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

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    <p>* Tensions escalate at the <a href="https://www.cnn.com/2021/03/18/politics/blinken-sullivan-china-alaska-meetings/index.html">first official meeting between the US and China</a><br/>* Russia reacts with anger to Biden’s <a href="https://www.cnn.com/2021/03/18/europe/biden-putin-killer-comment-russia-reaction-intl/index.html">statement</a> branding Putin as ‘a killer’<br/>* Economists <a href="https://www.wsj.com/articles/economy-revs-up-as-americans-increase-spending-on-flights-lodging-dining-out-11616146202?mod=hp_lead_pos1">adjust</a> their economic forecasts for the US due to increased spending by Americans<br/>* The Fed <a href="https://www.ft.com/content/89afdc8b-5bea-4ad8-b235-48e68291c44b">expresses concerns</a> about the sustainability of the booming economy<br/>* US bond market yields <a href="https://www.cnbc.com/2021/03/18/federal-reserve-inflation-policy-cues-a-run-up-in-treasury-yields.html">climbed</a> a day after the Fed meeting<br/>* The rising 10-year Treasury yield is viewed as a sign of increasing economic confidence, according to <a href="https://www.cnbc.com/2021/03/19/morgan-stanley-rise-in-us-10-year-treasury-yield-is-reasonable.html">analysts</a><br/>* The US Leading Economic Index continued its <a href="https://www2.staffingindustry.com/Editorial/Daily-News/US-Leading-Economic-Index-rises-in-February-signaling-recovery-should-pick-up-steam-57053?cookies=disabled">upward trend</a> in February<br/>* The Philly Fed Manufacturing Index <a href="https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/mbos-2021-03">reached</a> a 50-year high in March<br/>* Unexpectedly, US jobless claims <a href="https://www.cnbc.com/2021/03/18/weekly-jobless-claims.html">increased</a> last week:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/03/claims.19mar2021.png"><img fetchpriority="high" decoding="async" class="alignnone size-full wp-image-15720" src="https://www.capitalspectator.com/wp-content/uploads/2021/03/claims.19mar2021.png" alt="" width="740" height="451"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-19-march-2021/" title="6:07 am" rel="bookmark"><time class="entry-date" datetime="2021-03-19T06:07:40-04:00">March 19, 2021</time></a>
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    <p>The US economy is poised to report a remarkably strong increase in output in the first-quarter gross domestic product (GDP) report scheduled for next month, according to a series of nowcasts. Although the projected growth has moderated slightly, the current estimate remains significant.</p>

    <p> <a href="https://www.capitalspectator.com/us-gdp-q1-nowcasts-ease-but-still-point-to-strong-growth/#more-15716" 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/us-gdp-q1-nowcasts-ease-but-still-point-to-strong-growth/" title="7:15 am" rel="bookmark"><time class="entry-date" datetime="2021-03-18T07:15:09-04:00">March 18, 2021</time></a>
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    <p>* The Federal Reserve <a href="https://www.cnbc.com/2021/03/17/heres-where-the-federal-reserve-sees-interest-rates-the-economy-and-inflation-going-in-the-future.html">expects</a> stronger growth and higher inflation in 2021, yet plans to refrain from rate hikes<br/>* The US 10-year Treasury yield <a href="https://www.ft.com/content/55eb123d-b45e-4c30-a5e8-c026309cb482">exceeded 1.7%</a> on Thursday, the highest level in over a year<br/>* Rising inflation expectations <a href="https://www.wsj.com/articles/why-covid-19-aid-inflation-fears-hold-the-key-to-the-dollars-future-11616059289?mod=hp_lead_pos2">pose</a> a risk to the recent gains of the dollar<br/>* A rapid and uneven rebound in consumer demand is anticipated, as noted by McKinsey &amp; Co <a href="https://www.bloomberg.com/news/articles/2021-03-18/mckinsey-sees-fast-but-uneven-consumer-rebound-from-covid-crisis?srnd=economics-vp">predicts</a><br/>* Russia <a href="https://www.wsj.com/articles/russia-recalls-its-ambassador-to-the-u-s-for-consultations-11616011568?mod=lead_feature_below_a_pos1">has recalled</a> its US ambassador following a critical US intelligence report<br/>* The climate overhaul of the flood insurance program has been <a href="https://www.nytimes.com/2021/03/18/climate/chuck-schumer-fema-flood-insurance.html">delayed</a> by the Senate leader<br/>* China maintains <a href="https://www.cnn.com/2021/03/18/asia/china-us-alaska-cui-tiankai-intl-hnk/index.html">low expectations</a> for today’s dialogue with US officials<br/>* Exports from China <a href="https://www.cnbc.com/2021/03/17/china-exports-surged-late-last-year-as-consumer-recovery-picked-up-steam-in-us.html">saw a surge</a> in late 2020<br/>* The International Energy Agency suggests that world gasoline demand has likely <a href="https://apnews.com/article/coronavirus-pandemic-69638551c3eabe4a8d0f94f6bbb8c4a7">peaked</a> <br/>* US housing starts <a href="https://www.bloomberg.com/news/articles/2021-03-17/u-s-housing-starts-stumble-as-winter-weather-impedes-momentum">declined</a> more than anticipated in February:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/03/starts.18mar2021.png"><img decoding="async" class="alignnone size-full wp-image-15713" src="https://www.capitalspectator.com/wp-content/uploads/2021/03/starts.18mar2021.png" alt="" width="620" height="348"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-18-march-2021/" title="5:53 am" rel="bookmark"><time class="entry-date" datetime="2021-03-18T05:53:45-04:00">March 18, 2021</time></a>
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    <p>In this issue:</p>

    <ul>
        <li><em>Treasuries continue to decline</em></li>
        <li><em>Housing construction decelerated in February, yet housing stocks remained robust</em></li>
        <li><em>Is the selloff of gold coming to an end?</em></li>
    </ul>

    <p><a href="https://etfps.substack.com/p/the-etf-portfolio-strategist-17-march">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-17-march-2021/" title="6:17 pm" rel="bookmark"><time class="entry-date" datetime="2021-03-17T18:17:35-04:00">March 17, 2021</time></a>
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    <p>Portfolio managers have indicated that inflation has taken over as the chief concern for Wall Street, as per a survey released by Bank of America on March 16. This perspective may underplay the continued albeit diminishing risks posed by the pandemic in the coming months. Nonetheless, it is highly probable that inflationary pressures will increase as last year's temporary deflation, caused by the initial shock of the coronavirus, dissipates from year-over-year data. The pressing question remains: what will happen beyond this initial rebound?</p>

    <p> <a href="https://www.capitalspectator.com/will-the-initial-post-pandemic-rebound-in-inflation-persist/#more-15709" 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/will-the-initial-post-pandemic-rebound-in-inflation-persist/" title="7:41 am" rel="bookmark"><time class="entry-date" datetime="2021-03-17T07:41:35-04:00">March 17, 2021</time></a>
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    <p>* The US has <a href="https://www.nytimes.com/2021/03/17/world/asia/us-china-sanctions-biden.html">imposed</a> financial sanctions on Chinese officials in anticipation of discussions with China<br/>* Biden <a href="https://www.nbcnews.com/politics/congress/shift-joe-biden-endorses-talking-filibuster-change-senate-rules-n1261268">supports</a> amendments to Senate filibuster regulations<br/>* Wells Fargo <a href="https://www.cnbc.com/2021/03/16/as-fed-meets-wells-fargo-predicts-10-year-yield-could-reach-2point25percent.html">projects</a> the 10-year Treasury yield could elevate to 2.25% this year<br/>* The Fed will likely <a href="https://www.wsj.com/articles/fed-seen-standing-firm-on-interest-rates-bond-purchases-11615887002">maintain</a> its position that it’s premature to raise rates or taper bond buying<br/>* The Fed is <a href="https://www.ft.com/content/3d7704d3-a312-4294-95bc-90233f469ccd">expected</a> to revise economic forecasts during today’s FOMC meeting<br/>* Concerns over inflation <a href="https://www.cnn.com/2021/03/16/investing/wall-street-covid-inflation-economy/index.html">have replaced</a> Covid-19 as Wall Street’s primary worry<br/>* Confidence among homebuilders <a href="https://www.cnbc.com/2021/03/16/homebuilder-confidence-drops-as-interest-rates-and-lumber-prices-rise.html">dipped</a> in March after reaching record highs<br/>* Industrial output in the US <a href="https://www.morningstar.com/news/dow-jones/202103167197/us-industrial-production-fell-22-in-february">declined</a> in February following four months of growth<br/>* Retail sales in the US <a href="https://www.reuters.com/article/usa-economy/cold-weather-chills-u-s-retail-sales-factory-output-idINKBN2B81QC?edition-redirect=in">fell</a> more than anticipated in February:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/03/retail.17mar2021.png"><img decoding="async" class="alignnone size-full wp-image-15708" src="https://www.capitalspectator.com/wp-content/uploads/2021/03/retail.17mar2021.png" alt="" width="599" height="398"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-17-march-2021/" title="5:53 am" rel="bookmark"><time class="entry-date" datetime="2021-03-17T05:53:51-04:00">March 17, 2021</time></a>
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    <p>Finding a satisfactory yield in global markets has proven challenging in recent years, and 2021 is no different. This situation is somewhat unexpected considering the rise in interest rates this year. However, while investors in medium- to long-term Treasuries are presented with better rates these days, the story is decidedly different across <a href="https://www.capitalspectator.com/risk-premia-forecasts-major-asset-classes-2-march-2021/">major asset classes</a> represented by various ETFs.</p>

    <p> <a href="https://www.capitalspectator.com/desperately-seeking-yield-16-march-2021/#more-15703" 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/desperately-seeking-yield-16-march-2021/" title="7:39 am" rel="bookmark"><time class="entry-date" datetime="2021-03-16T07:39:09-04:00">March 16, 2021</time></a>
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    <p>* The risk of variants for the virus is <a href="https://www.cnn.com/2021/03/16/health/us-coronavirus-tuesday/index.html">still present</a> in the US<br/>* Europe's <a href="https://www.reuters.com/article/us-health-coronavirus/germany-italy-france-suspend-astrazeneca-shots-amid-safety-fears-disrupting-eu-vaccinations-idUSKBN2B722U">suspension</a> of AstraZeneca vaccinations disrupts plans<br/>* The ECB <a href="https://www.reuters.com/article/us-ecb-policy/ecb-wants-to-keep-yields-in-check-while-economy-heals-lane-tells-ft-idUSKBN2B815W?il=0">seeks to control yields</a> until economic conditions improve<br/>* The situation at the Southwest border is becoming a crisis for Biden due to an influx of migrants<br/>* North Korea <a href="https://www.cnn.com/2021/03/15/politics/north-korea-biden-kim-yo-jong/index.html">issues warnings</a> regarding US-South Korea military exercises<br/>* Markets <a href="https://www.cnbc.com/2021/03/15/why-this-weeks-fed-meeting-could-be-march-madness-for-markets.html">remain focused</a> on the impending Fed meeting<br/>* The pandemic <a href="https://www.wsj.com/articles/the-pandemic-ignited-a-housing-boombut-its-different-from-the-last-one-11615824558?mod=hp_lead_pos5">has led</a> to a unique housing boom<br/>* Facebook <a href="https://www.nytimes.com/2021/03/16/business/media/news-corp-facebook-news.html">will compensate for news content</a> in Australia<br/>* The NY Fed Manufacturing Index (current reading) <a href="https://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">increased</a> to a two-year peak<br/>* The US economic recovery <a href="https://www.ft.com/content/0e9396cf-13b2-4034-ab09-c2366c264f91">is on track to outperform</a> Europe’s rebound:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/03/us.euro_.16mar2021.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-15702" src="https://www.capitalspectator.com/wp-content/uploads/2021/03/us.euro_.16mar2021.png" alt="" width="903" height="665"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-16-march-2021/" title="5:57 am" rel="bookmark"><time class="entry-date" datetime="2021-03-16T05:57:41-04:00">March 16, 2021</time></a>
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    <p>In the trading week concluding on March 12, US real estate investment trusts (REITs) bounced back, achieving the highest performance among the <a href="https://www.capitalspectator.com/risk-premia-forecasts-major-asset-classes-2-march-2021/">major asset classes</a>, which exhibited mixed results overall, as indicated by a set of proxy ETFs.</p>

    <p> <a href="https://www.capitalspectator.com/reits-surged-amid-mixed-run-for-major-asset-classes-last-week/#more-15694" 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/reits-surged-amid-mixed-run-for-major-asset-classes-last-week/" title="7:38 am" rel="bookmark"><time class="entry-date" datetime="2021-03-15T07:38:23-04:00">March 15, 2021</time></a>
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    <p>* President Biden is <a href="https://www.bloomberg.com/news/articles/2021-03-15/biden-eyes-first-major-tax-hike-since-1993-in-next-economic-plan">considering</a> a significant federal tax increase, the first since 1993<br/>* Dr. Fauci cites Europe’s surge in Covid cases as a reason to <a href="https://www.cnbc.com/2021/03/14/fauci-says-europe-covid-surge-is-warning-as-us-lifts-restrictions-.html">maintain mask restrictions</a><br/>* The flow of migrants <a href="https://www.nytimes.com/2021/03/14/world/americas/mexico-border-biden.html?action=click&amp;module=Top%20Stories&amp;pgtype=Homepage">is increasing</a> at the US-Mexico border<br/>* Following the bloodiest day of protests in Myanmar, the military <a href="https://www.bbc.com/news/world-asia-56398001">extends</a> martial law<br/>* Chinese economic activity <a href="https://www.wsj.com/articles/chinas-economic-activity-soars-but-jobless-rate-hits-ceiling-set-by-beijing-11615798508?mod=hp_lead_pos4">surged</a> in January and February<br/>* The unemployment rate for young people in China <a href="https://www.cnbc.com/2021/03/15/chinas-young-people-are-still-having-a-hard-time-finding-jobs.html">remains</a> high at 13.1%<br/>* Emerging markets <a href="https://www.bloomberg.com/news/articles/2021-03-14/rate-hikes-are-coming-to-emerging-markets-with-debt-at-records?srnd=economics-vp">face</a> the risk of increasing rates amid growing debt levels<br/>* Investors often overreact when companies are impacted by natural disasters, according to a <a href="https://www.institutionalinvestor.com/article/b1qxm6g84y210n/Investors-Panic-During-Natural-Disasters-Who-Wins-When-They-Do">study</a><br/>* The US Consumer Sentiment Index <a href="http://www.sca.isr.umich.edu/">rebounded</a> to a one-year high in March:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2021/03/sent.15mar2021.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-15693" src="https://www.capitalspectator.com/wp-content/uploads/2021/03/sent.15mar2021.png" alt="" width="661" height="434"  /></a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-15-march-2021/" title="6:22 am" rel="bookmark"><time class="entry-date" datetime="2021-03-15T06:22:14-04:00">March 15, 2021</time></a>
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