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<p>In a period characterized by remarkable economic growth, managing a diversified portfolio of assets has proven beneficial for many investors. This trend has been evident in terms of overall returns, and the advantages remain apparent even after accounting for risk factors. However, there are emerging signs that this extended period of favorable risk-adjusted performance may be reaching its zenith for globally diversified investment strategies.</p>
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<p>* The Senate <a href="https://www.cnbc.com/2021/12/02/government-shutdown-house-strikes-deal-on-funding-bill.html">approved a short-term funding bill</a> to prevent a government shutdown.<br/>* Fed Governor Quarles <a href="https://www.wsj.com/articles/randal-quarles-says-fed-will-need-to-raise-rates-to-cool-inflation-11638467970">indicated</a> that rate hikes are necessary to temper inflation.<br/>* A global shortage of computer chips is expected to drive inflation <a href="https://www.cnn.com/2021/12/02/business/inflation-chip-shortage-raimondo/index.html">well into 2022</a>.<br/>* China’s growth <a href="https://www.markiteconomics.com/Public/Home/PressRelease/ef59c957a78b4342ae807cbe36f3d8ab">moderated</a> in November, according to the Composite Output Index.<br/>* Growth in the Eurozone <a href="https://www.markiteconomics.com/Public/Home/PressRelease/cdf7139e12b04c07925f3d6051cba224">strengthened</a> in November, as revealed by PMI survey data.<br/>* Chinese ride-hailing service Didi is set to <a href="https://www.bbc.com/news/business-59514800">delist</a> from the NYSE.<br/>* Apple has reported <a href="https://www.bloomberg.com/news/articles/2021-12-03/apple-warning-points-to-consumer-caution-in-omicron-hit-world?srnd=economics-vp">dwindling demand</a> for its iPhone 13.<br/>* US jobless claims <a href="https://www.cnbc.com/2021/12/02/us-weekly-jobless-claims-.html">increased</a> last week after reaching a 52-year low.<br/>* The 10-year to 3-month Treasury yield curve has contracted to a 2-month low:</p>
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<p>The anticipated risk premium for the Global Market Index (GMI) slightly decreased in November but remains historically high. The latest estimated figure stands at an annualized rate of 6.0%, a minor decline from the <a href="https://www.capitalspectator.com/risk-premia-forecasts-major-asset-classes-2-november-2021/">previous forecast.</a></p>
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<p>* The risk of a government shutdown is <a href="https://www.cnn.com/2021/12/01/politics/house-vote-bill-government-funding-shutdown/index.html">increasing</a> as Congressional discussions falter.<br/>* The first US case of the Omicron coronavirus variant has been <a href="https://www.bbc.com/news/world-us-canada-59498166">confirmed</a>.<br/>* Does Omicron <a href="https://www.nytimes.com/2021/12/02/business/economy/omicron-economy.html">threaten</a> the ongoing economic recovery?<br/>* Is OPEC's influence over oil prices <a href="https://www.cnn.com/2021/12/02/energy/opec-market-power/index.html">gaining strength?</a><br/>* The UN index of global food prices is <a href="https://www.bloomberg.com/news/articles/2021-12-02/food-prices-climb-closer-to-record-increasing-inflation-angst?srnd=economics-vp">approaching record highs,</a> raising inflation concerns.<br/>* Global manufacturing continues to <a href="https://www.markiteconomics.com/Public/Home/PressRelease/938c51c888bd41c0b5c0d81725abc6a9">expand at a moderate pace</a> despite supply shortages.<br/>* The US ISM Manufacturing Index <a href="https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/november/">rose</a> in November, indicating stronger growth in the sector.<br/>* Executives from major cryptocurrency firms have been <a href="https://www.bbc.com/news/business-59496509">summoned</a> to testify before Congress.<br/>* According to the OECD, inflation is projected to <a href="https://www.oecd.org/economic-outlook/">peak by late 2021:</a></p>
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<p>Most major asset classes faced significant losses in November, with the exception of US investment-grade bonds and inflation-indexed Treasuries. Overall, global markets saw a downturn last month according to a range of proxy ETFs.</p>
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<p>* Fed Chair Powell is <a href="https://www.wsj.com/articles/powell-warns-omicron-variant-could-worsen-inflation-boosting-bottlenecks-11638280800">prepared</a> for a quicker end to the stimulus program.<br/>* Omicron raises uncertainty regarding inflation risk, <a href="https://www.bbc.com/news/business-59480099">warns</a> the Fed Chair.<br/>* Russian President Putin <a href="https://apnews.com/article/europe-russia-ukraine-vladimir-putin-moscow-cd558699728e9ae935eaadf940efeb18">issues a warning</a> to NATO and the West concerning Ukraine.<br/>* Oil prices could potentially surge to $150, according to an analyst from Jefferies.<br/>* Chinese manufacturing activity <a href="https://www.markiteconomics.com/Public/Home/PressRelease/521486c1cbf348ff98996ea78259634a">expanded</a> moderately in November.<br/>* Eurozone manufacturing output <a href="https://www.markiteconomics.com/Public/Home/PressRelease/f5535dcf3f5d45bfbdfba94a927db080">stabilized</a> at a solid growth rate in November.<br/>* The UK manufacturing sector <a href="https://www.markiteconomics.com/Public/Home/PressRelease/5df6bf277cde4eeb8f50ed902de65953">grew</a> considerably in November as input costs climbed.<br/>* US home prices remain on the rise, although the growth rate <a href="https://www.cnbc.com/2021/11/30/home-price-hikes-slow-down-according-to-sp-case-shiller.html">slowed in September</a>.<br/>* The Chicago PMI indicates a <a href="https://www.advisorperspectives.com/dshort/updates/2021/11/30/chicago-pmi-slips-in-november">softening growth</a> trend in November.<br/>* The US Consumer Confidence Index has <a href="https://www.conference-board.org/data/consumerconfidence.cfm">dipped</a> to a 9-month low in November:</p>
<div class="entry-content">Yes, there are times when this is the case, and we are currently experiencing one of those periods!
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<p>* President Biden <a href="https://www.bbc.com/news/world-us-canada-59469486">states</a> that an Omicron lockdown is unnecessary for now.<br/>* Fed Chair Powell warns that Omicron <a href="https://www.cnn.com/2021/11/29/economy/omicron-jerome-powell/index.html">presents</a> a potential threat to the US economy.<br/>* The CEO of Moderna indicates that vaccines <a href="https://www.cnn.com/2021/11/30/investing/global-markets-stocks-oil/index.html">may face challenges</a> in combating Omicron.<br/>* The pandemic has sparked a substantial increase in self-employment and entrepreneurship, as noted in recent reports.<br/>* Eurozone inflation <a href="https://www.cnbc.com/2021/11/30/inflation-euro-zone-november-2021.html">hit a record high</a> of 4.9% year-on-year in November.<br/>* China’s Manufacturing PMI in November <a href="https://www.cnbc.com/2021/11/30/china-factory-activity-grows-in-november-as-supply-issues-ease.html">showed growth</a> for the first time in three months.<br/>* The Dallas Fed Manufacturing Index continues to signal <a href="https://www.advisorperspectives.com/dshort/updates/2021/11/29/november-dallas-fed-manufacturing-expansion-continues-costs-climbs?topic=covid-19-coronavirus-coverage">strong growth</a> in November.<br/>* US pending home sales have <a href="https://finance.yahoo.com/news/pending-home-sales-october-2021-145134118.html">increased significantly</a> in October, indicating a robust market ahead:</p>
<div class="entry-content">Was last Friday’s sell-off excessively harsh? It might be premature to determine, but the fallout from last week’s rapid risk aversion left nearly all the major asset classes in the negative, with the exception of US bonds, according to a variety of ETFs as of Friday, November 26.
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<p>* Are vaccines <a href="https://www.nytimes.com/2021/11/28/health/covid-omicron-vaccines-immunity.html">effective against Omicron?</a> Scientists are actively investigating.<br/>* Symptoms associated with the Omicron variant are <a href="https://www.cnbc.com/2021/11/29/omicron-covid-variant-symptoms-heres-what-we-know-so-far.html">currently reported</a> as ‘extremely mild.’<br/>* Moderna anticipates an Omicron variant-specific vaccine could be ready by early 2022, <a href="https://www.cnbc.com/2021/11/28/moderna-says-an-omicron-variant-vaccine-could-be-ready-in-early-2022.html">according to</a> their statements.<br/>* Global markets are preparing for a <a href="https://www.cnn.com/2021/11/29/investing/global-stocks-omicron-variant-intl-hnk/index.html">nervous week</a> ahead as updates about Omicron emerge.<br/>* As the US approaches the December 15 debt limit deadline, <a href="https://thehill.com/policy/finance/583091-no-deal-in-sight-as-congress-nears-debt-limit-deadline">no resolution is apparent.</a><br/>* The US Dollar Index fell from a 16-month high last Friday:</p>
