> Secretary of State.<br/>* The West <a href="https://www.politico.com/news/2022/03/06/ukraine-no-fly-zone-00014437">resists</a> Ukraine's calls for a no-fly zone.<br/>* The U.S. <a href="https://www.nytimes.com/2022/03/06/us/politics/us-ukraine-weapons.html">balances</a> providing arms to Ukraine while avoiding a direct conflict.<br/>* The war in Ukraine is predicted to <a href="https://www.bbc.com/news/business-60623941">disrupt</a> food supplies and costs, warns a fertilizer executive.<br/>* The average U.S. gasoline price <a href="https://www.cnbc.com/2022/03/06/national-average-for-a-gallon-of-gas-tops-4-the-highest-price-at-the-pump-since-2008.html">exceeds $4 per gallon</a>, hitting the highest level since 2008.<br/>* Economic forecasters are <a href="https://www.cnbc.com/2022/03/06/war-fallout-us-economy-to-slow-europe-risks-recession-and-russia-to-suffer-double-digit-decline.html">growing increasingly cautious</a> about the U.S. economic outlook.<br/>* U.S. payrolls <a href="https://www.reuters.com/business/us-feb-payrolls-blowout-shows-economy-near-full-employment-2022-03-04/">show a rebound</a> in February, exceeding consensus forecasts:</p>
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        <a href="https://www.capitalspectator.com/wp-content/uploads/2022/03/payrolls.07mar2022.png"><img decoding="async" class="alignnone size-full wp-image-17599" src="https://www.capitalspectator.com/wp-content/uploads/2022/03/payrolls.07mar2022.png" alt="" width="818" height="512"  /></a>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-7-march-2022/" title="6:04 am" rel="bookmark"><time class="entry-date" datetime="2022-03-07T06:04:59-05:00">March 7, 2022</time></a>
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    <p><a href="https://www.amazon.com/Trillion-Dollar-Triage-President-Pandemic/dp/0316272817?keywords=Trillion+Dollar+Triage%3A+How+Jay+Powell+and+the+Fed+Battled+a+President+and+a+Pandemic---and+Prevented+Economic+Disaster&amp;qid=1646322338&amp;s=books&amp;sr=1-1&amp;linkCode=li3&amp;tag=thecapitalspe-20&amp;linkId=159c7836ba360f0aac1f52efa58fd7cc&amp;language=en_US&amp;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&amp;ASIN=0316272817&amp;Format=_SL250_&amp;ID=AsinImage&amp;MarketPlace=US&amp;ServiceVersion=20070822&amp;WS=1&amp;tag=thecapitalspe-20&amp;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&amp;language=en_US&amp;l=li3&amp;o=1&amp;a=0316272817" alt="" width="1" height="1" border="0"/>● <a href="https://amzn.to/35OSrrH">Trillion Dollar Triage: How Jay Powell and the Fed Battled a President and a Pandemic—and Prevented Economic Disaster</a><br/>Nick Timiraos<br/><strong><a href="https://www.publishersweekly.com/978-0-316-27281-0">Review</a> via Publishers Weekly</strong><br/>Timiraos crafts a compelling narrative of the early COVID-19 panic, detailing how Powell and the Fed team worked tirelessly to inject liquidity into a faltering economy, collaborating with Treasury Secretary Steve Mnuchin and a divided Congress to establish emergency fiscal measures while keenly examining the economic trade-offs between unemployment, inflation, stability, and moral hazard. This riveting account provides insight into policymaking during a crisis and highlights the shifting role of the Fed in the economy.</p>
    <p><a href="https://www.capitalspectator.com/book-bits-5-march-2022/#more-17576" 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-5-march-2022/" title="5:01 am" rel="bookmark"><time class="entry-date" datetime="2022-03-05T05:01:00-05:00">March 5, 2022</time></a>
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    <p>As the conflict in Ukraine persists, the global economy is anticipated to experience consequences that will inevitably reach the United States. Indicators of this fallout are already emerging in the nowcasts for GDP activity in the first quarter.</p>
    <p><a href="https://www.capitalspectator.com/us-q1-growth-estimates-continue-to-slide/#more-17592" 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-q1-growth-estimates-continue-to-slide/" title="7:33 am" rel="bookmark"><time class="entry-date" datetime="2022-03-04T07:33:52-05:00">March 4, 2022</time></a>
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    <p>* Russian troops <a href="https://www.cnbc.com/2022/03/04/russia-ukraine-latest-updates.html">attack and seize</a> a Ukrainian nuclear power plant.<br/>* Bipartisan pressure is <a href="https://www.cnn.com/2022/03/03/politics/congress-russian-oil-imports-ban/index.html">mounting</a> on the Biden administration to halt Russian oil imports.<br/>* With increasing Western pressures on Russia, <a href="https://www.nytimes.com/2022/03/03/us/politics/biden-putin-sanctions.html">how will Putin respond?</a><br/>* Fed Chair Powell <a href="https://finance.yahoo.com/news/fed-chairman-powell-we-should-have-moved-earlier-211146680.html">acknowledges</a> that the Fed should have acted sooner to withdraw pandemic stimulus.<br/>* Global economic growth <a href="https://www.markiteconomics.com/Public/Home/PressRelease/276213cdc9054c309ca8f9d73ba8a4fb">picked up</a> in February after slowing to a year-and-a-half low.<br/>* The U.S. ISM Services Index <a href="https://www.reuters.com/business/us-service-sector-slows-further-february-ism-survey-2022-03-03/">declined</a> to a one-year low, yet…<br/>* The U.S. Services Index reported a <a href="https://www.markiteconomics.com/Public/Home/PressRelease/b1c01498302642fb994a010cf65b57d3">notable increase in activity</a> in February.<br/>* U.S. factory orders <a href="https://www.reuters.com/business/us-factory-orders-growth-beats-expectations-january-2022-03-03/">surged</a> beyond expectations in January.<br/>* U.S. jobless claims fell last week to their lowest level since the year's start:</p>
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        <a href="https://www.capitalspectator.com/wp-content/uploads/2022/03/jobless.claims.04mar2022.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-17591" src="https://www.capitalspectator.com/wp-content/uploads/2022/03/jobless.claims.04mar2022.png" alt="" width="559" height="402"  /></a>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-4-march-2022/" title="6:24 am" rel="bookmark"><time class="entry-date" datetime="2022-03-04T06:24:44-05:00">March 4, 2022</time></a>
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    <p>The risk-adjusted performance of the Global Market Index (GMI) continues to decline after reaching a peak in December, as indicated by the trailing three-year Sharpe ratio, a metric that considers returns adjusted for volatility. This sharp downturn has also caused the 10-year rolling Sharpe ratio to drop. Both measures fell to their lowest points in nearly a year for this multi-asset-class benchmark.</p>
    <p><a href="https://www.capitalspectator.com/major-asset-classes-february-2022-risk-profile/#more-17586" 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-february-2022-risk-profile/" title="7:06 am" rel="bookmark"><time class="entry-date" datetime="2022-03-03T07:06:53-05:00">March 3, 2022</time></a>
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    <p>* Fed Chair Powell <a href="https://www.cnbc.com/2022/03/02/fed-chair-powell-notes-highly-uncertain-ukraine-impact-but-says-rate-hikes-are-still-coming.html">announces</a> that rate hikes are forthcoming, yet Ukraine introduces uncertainty.<br/>* The first significant Ukrainian city has <a href="https://news.yahoo.com/major-ukrainian-city-has-reportedly-fallen-to-russian-troops-220551453.html">fallen</a> to Russian forces.<br/>* More than 1 million individuals <a href="https://apnews.com/article/russia-ukraine-united-nations-general-assembly-volodymyr-zelenskyy-kyiv-moscow-a3092d8e476949ed7c55607a645a9154">have fled</a> Ukraine since the invasion began.<br/>* Analysts predict that the West's response to the Ukraine conflict could severely harm Russia's economy, <a href="https://www.cnbc.com/2022/03/03/ukraine-analysts-think-western-sanctions-may-destroy-russias-economy.html">according to experts</a>.<br/>* Commodity prices have surged, with the S&amp;P GSCI index reaching the <a href="https://www.ft.com/content/5753f4dd-1e8e-4159-a4e4-d232e4ad50ed">highest levels since 2008</a>.<br/>* MSCI <a href="https://www.ft.com/content/f1341a52-291f-4a4c-9d8b-d0e1f5707d1c">excludes</a> Russian stocks from emerging markets indices.<br/>* The China Composite PMI <a href="https://www.markiteconomics.com/Public/Home/PressRelease/122199ab6f274d67ba5f5b98c795164c">indicates</a> that economic growth was "muted" in February.<br/>* Concerns are rising about whether eastern Europe <a href="https://www.nytimes.com/2022/03/02/world/europe/ukraine-russia-eastern-europe.html">is at risk</a> from Russia.<br/>* U.S. companies maintained a robust hiring pace in February, <a href="https://adpemploymentreport.com/2022/February/NER/NER-February-2022.aspx">according to reports</a>:</p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-3-march-2022/" title="6:21 am" rel="bookmark"><time class="entry-date" datetime="2022-03-03T06:21:53-05:00">March 3, 2022</time></a>
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