Recent Economic Developments
The Trump administration is preparing to implement a robust trade crackdown: Politico
French President advocates for EU-China collaboration on trade and climate issues: WaPo
Cleveland Fed President states that rate hikes are a last resort for addressing financial risks: Reuters
US job growth experienced unexpected sluggishness in December: CNBC
US factory orders increased for the fourth consecutive month in November: MarketWatch
ISM reports that growth in the US services sector slowed for the second month in December: RTT
White House Chief Economist sees no necessity for accelerated rate hikes: Bloomberg
The US trade deficit expanded to the largest gap in six years in November: RTT
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In December, US corporate payrolls grew by only 146,000, a disappointing figure compared to November’s robust increase of 239,000, based on today’s employment report from the Labor Department. Analysts had anticipated a stronger rise, estimating an increase of 185,000 according to Econoday.com’s consensus. This weaker growth has maintained a steady year-over-year trend, suggesting that the labor market may face more significant challenges in 2018.
This week, the 10-year inflation expectations as estimated from the Treasury market surpassed the Federal Reserve’s target of 2%. This marks the first instance this benchmark has been crossed since last March, based on daily yield-spread information from Treasury.gov. Official inflation data continues to show pricing pressures slightly below the Fed’s target, yet the Treasury market anticipates an acceleration in inflation over the upcoming year.
North Korea is open to discussions with South Korea next week: Reuters
Global debt reached an unprecedented $233 trillion during the third quarter of 2017: Bloomberg
A severe winter storm impacted the US Northeast on Thursday: Reuters
Trump plans to permit oil drilling across most US coastal waters: NY Times
Private employment in the US surged by 250,000 in December: ADP
US jobless claims experienced an increase last week but remain at historic lows: Dow Jones
Global economic output strengthened, reaching a 2.5-year high in December: IHS Markit
SEC warns investors: Navigate cryptocurrency investments at your own risk: The Hill
Job cuts at US companies dropped to the lowest level since 1990: CG&C
Natural disaster losses for insurers in 2017 reached a record $135 billion: Munich Re
The current bull market is the second longest on record—when will it come to an end? NY Times
PMI reports that growth in the US services sector slowed to a seven-month low in December: IHS Markit
The technology sector continues to dominate US equity market performance, based on the one-year returns from a range of ETFs. Although most sectors show positive annual growth, the technology sector’s rate of increase remains particularly pronounced.
New security flaws in computers worldwide pose significant risks: c|net
A severe winter storm impacts the East Coast of the US: Fox
Oil prices reach their highest levels since 2015: Reuters
Countries contemplate launching virtual currencies to bypass sanctions: NY Times
Minutes from the Fed indicate ongoing support for gradual rate increases: Bloomberg
ISM indicates that US factory activity surged in December, reaching the second highest level in six years: Reuters
PMI reveals that China’s services sector growth reached its highest in over three years: Reuters
US auto sales declined by 2% in 2017—the first annual drop since 2009—but the overall pace remains healthy: AP
Broad US stock indices reached new record highs: RTT
The CBOE VIX Volatility Index saw another decrease, nearing record lows: TradingGods.net
Historically, stock indices have predominantly employed market capitalization for weighting within index funds; however, a recently introduced ETF challenges this convention. The Reverse Cap Weighted US Large Cap ETF (RVRS) retains well-known S&P 500 stocks but assigns weights in an inverse manner relative to their market capitalization. In simpler terms, the largest stocks receive the smallest weights, while smaller companies gain larger proportions. What drives this unconventional approach? Could it simply be another iteration utilizing the small-cap factor? The Capital Spectator engaged Herb Blank, a senior consultant at Global Finesse, to shed light on this strategy’s rationale. According to a recent study titled “The Case for Reverse-Cap-Weighted Indexing”, conducted by Blank and collaborator Qiao Duan, reverse weighting has outperformed the traditional S&P 500 over the past ten years leading up to 2016. The findings suggest that this innovative weighting method could offer superior returns.
South Korea extends an invitation for border talks with North Korea: NY Times
Will Mitt Romney, a potential challenger to Trump, consider running for Utah’s Senate seat? CNN
Is China’s growing economic influence in Latin America a concern for the US? Bloomberg
Trump threatens to cut aid to Palestine: Haaretz
Germany’s unemployment rate dropped to a record low in December: Bloomberg
Global Manufacturing PMI concludes 2017 at a seven-year peak: IHS Markit
US Manufacturing PMI escalated to a two-year pinnacle in December: IHS Markit
Gold prices reached their highest close since September: Reuters
In 2017, major asset classes experienced an uninterrupted bull market, driven by widespread gains across all significant indices within the global markets. Even cash managed to achieve modest gains during this period.
In this article, we have outlined significant economic events and trends happening as of early January 2018, covering themes from job growth fluctuations to market performance. The macroeconomic landscape is shifting, revealing both challenges and opportunities on the horizon. We must keep a close eye on these developments as they evolve through the year.
