Key Highlights from Current Events:
- China announces it will take countermeasures against the US in the ongoing balloon controversy.
- The European Union has prohibited the sale of gas-powered vehicles starting in 2035.
- US companies are facing an expected earnings recession.
- Sentiment among small US businesses has improved but remains below the 49-year average.
- Logistics managers warn of ongoing inflation risks within supply chains.
- A recent rally in emerging markets is encountering obstacles as the US economy maintains resilience.
- Intensified regulatory actions from US authorities are shaking the cryptocurrency markets.
- US consumer inflation showed a continued easing trend in January.
Diversification into global markets beyond the US has often been a challenging decision for asset allocation over the past decade. While traditional portfolio theory advocates for a mix of international stocks, this strategy has generally underperformed as US equities have significantly outpaced offshore securities. However, the recent rally in foreign stock markets in 2023 indicates that the momentum may be shifting in favor of global investment strategies.
Recent Developments:
- President Biden is expected to appoint Fed Vice Chair Brainard as the chief economic adviser at the White House.
- The Federal Reserve is likely to maintain elevated interest rates for an extended period, according to a prediction from a Wells Fargo economist .
- Today’s CPI report will focus on the concept of supercore inflation, which is gaining attention.
- US consumers continue to spend despite rising inflation rates.
- Japan’s economy grew by 1.1% in 2022, a decline from the 2.1% increase in 2021.
- The new head of Japan’s central bank has been announced, marking the first leadership change in a decade.
- Ford plans to invest $3.5 billion in an electric vehicle battery plant in Michigan.
- The two-year US Treasury yield, a rate sensitive to policy changes, has ticked up to a three-month high.
Last week saw a bumpy ride for this year’s upswing in global markets, except for commodities, as indicated by a set of ETFs through Friday’s close (February 10).
Current Events Overview:
- The US has shot down multiple aerial objects over North America.
- Some economists are considering the possibility of an economic growth surge in the US.
- Concerns about a potential US debt crisis are deemed exaggerated by economist Barry Eichengreen, according to a recent article.
- This week’s US consumer inflation data will challenge disinflation optimism.
- The risk of recession appears lower, attributed to labor hoarding, as analyzed.
- Could rising yields in Japan affect assets residing overseas?
- US home prices are expected to decline further despite lower rates, according to an expert forecast.
- A recent survey revealed that half of Americans feel they are worse off than a year ago, findings from Gallup indicate.
- The US consumer inflation rate was adjusted upwards for December.
- The US population growth trend is increasingly driven by net immigration, as projected by the CBO .
Dougald Hine
Summary via the publisher (Chelsea Green Publishing)
In his thoughtfully researched prose, Hine illustrates how our over-dependence on a singular scientific perspective has clouded our understanding of the crises facing us. He argues that this reliance has often led to solutions that may exacerbate existing issues. In “At Work in the Ruins,” Hine reflects on the peculiar times we are navigating and examines our historical tendency to demand too much from science. The book also explores how we can regain our focus and what meaningful actions we should prioritize in light of the troubling circumstances around us.
Following a difficult year, US fixed-income securities have began to recover some of their losses in 2023, according to various ETFs tracked as of February 9. However, with the Federal Reserve’s aim to continue raising interest rates to combat inflation, the outlook for bonds remains uncertain.
Latest News Updates:
- The US appears ready to further restrict technology exports to China following the balloon incident.
- Russia plans to reduce oil output by 5% in response to Western price caps.
- The UK economy stagnated in the fourth quarter.
- As China’s economy reopens, inflation is beginning to rise.
- The risk of a US recession seems to be decreasing, according to analysts .
- Is the current rush into artificial intelligence poised to become the next bubble on Wall Street?
- The US Energy Department will lend $2 billion to a battery recycling firm.
- Yahoo is reportedly planning to lay off 20% of its workforce this year.
- Although US jobless claims remain low, they are showing an upward trend year over year:
This year’s rebounds in asset prices globally indicate a shift in investor sentiment towards risk-taking following a defensive approach last year. Forecasting future price movements is always a tricky endeavor, particularly in the short term. However, examining key market trends through various ETF pairs can be insightful. As we shall explore, certain market segments suggest the possibility of a new bull run; nevertheless, it remains premature to declare definitive trends based on a broad comparison of US stocks to US bonds, which is arguably a more reliable gauge. Let’s delve deeper into the current market dynamics.
In Summary:
- Despite heightened US-China tensions, trade between both nations persists.
- Federal Reserve officials reinforce the need for elevated rates to manage inflation.
- According to US officials, China has deployed surveillance balloons globally .
- Disney has announced 7,000 layoffs as challenges in its streaming sector grow.
- Credit Suisse reported sizable annual losses amid ongoing restructuring.
- Mortgage refinance requests increased as interest rates dropped for the fifth consecutive week.
- JPMorgan is reportedly laying off numerous mortgage staff members.
- The prices of commodities are nearing their lowest point in over a year:
