Initial Guidance | 10 February 2016

● Donald Trump and Bernie Sanders Win in New Hampshire | NY Times
● Yellen to face Congress amid uncertainty on Fed policy | WaPo
● US job openings at near-record 5.6 million in Dec | CNBC
● US small business optimism index falls to 2yr low in Jan | Fortune
● Redbook: US retail sales fell 2.6% in first week of Feb vs. Jan | WSJ
● US wholesale inventories edge lower in Dec | RTT
● UK industrial output falls sharply in Dec | MNI
● France’s industrial output surprisingly weak in Dec | MarketWatch
● Italy Industrial Production Falls Unexpectedly In Dec | RTT

Treasury Market’s 10-Year Inflation Forecast Falls To 7-Year Low

Yesterday’s tumble in US equities fueled another leg down in Treasury yields. As the bear market in stocks rolls on, the crowd continued to rush into the safe-haven trade, pushing the 10-year yield down to 1.75% yesterday (Feb. 8)–the lowest level in about a year, based on daily data via Treasury.gov. Meanwhile, the 2-year yield—considered the most sensitive spot on the yield curve for rate expectations—tumbled to 0.66%, the lowest in nearly four months.
Continue reading

Initial Guidance | 9 February 2016

● Fed’s labor index falls in Jan to lowest level in 10 mos. | MarketWatch
● US Employment Trend Index increased in Jan, But at slower pace | CB
● The World’s Economy Soared Last Year (or Plunged) | NY Times
● Central banks make global economy vulnerable, says OECD adviser | Bloomberg
● India’s GDP grows 7.3% in Q4:2015, outrunning China | AP
● Japan’s Bond Yields Follow Interest Rates Into Negative Territory | NY Times
● IEA Raises Estimate of Surplus Oil Supply on Higher OPEC Output | Bloomberg

Demand For Safe-Haven Bonds Surged Last Week

The crowd piled into investment-grade bonds last week as economic worries triggered an exodus out of risky assets. Reviewing the major asset classes for the week just passed through an ETF lens reveals sharply divided results. The safe-haven trade generated handsome gains for several ETFs representing broad measures of the global fixed-income realm for the five trading days through Feb. 5. Even the usually weak corner of emerging-market government bonds caught a break. Stocks, REITs, and commodities, by contrast, suffered hefty losses.
Continue reading

Book Bits | 6 February 2016

Shrinking the Earth: The Rise and Decline of American Abundance
By Donald Worster
Summary via publisher (Oxford University Press)
The discovery of the Americas around 1500 AD was an extraordinary watershed in human experience. It gave rise to the modern period of human ecology, a phenomenon global in scope that set in motion profound changes in almost every society on earth. This new period, which saw the depletion of the lands of the New World, proved tragic for some, triumphant for others, and powerfully affecting for all. In this work, acclaimed environmental historian Donald Worster takes a global view in his examination of the ways in which complex issues of worldwide abundance and scarcity have shaped American society and behavior over three centuries. Looking at the limits nature imposes on human ambitions, he questions whether America today is in the midst of a shift from a culture of abundance to a culture of limits-and whether American consumption has become reliant on the global South.
Continue reading

Labor Dept: US Job Growth Slows Sharply In January

US companies added substantially fewer jobs last month than analysts expected, according to this morning’s update from the Labor Dept. The 158,000 increase in private payrolls is a decent gain, but it’s well below Econoday.com’s consensus forecast for a 180,000 pop. Meantime, the slow grind lower for the year-over-year gain rolls on, echoing yesterday’s numbers from ADP. The labor market still has a fair amount of forward momentum, but the evidence is building that the peak has passed. That’s a concern at a time when the broad trend for growth has hit some turbulence.
Continue reading

The Case For A Bear Market In US Stocks Growls On

What does a bear market for the US equity market look like? Current conditions seem to fit the bill. The clues, after all, are piling up, including the early warning that’s still in progress via a relatively reliable quantitative tool—the Hidden Markov model (HMM). This is old news, of course, which means that it’s time to focus on early signs that the bear has run its course. Yes, it’s still early in the game on that score. But recognizing that the market’s bullish tide has probably turned leads to the obvious questions: What will a bottom look like and when will it arrive? No one really knows, but the toolkit that helped identify the start of a bear market will serve us well in the search for the seeds of a new bull market down the road.
Continue reading