In May, the Global Market Index (GMI) maintained its expected risk premium at 5.9% annualized, consistent with the estimate from the previous month. This projection—indicating expected performance above the “risk-free” rate—continues to fall below the realized risk premiums seen in recent years, as derived from rolling 10-year annualized data.
* The first human case of H10N3 bird flu has been reported in China.
* The world’s largest meat supplier is the latest victim of a ransomware attack.
* OPEC+ oil producers have agreed to gradually ease supply curbs.
* President Biden has suspended oil drilling in Alaska’s Arctic Refuge.
* Malaysia has charged China with violating airspace over the South China Sea.
* Will Friday’s jobs report disrupt Biden’s economic agenda?
* Has the wager on inflation peaked?
* US manufacturing activity strengthened in May according to the ISM Manufacturing Index.
* US construction spending rose less than expected in April.
* Global manufacturing activity hit its highest level in 11 years in May:
Throughout May, major asset classes experienced widespread gains for the second month in a row. Excluding cash, all other sectors saw an increase, highlighted by a remarkable surge in foreign inflation-linked government bonds.
* Could this week’s jobs report for May influence the Fed’s monetary policy?
* The ongoing shortage crisis is impacting various sectors globally.
* China’s manufacturing sector expanded at a slightly reduced pace in May.
* Eurozone manufacturing activity reached new peaks in May.
* US crude oil futures surged to a two-and-a-half-year high.
* A key US inflation measure rose more than anticipated in April.
* US consumer spending increased by 0.5% in April, continuing the March momentum.
* Probability of US PCE inflation exceeding 2.5% climbed to 84% in May:
This year has posed challenges for our three proprietary strategies attempting to keep up with the benchmark. Global Beta 16 (G.B16), which consistently maintains all 16 funds within the target global opportunity set, has recorded an 8.7% rise year to date. This performance slightly exceeds that of two of our proprietary portfolios and considerably surpasses a third one. (It’s important to note that all three proprietary strategies and the benchmark utilize the same 16-fund opportunity set; the main variance lies in the risk-on and risk-off signals.) For detailed strategy rules and risk metrics in the subsequent tables, please refer to this summary.
Donald MacKenzie
Summary via publisher (Princeton U. Press)
In today’s financial markets, traditional trading floors where brokers buy and sell shares face-to-face are increasingly being replaced by ultrafast electronic systems employing algorithms for executing vast numbers of transactions. “Trading at the Speed of Light” chronicles this remarkable shift. Donald MacKenzie informs us how, during the 1990s—initially in the less reputable sectors of the US financial landscape—a new method of trading, known as automated high-frequency trading (HFT), emerged and subsequently proliferated globally. Although HFT has enhanced efficiency in global trading, it has simultaneously instigated a relentless competition for speed, resulting in an ongoing, covert contest among HFT algorithms.
In this issue:
- Winners across global markets this week
- A favorable week for our portfolio strategy benchmarks as well
Concerns regarding inflation are intensifying, and for good reason. Multiple inflation indices that are frequently monitored saw significant increases in April, paralleled by various price sentiment measures and critical commodities. To provide clarity amidst the noise, CapitalSpectator.com is introducing a seven-factor inflation metric known as the Inflation Trend Index (ITI).
* President Biden has proposed a $6 trillion budget for the upcoming year, accompanied by a $1.8 trillion federal deficit.
* Russia is suspected of being involved in a new hack targeting government email accounts.
* The Senate is poised to pass a $195 billion bill aimed at strengthening US competitiveness against China.
* The Eurozone’s economic sentiment has risen to a three-year high in May.
* The US will not rejoin a significant arms control agreement with Russia.
* Core durable goods orders in the US increased sharply in April.
* Pending home sales in the US fell in April, marking the third decline in four months.
* Revised Q1 GDP growth in the US remains at a strong +6.1% increase.
* Jobless claims in the US continue to improve, falling to another pandemic low:
The current economic landscape remains dynamic, with significant fluctuations in various sectors. Investors are closely monitoring reports and trends that could impact economic recovery and overall market confidence. As various metrics rise and fall, the significance of tracking these developments cannot be understated. It’s crucial for both investors and analysts to stay well-informed to navigate these changing tides effectively.
