While visions of sugar plums may not be dancing in my head just yet, I could swear I heard the laughter of a jolly old elf. Perhaps it was just my neighbor’s cat? Regardless, the main office of The Capital Spectator is now closed for the holiday season and will reopen on Tuesday, December 26. Until then, I shall take my leave like the down of a thistle. Cheers!
Factor Zoo (.zip)
Alexander Swade (Lancaster University) et al.
October 2023
The number of factors purportedly influencing the cross-section of stock returns has proliferated over time. This study investigates how much we can condense this ‘factor zoo,’ with an emphasis on elucidating the available alpha rather than analyzing the covariance matrix of factor returns. Our results suggest that around 15 factors are sufficient to encompass the entire factor zoo. This indicates that many factors may be redundant, and merely employing a few factors, as is common in standard asset pricing models, is inadequate. While chosen factor styles maintain persistence, the specific representatives of these styles shift over time, highlighting the need for ongoing factor innovation.
* A small number of Wall Street economists continue to foresee a US recession looming, yet…
* Concerns about a recession are beginning to subside for Americans
* Warner Bros is engaged in merger discussions with Paramount
* Here are five portfolio lessons from 2023, emphasizing: Don’t oppose the Fed
* Existing home sales in the US increased in November—marking the first rise in five months
* The US Consumer Confidence Index rebounded sharply in December:
Market sentiment is increasingly optimistic that the Federal Reserve will begin reducing interest rates in 2024, with the first decrease anticipated during the March 20 monetary policy meeting.
* Chaos in the Red Sea will result in shipping delays, escalating goods prices
* Democrats are pressuring Biden to adopt stricter tech regulations akin to Europe’s
* Canada plans to mandate zero-emission vehicles for all new automobiles by 2035
* 44% of US office loans are in jeopardy, indicating a high risk of bank failures
* US housing starts increased sharply, significantly surpassing expectations in November:
The recent uptick in the S&P 500 Index has positioned it close to its all-time high achieved in January 2022. Nevertheless, some analysts caution that the market’s dependency on a narrow range of Big Tech stocks may expose it to vulnerabilities.
* Attacks in the Red Sea threaten disruptions to the global supply chain
* Is enthusiasm for growing US debt reaching its limits?
* A Fed official suggests that risks of overtightening imply that rate cuts may be necessary, according to reports
* A recent poll indicates a resurgence in demand for stocks driven by expectations of upcoming rate cuts
* The Bank of Japan continues its ultra-accommodative monetary policy amid ‘extremely high’ uncertainties
* Goldman Sachs raises its S&P 500 forecast, citing strong expectations for rate cuts
* US home builder confidence increased in December for the first time in five months:
This year has been favorable for the major asset classes, with one notable exception: commodities. The general decline in raw materials prices stands out amid an otherwise thriving market landscape, as evidenced by a selection of ETFs up to Friday’s close (December 15).
* Declaring a comprehensive victory over inflation is prematurely optimistic, according to the Chicago Fed chairman
* Major central banks have varying strategies regarding initial rate cuts
* Regional bank stocks surged following hints from the Fed about potential rate cuts in 2024
* Corporate bankruptcies are increasing at double-digit rates across most advanced economies
* Analysts predict that oil prices are unlikely to rebound to $100 a barrel in 2024, according to forecasts
* Business activity in the US improved in December according to PMI survey data:
● Political Technology: The Globalisation of Political Manipulation
Andrew Wilson
Summary via publisher (Cambridge U. Press)
The term ‘political technology,’ derived from Russian, refers to the professional engineering of politics. It has transformed Russian politics into a theater of propaganda and has expanded its influence into foreign policy and the manipulation of history. The conflict in Ukraine is one resultant effect. In the West, political consultants and spin doctors influence media narratives and campaigns, simultaneously crafting parallel realities. Nations learn from each other—Hungary has employed political technology to erode democracy, while India’s BJP has used it to wield unprecedented authority. Although notorious practices such as troll farms and data mining are recognized, a global industry has emerged, selling an array of manipulation strategies ranging from astroturfing to propaganda applications. This book underscores that ‘political technology’ encompasses much more than online deception; it involves entire industries dedicated to political engineering.
In summary, the recent entries on The Capital Spectator reflect a holiday hiatus and various economic analyses, highlighting significant market trends and forecasts for the upcoming year. For individuals closely following economic shifts, these insights present a comprehensive view of current events shaping the financial landscape.
