● Paying the Price: Ending the Great Recession and Beginning a New American Century
By Mark Zandi
Interview with author via Bloomberg TV (Sep 17)
U.S. Economy Doesn’t Need More Stimulus, Zandi Says: Mark Zandi, chief economist at Moody’s Analytics Inc., talks about federal stimulus programs and the impact on the U.S. economy. Zandi also discusses the U.S. budget deficit and Federal Reserve monetary policy. He speaks with Trish Regan on Bloomberg Television’s “Street Smart.”
Monthly Archives: September 2012
Expected Equilibrium Risk Premiums | 9.21.12
After asset allocation and rebalancing, one of the tasks on the short list of strategic-minded portfolio design and management is developing reasonable assumptions about risk premiums. In fact, all three are intimately linked. You can hardly make informed decisions about any one without spending some time analyzing the other two. Forecasting is challenging, of course, to say the least. But it’s also necessary and inevitable. Investing by nature is a process of making decisions about the future, and so the price of doing business in the money game is developing assumptions.
Q3:2012 U.S. GDP Nowcast | +1.92% | 9.20.12
After today’s update of jobless claims, The Capital Spectator’s revised nowcast of third-quarter GDP slipped by the smallest of margins to real annualized growth of 1.92%. That’s down ever so slightly from the previous 1.93% estimate. Once again, it adds up to effectively no change, which is a clue for thinking that the outlook for sluggish growth rolls on. That said, the current nowcast still represents a small improvement over the 1.7% growth rate for Q2, as reported by the Bureau of Economic Analysis.
Are Jobless Claims Treading Water Again?
New filings for jobless benefits slipped a bit last week, but the bigger story is that new claims appear to be stuck in neutral again. It’s hard to say for sure, however, since the weekly numbers are quite noisy. But if the last few months are an indication, progress in paring claims has slowed to a crawl if not ceased altogether. Even so, it’s too soon to assume the worst: the year-over-year change in unadjusted claims is still falling.
Q3:2012 U.S. GDP Nowcast | +1.93% | 9.19.12
The Capital Spectator’s latest nowcast of third-quarter GDP pares the outlook ever so slightly to real annualized growth of 1.93%, or down a touch from the previous 1.95% estimate. That’s effectively no change from the earlier nowcast, which implies that the outlook for the economy remains in a holding pattern of sluggish growth. That said, the current nowcast represents a small improvement over the 1.7% growth rate for Q2, as reported by the Bureau of Economic Analysis.
Housing Starts Rise In August As New Building Permits Slip
The housing recovery was a bit sluggish in August, although perhaps today’s monthly update is more noise than signal. Nonetheless, the latest residential construction figures from the Census Bureau are a mixed bag: newly issued building permits for housing retreated modestly (-1.0%) in August vs. July while new housing starts in August rose 2.3% over the previous month. It’s not a terribly encouraging batch of numbers, but it doesn’t look especially troubling either. But if we strip away the short-term changes and focus on the annual trend, the numbers still suggest growth will prevail in the months ahead.
U.S. Economic Trend Update | 9.18.12
Several analysts are warning (again) that we’re in a recession now, today, this minute. They may be right, or not. It’s hard to say for sure, of course, because we have minimal economic data about what’s happening now, today, this minute. Septermber’s economic profile, in other words, remains a mystery for the most part for a few weeks longer. But we do have most of the data through August, and it’s always worthwhile to review a broad measure of the numbers as a benchmark for thinking about where we’ve been in the business cycle, and where we seem to be headed.
Q3:2012 U.S. GDP Nowcast Update | 9.17.12
Friday’s update on industrial production and retail sales for August, along with the ongoing changes in the market indicators, provides an opportunity to run fresh numbers on the Capital Spectator’s 10-factor GDP nowcast (see this post for an overview of the methodology).1 The current nowcast anticipates Q3:2012 GDP rising at nearly 2.0% in real annualized terms—down from the previous +2.3% nowcast. (The government’s first estimate of Q3 GDP is scheduled for release on October 26.)
Book Bits | 9.15.2012
● The Value Investors: Lessons from the World’s Top Fund Managers
By Ronald Chan
Summary via publisher, Wiley
Investing legend Warren Buffett once said that “success in investing doesn’t correlate with I.Q. once you’re above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.” In an attempt to understand exactly what kind of temperament Buffett was talking about, Ronald W. Chan interviewed 12 value-investing legends from around the world, learning how their personal background, culture, and life experiences have shaped their investment mindset and strategy. The Value Investors: Lessons from the World’s Top Fund Managers is the result. From 106-year-old Irving Kahn, who worked closely with “father of value investing” Benjamin Graham and remains active today, and 95-year-old Walter Schloss (described by Warren Buffett as the “super-investor from Graham-and-Dodsville”), to the co-founders of Hong Kong-based Value Partners, Cheah Cheng Hye and V-Nee Yeh, and Francisco García Paramés of Spain’s Bestinver Asset Management, Chan chose investment luminaries to help him understand the international appeal – and success – of value investing. All of these men became strong advocates of the approach despite considerable age and cultural differences. Chan finds out why.
Retail Sales Strengthen In August As Industrial Production Slumps
Retail sales continued to rebound in August, the Census Bureau reports. Industrial production, however, tumbled sharply last month—the most, in fact, since 2009. But Hurricane Isaac may be to blame for most of the weakness in industrial production, according to today’s update from the Federal Reserve. If so, the strong report for consumer spending in August offers a clearer profile of the general trend last month.