The Capital Spectator: Insights on Investing, Asset Allocation, and Economics

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    <p>In the upcoming update for January, housing starts are projected to decline to an annual rate of 1.075 million, as indicated by The Capital Spectator's median forecast based on various econometric estimates. This figure suggests a slight decrease in residential construction compared to December's 1.089 million units.<br/><a href="https://www.capitalspectator.com/us-housing-starts-january-2015-preview/#more-4919" 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-housing-starts-january-2015-preview/" title="9:47 am" rel="bookmark"><time class="entry-date" datetime="2015-02-17T09:47:13-05:00">February 17, 2015</time></a>
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    <p>The current method of managing the European currency experiment leaves much to be desired. The decision-makers appear to favor last-minute negotiations and high-stakes tactics to circumvent crises. Europe, unfortunately, seems to encounter one crisis after another. The recent impasse with Greece—following unsuccessful negotiations regarding bailout conditions—may lead to significant consequences. Thus far, it’s evident that Eurozone leaders have adopted a reckless approach to policy-making. This can be partially attributed to the fragile structure of the currency union, which appears equipped only for favorable economic conditions, lacking provisions to handle turbulence. Additionally, the daily management of negotiations deserves scrutiny.<br/><a href="https://www.capitalspectator.com/flirting-with-grexit-risk/#more-4918" 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/flirting-with-grexit-risk/" title="7:03 am" rel="bookmark"><time class="entry-date" datetime="2015-02-17T07:03:34-05:00">February 17, 2015</time></a>
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    <p>● Greek impasse weighs on European stocks | <a href="http://www.marketwatch.com/story/greek-impasse-weighs-on-european-stocks-2015-02-17?link=MW_latest_news">MarketWatch</a><br/>● Eurogroup Grants Greece Time Till Friday To Seek Bailout Extension | <a href="http://www.rttnews.com/2457189/eurogroup-grants-greece-time-till-friday-to-seek-bailout-extension.aspx?type=alleco">RTT</a><br/>● U.K. Inflation Slows More Than Forecast to Record-Low 0.3% | <a href="http://www.bloomberg.com/news/articles/2015-02-17/u-k-inflation-slows-more-than-forecast-to-record-low-0-3-">Bloomberg</a><br/>● China’s economy to grow about 7% this year: central bank official | <a href="http://www.reuters.com/article/2015/02/17/us-china-economy-idUSKBN0LL0CB20150217">Reuters</a><br/>● Japan Escapes Recession But Q4 GDP Growth Misses Forecasts | <a href="http://www.wsj.com/articles/japan-q4-gdp-worse-than-expected-at-22-1424044641">WSJ</a><br/>● German Investor Confidence Rises to One-Year High Before QE | <a href="http://www.bloomberg.com/news/articles/2015-02-17/german-investor-confidence-rises-to-one-year-high-before-qe">Bloomberg</a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/initial-guidance-17-february-2015/" title="5:27 am" rel="bookmark"><time class="entry-date" datetime="2015-02-17T05:27:32-05:00">February 17, 2015</time></a>
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    <p>I have been examining a 60/40 U.S. stock-to-bond portfolio using <a href="http://www.r-project.org/">R</a> in a series of posts. Today’s installment continues from the <a href="https://www.capitalspectator.com/portfolio-analysis-in-r-part-ii-analyzing-a-6040-strategy/">previous post</a> by incorporating a global strategy. The aim is to enhance the returns of the 60/40 portfolio while maintaining a similar or lower level of risk. This may seem overly ambitious, but it's worthwhile to review the historical performance.<br/><a href="https://www.capitalspectator.com/portfolio-analysis-in-r-part-iii-adding-a-global-strategy/#more-4912" 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/portfolio-analysis-in-r-part-iii-adding-a-global-strategy/" title="9:05 am" rel="bookmark"><time class="entry-date" datetime="2015-02-16T09:05:51-05:00">February 16, 2015</time></a>
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    <p>● <a href="http://www.amazon.com/gp/product/147675571X/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=147675571X&amp;linkCode=as2&amp;tag=thecapitalspe-20&amp;linkId=SE73R42MY34D7N6Q">Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice</a><img decoding="async" style="border: none !important; margin: 0px !important;" src="http://ir-na.amazon-adsystem.com/e/ir?t=thecapitalspe-20&amp;l=as2&amp;o=1&amp;a=147675571X" alt="" width="1" height="1" border="0"/><br/>By Bill Browder<br/><strong><a href="http://readingthemarkets.blogspot.com/">Review</a> via Reading The Markets</strong><br/>Bill Browder has penned a book that is both gripping and thought-provoking. *Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice* (Simon & Schuster, 2015) serves as a harsh critique of Putin’s oppressive regime, a reality faced by Browder and his associates at Hermitage Capital.<br/><a href="https://www.capitalspectator.com/book-bits-14-february-2015/#more-4911" 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-14-february-2015/" title="6:34 am" rel="bookmark"><time class="entry-date" datetime="2015-02-14T06:34:07-05:00">February 14, 2015</time></a>
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    <p><a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2545565">Smart Beta Through the Lens of Risk Factors</a><br/><strong>Ben Meng and Paul Zhang</strong><br/><em>November 18, 2014</em><br/>This analysis examines five popular smart beta indices using a straightforward two-risk-factor framework. Our findings reveal that a substantial portion of the return variations in these indices can be traced back to the S&P 500 and the Barclays Treasury index. Additionally, we illustrate how the diversification effect decreases when these smart beta indices are included in a standard equity portfolio, measured by a metric known as implied breadth.<br/><a href="https://www.capitalspectator.com/research-review-13-feb-2015-portfolio-design/#more-4909" 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-13-feb-2015-portfolio-design/" title="6:31 am" rel="bookmark"><time class="entry-date" datetime="2015-02-13T06:31:53-05:00">February 13, 2015</time></a>
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    <p>● German GDP Growth Gains Momentum In Q4; French Expansion Slows | <a href="http://www.rttnews.com/2456442/german-gdp-growth-gains-momentum-in-q4-french-expansion-slows.aspx">RTT</a><br/>● Eurozone economy grows 0.3% in fourth quarter | <a href="http://www.ft.com/intl/cms/s/0/9b6575a6-b34e-11e4-9449-00144feab7de.html#axzz3RcS5ZLeb">FT</a><br/>● Ukraine crisis: more shelling and fighting after Minsk ceasefire agreed | <a href="http://www.theguardian.com/world/2015/feb/13/ukraine-service-personnel-killed-minsk-ceasefire">Telegraph</a><br/>● Greece, lenders appear to edge closer to deal | <a href="http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_12/02/2015_547217">Kathimerini</a><br/>● Worst Drought in 1,000 Years Predicted for American West | <a href="http://news.nationalgeographic.com/news/2015/02/150212-megadrought-southwest-water-climate-environment/">Nat’l Geographic</a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/initial-guidance-13-february-2015/" title="5:32 am" rel="bookmark"><time class="entry-date" datetime="2015-02-13T05:32:52-05:00">February 13, 2015</time></a>
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    <p>Retail sales experienced a decline for the second consecutive month in January, dropping by 0.8% compared to December. This decrease is significantly worse than the anticipated 0.5% decline noted in consensus forecasts (Econoday.com) and starkly contrasts with even a slight gain projected by my econometric modeling <a href="https://www.capitalspectator.com/us-retail-sales-january-2015-preview/">implied.</a> However, this downturn in spending might be caused by the ongoing decline in the dollar value of gasoline sales. A closer examination reveals that the annual rate of increase for retail sales, excluding gasoline, continues to show improvement.<br/><a href="https://www.capitalspectator.com/retail-spending-stumbled-again-in-january/#more-4905" 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/retail-spending-stumbled-again-in-january/" title="9:28 am" rel="bookmark"><time class="entry-date" datetime="2015-02-12T09:28:58-05:00">February 12, 2015</time></a>
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    <p>When evaluating recession risks in the U.S., quarterly GDP reports are not very timely. These figures are released with significant delays, are subject to extensive revisions, and are reported quarterly rather than monthly. However, the components of the GDP report can be valuable in assessing the economic landscape. In particular, gross private domestic investment tends to react more sensitively to macroeconomic trends than the overall GDP data or personal consumption expenditures (PCE).<br/><a href="https://www.capitalspectator.com/us-private-investments-history-for-business-cycle-analysis/#more-4903" 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-private-investments-history-for-business-cycle-analysis/" title="7:24 am" rel="bookmark"><time class="entry-date" datetime="2015-02-12T07:24:13-05:00">February 12, 2015</time></a>
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    <p>● Ceasefire agreed for eastern Ukraine after Minsk summit |<a href="http://www.reuters.com/article/2015/02/12/us-ukraine-crisis-idUSKBN0LG0FX20150212"> Reuters</a><br/>● I.M.F. Approves $17.5 Billion Bailout for Ukraine | <a href="http://www.nytimes.com/2015/02/13/world/europe/imf-approves-17-5-billion-bailout-for-ukraine.html?_r=0">NY Times</a><br/>● Sweden Cuts Rate, Announces Bond-Buying Program | <a href="http://www.wsj.com/articles/sweden-cuts-rate-announces-qe-1423731254">WSJ</a><br/>● US mortgage applications begin February with a drop | <a href="http://www.ft.com/intl/fastft/276631/us-mortgage-market-starts-february-on-backfoot">FT</a><br/>● Eurozone Industrial Output Remains Flat In December | <a href="http://www.rttnews.com/2455685/eurozone-industrial-output-remains-flat-in-december.aspx">RTT</a><br/>● German inflation falls 0.4% in January, the largest drop since 2009 | <a href="http://en.europeonline-magazine.eu/german-prices-fell-04-per-cent-in-january-biggest-drop-since-2009_377159.html">Europe Online</a><br/>● Bank of England inflation report: UK inflation rate expected to go negative | <a href="http://www.cityam.com/209297/bank-of-england-quarterly-inflation-report-february">City AM</a></p>
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    By James Picerno | <a href="https://www.capitalspectator.com/initial-guidance-12-february-2015/" title="5:54 am" rel="bookmark"><time class="entry-date" datetime="2015-02-12T05:54:00-05:00">February 12, 2015</time></a>
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