Stock markets in the Middle East and the US continue to hold a clear performance edge over the rest of the world this year, based on trading through July 24 for a set of exchange-traded products. Whereas those two slices of the global equity pie are posting solid gains, the rest of the field has lost ground so far this year.
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Trump administration outlines $12bill plan for farmers hurt by trade tariffs: CNBC
Trump demands European Union cut all tariffs ahead of trade talks: Bloomberg
Israel shoots down Syrian fighter jet in Israeli airspace: CNN
Sec. of State headed for testy Senate hearing on trade, foreign policy: The Hill
Despite various threats lurking, US business optimism remains high: NY Times
US Composite PMI: economic growth strong in July; inflation picking up: IHS Markit
Richmond Fed mfg index slips in July but still pointing to solid growth: Bond Buyer
US stock market rally lifts S&P 500 Index to highest level since Feb: Reuters

Trade tensions and geopolitical risk remain potential threats to US economic growth in the second half of the year and beyond, but the search for smoking guns in the published numbers continues to turn up empty. Near-term estimates of the US business cycle point to a mild deceleration in the trend (see details below). It’s unclear at this stage if the projected softening is a warning sign or noise. What’s beyond doubt is that the indicators published to date reflect a solid run of growth.
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Iran says it would react if US tries to block its oil exports: Reuters
Trump considers removing security clearances for former Obama officials: The Hill
N. Korea reportedly dismantling key part of missile launch site: Bloomberg
California’s power grid operator urges customers to conserve energy: Reuters
Eurozone Composite PMI: euro area growth eases in July: IHS Markit
Chicago Fed Nat’l Activity Index rebounded in June: Bond Buyer
US existing home sales fell for third month in June: HousingWire
Analysts expect strong gain for corporate earnings in second quarter: NY Times

Non-US equity markets posted the strongest gains last week for the major asset classes, based on a set of exchange-traded products. Meanwhile, real estate investment trusts (REITs) in the US fell for a second week by the close of trading on Friday, July 20.
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Trump warns Iran in Tweet: ‘never, ever threaten’ US: Reuters
G-20 finance ministers advise that trade-war risk is rising: NY Times
China: threats and intimidation on trade will never work: Reuters
China says it has no plans for currency devaluation to boost exports: Bloomberg
Trump criticizes Fed rate hikes, but tightening expected to continue: MW
Fed’s Bullard says US yield-curve inversion “has become a real possibility”: MNI
NY Fed’s Q2 GDP nowcast for US ticks down to +2.7%: NY Fed

We interrupt our regularly scheduled programming with a public service announcement: The Capital Spectator will be decamping to Palermo for a week. The usual routine returns on Monday, July 23. Ciao!

● Copycats and Contrarians: Why We Follow Others… and When We Don’t
By Michelle Baddeley
Summary via publisher (Yale University Press)
Rioting teenagers, tumbling stock markets, and the spread of religious terrorism appear to have little in common, but all are driven by the same basic instincts: the tendency to herd, follow, and imitate others. In today’s interconnected world, group choices all too often seem maladaptive. With unprecedented speed, information flashes across the globe and drives rapid shifts in group opinion. Adverse results can include speculative economic bubbles, irrational denigration of scientists and other experts, seismic political reversals, and more. Drawing on insights from across the social, behavioral, and natural sciences, Michelle Baddeley explores contexts in which behavior is driven by the herd. She analyzes the rational vs. nonrational and cognitive vs. emotional forces involved, and she investigates why herding only sometimes works out well.
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The trade war that appears to be escalating may bring headwinds in the second half of the year, but second-quarter US GDP growth remains on track to accelerate, based on several forecasts compiled by The Capital Spectator. The current median projection calls for real GDP growth in Q2 to rise 3.1% (seasonally adjusted annual rate) – a solid improvement over Q1’s modest 2.0% increase. The Bureau of Economic Analysis is scheduled to publish its initial GDP report for the second-quarter in two weeks (July 27).
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Trump: May is wrecking Brexit and US-UK trade deal is uncertain: The Sun
At NATO summit, Trump didn’t rule out ending military exercises: CNN
China’s trade surplus rose to record in June: Reuters
Annual US consumer inflation rate ticks up to 6-year high in July: MW
US jobless claims fell to 2-month low during July 4 holiday week: Bloomberg
Worldwide PC shipments increased in Q2 2018, first gain in years: C|NET
Will the Fed pull back from more rate hikes to avoid an inverted yield curve? MW
US 10yr-2yr Treasury yield curve sinks to new 11-year low — 25 basis points: