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

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    <p>In recent times, foreign fixed-income markets have lost their allure for US investors, except for one notable exception: corporate bonds in emerging markets. So far this year, this segment of global fixed-income securities has shown remarkable strength, as indicated by a specific set of ETFs through the market close on May 9. Meanwhile, other sectors are struggling to find momentum.</p>
    <p><a href="https://www.capitalspectator.com/emerging-markets-corporates-are-upside-outlier-for-global-bonds/#more-22171" 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/emerging-markets-corporates-are-upside-outlier-for-global-bonds/" title="7:37 am" rel="bookmark"><time class="entry-date" datetime="2024-05-10T07:37:56-04:00">May 10, 2024</time></a>
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    <p>* Defensive stocks are <a href="https://finance.yahoo.com/news/recession-proof-stocks-are-leading-the-markets-latest-leg-higher-135138102.html">fueling</a> the ongoing market rally.<br /> * The 30-year mortgage rate <a href="https://abcnews.go.com/Business/wireStory/average-long-term-us-mortgage-rate-snaps-week-110076483">drops</a> for the first time in four weeks.<br /> * Historical analysis suggests that lengthy pauses between Fed actions <a href="https://www.cnbc.com/2024/05/09/long-pauses-between-fed-actions-are-historically-good-for-stocks.html">benefit stocks</a> significantly.<br /> * The UK experiences a rebound in economic activity <a href="https://www.cnn.com/2024/05/10/economy/uk-gdp-growth-recession-elections/index.html">as it exits recession</a>.<br /> * US jobless claims <a href="https://www.nasdaq.com/articles/u.s.-weekly-jobless-claims-climb-to-highest-level-since-august">rise</a> to their highest point since August:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2024/05/claims2.10may2024.png"><img fetchpriority="high" decoding="async" class="alignnone size-full wp-image-22169" src="https://www.capitalspectator.com/wp-content/uploads/2024/05/claims2.10may2024.png" alt="" width="1200" height="753"   /></a></p>
    <p><a href="https://www.capitalspectator.com/macro-briefing-10-may-2024/#more-22167" 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/macro-briefing-10-may-2024/" title="6:42 am" rel="bookmark"><time class="entry-date" datetime="2024-05-10T06:42:59-04:00">May 10, 2024</time></a>
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    <p>Monitoring recession risk can take many forms, yet relying on a single indicator is fraught with pitfalls. It's vital to examine a broad range of metrics to cut through the noise. In the quest for early warning signals, focusing on the labor market is particularly essential, as it plays a critical role in determining economic strength and weakness. While caution remains prudent, certain indicators of the labor market's shifts are raising alarms, making it necessary to delve deeper.</p>
    <p><a href="https://www.capitalspectator.com/us-labor-market-cycle-has-peaked-will-recession-soon-follow/#more-22162" 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-labor-market-cycle-has-peaked-will-recession-soon-follow/" title="7:21 am" rel="bookmark"><time class="entry-date" datetime="2024-05-09T07:21:59-04:00">May 9, 2024</time></a>
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    <p>* Boston Fed President <a href="https://finance.yahoo.com/news/collins-becomes-latest-fed-official-to-warn-rates-will-likely-stay-higher-for-longer-154507285.html">aligns with the sentiment</a> that interest rates will remain elevated for an extended period.<br /> * China’s factory surplus <a href="https://www.straitstimes.com/business/china-s-factory-glut-alarms-the-world-but-there-s-no-quick-fix">concerns</a> the global market, with no quick solutions in sight.<br /> * China's imports <a href="https://www.cnbc.com/2024/05/09/china-trade-data-april-exports-imports.html">surge</a> in April, surpassing expectations by a significant margin.<br /> * Americans <a href="https://www.investopedia.com/why-americans-are-cutting-back-on-credit-card-debt-8645241">dramatically reduced</a> credit card debt in March.<br /> * US stocks (S&P 500) pull back but remain below the record high set in March:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2024/05/sp500.09may2024.png"><img decoding="async" class="alignnone size-full wp-image-22161" src="https://www.capitalspectator.com/wp-content/uploads/2024/05/sp500.09may2024.png" alt="" width="900" height="396"   /></a></p>
    <p><a href="https://www.capitalspectator.com/macro-briefing-9-may-2024/#more-22159" 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/macro-briefing-9-may-2024/" title="6:26 am" rel="bookmark"><time class="entry-date" datetime="2024-05-09T06:26:13-04:00">May 9, 2024</time></a>
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    <p>The housing market is highly sensitive to interest rates and plays a vital role in the business cycle. Given the sharp increase in interest rates over the past two years, one might assume that housing prices would have tumbled. While there was some initial impact, the year-over-year change in US house prices is now showing an uptick again. Although the recent rebound is moderate compared to the explosive growth of 2021-2022, it is noteworthy that housing prices appear resilient following the Federal Reserve's most aggressive tightening policy in decades—without yet experiencing any rate cuts.</p>
    <p><a href="https://www.capitalspectator.com/will-housing-inflation-keep-interest-rates-higher-for-longer/#more-22154" 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-housing-inflation-keep-interest-rates-higher-for-longer/" title="7:45 am" rel="bookmark"><time class="entry-date" datetime="2024-05-08T07:45:21-04:00">May 8, 2024</time></a>
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    <p>* Morningstar forecasts that US economic growth will continue to decline until the Federal Reserve reduces interest rates: <a href="https://www.morningstar.com/economy/we-expect-gdp-growth-weaken-until-fed-starts-cutting-interest-rates">Morningstar</a>.<br /> * Rents are anticipated to be the <a href="https://finance.yahoo.com/news/rents-set-last-domino-fall-230000262.html">last hurdle</a> in controlling global inflation.<br /> * Minneapolis Fed President indicates that the Fed may need to maintain steady rates throughout 2024, <a href="https://www.reuters.com/markets/rates-bonds/fed-may-need-hold-rates-steady-all-year-kashkari-says-2024-05-07/">according to news reports</a>.<br /> * US consumer credit growth <a href="https://www.forexfactory.com/news/1282641-us-consumer-credit-growth-slows-in-march">slowed</a> in March.<br /> * Projections indicate that federal subsidies for semiconductor companies will stimulate industry growth…<br /> * The Semiconductor ETF (SMH) approaches record highs:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2024/05/smh.08may2024.png"><img decoding="async" class="alignnone size-full wp-image-22152" src="https://www.capitalspectator.com/wp-content/uploads/2024/05/smh.08may2024.png" alt="" width="900" height="396"   /></a></p>
    <p><a href="https://www.capitalspectator.com/macro-briefing-8-may-2024/#more-22151" 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/macro-briefing-8-may-2024/" title="6:29 am" rel="bookmark"><time class="entry-date" datetime="2024-05-08T06:29:57-04:00">May 8, 2024</time></a>
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    <p>This year, the US stock market's positive momentum has largely been driven by rallies in the communications services and energy sectors, based on a selection of ETFs through the market close on May 6. Both sectors have been outperforming the overall market and their peers.</p>
    <p><a href="https://www.capitalspectator.com/communications-energy-are-2024s-sector-leaders-for-us-stocks/#more-22148" 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/communications-energy-are-2024s-sector-leaders-for-us-stocks/" title="7:12 am" rel="bookmark"><time class="entry-date" datetime="2024-05-07T07:12:03-04:00">May 7, 2024</time></a>
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    <p>* In April, global economic growth reached a 10-month high: <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/7a114c7d7f124b99a4935c574aa1e26e">PMI survey</a>.<br /> * The fiscal outlook for America remains <a href="https://www.economist.com/briefing/2024/05/02/americas-fiscal-outlook-is-disastrous-but-forgotten">dire,</a> yet it is largely overlooked on the campaign trail.<br /> * The Sahm Indicator <a href="https://fred.stlouisfed.org/series/SAHMCURRENT">rises</a> for the third consecutive month in April, nearing a recession tipping point.<br /> * Expectations of homeownership among renters have fallen to a record low: <a href="https://www.cnbc.com/2024/05/06/renters-hopes-of-being-able-to-buy-a-home-have-fallen-to-a-record-low-new-york-fed-survey-shows.html">NY Fed survey</a>.<br /> * The US 10-year Treasury yield has dropped for the fifth consecutive day to its lowest level since December:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2024/05/ten.yr_.07may2024.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-22147" src="https://www.capitalspectator.com/wp-content/uploads/2024/05/ten.yr_.07may2024.png" alt="" width="900" height="396"   /></a></p>
    <p><a href="https://www.capitalspectator.com/macro-briefing-7-may-2024/#more-22145" 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/macro-briefing-7-may-2024/" title="6:38 am" rel="bookmark"><time class="entry-date" datetime="2024-05-07T06:38:11-04:00">May 7, 2024</time></a>
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    <p>April proved to be a challenging month for investors, but the early signs of a rebound in May have rejuvenated hopes that the worst has passed. A key driver of this shift in sentiment has been the US payroll data, which indicated a significantly weaker-than-expected increase in April. This news has been interpreted positively, as it raises the likelihood that the Federal Reserve will consider cutting interest rates later this year.</p>
    <p><a href="https://www.capitalspectator.com/was-aprils-correction-noise-or-signal-for-global-markets/#more-22140" 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/was-aprils-correction-noise-or-signal-for-global-markets/" title="7:47 am" rel="bookmark"><time class="entry-date" datetime="2024-05-06T07:47:27-04:00">May 6, 2024</time></a>
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    <p>* The risk of a hard landing for the US economy is increasing, <a href="https://finance.yahoo.com/news/u-economy-headed-hard-landing-222148023.html">according to predictions</a> from Citi economists.<br /> * Eurozone business activity <a href="https://www.cnbc.com/2024/05/06/euro-zone-business-activity-grows-at-fastest-pace-in-almost-a-year-pmi-shows.html">grows</a> at its fastest rate in nearly a year.<br /> * China’s role is seen as a <a href="https://www.nytimes.com/2024/05/05/business/china-gold-price.html">key driver</a> behind the recent surge in gold prices.<br /> * The demand for natural gas may skyrocket due to AI developments, as <a href="https://www.cnbc.com/2024/05/05/ai-could-drive-natural-gas-boom-as-utilities-face-surging-electric-demand.html">suggested</a> by Wells Fargo.<br /> * Current trends indicate a cooling US economy as hiring has <a href="https://www.reuters.com/markets/us/us-job-growth-slows-april-unemployment-rate-rises-39-2024-05-03/">slowed</a> more than anticipated in April:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2024/05/payrolls.06may2024.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-22137" src="https://www.capitalspectator.com/wp-content/uploads/2024/05/payrolls.06may2024.png" alt="" width="598" height="497"   /></a></p>
    <p><a href="https://www.capitalspectator.com/macro-briefing-6-may-2024/#more-22135" 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/macro-briefing-6-may-2024/" title="6:37 am" rel="bookmark"><time class="entry-date" datetime="2024-05-06T06:37:09-04:00">May 6, 2024</time></a>
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