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

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    <p>* Today, President Biden will <a href="https://www.cnbc.com/2021/04/28/biden-american-families-plan-whats-in-it.html">present</a> a $1.8 trillion proposal that includes new spending and tax credits.<br/>* India's coronavirus situation is <a href="https://apnews.com/article/health-india-business-coronavirus-f1d71b25d0a5778180440c9a200a797b">deteriorating</a>, putting enormous strain on the health system.<br/>* Google and Microsoft have seen their profits <a href="https://www.nytimes.com/live/2021/04/27/business/stock-market-today">soar</a> as both companies prosper during the pandemic.<br/>* The Federal Reserve is <a href="https://www.bloomberg.com/news/articles/2021-04-28/fed-to-stay-patient-as-u-s-outlook-improves-decision-day-guide?srnd=premium">expected</a> to keep its aggressive monetary stimulus in place despite signs of accelerating growth.<br/>* The US Consumer Confidence Index <a href="https://www.reuters.com/article/usa-economy/wrapup-1-u-s-consumer-confidence-hits-14-month-high-house-prices-soar-idUSL1N2MK1FY">reached</a> a 14-month high in April.<br/>* Manufacturing growth in the Richmond Fed district remained <a href="https://www.richmondfed.org/research/regional_economy/surveys_of_business_conditions/manufacturing/&quot;">stable</a> in April compared to March.<br/>* The year-on-year increase in US housing prices continued to <a href="https://www.cnbc.com/2021/04/27/february-home-prices-see-biggest-gain-in-15-years-sp-case-shiller-says.html">accelerate</a> in February:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/04/cs.28apr2021.png"><img fetchpriority="high" decoding="async" class="alignnone size-full wp-image-15943" src="https://www.capitalspectator.com/wp-content/uploads/2021/04/cs.28apr2021.png" alt="" width="650" height="450"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-28-april-2021/" title="5:48 am" rel="bookmark"><time class="entry-date" datetime="2021-04-28T05:48:48-04:00">April 28, 2021</time></a>
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    <p>Regardless of your stance on the recent rise in inflation expectations—especially if price pressures remain strong—it marks a significant shift from trends observed over the last four decades. Disinflation and deflation have dominated the macroeconomic landscape since Paul Volcker implemented a strict monetary policy in the early 1980s. Since that pivotal moment, disinflation has prevailed, arguably to the extent that policies aimed at promoting it may have become problematic in their own right.</p>
    <p> <a href="https://www.capitalspectator.com/has-the-feds-monetary-policy-playbook-run-out-of-road/#more-15936" 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/has-the-feds-monetary-policy-playbook-run-out-of-road/" title="7:49 am" rel="bookmark"><time class="entry-date" datetime="2021-04-27T07:49:20-04:00">April 27, 2021</time></a>
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    <p>* The US population grew at its <a href="https://www.nytimes.com/2021/04/26/us/us-census-numbers.html">slowest rate</a> since the 1930s over the last decade.<br/>* California's governor is likely to face a <a href="https://apnews.com/article/government-and-politics-california-9cdb7cd9ef3684f4a8a3dda471390cac">recall vote</a> in the fall.<br/>* The UK plans to send a <a href="https://www.cnn.com/2021/04/26/europe/uk-aircraft-carrier-strike-group-asia-intl-hnk-scli-ml/index.html">naval flotilla</a> through tense waters in Asia next month.<br/>* Tesla experienced a significant earnings increase, partly <a href="https://www.cnbc.com/2021/04/26/tesla-tsla-earnings-q1-2021-.html">boosted</a> by its trading activities in bitcoin.<br/>* Are the market-beating <a href="https://www.institutionalinvestor.com/article/b1rkzgfmhz1wkr/Is-ESG-Outperformance-Just-an-Illusion">results</a> of ESG an illusion?<br/>* Texas manufacturing is <a href="https://www.morningstar.com/news/dow-jones/202104268345/texas-factory-output-continues-to-grow-at-robust-pace-in-april-dallas-fed">growing</a> rapidly in April.<br/>* Orders for US durable goods <a href="https://www.wsj.com/articles/u-s-durable-goods-orders-rebound-following-dip-11619442529">rebounded</a> in March after last month's decline.<br/>* Texas and Florida <a href="https://www.nytimes.com/interactive/2021/04/26/us/politics/congress-house-seats-census.html">gained seats</a> in Congress due to new census data, while New York and California each lost a seat:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/04/census.27apr2021.png"><img decoding="async" class="alignnone size-full wp-image-15935" src="https://www.capitalspectator.com/wp-content/uploads/2021/04/census.27apr2021.png" alt="" width="921" height="765"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-27-april-2021/" title="6:00 am" rel="bookmark"><time class="entry-date" datetime="2021-04-27T06:00:16-04:00">April 27, 2021</time></a>
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    <p>Commodities experienced a rally last week, marking a fourth consecutive weekly gain. This surge led to mainly positive returns across major asset classes for the trading week ending on April 23, as evidenced by a variety of exchange-traded funds.</p>
    <p> <a href="https://www.capitalspectator.com/commodities-led-returns-for-global-markets-last-week/#more-15928" 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-returns-for-global-markets-last-week/" title="7:01 am" rel="bookmark"><time class="entry-date" datetime="2021-04-26T07:01:03-04:00">April 26, 2021</time></a>
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    <p>* A pivotal swing voter in the Senate <a href="https://www.cnbc.com/2021/04/25/democrat-manchin-praises-gop-infrastructure-proposal.html">indicated</a> support for a targeted version of the infrastructure bill.<br/>* Fully vaccinated Americans will be able to <a href="https://www.cnn.com/2021/04/25/us/europe-vaccinated-americans-summer-eu-vacation/index.html">visit</a> the European Union this summer.<br/>* India’s Covid situation is <a href="https://www.wsj.com/articles/indias-covid-surge-is-most-ferocious-yet-spreading-like-wildfire-11619388584">surging</a> and "spreading like wildfire".<br/>* Concerns are rising over space debris, a situation identified as a <a href="https://www.bbc.com/news/av/science-environment-56845104">ticking time-bomb</a> for essential satellites in orbit.<br/>* The options market <a href="https://www.ft.com/content/fd30060f-cb7a-43b1-83aa-410b60a7dc1c">reflects</a> an increasing likelihood of more than 3% inflation for US consumers.<br/>* Significant price increases <a href="https://www.wsj.com/articles/wild-market-ride-lifts-everything-from-lumber-to-stocks-to-bitcoin-11619343001?mod=hp_lead_pos3">have raised</a> worries about a potential global market bubble.<br/>* New US home sales <a href="https://www.bloomberg.com/news/articles/2021-04-23/u-s-new-home-sales-rise-more-than-forecast-after-winter-setback?srnd=premium">rebounded</a> sharply in March.<br/>* The US economy is “firing on all cylinders,” according to April <a href="https://www.markiteconomics.com/Public/Home/PressRelease/22fc73216cf444c9b5443bb2a535091e">PMI survey data</a>:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/04/pmi.26apr2021.png"><img decoding="async" class="alignnone size-full wp-image-15927" src="https://www.capitalspectator.com/wp-content/uploads/2021/04/pmi.26apr2021.png" alt="" width="566" height="447"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-26-april-2021/" title="5:59 am" rel="bookmark"><time class="entry-date" datetime="2021-04-26T05:59:09-04:00">April 26, 2021</time></a>
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    <p><em>Proprietary Strategies</em></p>

    <p>Last week's rally across most global markets <a href="https://etfps.substack.com/p/the-etf-portfolio-strategist-23-april">benefited</a> all three of our proprietary strategies, which utilize the same 16-fund opportunity set that establishes their benchmark.</p>

    <p><em><a href="https://etfps.substack.com/p/the-etf-portfolio-strategist-25-april">Continue reading at The ETF Portfolio Strategist</a></em></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/the-etf-portfolio-strategist-25-april-2021/" title="2:12 pm" rel="bookmark"><time class="entry-date" datetime="2021-04-25T14:12:18-04:00">April 25, 2021</time></a>
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    <p><a href="https://www.amazon.com/gp/product/0674971167/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=0674971167&amp;linkCode=as2&amp;tag=thecapitalspe-20&amp;linkId=1c902d12cf2d4752d2ca96885c3217a8" target="_blank" rel="noopener"><img decoding="async" class="alignleft" src="https://ws-na.amazon-adsystem.com/widgets/q?_encoding=UTF8&amp;MarketPlace=US&amp;ASIN=0674971167&amp;ServiceVersion=20070822&amp;ID=AsinImage&amp;WS=1&amp;Format=_SL250_&amp;tag=thecapitalspe-20" border="0"/></a>● <a href="https://www.amazon.com/gp/product/0674971167/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=0674971167&amp;linkCode=as2&amp;tag=thecapitalspe-20&amp;linkId=c2940d6dbaaa4b1df8726096122961ec" target="_blank" rel="noopener">The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations</a><br/>Philippe Aghion, et al.<br/><strong><a href="https://www.economist.com/books-and-arts/2021/04/24/how-schumpeter-would-view-the-economy-today">Review</a> via The Economist</strong><br/>Joseph Schumpeter believed that capitalism was destined for failure as incumbent firms became too powerful, leading to corruption and eventually socialism. His mid-20th-century pessimism resonates today as societies face issues of inequality, climate change, and the dominance of tech giants. However, some of Schumpeter’s intellectual descendants maintain a more optimistic outlook. In “The Power of Creative Destruction,” authors Philippe Aghion, Céline Antonin, and Simon Bunel apply his influential ideas to current debates within economics. The outcome is comprehensive, authoritative, and notably optimistic given today’s challenges.</p>
    <p> <a href="https://www.capitalspectator.com/book-bits-24-april-2021/#more-15899" 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-24-april-2021/" title="7:09 am" rel="bookmark"><time class="entry-date" datetime="2021-04-24T07:09:30-04:00">April 24, 2021</time></a>
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    <p>In this issue:</p>
    <ul>
        <li><em>Commodities reach a six-year high</em></li>
        <li><em>US stocks stagnate, ending a four-week winning streak</em></li>
        <li><em>US Treasuries are on the path to recovery</em></li>
        <li><em>Global diversification consistently leads portfolio strategy benchmarks</em></li>
    </ul>
    <p><a href="https://etfps.substack.com/p/the-etf-portfolio-strategist-23-april">Continue reading at The ETF Portfolio Strategist</a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/the-etf-portfolio-strategist-23-april-2021/" title="6:31 pm" rel="bookmark"><time class="entry-date" datetime="2021-04-23T18:31:02-04:00">April 23, 2021</time></a>
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    <p>In <a href="https://www.capitalspectator.com/capturing-average-returns-with-asset-allocation-part-ii/">previous discussions</a>, I explored the efficacy of asset allocation for securing average returns and mitigating risk as part of portfolio design. Empirical evidence indicates that this strategy is versatile across various standard portfolio configurations. Now, let's elevate the analysis by constructing a poorly designed portfolio to serve as a stress test.</p>
    <p> <a href="https://www.capitalspectator.com/capturing-average-returns-with-asset-allocation-part-iii/#more-15919" 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/capturing-average-returns-with-asset-allocation-part-iii/" title="7:35 am" rel="bookmark"><time class="entry-date" datetime="2021-04-23T07:35:48-04:00">April 23, 2021</time></a>
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    <p>* Biden <a href="https://www.nytimes.com/2021/04/22/business/economy/biden-taxes.html">proposes</a> higher taxes on the wealthy to fund child care and education initiatives.<br/>* Russia <a href="https://www.cnn.com/2021/04/22/europe/russia-military-ukraine-border-exercises-intl/index.html">has ordered</a> troops to withdraw from the Ukraine border after a military buildup.<br/>* Economic growth in the Eurozone accelerated in April, according to <a href="https://www.markiteconomics.com/Public/Home/PressRelease/7344c5db768b4d27a4174697c342ec50">survey data</a>.<br/>* PMI survey results indicate a <a href="https://www.markiteconomics.com/Public/Home/PressRelease/f32d3c87b96f4c8ca7577a72322804cf">robust economic revival</a> in the UK for April.<br/>* Japan’s economy is <a href="https://www.markiteconomics.com/Public/Home/PressRelease/8724638f32394a1dbc5953e5d8f5f6b3">growing again</a> for the first time in over a year, according to a recent survey.<br/>* The US Leading Economic Index <a href="https://conference-board.org/data/bcicountry.cfm?cid=1">increased</a> in March, indicating stronger economic momentum.<br/>* Existing US home sales <a href="https://www.cnbc.com/2021/04/22/home-sales-fell-in-march-as-tight-supply-pushed-prices-higher.html">declined</a> for the second consecutive month in March.<br/>* US jobless claims <a href="https://www.cnbc.com/2021/04/22/us-jobless-claims.html">hit</a> a new low for the pandemic last week:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/04/claims.23apr2021.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-15918" src="https://www.capitalspectator.com/wp-content/uploads/2021/04/claims.23apr2021.png" alt="" width="630" height="384"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-23-april-2021/" title="6:07 am" rel="bookmark"><time class="entry-date" datetime="2021-04-23T06:07:53-04:00">April 23, 2021</time></a>
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