The energy sector has marked an impressive performance, emerging as the top-performing sector in the U.S. equity landscape as of March 23. After last year’s lows, the recovery this year has significantly outpaced other sectors. Recently, however, some lagging sectors have begun to gain traction, indicating a possible shift in leadership within the market.
* The White House plans to discuss the migrant surge at the border with Mexico and Guatemala.
* North Korea’s missile tests are deemed ‘not provocative,’ according to President Biden.
* The EU has proposed a law to significantly reduce vaccine exports for six months.
* Fed Chair Powell predicts that the stimulus package will have only a modest impact on inflation.
* Demand for summer travel is increasing.* The Eurozone economy shows signs of recovery, growing in March for the first time in half a year according to PMI data.
* The UK economy has rebounded, recording its strongest growth in seven months, as per PMI data.
* Richmond Fed Manufacturing Index reports stronger growth for March.
* New home sales in the U.S. dropped to a nine-month low in February:
Concerns about inflation are resurfacing. There is growing unease that a mix of heightened fiscal spending and persistent monetary stimulus will lead to stronger pricing pressures. Some analysts predict that inflation might escalate, challenging the price stability that has been maintained for decades.
* A gunman killed 10 people in a mass shooting at a grocery store in Colorado.
* U.S. officials question the results of AstraZeneca’s vaccine trial.
* The White House is developing a $3 trillion infrastructure proposal.
* Will escalating EU-China tensions hinder new investment agreements?
* Insights from the 2010-2011 inflation scare are relevant once again.
* The unemployment rate in the UK unexpectedly dropped for the three months ending January.
* The Federal Reserve will not issue a digital currency without congressional approval.
* Existing home sales declined significantly in February due to a low supply.
* The U.S. economy shrank in February, according to the Chicago Fed National Activity Index.
While most major asset classes have shown stable to negative trends, the real estate sector outside the U.S. exhibited a robust rally last week. This area of the global market significantly outperformed others based on a selection of ETFs for the trading week ending on March 19.
* AstraZeneca’s vaccine has shown a 79% efficacy rate in a U.S. study, with no increased risk of blood clots.
* Homeland Security Secretary states that the U.S. border with Mexico is ‘closed,’ emphasizing ongoing security measures.
* The potential for another COVID-19 surge in the U.S. remains uncertain, according to experts.
* On Sunday, Canadian Pacific Railway announced plans to acquire Kansas City Southern for $25 billion.
* A Federal Reserve unconcerned about inflation presents a risk factor for investors.
* Economists note that the U.S. economy is on the ‘verge’ of a total recovery, according to the Richmond Fed.
* Analysts predict the U.S. stimulus package will benefit the global economy as well, offering advantages across borders.
* The Turkish currency plummeted following the president’s dismissal of the country’s central bank governor.
* The yield curve for 10-year and 3-month U.S. Treasury bonds has reached a 1.73 percentage point difference, the highest in four years:
Last week’s negative trend in global markets impacted our two proprietary strategies, which performed in line with their benchmarks. Although both active strategies, governed by a set of quantitative rules, have achieved year-to-date gains, their performances are slightly behind the benchmarks.
In this issue:
- Asian stocks, primarily driven by Japan, saw a significant rally this week.
- Portfolio strategy benchmarks experienced a downturn for the trading week.
Predictable Financial Crises
Robin Greenwood (Harvard University), et al.
March 2021
Research based on post-war financial crises indicates that these events are significantly predictable. The data reveals that a combination of fast credit expansion and rising asset prices over the preceding three years is linked to a 40% chance of entering a financial crisis within the next three years. This is in stark contrast to the roughly 7% possibility of a crisis during stable periods. Our findings challenge the notion that financial crises are unforeseeable events and support the idea that they result from cyclical boom-bust dynamics. This predictability underscores the need for proactive macro-financial policies that counteract credit market booms.
Conclusively, the economic landscape presents a complex interplay of factors, from inflation concerns to sector performances. These dynamics underscore the importance of closely monitoring market trends and adapting strategies in response to shifting conditions. As we navigate these developments, staying informed will be key to making sound financial decisions.
