The U.S. equity market has reclaimed its position as the leader in terms of one-year returns among the major asset classes. However, the current advantage appears significantly less striking than in previous years. In fact, rolling one-year returns have declined overall, as indicated by our selected ETF proxies that monitor broad global market trends. The number of positive returns for the past 250 days has decreased, and those that remain in the positive show only modest gains compared to historical performance. In essence, achieving a risk premium is becoming increasingly challenging.
● U.S. Airstrike in Libya Targets Planner of 2013 Algeria Attack | NY Times
● Consumer Sentiment in the U.S. Rebounds in Early June | CNBC
● U.S. Producer Prices Rise as Oil Prices Stabilize | WSJ
● Greece Faces a Critical Week as Talks in Brussels Fail | Bloomberg
● Gas Prices in the U.S. Increase but May Be Peaking: Survey | Reuters
● Eurozone Merchandise Exports Increase 9% in April 2015 Compared to Last Year | Eurostat
According to The Capital Spectator’s average point forecast from various econometric models, U.S. industrial production is expected to rise by 0.1% in the upcoming May report compared to the previous month. This average forecast suggests a modest recovery from the 0.3% decline observed in April.
● The Next Financial Crisis and How to Save Capitalism
By Hossein Askari and Abbas Mirakhor
Summary via publisher (Palgrave Pivot)
The financialization of our economy, characterized by the rapid growth of the financial sector compared to the real economy, has resulted in various interconnected issues that exacerbate income and wealth inequality. In this thought-provoking work, Askari and Mirakhor argue for the necessity of a bold transformation to rectify the financial system and pave a better future. While solutions like increased capital requirements for banks and improved regulations are critical, they merely postpone the inevitable crisis, which can have dire consequences. The authors pinpoint debt financing as the core issue and advocate for profound reforms to reduce the dominance of debt and enhance reserve levels in fractional reserve banking.
Is it still valid to regard weekly jobless claims data as one of the more “reliable” indicators for the U.S. business cycle? If the answer is “yes”—and it should be—then the latest update paints a positive picture for the economy. Although new claims for unemployment benefits rose by 2,000 in the first week of June, adjusting for seasonal factors brings the total to 279,000, which is near a 15-year low. This suggests an optimistic outlook for both the labor market and the broader U.S. economic landscape.
● U.S. Retail Sales Surge, Indicating More Confident Consumers | USN&WR
● Jobless Claims in the U.S. Slightly Rise to 279,000 in Early June | MarketWatch
● Consumer Comfort in the U.S. Declines for a Record Ninth Consecutive Week | Bloomberg
● U.S. Business Inventories See Largest Increase in Almost a Year | Reuters
● Eurozone Industrial Production Growth Slows to a 3-Month Low in April | RTT
● IMF Withdraws from Negotiations with Greek Creditors | The Independent
● Keeping Greece in the Eurozone May Have Less to Do with Finances than Previously Thought | Bloomberg
Retail sales saw a notable rebound last month, increasing by 1.2% in May, according to the latest report released by the U.S. Census Bureau. This figure indicates a significant improvement over April’s modest 0.2% rise, supporting the forecast that U.S. economic growth in the second quarter will not mirror the lackluster performance of Q1.
U.S. Treasury yields continued their upward trend yesterday, with the yield on the benchmark 10-year note reaching 2.50%—its highest level since last September, according to Treasury.gov data. Additionally, the 2-year yield, which is highly sensitive to interest rate expectations, rose to a four-year high of 0.75% as of Wednesday, June 10.
● U.S. Mortgage Applications Surge by 8% Ahead of Anticipated Rate Hikes | WPJ
● U.S. Annual Budget Deficit Reaches Lowest Level in Nearly Seven Years | WSJ
● Global Bond Market Faces Significant Turmoil as Deflation Expectations Deteriorate | Telegraph
● World Bank Lowers Global Growth Projections, Urges the Fed to Delay Rate Hike | RTT
● S&P Downgrades Greece After Delay in IMF Repayment | Reuters
● Stock Market Rallies on Rumors of German Compromise in Greece Bailout Talks | Guardian
According to The Capital Spectator’s average point forecast from various econometric estimates, U.S. retail sales are anticipated to climb by 0.5% in the upcoming May report compared to the previous month. This forecast indicates a slight improvement compared to last month’s stagnant performance. Recent economist surveys, however, suggest a notably higher growth rate for retail spending in May.
In summary, the current economic landscape presents a mixed picture. While some indicators show positive trends, others reflect ongoing challenges. The complexities of the market and global economy continue to require careful monitoring and analysis.
