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

<div class="entry-content">

    <p>The yield on the 10-year Treasury bond remains significantly higher than the fair-value estimate provided by CapitalSpectator.com. This discrepancy indicates that any further increases in the benchmark rate are likely to encounter substantial resistance.</p>

    <p> <a href="https://www.capitalspectator.com/10-year-us-treasury-yield-fair-value-estimate-11-august-2023/#more-20660" 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/10-year-us-treasury-yield-fair-value-estimate-11-august-2023/" title="7:29 am" rel="bookmark"><time class="entry-date" datetime="2023-08-11T07:29:31-04:00">August 11, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p>* President Biden <a href="https://www.theguardian.com/us-news/2023/aug/11/joe-biden-china-economy-time-bomb">describes</a> China’s economic challenges as a “ticking time bomb.”<br/>* A major Chinese property developer <a href="https://www.bbc.com/news/business-66470170">forecasts</a> substantial losses.<br/>* The UK economy <a href="https://www.cnbc.com/2023/08/11/uk-economy-posts-surprise-second-quarter-growth-as-households-kept-spending.html">exceeded</a> expectations with growth in Q2.<br/>* Scientists from NOAA <a href="https://www.cnbc.com/2023/08/10/noaa-record-hot-ocean-temps-could-turbocharge-the-hurricane-season.html">warn</a> that record-high ocean temperatures may intensify hurricane activity.<br/>* Jobless claims in the US <a href="https://apnews.com/article/unemployment-benefits-jobless-claims-layoffs-labor-facd1c73adc04cd88312bfd27382dd8a">rose</a> to a five-week peak, though not significantly concerning.<br/>* Headline consumer inflation in the US <a href="https://www.cnbc.com/2023/08/10/cpi-inflation-july-2023-.html">increased</a>, while core CPI remained stable in July:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/08/cpi.11aug2023.png"><img fetchpriority="high" decoding="async" class="alignnone size-full wp-image-20658" src="https://www.capitalspectator.com/wp-content/uploads/2023/08/cpi.11aug2023.png" alt="" width="552" height="456"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-11-august-2023/#more-20657" 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-11-august-2023/" title="6:28 am" rel="bookmark"><time class="entry-date" datetime="2023-08-11T06:28:34-04:00">August 11, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">

    <p>The worldwide rise in interest rates may be nearing its peak, a notion that has contributed to the rise of various overseas bond markets this year, according to a selection of ETFs as of yesterday’s close (August 9).</p>

    <p> <a href="https://www.capitalspectator.com/foreign-bonds-lead-us-fixed-income-so-far-in-2023/#more-20652" 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/foreign-bonds-lead-us-fixed-income-so-far-in-2023/" title="7:57 am" rel="bookmark"><time class="entry-date" datetime="2023-08-10T07:57:05-04:00">August 10, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p>* President Biden <a href="https://www.wsj.com/articles/u-s-and-china-poised-to-drift-further-apart-after-investment-ban-1e37427d?mod=hp_lead_pos1">announces an executive order</a> to redirect certain US investments away from China.<br/>* China <a href="https://www.cnbc.com/2023/08/10/china-slams-biden-order-limiting-us-overseas-technology-investment.html">responds</a> critically to Biden’s restrictions on US technology investments.<br/>* A downturn in global trade <a href="https://www.wsj.com/articles/sputtering-trade-fuels-fears-for-a-connected-world-81c99922?mod=economy_lead_story">raises concerns</a> about a fragmented global economy.<br/>* Veteran economists predict that central banks must maintain rates around 5% <a href="https://www.cnbc.com/2023/08/10/veteran-economist-jim-oneill-says-interest-rates-should-stay-around-5percent-for-longer.html">for an extended period</a>.<br/>* The average mortgage rate in the US <a href="https://www.investopedia.com/mortgage-demand-falls-as-us-credit-downgrade-treasury-yields-push-rates-higher-7574471">climbed</a> to 7.02%, the highest level in nearly 21 years.<br/>* There are five bearish arguments that, so far, <a href="https://www.linkedin.com/pulse/here-five-bearish-arguments-havent-worked-so-far-edward-yardeni/">have not proven true</a>.<br/>* The US Q3 GDP nowcast has been revised upwards to a robust 4.1% per the Atlanta Fed’s <a href="https://www.atlantafed.org/cqer/research/gdpnow">GDPNow model:</a></p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/08/gdpnow.10aug2023.png"><img decoding="async" class="alignnone size-full wp-image-20650" src="https://www.capitalspectator.com/wp-content/uploads/2023/08/gdpnow.10aug2023.png" alt="" width="650" height="509"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-10-august-2023/#more-20649" 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-10-august-2023/" title="6:41 am" rel="bookmark"><time class="entry-date" datetime="2023-08-10T06:41:58-04:00">August 10, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">

    <p>The recent upturn in risk assets has surprised some analysts. Nevertheless, the resurgence of investor confidence appears to be gaining momentum, as indicated by various market behavior metrics derived from ETF pairs as of yesterday’s close (August 8).</p>

    <p> <a href="https://www.capitalspectator.com/markets-continue-to-signal-a-risk-on-bias-prevails/#more-20641" 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/markets-continue-to-signal-a-risk-on-bias-prevails/" title="7:27 am" rel="bookmark"><time class="entry-date" datetime="2023-08-09T07:27:07-04:00">August 9, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p>* The US plans to <a href="https://www.wsj.com/articles/u-s-to-ban-some-investments-in-china-71f519d6">prohibit</a> certain private-equity and venture-capital investments in China.<br/>* Moody’s has indicated it may <a href="https://www.cnn.com/2023/08/08/investing/moodys-credit-ratings-us-banks/index.html">downgrade</a> credit ratings for six significant US banks.<br/>* Economists <a href="https://www.morningstar.com/markets/july-cpi-forecasts-predict-continued-slowing-inflation">anticipate</a> another month of reduced inflation for July.<br/>* The S&P <a href="https://www.ft.com/content/9426937e-28d3-4846-8440-c30583524d4c">will cease</a> ranking companies by environmental, social, and governance risks.<br/>* The US trade deficit <a href="https://news.yahoo.com/us-trade-gap-narrows-june-125958358.html">narrowed</a> in June due to a decrease in imports.<br/>* Consumer inflation in China has turned <a href="https://www.bloomberg.com/news/articles/2023-08-09/china-slides-into-deflation-as-consumer-producer-prices-decline#xj4y7vzkg">negative</a> for the first time since 2020:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/08/china.cpi_.09aug2023.png"><img decoding="async" class="alignnone size-full wp-image-20639" src="https://www.capitalspectator.com/wp-content/uploads/2023/08/china.cpi_.09aug2023.png" alt="" width="1200" height="675"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-9-august-2023/#more-20638" 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-9-august-2023/" title="6:37 am" rel="bookmark"><time class="entry-date" datetime="2023-08-09T06:37:52-04:00">August 9, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">

    <p>Investors appear to believe that the Federal Reserve's interest rate hikes are behind us following a ¼-point increase last month. However, recent remarks from various central bank officials suggest otherwise. Complicating matters are the mixed forecasts ahead of Thursday's (August 10) release of data on US consumer inflation for July.</p>

    <p> <a href="https://www.capitalspectator.com/markets-see-end-of-rate-hikes-as-fed-officials-suggest-otherwise/#more-20631" 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/markets-see-end-of-rate-hikes-as-fed-officials-suggest-otherwise/" title="7:20 am" rel="bookmark"><time class="entry-date" datetime="2023-08-08T07:20:22-04:00">August 8, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p>* China’s exports <a href="https://apnews.com/article/china-trade-economy-united-states-russia-171915b7daf9ba3f8fbd55724680bbb2">fell</a> by the largest margin in over three years in July.<br/>* The NY Fed President <a href="https://www.bloomberg.com/news/articles/2023-08-07/fed-s-williams-tells-nyt-he-sees-restrictive-rates-for-some-time">forecasts</a> that interest rates will remain restrictive for an extended period.<br/>* Global temperatures reached a critical milestone for climate change in July, <a href="https://www.cnn.com/2023/08/08/world/july-climate-record-paris-agreement/index.html">as reported</a>.<br/>* A study reveals that climate change may jeopardize the credit ratings of various nations, <a href="https://www.investing.com/news/economy/climate-change-puts-sovereigns-at-downgrade-risk-study-finds-3146169">indicating risk</a> of downgrades.<br/>* Moody's has <a href="https://news.yahoo.com/moodys-downgrades-10-us-banks-032059018.html">downgraded</a> several small to mid-sized US banks.<br/>* New lending by mortgage REITs has <a href="https://www.wsj.com/articles/new-lending-by-mortgage-reits-has-dried-up-49551878?mod=hp_lead_pos2">plummeted</a>.<br/>* Confidence among US small businesses <a href="https://www.nfib.com/surveys/small-business-economic-trends/">rose</a> to an eight-month high in July:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/08/small.biz_.08aug2023.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-20630" src="https://www.capitalspectator.com/wp-content/uploads/2023/08/small.biz_.08aug2023.png" alt="" width="600" height="349"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-8-august-2023/#more-20628" 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-8-august-2023/" title="6:23 am" rel="bookmark"><time class="entry-date" datetime="2023-08-08T06:23:31-04:00">August 8, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">

    <p>Global markets experienced a downturn last week; however, US equities continue to lead among all major asset classes for the year, according to a selection of ETFs as of Friday’s close (August 4).</p>

    <p> <a href="https://www.capitalspectator.com/us-stocks-still-lead-global-markets-in-2023-by-wide-margin/#more-20626" 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-stocks-still-lead-global-markets-in-2023-by-wide-margin/" title="7:13 am" rel="bookmark"><time class="entry-date" datetime="2023-08-07T07:13:06-04:00">August 7, 2023</time></a>
</footer><!-- .entry-meta -->

<div class="entry-content">
    <p>* Federal Reserve Governor Bowman <a href="https://www.cnbc.com/2023/08/05/feds-bowman-says-more-us-rate-hikes-likely-will-be-needed.html">indicates</a> that additional rate hikes may be necessary to manage inflation.<br/>* JPMorgan <a href="https://www.cnbc.com/2023/08/04/jpmorgan-backs-off-recession-call-even-with-very-elevated-risks.html">revises</a> its recession forecast for the US, despite acknowledging “very elevated” risks.<br/>* Saudi Aramco <a href="https://apnews.com/article/saudi-aramco-oil-earnings-c35f49a90d71c8c33a1683a05e074470">reports</a> a significant profit decline, attributed to lower oil prices.<br/>* US job growth <a href="https://www.cnbc.com/2023/08/04/jobs-report-july-2023-187000-jobs-in-july.html">slowed</a> in July, coming in below expectations.<br/>* US researchers <a href="https://www.axios.com/2023/08/07/nuclear-fusion-net-energy-gain-second-time-us-scientists">successfully achieved</a> net energy gain in a nuclear fusion experiment.<br/>* The trucking company Yellow <a href="https://www.cnn.com/2023/08/07/business/yellow-bankruptcy-filing/index.html">files for bankruptcy</a> after shutting down operations.<br/>* Concerns are rising regarding stress in China’s local government financing vehicles <a href="https://finance.yahoo.com/news/record-china-local-state-borrowers-025601708.html"> amid increasing signs of strain</a>.<br/>* The valuation of the US stock market is considered fair, according to <a href="https://www.morningstar.com/markets/stock-market-now-fairly-valued-what-do-next">Morningstar estimates</a>:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/08/sp500.fv_.07aug2023.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-20625" src="https://www.capitalspectator.com/wp-content/uploads/2023/08/sp500.fv_.07aug2023.png" alt="" width="792" height="598"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-7-august-2023/#more-20623" 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-7-august-2023/" title="6:20 am" rel="bookmark"><time class="entry-date" datetime="2023-08-07T06:20:27-04:00">August 7, 2023</time></a>
</footer><!-- .entry-meta -->