Last week, I explored the recent performance of the US stock market, evaluating it against historical benchmarks to determine whether the current bull market is indeed extraordinary. The findings revealed that the trailing performance over one and three years is impressive but not unprecedented. However, this analysis was constrained to the last 25 years using a proxy ETF. What happens when we expand this analysis to include a more extensive data set?
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Trump unveils a national security strategy focused on ‘America First’: The Hill
House set to announce a massive $81 billion disaster relief bill: Politico
Homebuilder sentiment in the US reaches an 18-year high in December: Bloomberg
Inflation expectations increase among Japanese companies: RTT
CalPERS raises its bond allocation from 20% to 28%: Reuters
Minneapolis Fed President opposed rate hikes due to low inflation: Reuters
Morgan Stanley: low market volatility “reflects the fundamentals”: MarketWatch
2-year Treasury yield surpasses S&P 500 dividend yield for the first time in a decade: Schwab
Last week, real estate investment trusts (REITs) in the US outperformed amid a generally rising trend across major asset classes, as indicated by a series of exchange-traded products. The sole weak performer during the trading week ending December 15 was US junk bonds.
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Republicans are optimistic that the tax bill will be enacted this week: Reuters
Trump will focus on economic competitiveness in today’s speech: USA Today
US industrial output y-o-y rises 3.4% in November, reaching a three-year high: MarketWatch
NY Fed Manufacturing Index eases in December, still indicating solid growth: NY Fed
Projections indicate the best holiday spending season in seven years: CNBC
Bitcoin futures debuted on a second futures exchange: Bloomberg
Increasing student debt defaults pose risks to the US economy: Business Insider
The GOP’s proposed corporate tax cut may be less substantial than it appears: FiveThirtyEight
By David G. McMillan
Summary via publisher (Palgrave)
This book provides an in-depth analysis of asset price fluctuations. It explores various aspects of stock return predictability, the interplay between stock return and dividend growth predictability, the relationship between stocks and bonds, and the resulting implications for asset price movements. This comprehensive approach offers valuable insights for researchers, practitioners, and policymakers alike.
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The US stock market has seen remarkable gains recently. Has the upswing gone too far? An increasing number of analysts are cautioning against complacency, citing various valuation metrics. For example, the Shiller PE Ratio currently stands at its second-highest level since the late 1800s.
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Final push for the GOP tax bill faces challenges: The Hill
FCC repeals net neutrality regulations: Reuters
Jobless claims in the US fell by 11,000 last week, nearing a multi-decade low: AP
US retail spending accelerated in November, exceeding expectations: IBD
The US Composite Output Index dropped to a 9-month low in December: IHS Markit
US business inventories fell in October amidst robust sales growth: Reuters
Confidence among large Japanese manufacturers rises to an 11-year high: RTT
Eurozone Composite PMI reaches an 82-month high in December: IHS Markit
The Federal Reserve raised interest rates once again yesterday, a move followed by news indicating a downward trend in core consumer inflation. This combination of rate hikes and diminishing pricing pressure raises questions about the Fed’s outlook for 2018.
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Challenges arise for the GOP’s legislative agenda following Alabama election loss: Politico
The Fed increased the target rate by 50 basis points to a range of 1.25%-1.50%: CBS MoneyWatch
Fed Chair Yellen expresses caution regarding growth projections for the GOP tax cut: Bloomberg
US core consumer inflation dipped to 1.7% y-o-y, nearing a two-year low: Reuters
Retail spending growth quickens in China: MNI
China’s central bank unexpectedly raises short-term rates: RTT
UK Parliament votes for final say over Brexit negotiations: Guardian
Fed projects median GDP growth forecast for 2018 raised by 40 bps to 2.5%: Federal Reserve
Creating a “market portfolio” offers clear advantages in portfolio design. By allowing the market to dictate asset weights, this approach remains relatively objective. Historical evidence indicates its competitiveness as a strategy. Even when not strictly adhered to, market weights can provide invaluable guidance in both portfolio construction and management. However, accurately estimating market values can be challenging, particularly when incorporating alternative asset classes and strategies. One solution might be employing a statistical factor model to estimate a market portfolio.
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In this revision, I’ve introduced a structured presentation that is easier to navigate while ensuring that the original message is conveyed effectively. Each section retains its context and relevance, providing a comprehensive overview of recent economic and market developments, along with insightful details and links.
