Recent years have witnessed a remarkable bull run in US equities, captivating the attention of many investors. While Mr. Market has seen its share of sudden corrections, the trend toward a buy-and-hold strategy, such as one involving an S&P 500 Index fund, appears to have been a mostly uninterrupted success. Is this characteristic of typical market behavior? Determining that requires a closer examination of what “typical” means over different timeframes. To gain insight, let’s compare the current performance of the S&P 500 against its historical trends across various decades.
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Bolton expresses readiness to testify, but no indication the Senate will issue a subpoena: Politico
White House blocks Iranian diplomat’s visa for a UN meeting: The Hill
Could the escalating US-Iran tensions open strategic doors for China? CNN
France and the EU gear up to counter new US tariffs: AP
Global growth showed improvement in December, as indicated by PMI survey data: IHS Markit
Is the recent spike in Eurozone inflation and retail sales merely a temporary surge? ING
US Services PMI reveals moderate growth reaching a 5-month high in December: IHS Markit
The trading week opens amid heightened uncertainty following last week’s US airstrike that resulted in the death of Qassem Soleimani, Iran’s leading military figure. Despite most major asset classes posting gains last week and maintaining a positive trend over the past year, evaluating risk has become significantly more complex and vital.
Secretary of State Pompeo cautions Iran against potential attacks on US interests: NY Times
Trump threatens economic sanctions on Iraq following requests for the withdrawal of US troops: BBC
Large crowds gather in Tehran to mourn Iran’s military commander: Reuters
House prepares to vote on measures limiting Trump’s military authority regarding Iran: CNBC
Uncertainty looms over Trump’s Middle East strategy following the assassination of Soleimani: BBG
New York Fed President advocates for adherence to the 2% inflation target: WSJ
Economists express skepticism regarding the Fed’s capacity to combat the next recession effectively: MW
Brexit-related economic uncertainty remains widespread: BBG
Revised Eurozone PMI indicates economy is close to stagnation in December: IHS Markit
By Tim Lee, et al.
Summary via publisher (McGraw-Hill)
This enlightening read offers critical insights into the emerging landscape of financial markets, shedding light on the meteoric rise of carry trading and its implications. While many books discuss the popularity of carry trading, few reveal its significant impact on the global economy. “The Rise of Carry” articulates how these trades have shaped economic growth, fluctuations, wealth disparity, and even social and political unrest. The authors explore the mechanics of carry trades, particularly in currencies and stocks, and build a persuasive case for their domination over the global business cycle.
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In December, the expected risk premium for the Global Market Index increased, marking the fourth consecutive month of growth. This rise elevates GMI’s long-term ex ante return to an annualized 5.0%, not accounting for a “risk-free” rate.
Iran promises retaliation after the US airstrike that killed a prominent Iranian commander: Reuters
Will the global economy feel the repercussions of the US strike against an Iranian general? BBG
Many analysts perceive a dangerous escalation following the assassination of the Iranian general: CNBC
Oil prices soar while stock futures plummet in the aftermath of the strike: MW
US Manufacturing PMI indicates a modest recovery in December: IHS Markit
Job cut numbers in the US fell in December to their lowest level since July 2018: CG&C
US jobless claims dipped last week, nearing a 50-year low: MW
For investors, 2019 was an extraordinarily fruitful year. In fact, those who adopted basic buy-and-hold strategies involving major asset classes found it nearly impossible to incur losses.
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Recent protests at the US embassy in Iraq demonstrate Iran’s far-reaching influence: NY Times
Taiwan’s top military officer perished in a helicopter crash: CNN
Israel’s Netanyahu seeks parliamentary immunity from prosecution: BBC
Hundreds are arrested in Hong Kong protests: Reuters
UK manufacturing output shrank at its fastest rate in over seven years in December: IHS Markit
Eurozone manufacturing recession persisted in December: IHS Markit
China’s manufacturing sector continued to show signs of a mild recovery in December: IHS Markit
CEOs identify recession as a significant concern for 2020: WSJ
The 10-year Treasury yield ended 2019 at a five-month high:
This marks the end of the calendar year, a fitting point for The Capital Spectator to reflect on 2019. We will return on Thursday, January 2, with new data and insights for the year ahead. In the meantime, wishing everyone a successful 2020. Cheers!
