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

<div class="entry-content">

    <p>The US stock market is poised to be the standout performer among major asset classes in 2023, a trend largely driven by the impressive gains of big-tech stocks. Excluding these influential companies, the overall returns on US equities would appear much less impressive, aligning more closely with the yields seen in money-market funds.</p>

    <p> <a href="https://www.capitalspectator.com/will-us-stocks-lead-again-in-2024-big-tech-has-the-answer/#more-21186" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
</div><!-- .entry-content -->
<footer class="entry-meta">
    By James Picerno | <a href="https://www.capitalspectator.com/will-us-stocks-lead-again-in-2024-big-tech-has-the-answer/" title="7:58 am" rel="bookmark"><time class="entry-date" datetime="2023-11-27T07:58:44-05:00">November 27, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p>* Investors are seeing <a href="https://www.wsj.com/finance/investing/investors-see-interest-rate-cuts-coming-soon-recession-or-not-d30646c9?mod=hp_lead_pos1">rising probabilities</a> of interest rate cuts within the next four months.<br/>* Black Friday sales reached a record-breaking $9.8 billion, an increase of 7.5% from last year, according to <a href="https://www.cnbc.com/2023/11/25/black-friday-shoppers-spent-a-record-9point8-billion-in-us-online-sales-up-7point5percent-from-last-year.html">reports</a>.<br/>* Could the <a href="https://www.wsj.com/finance/stocks/investors-are-hungry-for-riskand-holding-record-cash-sums-6fe43275?mod=hp_lead_pos1">growth</a> in money-market funds be a positive indicator for the broader market?<br/>* An analysis <a href="https://www.nytimes.com/2023/11/24/business/stock-market-hold-sell-timing.html">reaffirms</a> that buy-and-hold strategies continue to outperform timing strategies.<br/>* Some economists are <a href="https://www.bloomberg.com/opinion/articles/2023-11-24/economists-may-have-been-flying-blind-all-along?srnd=prognosis">questioning</a> their data accuracy due to declining survey response rates.<br/>* The latest PMI survey indicates that US economic activity remained lackluster in November.</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/11/pmi.27nov2023.png"><img fetchpriority="high" decoding="async" class="alignnone size-full wp-image-21183" src="https://www.capitalspectator.com/wp-content/uploads/2023/11/pmi.27nov2023.png" alt="" width="668" height="457"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-27-november-2023/#more-21182" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
</div><!-- .entry-content -->
<footer class="entry-meta">
    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-27-november-2023/" title="6:37 am" rel="bookmark"><time class="entry-date" datetime="2023-11-27T06:37:47-05:00">November 27, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/11/thanksgiving.2023.png"><img decoding="async" class="wp-image-21178 alignright" src="https://www.capitalspectator.com/wp-content/uploads/2023/11/thanksgiving.2023.png" alt="" width="266" height="172"  /></a>Although it’s only Tuesday, the holiday week is already in full swing at The Capital Spectator headquarters. We’ll be back with fresh insights on Monday, November 27. Until then, Happy Thanksgiving!</p>
</div><!-- .entry-content -->
<footer class="entry-meta">
    By James Picerno | <a href="https://www.capitalspectator.com/the-week-ends-now/" title="4:56 am" rel="bookmark"><time class="entry-date" datetime="2023-11-21T04:56:00-05:00">November 21, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p>Investor sentiment appears to be rebounding as US stocks have experienced a three-week rally, driven by optimism that the Federal Reserve will pause its rate hikes and may soon start cutting rates.</p>

    <p> <a href="https://www.capitalspectator.com/rally-in-us-stocks-inspires-bullish-outlook/#more-21172" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
</div><!-- .entry-content -->
<footer class="entry-meta">
    By James Picerno | <a href="https://www.capitalspectator.com/rally-in-us-stocks-inspires-bullish-outlook/" title="8:03 am" rel="bookmark"><time class="entry-date" datetime="2023-11-20T08:03:49-05:00">November 20, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p>* Microsoft <a href="https://www.theverge.com/2023/11/20/23968829/microsoft-hires-sam-altman-greg-brockman-employees-openai">hires</a> Sam Altman, the former CEO of OpenAI, known for ChatGPT.<br/>* Radical libertarian populist Javier Milei <a href="https://www.npr.org/2023/11/20/1214109123/radical-libertarian-populist-javier-milei-was-elected-president-of-argentina">is elected</a> president of Argentina.<br/>* Positive earnings surprises have been a key factor in driving the stock market rally, according to a recent <a href="https://finance.yahoo.com/news/stock-market-just-avoided-earnings-211501460.html">analysis</a>.<br/>* The strong labor market is a major reason why the US <a href="https://www.ibtimes.com/why-high-interest-rates-have-not-pushed-us-economy-recession-yet-3718749">is avoiding a recession</a> despite rising interest rates.<br/>* A decrease in foreign demand for US Treasuries <a href="https://www.wsj.com/finance/investing/where-have-all-the-foreign-buyers-gone-for-u-s-treasury-debt-3db75625?mod=economy_lead_story">has been noted</a> as supply increases.<br/>* US housing starts <a href="https://www.marketwatch.com/story/u-s-housing-starts-rise-for-the-second-straight-month-80f18869">rose</a> for the second month in October.<br/>* OPEC+ <a href="https://www.reuters.com/business/energy/opec-consider-whether-more-oil-cuts-needed-sources-2023-11-17/">is considering</a> further production cuts as oil prices decline:.</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/11/oil.20nov2023.png"><img decoding="async" class="alignnone size-full wp-image-21171" src="https://www.capitalspectator.com/wp-content/uploads/2023/11/oil.20nov2023.png" alt="" width="700" height="312"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-20-november-2023/#more-21170" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
</div><!-- .entry-content -->
<footer class="entry-meta">
    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-20-november-2023/" title="6:56 am" rel="bookmark"><time class="entry-date" datetime="2023-11-20T06:56:22-05:00">November 20, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/11/friedman.18nov2023.png"><img loading="lazy" decoding="async" class="wp-image-21144 alignleft" src="https://www.capitalspectator.com/wp-content/uploads/2023/11/friedman.18nov2023.png" alt="" width="140" height="200"/></a>● <a style="font-size: inherit;" href="https://amzn.to/3FYFgDf">Milton Friedman: The Last Conservative</a><br/>Jennifer Burns<br/><strong><a href="https://newrepublic.com/article/175932/milton-friedman-chicagonomics-end-reign">Review</a> via The New Republic</strong><br/>In her biography of economist Milton Friedman, Jennifer Burns explores his controversial legacy. Known for advocating neoliberalism, Friedman’s ideas on the benefits of markets reached wide audiences through popular books and television. Burns argues that he laid the foundational beliefs that fueled 20th-century American conservatism. While some regard him as a visionary who championed capitalism, others criticize his role in enabling a system that disproportionately benefits the wealthy, especially during the financial crisis of 2008.</p>
    <p> <a href="https://www.capitalspectator.com/book-bits-18-november-2023/#more-21143" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
</div><!-- .entry-content -->
<footer class="entry-meta">
    By James Picerno | <a href="https://www.capitalspectator.com/book-bits-18-november-2023/" title="3:54 am" rel="bookmark"><time class="entry-date" datetime="2023-11-18T03:54:00-05:00">November 18, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p><span style="color: #ff0000;"><strong><a style="color: #ff0000;" href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4589816">Causes of Deviations from a Real Earnings Yield Model of the Equity Premium</a></strong></span><br/>Austin Murphy and Zeina N. Alsalman (Oakland University)<br/><strong>October 2023</strong><br/><em>A market-driven analysis of inflation alongside equity earnings yields accounts for much of the variability in stock market returns over extended periods. Deviations from forecasts are found to correlate negatively with current inflation rates across various time horizons. Existing inflation has been linked positively with future real profit growth, demonstrating a complex dynamic between inflation and equity returns. These findings bolster the theory that equity returns tend to move in tandem with inflationary pressures.</em></p>
    <p> <a href="https://www.capitalspectator.com/research-review-17-november-2023-return-expectations/#more-21164" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
</div><!-- .entry-content -->
<footer class="entry-meta">
    By James Picerno | <a href="https://www.capitalspectator.com/research-review-17-november-2023-return-expectations/" title="7:28 am" rel="bookmark"><time class="entry-date" datetime="2023-11-17T07:28:37-05:00">November 17, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p>* A soft landing for the US economy seems achievable, according to <a href="https://www.ibtimes.com/us-fed-governor-says-soft-landing-possible-3718742">Fed Governor Lisa Cook</a>.<br/>* The Fed may <a href="https://finance.yahoo.com/news/clear-inflation-fed-could-cut-223722409.html">consider rate cuts</a> as early as March, suggests Wharton professor Jeremy Siegel.<br/>* Steering clear of China has proven a <a href="https://www.wsj.com/finance/investing/avoiding-china-has-been-a-winning-investment-strategy-but-it-isnt-easy-ea48de8d?mod=hp_lead_pos1">successful strategy</a> in emerging-market investments.<br/>* Industrial production in the US <a href="https://www.industryweek.com/the-economy/article/21277510/us-industrial-production-falls-in-october-due-to-strikes">declined</a> in October, largely affected by labor strikes.<br/>* The sentiment among US homebuilders <a href="https://tradingeconomics.com/united-states/nahb-housing-market-index">dipped</a> to an 11-month low in November.<br/>* Jobless claims in the US <a href="https://www.rttnews.com/3406059/u-s-weekly-jobless-claims-reach-nearly-three-month-high.aspx">rose</a> to their highest level in three months:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/11/claims.16nov2023.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-21162" src="https://www.capitalspectator.com/wp-content/uploads/2023/11/claims.16nov2023.png" alt="" width="700" height="500"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-17-november-2023/#more-21161" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
</div><!-- .entry-content -->
<footer class="entry-meta">
    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-17-november-2023/" title="6:38 am" rel="bookmark"><time class="entry-date" datetime="2023-11-17T06:38:40-05:00">November 17, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">

    <p>The outlook for US economic activity in the fourth quarter indicates a notable slowdown compared to Q3, although expectations for growth have recently shown signs of improvement, according to updated forecasts.</p>

    <p> <a href="https://www.capitalspectator.com/us-q4-gdp-outlook-appears-on-track-for-modest-growth/#more-21158" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
</div><!-- .entry-content -->
<footer class="entry-meta">
    By James Picerno | <a href="https://www.capitalspectator.com/us-q4-gdp-outlook-appears-on-track-for-modest-growth/" title="7:17 am" rel="bookmark"><time class="entry-date" datetime="2023-11-16T07:17:24-05:00">November 16, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p>* Five <a href="https://www.bbc.com/news/world-us-canada-67433961">key insights</a> from the Biden-Xi discussions.<br/>* The Senate <a href="https://www.cnbc.com/2023/11/16/senate-sends-funding-bill-to-bidens-desk-averting-a-government-shutdown.html">passed a funding bill</a>, preventing a potential government shutdown.<br/>* US wholesale prices <a href="https://www.cnbc.com/2023/11/15/wholesale-prices-fell-0point5percent-in-october-for-biggest-monthly-drop-since-april-2020.html">dropped 0.5%</a> in October, marking the largest decline since April 2020.<br/>* The NY Fed Manufacturing Index shows regional business activity <a href="https://www.newyorkfed.org/survey/empire/empiresurvey_overview">grew</a> "modestly" in November.<br/>* Business inflation expectations <a href="https://www.atlantafed.org/research/inflationproject/bie">remained stable</a> at 2.5% in November.<br/>* US retail sales <a href="https://finance.yahoo.com/news/retail-sales-fall-less-than-forecast-in-october-as-us-consumers-defy-expectations-again-133915577.html">experienced a decline</a> in October, the first monthly drop since March:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/11/retail.16nov2023.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-21156" src="https://www.capitalspectator.com/wp-content/uploads/2023/11/retail.16nov2023.png" alt="" width="651" height="405"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-16-november-2023/#more-21155" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
</div><!-- .entry-content -->
<footer class="entry-meta">
    By James Picerno | <a href="https://www.capitalspectator.com/macro-briefing-16-november-2023/" title="6:36 am" rel="bookmark"><time class="entry-date" datetime="2023-11-16T06:36:11-05:00">November 16, 2023</time></a>
</footer><!-- .entry-meta -->