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

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    <p>The US stock market is poised to conclude the year with impressive gains, largely driven by outstanding performances in the energy and real estate sectors.</p>

    <p> <a href="https://www.capitalspectator.com/energy-and-real-estate-lead-us-equity-sector-returns-in-2021/#more-17258" 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/energy-and-real-estate-lead-us-equity-sector-returns-in-2021/" title="7:28 am" rel="bookmark"><time class="entry-date" datetime="2021-12-29T07:28:33-05:00">December 29, 2021</time></a>
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    <p>* The US's 7-day average for reported Covid-19 cases <a href="https://www.cnn.com/2021/12/28/us/us-coronavirus-tuesday/index.html">has reached</a> a record high<br/>* Although Covid-19 cases are on the rise again, the hospitalization rate is <a href="https://www.bloomberg.com/news/articles/2021-12-28/omicron-causes-fewer-u-s-hospitalizations-than-prior-waves">lower this time</a><br/>* The Omicron variant presents a new <a href="https://www.cnn.com/2021/12/28/economy/covid-economy-omicron/index.html">risk factor</a> for the economy<br/>* Many states are <a href="https://www.wsj.com/articles/as-omicron-variant-spreads-states-aim-for-balance-between-curbs-and-safety-11640714214?mod=hp_lead_pos6">avoiding strict measures</a> to control the spread of Omicron<br/>* US and Russian officials are set to hold <a href="https://www.cnbc.com/2021/12/28/us-and-russia-security-talks-on-jan-10-amid-ukraine-tensions.html">security talks</a> amid rising tensions over Ukraine<br/>* UBS analysts note that stock valuations in China appear "very, very attractive" <a href="https://www.cnbc.com/2021/12/29/ubs-chinese-stock-valuations-attractive-dont-expect-quick-rebound.html">.</a><br/>* The Richmond Fed Manufacturing Index <a href="https://www.advisorperspectives.com/dshort/updates/2021/12/28/richmond-fed-manufacturing-activity-strengthened-in-december">has strengthened</a> in December<br/>* The growth trend for US home prices <a href="https://www.builderonline.com/data-analysis/case-shiller-index-reaches-19-1-annual-gain-in-october_o">has decelerated</a> again through October:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/12/case.shiller.29dec2021.png"><img fetchpriority="high" decoding="async" class="alignnone size-full wp-image-17257" src="https://www.capitalspectator.com/wp-content/uploads/2021/12/case.shiller.29dec2021.png" alt="" width="650" height="450"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-29-december-2021/" title="6:10 am" rel="bookmark"><time class="entry-date" datetime="2021-12-29T06:10:56-05:00">December 29, 2021</time></a>
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    <p>The year is set to conclude on a positive note with the forthcoming US GDP report for the fourth quarter showing promising signs, as indicated by several nowcasts. However, the outlook for early 2022 appears uncertain due to the Omicron variant's spread. Despite this, there is a considerable level of confidence that the end of 2021 will provide a favorable boost as the nation enters its third year navigating the pandemic.</p>

    <p> <a href="https://www.capitalspectator.com/strong-rebound-expected-for-us-q4-gdp-growth-as-of-2021s-close/#more-17252" 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/strong-rebound-expected-for-us-q4-gdp-growth-as-of-2021s-close/" title="7:28 am" rel="bookmark"><time class="entry-date" datetime="2021-12-28T07:28:10-05:00">December 28, 2021</time></a>
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    <p>* US health officials <a href="https://apnews.com/article/coronavirus-pandemic-science-business-health-rochelle-walensky-d7d609c9c01e200d250df7ca7282c9d6">suggest</a> shortening the Covid quarantine period<br/>* Economists are <a href="https://www.wsj.com/articles/omicron-variant-is-expected-to-dent-global-economy-in-early-2022-11640631554">downgrading their economic forecasts</a> for early 2022 due to the Omicron variant<br/>* Adverse weather conditions are cited as a <a href="https://www.wsj.com/articles/blame-bad-weather-for-your-bigger-bills-11640640525?mod=hp_lead_pos2">contributor</a> to rising inflation<br/>* China is <a href="https://www.bloomberg.com/news/articles/2021-12-28/china-s-central-bank-vows-to-step-up-to-stabilize-economy">expected</a> to introduce stimulus measures aimed at stabilizing its economy in 2022<br/>* The UK and Germany <a href="https://thehill.com/policy/international/europe/587382-uk-and-germany-weighing-potential-fourth-covid-shot-second">are considering</a> administering a fourth Covid vaccine (second booster)<br/>* US stocks (S&P 500) closed at an all-time high on Monday, reflecting a <a href="https://www.barchart.com/story/news/6791397/s-p-500-jumps-to-record-high-on-year-end-rally">year-end rally</a><br/>* Texas factory activity continues to show <a href="https://www.morningstar.com/news/dow-jones/202112273359/texas-factory-production-growth-steadies-at-solid-levels-in-december-dallas-fed">strong growth</a> in December<br/>* The policy-sensitive 2-year Treasury yield has risen to a new pandemic high of 0.76%:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/12/two.yr_.28dec2021.png"><img decoding="async" class="alignnone size-full wp-image-17251" src="https://www.capitalspectator.com/wp-content/uploads/2021/12/two.yr_.28dec2021.png" alt="" width="700" height="312"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-28-december-2021/" title="6:09 am" rel="bookmark"><time class="entry-date" datetime="2021-12-28T06:09:39-05:00">December 28, 2021</time></a>
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    <p>During the holiday-affected trading week through December 23, many <a href="https://www.capitalspectator.com/major-asset-classes-november-2021-performance-review/">major asset classes</a> saw gains, as reflected by a range of ETFs. However, with various risk factors looming as the year closes, investors are left uncertain about whether the previous week’s recovery in asset prices will continue until the year's end.</p>

    <p> <a href="https://www.capitalspectator.com/commodities-led-last-weeks-rebound-in-risk-assets/#more-17244" 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-led-last-weeks-rebound-in-risk-assets/" title="7:16 am" rel="bookmark"><time class="entry-date" datetime="2021-12-27T07:16:21-05:00">December 27, 2021</time></a>
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    <p>* US holiday spending <a href="https://www.cnbc.com/2021/12/26/despite-supply-issues-and-omicron-holiday-sales-rise-8point5percent.html">increased</a> at the fastest rate in 17 years, according to credit card data<br/>* Goldman Sachs is <a href="https://nypost.com/2021/12/25/goldman-sachs-advice-on-build-back-better-a-bad-economic-call/">reassessing</a> its forecast for slower growth following the collapse of the BBB bill<br/>* Numerous food manufacturers indicate plans to <a href="https://www.wsj.com/articles/these-food-items-are-getting-more-costly-in-2022-11640601008?mod=hp_lead_pos1">raise prices</a> in 2022<br/>* Flight cancellations <a href="https://www.bbc.com/news/world-59798682">continue to rise</a> as Covid cases climb<br/>* US jobless claims <a href="https://www.cnbc.com/2021/12/23/us-weekly-jobless-claims-unchanged-at-205000.html">remain near historic lows</a><br/>* Sales of new homes in the US <a href="https://www.census.gov/construction/nrs/pdf/newressales.pdf">increased 12.4%</a> in November, marking the largest monthly gain in over a year<br/>* Durable goods orders in the US <a href="https://www.bloomberg.com/news/articles/2021-12-23/orders-for-u-s-durable-goods-increase-more-than-forecast">rose</a> more than anticipated in November<br/>* US consumer sentiment <a href="http://www.sca.isr.umich.edu/">was slightly adjusted upward</a> for December<br/>* Personal income and spending in the US <a href="https://www.bea.gov/news/2021/personal-income-and-outlays-november-2021">increased</a> for the second consecutive month in November:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/12/spend.inc_.27dec2021.png"><img decoding="async" class="alignnone size-full wp-image-17239" src="https://www.capitalspectator.com/wp-content/uploads/2021/12/spend.inc_.27dec2021.png" alt="" width="650" height="450"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-27-december-2021/" title="6:15 am" rel="bookmark"><time class="entry-date" datetime="2021-12-27T06:15:55-05:00">December 27, 2021</time></a>
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    <p>The year 2021 has brought its share of surprises, both positive and negative, but the plethora of new book releases has certainly captivated readers. As we prepare to welcome the new year, let’s take a moment to reflect on some highlights from CapitalSpectator.com’s weekly Book Bits column over the past year. Here are ten standout titles from 2021—five listed today and another five to follow on January 1. Enjoy your reading!</p>
    <p> <a href="https://www.capitalspectator.com/best-of-books-bits-2021-part-i/#more-17236" 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/best-of-books-bits-2021-part-i/" title="7:52 am" rel="bookmark"><time class="entry-date" datetime="2021-12-26T07:52:06-05:00">December 26, 2021</time></a>
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    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/12/christmas1.2021.png"><img loading="lazy" decoding="async" class="wp-image-17231 alignleft" src="https://www.capitalspectator.com/wp-content/uploads/2021/12/christmas1.2021.png" alt="" width="217" height="352"  /></a><em>I heard the bells on Christmas Day</em><br/><em>Their old, familiar carols play,</em><br/><em>And wild and sweet</em><br/><em>The words repeat</em><br/><em>Of peace on earth, good will to men!</em><br/>“Christmas Bells”, Henry Wadsworth</p>
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    By James Picerno | <a href="https://www.capitalspectator.com/merry-christmas-2021/" title="5:00 am" rel="bookmark"><time class="entry-date" datetime="2021-12-25T05:00:00-05:00">December 25, 2021</time></a>
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    <p><em>Christmas! ‘Tis the season for kindling the fire of hospitality in the hall, the genial flame of charity in the heart. </em><br/>Washington Irving<a href="https://www.capitalspectator.com/wp-content/uploads/2021/12/christmas.eve_.2021.png"><img loading="lazy" decoding="async" class="wp-image-17233 alignright" src="https://www.capitalspectator.com/wp-content/uploads/2021/12/christmas.eve_.2021.png" alt="" width="237" height="278"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/tis-the-season-2/" title="5:00 am" rel="bookmark"><time class="entry-date" datetime="2021-12-24T05:00:00-05:00">December 24, 2021</time></a>
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    <p><span style="color: #ff0000;"><strong><a style="color: #ff0000;" href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3985640">Trading Down: The Effects of Active Trading on One-Month ETF Returns</a></strong></span><br/>Ian Gray (Loyola Marymount University)<br/><strong>December 15, 2021</strong><br/><em>Ark Investment Management (ARK), led by CIO Cathie Wood, has gained significant recognition over the past few years due to its exceptional performance. The daily disclosures required for active ETFs allow market participants unprecedented visibility into the strategies that lead to superior returns. While ARK is known for its stock-picking and trading capabilities, this paper examines the impact of their active trading on alpha. The findings reveal that active trading typically reduces ARK’s one-month returns by an average of 1.36 percentage points.</em></p>
    <p> <a href="https://www.capitalspectator.com/research-review-23-december-2021-etfs/#more-17228" 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/research-review-23-december-2021-etfs/" title="7:00 am" rel="bookmark"><time class="entry-date" datetime="2021-12-23T07:00:59-05:00">December 23, 2021</time></a>
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