Is there a turning point for quantitative tightening?
On Tuesday, the mood on the US stock exchanges was positive.
The benchmark Dow Jones Industrial climbed +0.85% to 34,852.67 points.
The S&P 500 closed +1.45% to 4497.63 points.
The tech index Nasdaq 100 jumped +2.15% to 15,376.55 points.
Good quarterly figures and a positive outlook are helping the price of electronics retailer Best Buy whose share prices increased by+3.9%.
Online retailer PDD Holdings shot up by +15.4% as the best performer on the Nasdaq 100 after its Pinduoduo platform saw its revenue surge last quarter.
The conglomerate 3M whose share prices increased by +1.4% has agreed with the US military on a settlement because of defective earplugs.
Payments of $6 billion through 2029 are lower than expectations.
Asian markets are trending higher on Wednesday morning.
The leading Japanese index Nikkei 225 went up by +0.4% and the broader Topix gained +0.5%.
In Hong Kong the Hang Seng is trading +0.3% higher.
The Korean Kospi increased by +0.5% and the Taiex is also gaining ground in Taiwan by +0.6%..
The Australian ASX 200 gains significantly by +1.2%.
A turning point for quantitative tightening
Federal Reserve official haven’t apparently put much stock in its balance-sheet reduction program, Quantitative Tightening or QT, in tightening financial conditions since its start in June 2022.
That may be because in its first year, QT didn’t dent the part of the Fed’s balance-sheet that represented assets of the private sector supporting economic and financial activity – currency, reserves, and overnight reserve repurchases or RP agreements.
In fact, their sum, plotted in the chart, returned close to its all time high despite ongoing QT reductions in its asset portfolio.
With the debt ceiling suspended, the Treasury has rebuilt its Fed deposits and securities shrinkage is taking a toll on the private sector wrote Vincent Reinhart from Standish Mellon?
We show how equity Real Estate Investment Trusts, the world's best asset class, closed on Tuesday, August 29, 2023 with our optimized quant pooling index approach in dividing the index into four elements:
Fire: Our top 10 performers achieved a one day performance of 2.51% on Tuesday, August 29, 2023 with an average annual dividend yield of 11.77%
Water: Our 10 best mREIT components according to their dividend yields achieved a one day performance of 1.33% on Tuesday, August 29, 2023 with an average annual dividend yield of 15.36%
Earth: Our top 10 best mREIT components according to their market capitalization reached a one day performance of 2.14% on Tuesday, August 29, 2023 with an average annual dividend yield of 11.14%
Air: All our 38 mREIT components reached a one day performance of 1.19% on Tuesday, August 29, 2023 with an average annual dividend yield of 11.72%
The average dividend yield of our four elements of our mortgage Real Estate Investement Trusts is 12.49%
As US Inflation, from August 2022 to July 2023 was 3.2%, our average cash flow without inflation would have been +9.29%.
Our weighted mREIT ETN and ETFs reached a one day performance of 1.62% on Tuesday, August 29, 2023 with an average annual dividend yield of 13.98%.
We consider that the creation of individual prototype portfolios with our optimized quant pooling approach that includes all 38 elements of mortgage Real Estate Investment Trusts would outperform weighted mortgage Real Estate Investment Trusts Exchange-Traded Funds and mortgage Real Estate Investment Trusts Exchange-Traded Notes.
We also consider that decentralized real assets cooperatives that would be organized like the world's biggest asset management cooperative that is the Vanguard Group could help local commuity members to contribute to strongly compensate the risks of inflation and financial turmoil that the world suffers since the pandemics.
We wish you all a great and happy new week!
Kind regards
Lucas