We are pleased to announce the publication of the August 27 edition of The US Business Cycle Risk Report, which has been sent to subscribers. This edition introduces a new feature: a forecast of GDP estimates for the upcoming quarterly report, compiled from various sources and methodologies. To learn more about subscription options and access a recent sample, please visit:
By Geoff Dembicki
Review via the New York Journal of Books
In his book, Dembicki argues that millennials represent a significant challenge to capitalism. Their reluctance to own cars, houses, and other material possessions is fueled by a sharing economy that includes services like Lyft, Airbnb, and the rental of goods. This shift leads to reduced demand for automobiles, which subsequently diminishes the market for oil, impacting the petroleum industry. Although “petrostates” will still benefit from the plastics and chemicals sectors that rely on oil, a substantial part of their market is decreasing.
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Cliff Asness, co-founder of AQR Capital Management, has an appeal: “Please Stop Talking About the VIX So Much.” He points out that the popular risk gauge, which tracks the implied volatility of the S&P 500, has seen an unusually low level in its recent uptick. Asness finds the obsession with the VIX to be quite irritating.
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While relying solely on one data point can be risky for analyzing the business cycle, the continuing decline in commercial and industrial (C&I) lending is capturing attention. Although this downward trend is concerning, it is too early to reach definitive conclusions about the US economy since most key indicators are still showing positive trends.
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Over the past year, financial and technology stocks have emerged as the leading sectors, according to data from a selection of ETFs. Although the bullish trend has moderated in recent weeks, both sectors continue to outperform the rest of the market.
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The ongoing trend of low inflation will be a focal point at the Federal Reserve’s upcoming Jackson Hole Symposium, beginning Friday (August 24). However, as prominent monetary leaders prepare to discuss “Fostering a Dynamic Global Economy,” Treasury yields are once again declining, suggesting that market participants expect weakened price pressure.
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According to the latest update from the Chicago Fed National Activity Index (CFNAI), the US economy showed a growth rate in July that was slightly below the historical average. The index’s monthly reading fell from +0.16 in June to -0.01, indicating economic activity just under the historical trend.
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Last week, equities and fixed-income securities in emerging markets led the pack, realizing the greatest gains among the major asset classes, based on various exchange-traded products. Conversely, US stocks experienced a decline for the second consecutive week, marking the first back-to-back losses in three months, according to the Vanguard Total Stock Market (VTI).
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By Joel Tillinghast
Summary via publisher (Columbia University Press)
Investors often face the temptation of inaccurate or incomplete information. A fortunate gamble might yield a significant profit, leading to overconfidence, but subsequent high-stake decisions can prove disastrous, both financially and emotionally. Even seasoned investors can be blindsided: unexpected news may disrupt their investments, herd behavior among peers can distort market perceptions, and unqualified CEOs may negatively impact company direction. So, how can investors maintain clarity in such an unpredictable field? If past successes cannot be relied upon to forecast future risks, how can they navigate uncertain waters?
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The Capital Spectator headquarters will be closed for an extended weekend, starting… now. Regular programming will resume shortly — specifically, on Monday, August 21. Cheers!
