On August 23, the spread between 10-year and 2-year Treasury yields decreased to 21 basis points, reaching an 11-year low according to daily data from Treasury.gov. This tightening gap has sparked discussions regarding the potential onset of a recession and the appropriateness of another anticipated interest rate hike by the Federal Reserve next month. Nevertheless, current economic indicators still suggest a robust macroeconomic environment in the US. The pressing question remains: will looming challenges such as the US-China trade war hold up or even undermine the central bank’s intentions for higher rates?
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The Arctic’s “last bastion” of sea ice is melting: USA Today
US-China trade war continues despite recent negotiations: Bloomberg
China’s foreign minister announces ongoing counter-strikes to US trade tariffs: Reuters
The Fed warns that escalating trade tensions pose a risk to the economy: CNN Money
New home sales in the US fall to a nine-month low in July: CNBC
House prices in the US rise at the slowest rate in four years: HousingWire
Economists predict a downturn in US durable goods orders for July: Econoday
US jobless claims indicate sustained strength in the labor market: Reuters
Eurozone Composite PMI rises to a two-month high in August: IHS Markit
PMI data indicates a slowdown in US private-sector growth for August: IHS Markit
The Capital Spectator is wrapping up early today and will be taking a break tomorrow. The plan is to resume normal operations on Friday, August 24. Cheers!
The S&P 500 briefly hovered in record territory yesterday before finishing just below its all-time peak. Conversely, small-cap stocks succeeded in achieving new highs.
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Cohen pleads guilty, implicating Trump: CNN
Former Trump campaign chairman Manafort convicted on fraud charges: The Hill
Legal challenges increase impeachment risk for Trump: Politico
Trump faces pressure to adopt a tougher stance on Russia: CNBC
US-China trade discussions are ongoing today: Reuters
Economists warn of further deceleration in China’s growth if the trade war persists: SCMP
US existing home sales for July are expected to decline in today’s report: MW
S&P 500 momentarily reached a record high before closing just below its previous peak:
Nearly ten years have passed since the low point of the global financial crisis. Thanks to a broad recovery over many years, the current scenario for acquiring assets at low prices is one of decreasing availability. While bargains can be found in relative terms—such as comparing emerging market stocks to US equities—identifying clear values beyond recent history becomes increasingly difficult. For instance, as of August 20, the Vanguard Total Stock Market ETF (VTI), a US benchmark, has appreciated by 8.3% in 2018, compared to an 8.8% drop in the Vanguard FTSE Emerging Markets ETF (VWO). Recognizing value in absolute terms remains a formidable task.
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US business leaders caution that additional sanctions on China could prove detrimental: NY Times
New Russian cyber operations target Senate and conservative think tanks: CNN
Malaysian prime minister cancels China-backed infrastructure projects: Reuters
The Fed’s strategy for increasing interest rates faces challenges from global uncertainties: Reuters
Trump expresses dissatisfaction with the Fed’s rate hikes during a fundraiser: Bloomberg
The 10-year to 2-year Treasury yield spread hits a new post-recession low of 22 basis points:
In the past week, US securitized real estate securities delivered the most significant gains among the major asset classes, based on a selection of exchange-traded products. In a week where global markets had mixed results, the substantial rise in real estate investment trusts (REITs) stands out as a notable positive trend.
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Challenges lie ahead for this week’s US-China trade negotiations: CNBC
The White House declines Turkey’s offer for the release of a pastor: WSJ
The US Secretary of State indicates a possible ceasefire in Afghanistan: Politico
Taiwan’s president’s visit to the US provokes anger in China: NY Times
China resuming oil imports from Iran using its tankers to evade US sanctions: Reuters
Greece’s eight-year bailout officially concludes today: CNN
The Trump administration claims that conserving oil is no longer economically imperative: PBS
The US Leading Economic Index points towards strong growth for the remainder of the year: CB
Strong economic activity drove corporate results in Q2: CNBC
Political perspectives influence economic perceptions heading into mid-term elections: NY Times
US consumer sentiment slips to an 11-month low in August: MarketWatch
By Devin Fergus
Summary via publisher (Oxford University Press)
The persistent problem of wealth inequality has been attributed to various factors by politicians, economists, and the media. These include job losses in the working class, the rise of speculative capitalism driven by finance, and tax policies favoring the ultra-rich. However, a significant contributor to this growing inequality that is often overlooked is the increase in fees associated with nearly every transaction. In “Land of the Fee,” Devin Fergus illustrates how these legally accepted fees are deeply embedded within intricate agreements between vendors and consumers—agreements that are rarely fully read or understood. Ultimately, Fergus argues, this results in a substantial transfer of wealth from the many to the few, benefiting large banking corporations, airlines, hotel chains, and other affluent entities.
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