Diversifying an equity portfolio based on risk factors has paid off this year, but only in relative terms, according to a set of ETF proxies. Across-the-board losses for equities have hammered portfolios in 2022, but the degree of red ink varies dramatically, depending on how you carved up factor exposure.
Monthly Archives: July 2022
Macro Briefing: 5 July 2022
* Macro outlook remains uncertain due to Ukraine war and inflation risks
* China economic activity rebounds sharply in June via PMI survey data
* Eurozone still posting modest economic growth in June via PMI survey data
* Germany reports first trade deficit in over 30 years
* Euro at 20-year low vs. US dollar as Eurozone recession risk rises
* Slower but still healthy growth expected for US payrolls in June
“A republic, if you can keep it.”
So replied Benjamin Franklin, when asked, as he walked out of Independence Hall after the Constitutional Convention in 1787, to the question: “Doctor, what have we got? A republic or a monarchy?” Fast forward 235 years and the answer — and its caveat — remain no less germane.
Book Bits: 2 July 2022
Jon Danielsson
Review via Foreign Affairs
“Not another book about financial crises!” one is tempted to exclaim. Fortunately, this is an exceptionally provocative and original addition to an ample literature. Drawing on the historical record, Danielsson explains why regulators have not been more successful at limiting financial instability. They tend to focus excessively on exogenous risks (shocks coming from outside the financial system) while neglecting endogenous risks—the destabilizing responses of the participants in financial markets to those same exogenous shocks and, no less, to regulatory action. Having been encouraged in the wake of past crises to develop numerical measures of financial risks, regulators tend to place excessive confidence in the accuracy of those numbers, which are better at predicting the last crisis than the next one, given the ever-changing nature of the financial system.
Major Asset Classes | June 2022 | Performance Review
As risk-off messages go, the markets couldn’t be any clearer in June. Losses weighed on every slice of the major asset classes, based on a set of proxy ETFs. Even cash took a hit, albeit a fractional one.
Macro Briefing: 1 July 2022
* Supreme Court limits EPA rules for curbing power plant emissions
* US consumer spending growth slowed in May, raising concerns for economy
* US jobless claims hold steady, suggesting upbeat labor market outlook
* Eurozone mfg activity continues to slow, weakening to 22-month low in June
* Eurozone inflation hits record pace in June
* US dollar bucks the trend vs. most assets with a Q2 gain
* Atlanta Fed’s revised nowcast for US GDP turns negative for Q2:
