Commodities have joined the party. After last week’s rally that lifted a broad measure of commodities, all the major asset classes are now posting gains for the year to date through Friday’s close (July 28), based on a set of ETFs.
Monthly Archives: July 2023
Macro Briefing: 31 July 2023
* S&P 500 profits get a boost from weaker US dollar
* Stock market rally showing signs of broadening as…
* Equal-weighted S&P 500 ETF (RSP) leads cap-weighted ETF (SPY) over past month
* US economy remains “resilient”, says Minneapolis Fed President Neel Kashkari
* 3 reasons why America may avoid a recession
* China’s factory activity for July contracts for the fourth straight month
* Eurozone growth picks up in Q2 and inflation eases
* Crude oil headed for biggest monthly price gain in more than a year
* Yellow, a major US trucking firm with 30,000 employees, is shutting down
* US consumer spending rose as inflation eased in June–‘sweet spot’ for economy:
Book Bits: 29 July 2023
Peter Cappelli
Review via Publishers Weekly
Misguided bean counting leads businesses to mistreat their workers to the detriment of profits, according to this incisive treatise. Wharton professor Cappelli (Why Good People Can’t Get Jobs) pillories financial accounting rules set by the nonprofit Financial Accounting Standards Board that regard wages, benefits, and training as costs to be minimized, resulting in the undervaluation of employees. These perverse incentives, he explains, lead to outcomes that are bad for business, as when the costs of increased turnover outweigh nominal savings from layoffs and pay cuts, and when the outsourcing of labor to “reduce costs in the ‘employment’ accounting category” ends up costing the same as employee wages would have.
Looking For Market Signals With Extreme Price Changes
Predicting is hard, especially about the future, but sometimes it’s a bit easier for financial markets when prices are at extremes. The challenge is defining “extreme.”
Macro Briefing: 28 July 2023
* US government-shutdown risk may be brewing… again
* US pending home sales index rose in June–first increase since February
* Japan 10yr bond yield jumps to 9yr high as Bank of Japan eases yield control
* German economy posts slight loss in GDP for second quarter
* US jobless claims fell more than expected last week
* Durable goods orders in US rose more than forecast in June
* US GDP posts strong upside surprise, increasing 2.4% in second quarter:
Tech Stocks Still Lead Market By Wide Margin This Year
This year’s rally in US stocks continues to rely heavily on a handful of red-hot sectors, based on a review of ETFs through yesterday’s close (July 26). Shares in technology, communications and consumer discretionary are well ahead of the broad market, providing strong upside support.
Macro Briefing: 27 July 2023
* Federal Reserve raises target interest rate 1/4 point to 22-year high
* Fed’s staff is no longer forecasting US recession, says Powell
* New US home sales fell in June following surge in May
* Regional banks show signs of recovery in Q2 earnings
* Investors avoid US consumer firms especially vulnerable to economic downturn
* Global oil demand on track to reach record high
* Is the Fed done with rate hikes? If so, it may be time to buy bonds:
Moderate US Growth Expected To Persist In Q2 GDP Report
Tomorrow’s initial estimate of US economic activity by the government for the second quarter (scheduled for Thursday, July 27) is expected to report that a moderate expansion continues, based on the median estimate via several sources compiled by CapitalSpectator.com.
Macro Briefing: 26 July 2023
* Federal Reserve expected to raise interest rates today to 22-year high
* Fed still at risk of doing too little to tame inflation, says SF Fed president
* IMF lifts global growth forecast despite slower momentum in China
* China announces new central bank governor at critical juncture for economy
* US faces “significant” shortage of tech workers in semiconductor industry
* US house prices rise for four months through May but dip vs. year-ago level
* US Consumer Confidence Index rebounds to two-year high in July:
Gold Still Looks Pricey Based On A “Fair Value” Model
The price of the world’s favorite precious metal remains near its upper range of the past three years, but for gold bulls this is disappointing. The surge of inflation in the wake of the pandemic should have by now pushed the price much higher than the current $1962 per ounce, its more zealous supporters complain. But while inflation is, or at least, can be a factor in gold’s price, real (inflation-adjusted) interest rates and the US dollar tend to dominate pricing. By that reasoning, the spike in real rates in recent years explains a lot. No wonder, then, that CapitalSpectator.com’s “fair value” gold model, which uses the greenback and real rates, still advises that the precious metal’s valuation is lofty.