Capital Spectator: Investing, Asset Allocation, and Economic Insights

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    <p>Last year, the energy sector was a focal point for investors, but as we move through 2023, it appears that a shift in sector leadership may be on the horizon, as indicated by recent trends in sector ETFs observed by January 25 market close.</p>

    <p> <a href="https://www.capitalspectator.com/is-rally-in-communications-stocks-sign-of-new-sector-leadership/#more-19562" 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/is-rally-in-communications-stocks-sign-of-new-sector-leadership/" title="7:07 am" rel="bookmark"><time class="entry-date" datetime="2023-01-26T07:07:21-05:00">January 26, 2023</time></a>
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    <p>* Russia intensifies attacks on Ukraine, which <a href="https://apnews.com/article/russia-ukraine-politics-government-military-technology-1982a1e06b21743ab6c5c4eccf91772b?utm_source=homepage&amp;utm_medium=TopNews&amp;utm_campaign=position_01">applauds Western plans</a> to provide tanks.<br/> 
    * A hiring surge among small companies <a href="https://www.wsj.com/articles/surge-in-hiring-by-small-business-complicates-feds-effort-to-cool-economy-11674627479?mod=economy_lead_story">complicates</a> the Federal Reserve’s efforts to reduce inflation.<br/> 
    * Senator Manchin <a href="https://apnews.com/article/biden-politics-us-department-of-the-treasury-west-virginia-europe-e4e137b38410f2c6d012b779561557b5">requests a delay</a> on new tax credits for electric vehicles.<br/> 
    * Will an increase in today’s Q4 GDP report <a href="https://www.cnbc.com/2023/01/25/4q-2022-gdp-estimates.html">reduce</a> recession fears?<br/> 
    * Despite easing inflation data, consumer prices <a href="https://www.cnbc.com/2023/01/25/inflation-is-cooling-but-high-prices-will-stick-around.html">remain elevated</a>.<br/> 
    * Investors <a href="https://www.wsj.com/livecoverage/stock-market-news-today-01-25-2023/card/investors-are-watching-bank-layoffs-as-recession-indicator-Y8xClAXxDNxuhUVinlGS">monitor layoffs</a> at investment banks as a potential signal of recession.<br/> 
    * The Google antitrust investigation <a href="https://gizmodo.com/google-bing-microsoft-chatgpt-ai-antitrust-doj-screwed-1850029781">threatens</a> its search business supremacy.<br/> 
    * Smartphone shipments <a href="https://www.cnbc.com/2023/01/26/apple-retains-top-smartphone-spot-as-global-shipments-fall-to-2013-low.html">suffer a sharp decline in Q4,</a> marking the largest drop on record.<br/> 
    * Signs of a rebound in US housing demand, as <a href="https://www.redfin.com/news/the-housing-market-has-started-to-recover/">per Redfin</a>:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/01/homebuying1.26jan2023.png"><img fetchpriority="high" decoding="async" class="alignnone size-full wp-image-19560" src="https://www.capitalspectator.com/wp-content/uploads/2023/01/homebuying1.26jan2023.png" alt="" width="459" height="307"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-26-january-2023/#more-19558" 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-26-january-2023/" title="6:17 am" rel="bookmark"><time class="entry-date" datetime="2023-01-26T06:17:51-05:00">January 26, 2023</time></a>
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    <p>The Federal Reserve is projected to moderate its upcoming rate increase to just a quarter-point, the smallest hike since it began raising rates in March 2022. This expectation has raised questions about whether the Fed's tightening measures will finish following the February 1 FOMC meeting.</p>

    <p> <a href="https://www.capitalspectator.com/fed-pivot-watch-25-january-2023/#more-19552" 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/fed-pivot-watch-25-january-2023/" title="7:12 am" rel="bookmark"><time class="entry-date" datetime="2023-01-25T07:12:35-05:00">January 25, 2023</time></a>
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    <p>* The US and Germany <a href="https://www.bloomberg.com/news/articles/2023-01-24/us-set-to-send-ukraine-its-abrams-battle-tank-in-major-reversal?leadSource=uverify%20wall">prepare to announce</a> the delivery of tanks to Ukraine.<br/> 
    * The Treasury <a href="https://apnews.com/article/biden-united-states-government-us-department-of-the-treasury-janet-yellen-business-f62225e6c6ca554c8fe91c5c0c8e8b48">takes further “extraordinary” measures</a> to navigate the debt-ceiling situation.<br/> 
    * Senators <a href="https://thehill.com/policy/finance/3829067-senators-eye-social-security-reforms-as-some-in-house-gop-consider-cuts/">explore</a> reforms for Social Security as House GOP members consider potential cuts.<br/>
    * Caution for the labor market: companies are <a href="https://www.wsj.com/articles/companies-cut-temp-workers-in-warning-sign-for-labor-market-11674524006?mod=economy lead_story">laying off</a> temporary workers.<br/>< 
    * Assessing the recession risk is <a href="https://www.bloomberg.com/news/articles/2023-01-25/how-close-is-the-us-to-recession-why-experts-are-struggling-to-predict-it?srnd=economics-v2#xj4y7vzkg">particularly challenging</a> this time around.<br/>
    * Climate change may <a href="https://www.nytimes.com/2023/01/25/business/economy/climate-change-global-trade.html">spark a new wave of trade wars</a>.<br/>
    * Justice Department <a href="https://apnews.com/article/justice-department-sues-google-c6afce17327b30a098b1bd6a7e947b81">files a lawsuit against Google,</a> alleging its dominance in digital advertising.<br/>
    * US economic contraction persists in January according to <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/40a5dc326b7f46e5a97c9033771d30ff">PMI survey data:</a></p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/01/pmi.25jan2023.png"><img decoding="async" class="alignnone size-full wp-image-19550" src="https://www.capitalspectator.com/wp-content/uploads/2023/01/pmi.25jan2023.png" alt="" width="578" height="363"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-25-january-2023/#more-19549" 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-25-january-2023/" title="6:07 am" rel="bookmark"><time class="entry-date" datetime="2023-01-25T06:07:30-05:00">January 25, 2023</time></a>
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    <p>While recession concerns persist, the expectations remain positive for the upcoming initial GDP estimate for Q4, as analyzed using estimates by CapitalSpectator.com.</p>

    <p> <a href="https://www.capitalspectator.com/us-q4-gdp-nowcasts-project-solid-rise-for-thursdays-report/#more-19543" 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-q4-gdp-nowcasts-project-solid-rise-for-thursdays-report/" title="6:53 am" rel="bookmark"><time class="entry-date" datetime="2023-01-24T06:53:10-05:00">January 24, 2023</time></a>
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    <p>* Eurozone's economic activity <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/b685e13f0aac48db8837186c81986493">returns to growth</a> in January, according to PMI survey data.<br/> 
    * The UK <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/8d327f0949e847dc8b3759de004d1a6b">experiences</a> a “sustained downturn” in January based on PMI data.<br/> 
    * US investment firms <a href="https://www.ft.com/content/ddb4c8c8-f6d9-4b35-b349-1ad8ab4a172c">shift focus to Europe</a> for growth opportunities, moving away from China.<br/> 
    * Analysts <a href="https://www.cnbc.com/2023/01/24/the-us-is-massively-underperforming-global-markets.html">forecast</a> US stocks to continue lagging behind global counterparts.<br/> 
    * The end of easy money is <a href="https://www.nytimes.com/2023/01/23/technology/tech-interest-rates-layoffs.html">especially challenging</a> for tech companies.<br/> 
    * Microsoft <a href="https://www.cnn.com/2023/01/23/tech/microsoft-invests-chatgpt-openai/index.html">will</a> invest substantial funds in OpenAI, the creator of ChatGPT.<br/> 
    * The US Leading Economic Index <a href="https://www.conference-board.org/topics/us-leading-indicators">saw a significant drop</a> for another month in December:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/01/lei.24jan2023.png"><img decoding="async" class="alignnone size-full wp-image-19541" src="https://www.capitalspectator.com/wp-content/uploads/2023/01/lei.24jan2023.png" alt="" width="901" height="546"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-24-january-2023/#more-19540" 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-24-january-2023/" title="5:53 am" rel="bookmark"><time class="entry-date" datetime="2023-01-24T05:53:55-05:00">January 24, 2023</time></a>
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    <p>Although diversifying into non-US equities has been less fruitful in recent years, January indicates a potential shift in favor of global investment strategies.</p>

    <p> <a href="https://www.capitalspectator.com/foreign-stocks-continue-to-rally-as-us-shares-retreat/#more-19534" 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/foreign-stocks-continue-to-rally-as-us-shares-retreat/" title="7:33 am" rel="bookmark"><time class="entry-date" datetime="2023-01-23T07:33:22-05:00">January 23, 2023</time></a>
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    <p>* Bipartisan lawmakers <a href="https://www.ibtimes.com/bipartisan-us-lawmakers-preparing-plan-avert-debt-ceiling-crisis-3659677">are crafting</a> a strategy to ease the debt-ceiling crisis.<br/> 
    * China's reopening may <a href="https://www.wsj.com/articles/chinas-reopening-complicates-global-fight-against-inflation-11674344924">hasten global inflation</a>.<br/> 
    * Market indicators suggest a <a href="https://www.wsj.com/articles/market-recovery-hinges-on-quick-inflation-drop-11674427477?mod=hp_lead_pos1">rapid decline</a> in inflation in the coming months.<br/> 
    * The first ETF <a href="https://www.cnbc.com/2023/01/23/the-first-etf-is-30-years-old-this-week-it-launched-a-revolution-in-low-cost-investing.html">marks its 30th anniversary</a> this week, signifying a milestone in low-cost investing.<br/> 
    * Banks are poised for <a href="https://www.ft.com/content/4beafb70-ec1a-41d3-b18e-33a85bf2a062">significant layoffs</a>, the largest since the financial crisis.<br/>
    * The <a href="https://www.nytimes.com/2023/01/22/business/economy/federal-debt-history.html">debate on US government’s $31 trillion debt</a> continues.<br/> 
    * Big tech is experiencing a sharp reversal <a href="https://www.cnbc.com/2023/01/23/the-first-etf-is-30-years-old-this-week-it-launched-a-revolution-in-low-cost-investing.html">due to misjudged pandemic growth bets.</a><br/> 
    * Fed’s Waller supports <a href="https://www.bloomberg.com/news/articles/2023-01-20/fed-s-waller-backs-slowing-the-next-rate-hike-to-25-basis-points">a slowed rate hike</a> to 25 basis points.<br/> 
    * Existing home sales in the US <a href="https://eyeonhousing.org/2023/01/existing-home-sales-end-2022-with-weakest-year-since-2014/">declined again</a> in December, hitting their lowest point since November 2010:</p>
    <p><a href="https://www.capitalspectator.com/wp-content/uploads/2023/01/existing.homes_.23jan2023.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-19530" src="https://www.capitalspectator.com/wp-content/uploads/2023/01/existing.homes_.23jan2023.png" alt="" width="2560" height="1920"  /></a></p>
    <p> <a href="https://www.capitalspectator.com/macro-briefing-23-january-2023/#more-19533" 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-23-january-2023/" title="6:50 am" rel="bookmark"><time class="entry-date" datetime="2023-01-23T06:50:40-05:00">January 23, 2023</time></a>
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    <p><a href="https://www.amazon.com/Edible-Economics-Hungry-Economist-Explains/dp/1541700546?qid=1674141226&amp;refinements=p_n_publication_date%3A1250226011%2Cp_n_feature_browse-bin%3A2656020011&amp;rnid=618072011&amp;s=books&amp;sr=1-53&amp;linkCode=li2&amp;tag=thecapitalspe-20&amp;linkId=31d3c84c648c7cc8644316fc294ca426&amp;language=en_US&amp;ref_=as_li_ss_il" target="_blank" rel="noopener"><img decoding="async" class="alignleft" src="https://ws-na.amazon-adsystem.com/widgets/q?_encoding=UTF8&amp;ASIN=1541700546&amp;Format=_SL160_&amp;ID=AsinImage&amp;MarketPlace=US&amp;ServiceVersion=20070822&amp;WS=1&amp;tag=thecapitalspe-20&amp;language=en_US" border="0"/></a><img loading="lazy" decoding="async" style="border: none !important; margin: 0px !important;" src="https://ir-na.amazon-adsystem.com/e/ir?t=thecapitalspe-20&amp;language=en_US&amp;l=li2&amp;o=1&amp;a=1541700546" alt="" width="1" height="1" border="0"/>● <a href="https://amzn.to/3CUJkTZ">Edible Economics: A Hungry Economist Explains the World</a><br/>Ha-Joon Chang<br/><strong><a href="https://www.publicaffairsbooks.com/titles/ha-joon-chang/edible-economics/9781541700567/">Summary</a> via publisher (Public Affairs Books)</strong><br/>For years, a single free-market ideology has reigned supreme in global economics. However, this monolithic viewpoint lacks flavor and vitality. Renowned author and economist Ha-Joon Chang makes complex economic concepts more palatable by intertwining them with culinary narratives from various cultures. By exploring the rich histories linked to familiar foods, he sheds light on economic theories. For Chang, chocolate represents a lasting passion, but even more exciting are the lessons it offers regarding post-industrial economies; similarly, while okra smooths out Southern gumbo, it also illuminates capitalism’s intricate connection with freedom. Engaging, humorous, and thought-provoking, *Edible Economics* serves a banquet of bold reflections on topics such as globalization, climate change, immigration, austerity, automation, and the unexpected colors of carrots.</p>
    <p> <a href="https://www.capitalspectator.com/book-bits-21-january-2023/#more-19502" 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/book-bits-21-january-2023/" title="1:28 am" rel="bookmark"><time class="entry-date" datetime="2023-01-21T01:28:00-05:00">January 21, 2023</time></a>
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    <p><span style="color: #ff0000;"><strong><a style="color: #ff0000;" href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4196830">Do Sector ETFs Outperform Treasury Bills?</a></strong></span><br/>Gow-Cheng Huang (Tuskegee U.) and Kartono Liano (Mississippi State U.)<br/><strong>June 2022</strong><br/><em>More than 67% of sector ETFs, unlike single stocks, have consistently recorded buy-and-hold returns that exceed T-bill rates, indicating that most sector ETFs outperform Treasury bills. However, less than 26% of these ETFs have returns surpassing those of SPY, an index ETF that reflects the overall stock market. In essence, the majority of sector ETFs underperform this market index.</em></p>
    <p> <a href="https://www.capitalspectator.com/research-review-20-jan-2023-etfs-and-related-strategies/#more-19526" 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/research-review-20-jan-2023-etfs-and-related-strategies/" title="7:25 am" rel="bookmark"><time class="entry-date" datetime="2023-01-20T07:25:10-05:00">January 20, 2023</time></a>
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