There is only one U.S. stock market, but there are countless strategies for estimating the expected risk premium for domestic equities.
The choices come in two broad flavors: fundamental and technical. We could, for instance, crunch the numbers using one of the many variations of discounting future cash flows to assess if stocks are “cheap” or “expensive.” Meanwhile, there are a number of so-called trend-following measures that are worth studying. How to choose? Actually, there’s a persuasive case for routinely analyzing a mix of so-called predictors for evaluating the outlook for stocks, and other asset classes, for that matter. To the extent that a broad and varied menu on this front represents opportunity, the world is brimming with possibilities.
Monthly Archives: March 2010
ADP SAYS PAYROLLS SHRUNK (AGAIN) IN MARCH
Nonfarm employment slipped by 23,000 this month vs. February on a seasonally adjusted basis, according to today’s update of the ADP National Employment Report. That’s disappointing news, and it suggests that Friday’s employment report from the Labor Department may be less than stellar. Or does it?
BONDS, STOCKS, JOBS & YIELDS
The 30-year bull market in bonds is fading, predicts Pimco’s Bill Gross, according to Bloomberg News. We’ve heard that one before. In fact, we’ve suspected no less for some time. In our newsletter and on these pages we’ve made the case that the path of least resistance for interest rates is probably up from here on out over the long haul. We continue to expect no less. But the same challenge lurks: timing.
WILL GOOD FRIDAY BE GOOD TO THE LABOR MARKET?
Is the labor market finally set to create jobs on a sustained basis? If not, will the stock market continue to shrug off the delayed rebound in the labor market? Such questions promise (threaten?) to be topical this week as Friday’s update on payrolls for March draws near. Whatever the answers, there’s a bit of timing glitch.The stock market will be closed for Good Friday and so equity traders will have to wait till the following Monday to react to the news.
TALKING ABOUT DYNAMIC ASSET ALLOCATION
I was a guest yesterday on the financial talk show hosted by HorsesMouth.com. The subject of discussion is my new book: Dynamic Asset Allocation
http://www.blogtalkradio.com/horsesmouth/2010/03/25/modern-portfolio-theory-grows-up
TAXING NUMBERS
The newly enacted health care reform legislation may be a net plus when it comes to expanding access to medical services, but it’s not free, or at least not for taxpayers in the upper brackets and certain investors. The new health care reform “will raise taxes for many Americans,” according to a report by RSM McGladrey, a consulting firm in Atlanta.
GDP ROSE 5.6% IN Q4 2009
The economy grew by 5.6% at a real annualized rate in the final three months of last year, the U.S. Bureau of Economic Analysis reported this morning. Today’s update is the third and final estimate of Q4 2009 GDP. The first estimate was 5.7%; the second was 5.9%. Although the final number has been revised down from the previous estimates, the 5.6% gain in GDP for the last three months of 2009 is the highest pace since the 6.9% gain in Q3 2003.
The government’s initial estimate of this year’s first quarter GDP is scheduled for release on April 30. “GDP isn’t expected to have gone up by as much in the first three months of 2010” compared with Q4 2009, The Wall Street Journal reported today. Early estimates for 2010’s first quarter GDP range from 2.5% to 3.0%, according to the article.
IS THE HOUSING MARKET RECOVERING?
The Fed is talking about an exit strategy these days, including selling its existing stockpile of mortgage securities, which it purchased in large quantities over the past 18 months to boost the sagging fortunes of the housing industry. It may be coincidence, but the Obama administration is reportedly rolling out a new program to address the still-high rate of foreclosure in the residential housing market.
JOBLESS CLAIMS IMPROVE, BUT THAT’S (STILL) ONLY HALF THE BATTLE
This morning’s update on initial jobless claims suggests that our previous anxiety over the recent rise in new filings for unemployment benefits was a false alarm. Good thing, too, since being right would have meant looking at a much bigger problem. Fortunately, the Labor Department reports today that new claims dropped last week to 442,000, or down 14,000 from the week before. Except for the first week of February, that’s the lowest reading since this data series peaked in March 2009. A collective sigh is in order, or so it seems.
WHO IS JANET YELLEN?
The White House says that San Francisco Fed president Janet Yellen is President Obama’s leading candidate for vice chairman of the Fed—the number two spot after Fed Chairman Bernanke. The open position comes by way of the retiring Fed governor Donald Kohn, who plans to step down in June. Meantime, Yellen says she’ll accept if nominated.