The Chicago Fed National Activity Index’s three-month average (CFNAI-MA3) ticked higher in April, but growth remained below the historical trend for the third month in a row. The latest string of three consecutive negative values represents the longest stretch of below-trend data in nearly two years. Still, CFNAI-MA3 inched up to -0.23 last month and so it remains well above the -0.70 mark that signals the start of new recessions. Nonetheless, growth is still weak by recent standards and so today’s report will continue to stoke debate about the economic outlook.
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Tobin’s Q, a market-valuation metric, is back in the news, in part thanks to a widely read Bloomberg article. The story, published earlier this week, offered the provocative title: “Nobel Winner’s Math Is Showing S&P 500 Unhinged From Reality.” Oh, my, that sounds serious. Or maybe not. As several observers have pointed out (see here, here, and here, for instance), the practical connection between real-world money management and Tobin’s Q is a dicey proposition. It does, however, provide the raw material for dramatic headlines.
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● Fed officials see June rate hike as unlikely: minutes | Reuters
● US mortgage applications drop for 4th straight week | RTT
● Eurozone Job creation at 4-year high as eco. growth slows in May: PMI | Markit
● Further slowing of German private sector output growth in May: PMI | Markit
● China’s mfg. output contracts at strongest rate in over a year in May: PMI | Markit
● Operating conditions in May improve at Japanese manufacturers: PMI | Markit