The Capital Spectator

The Capital Spectator will be traveling for the rest of the week, returning with a new Book Bits on Saturday, followed by the normal routine on Monday. Cheers!

Earlier this month I outlined a model for estimating the US stock market’s return in the decade ahead. The post is part of a larger goal is to develop several models and use the average as more reliable forecast, based on the empirical evidence that combining models tends to generate superior results vs. any one model. In addition, the focus on equities is the counterpart to a previous series on estimating “fair value” for the 10-year Treasury yield. Today’s update focuses on...

* World in ‘early stages’ of another Covid-19 wave, says WHO chief* US life expectancy fell 1.5 years in 2020, biggest drop since WWII* US economy facing stronger headwinds, including “whiff of stagflation”* US set to drop opposition to Germany-Russia Nord Stream 2 pipeline* Monthslong slide in bond yields challenges focus on inflation worries* Senate leader struggles to keep infrastructure spending bill alive* Covid slowing recovery for many Southeast Asian economies, says analyst*...

In case you took a day off yesterday, there’s a new narrative circulating that inflation anxiety is history and worries about slowing economic growth have moved to the fore. Maybe, but there’s no law that says you can’t have both macro risks bubbling, or neither. Granted, if growth slows fast enough and far enough, it’ll take the wind out of the recent inflationary surge. Meantime, if economic activity stays relatively strong, even if it decelerates, inflation could continue to...

* Biden pushes for more government spending to support the economy* 90%-plus of people hospitalized with Covid-19 are unvaccinated* US stock market decline leaves S&P 500 near one-month low at Monday’s close* Markets appear to be moving beyond inflation worries to concerns about growth* Spread of Delta variant raises possibility of US 10-year yield falling to 1%* Can Ireland block global effort to overhaul global tax rules?* Rising dollar makes emerging markets investors nervous*...

Inflation-indexed Treasuries and commodities were the top performers last week for the major asset classes, based on set of exchange traded funds. The iShares TIPS Bond ETF (TIP) rallied for a fourth straight week, gaining 0.8% over the five trading days through Friday, July 16. The gain lifted the fund to a record high. A close runner-up last week: broadly defined commodities. WisdomTree Continuous Commodity Index Fund (GCC), an equal-weighted portfolio, rose 0.6%. The...

* Economists expect US economy will slow as stimulus spending fades* Oil eases after Opec+ agrees to lift production* Zoom buys Five9 for $15 billion to boost appeal with business clients* US retail spending was surprisingly strong in June* Inflation worries weigh on US consumer sentiment in early July* 10yr-2yr Treasury yield curve narrowed to five-month low on Friday:

There’s good news and bad news for our trio of proprietary strategies in last week’s performance round-up. Relative to the benchmark (Global Beta 16 (G.B16)), all three outperformed for the trading week through Friday, July 16. Alas, the outperformance was in the form of lesser declines, ranging 0.5% to 1.0% losses. The benchmark shed 1.1%. continue reading at The ETF Portfolio Strategist

● The Financial System Limit: The World’s Real Debt BurdenDavid KaudersSummary via publisher (Sparkling Books)Why were economies sluggish before the pandemic arrived? Why have interest rates paid by businesses and households been rising even though deposit rates are nil? Does the policy of bailing out economies, now followed by most governments and central banks, bring any dangers? In The Financial System Limit, British investment manager David Kauders FRSA puts forward three...

US stocks break a 3-week winning streakBonds continue to rallyAcross-the-board losses for our strategy benchmark this weekcontinue reading at The ETF Portfolio Strategist