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

● When: The Scientific Secrets of Perfect Timing
By Daniel H. Pink
Summary via publisher (Riverhead Books)
Drawing from an extensive collection of studies across psychology, biology, and economics, Daniel Pink uncovers practical strategies for enhancing our lives, work, and success. This book addresses questions such as: How can we harness daily patterns for optimal scheduling? What breaks significantly boost student performance? How can we transition from a faltering start to a successful reset? Why is it advisable to refrain from visiting hospitals in the afternoon? What benefits do communal singing have, comparable to physical exercise? When is the most favorable time to make significant life choices like changing jobs or getting married?
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The US stock market reached another record high yesterday, further fueling the impressive momentum factor. Currently, all major factor strategies are enjoying strong one-year returns, but the momentum trend stands out as particularly bullish according to various proxy ETFs.
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Trump expected to extend sanctions relief to Iran: Reuters
German Chancellor Merkel’s party moves forward in coalition talks: Reuters
International backlash to Trump’s remarks on immigrants: BBC
China-North Korea trade experiences a significant drop in 2017: CNBC
Wal-Mart raises minimum wage to $11 per hour, citing tax reform: Bloomberg
Wal-Mart to close multiple Sam’s Club locations: USA Today
US jobless claims rise to highest level since September: Dow Jones
Producer price inflation slips in December, marking first decline since 2016: TheStreet.com
Brent crude oil prices briefly surpass $70 per barrel for the first time since 2014: Reuters

We pause our usual market and economic reviews to focus on President Trump’s recent comments regarding US libel laws. His statements on Wednesday indicate that the administration plans to initiate a new effort to modify longstanding legal standards pertaining to the First Amendment and press freedom – fundamental elements of American democracy. While the administration lacks the authority to alter libel laws, and it appears unlikely the Supreme Court would reconsider the issue, a constitutional amendment could theoretically be introduced; however, that remains an improbable avenue, given the complexities involved in legislative processes.
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Trump may be considering withdrawal from NAFTA: Bloomberg
New York City lawsuits against big oil on climate change: AP
IRS faces scrutiny to lessen withholding taxes ahead of elections: Politico
Trump criticizes US libel laws, calling them a “sham”: CNBC
US import prices showed little change in December: Dow Jones
Businesses lower their inflation expectations to around 2.0%: Atlanta Fed
Central bank policy changes regarding bond buying cause concern among investors: NY Times
South Korea intends to ban cryptocurrency trading: Reuters
US wholesale inventories significantly rebounded in December: RTT

What could ignite the next financial crisis? According to Steve Keen, an economics professor at Kingston University, private debt poses the most significant threat. He points out that since the 2008 financial crisis, debt levels have risen, alongside the expectation of increasing interest rates. However, many economists fail to appreciate the gravity of private debt risks, a theme Keen addresses in his recent book: Can We Avoid Another Financial Crisis? He argues that mainstream economists still dismiss the notion that debt levels and changes in debt dynamics matter, despite historical evidence to the contrary. Keen summarizes the implications of debt on economic cycles and assesses the current risks in the US and other economies.
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Federal judge rules in favor of the DACA program: The Hill
Trump expresses willingness to negotiate immigration reforms: Bloomberg
Court decision against GOP regarding gerrymandering: The Atlantic
Iran’s leader calls for retaliation against the US following recent protests: NY Times
S. Korea’s president cites Trump as a factor behind new talks with N. Korea: NY Times
The World Bank forecasts peak global growth for this year: The Telegraph
Job openings in the US have fallen to a six-month low in November: Reuters
Small Business Optimism Index in the US remains near record highs in December: NFIB
Challenges remain for bitcoin ETF approval due to regulatory hurdles: Reuters
US Treasury yields reach 2.55%, the highest in 10 months: Reuters

On January 8, US stocks recorded another record close, marking the fifth consecutive day of upward momentum, as seen in the S&P 500 Index. For much of the past two years, equities have steadily climbed, establishing new highs with remarkably low levels of volatility. While the longevity of this calm remains uncertain, historical trends suggest that periods of low volatility don’t last indefinitely. What indicators can signal a potential shift in this regime? Let’s explore some possibilities, including key metrics to watch for signs that change may be on the horizon.
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North Korea and South Korea held their first meeting in two years: CNN
Risk of a US government shutdown increases: Fiscal Times
Trump administration orders nearly 200,000 Salvadorans to leave the US: Fox
Special Counsel Mueller likely to seek an interview with Trump: CNN
Regulators reject the Energy Secretary’s plan to support coal and nuclear energy: The Hill
US credit card debt reached a record high in November: USA Today
Is Wall Street’s optimism a contrarian signal? Bloomberg
China reportedly takes steps to reduce cryptocurrency mining: TechCrunch
Annual growth for US commercial and industrial lending dips below 1%: St Louis Fed

Equities in emerging markets delivered the strongest performance among major asset classes during the first week of trading in 2018, based on various exchange-traded products. The only asset classes showing a decline in year-to-date performance thus far are US bonds and real estate investment trusts (REITs).
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