In the June 2011 issue of Financial Advisor magazine I take a fresh look at an old question: What’s the connection between the business cycle and financial markets? In fact, I’m working on a new book about the finer points of the macro/markets linkage and how we can enhance our strategic investment outlook by analyzing this relationship. Indeed, the research on this subject has exploded in recent years. Meantime, here’s a brief preview via my latest for FA.
Daily Archives: June 3, 2011
Job Creation Slows Sharply In May
Today’s employment report for May isn’t good. It’s not even close to being good. But it’s not surprising. After ADP reported on Wednesday that its estimate of private payrolls suffered a big slowdown in growth last month, today’s disappointing news from the Labor Department was expected, as we discussed two days ago. The question now is deciding if the slump in job creation is temporary or something with legs. That’s not going to be easy until we see more numbers over the next few weeks. Meantime, erring on the side of caution about the macro outlook is the only game in town. It’s too soon to throw in the towel on expecting the recovery to muddle through, but make no mistake: We’re looking at the biggest threat to growth in, well, since this time last year. Yes, the prospect of another summer slowdown has returned.
The New Decline In The Inflation Forecast
The Treasury market’s inflation forecast has been falling for nearly two months, sending a warning sign that the economy is headed for a slowdown. The change for the worse in this indicator first caught our attention several weeks ago and the risk is even higher now. The basic problem is that the a sharp fall in inflation expectations is a sign of trouble for an economy that’s only been growing modestly, and unevenly. As a result, economic updates in recent days seem to confirm that disinflation/deflationary forces are on the rise again.