Don’t Fear the Sequester | Brian Wesbury, First Trust
The first thing to realize is that implementing the sequester is not the end of the world. Not by a long shot.
Budget Cuts Seen as Risk to Growth of U.S. Economy | B. Appelbaum and A. Lowrey, NY Times
The fresh round of federal spending cuts scheduled to begin next week would slow economic growth in the next year, though not nearly as much as going over the so-called fiscal cliff might have, economists said.
What Kind of Cuts Grow the Economy? | Rep Kevin Brady, Nat’l Review
Spending reductions must be large, credible, and politically difficult to reverse.
The sequester would really cut the budget | Jamie Dupree, Atlanta Journal-Constitution
I know it’s hard for many people to believe, but instead of just trimming the rate of increase in the federal budget, the $85 billion in automatic budget cuts set to hit on March 1 would actually result in less spending by Uncle Sam.
CBO Testifies on the Budget and Economic Outlook | Congressional Budget Office
We anticipate that economic growth will remain slow this year, because the gradual improvement we see in underlying economic factors will be offset by a tightening of federal fiscal policy scheduled under current law.
Schroders’ Joanna Shatney cautiously optimistic as mandatory spending cuts loom over US | Joanna Shatney, Investment Europe
While GDP will be hit by these government spending changes, we see the multiplier effects as being more limited than the tax increases agreed to at the end of 2012 – meaning any effects from sequestration should be more manageable for corporate earnings.
Monthly Archives: February 2013
Housing Starts Fell In January As Permits Rose
US housing starts dropped by a more-than-expected 8.5% last month, the Census Bureau reports. Meanwhile, newly issued building permits gained 1.8% over December’s total, at a seasonally adjusted annual rate. More importantly, both series continue to advance at 20%-plus levels on a year-over-year basis. That’s a strong signal for thinking that housing recovery remains intact.
The (Really) High Price Of Active Management
It’s no secret that indexing is considerably less expensive than active management. It’s also well established that indexing’s lower price tag often provides a considerable performance advantage when measured over time. As it turns out, the drag from higher active fees is far larger than generally known. A recent article by consultant/strategist Charlie Ellis (author of the must-read book Winning the Loser’s Game
Housing Starts: January 2013 Preview
Housing starts in January are expected to fall 2.2% vs. the previous month, on a seasonally adjusted annualized basis, according to The Capital Spectator’s average econometric forecast. That’s a sharp reversal from December’s 12.1% gain over the previous month. The Capital Spectator’s projected decrease for tomorrow’s January report is roughly half as much as the anticipated decline based on consensus forecasts from economists.
The Holy Grail For Monitoring Your Portfolio
What’s the most important source of strategic information for managing your investment portfolio? Is it the outlook for each of the markets that are targeted by your strategy? Estimates of risk? Expectations for interest rates or the business cycle? Actually, most of what you need to know comes directly from the portfolio–your portfolio. To be precise, the shifting allocation weights contain the lion’s share of critical data you need for making informed investment decisions and generating a satisfactory risk-adjusted return through time.
U.S. Economic Profile | 2.18.13
Worries about the future still permeate the macro climate, but the numbers published for January so far continue to look encouraging for expecting slow growth. Eight of the 14 indicators that comprise The Capital Spectator Economic Trend (CS-ETI) and Momentum (CS-EMI) indices are positive. The economy, in short, is still biased toward expansion, based on what we know at the moment from the perspective of a broad measure of economic activity.
Book Bits | 2.16.13
● The 25 Habits of Highly Successful Investors: How to Invest for Profit in Today’s Changing Markets
By Peter Sander
Summary via publisher, Adams Media
Especially after the wild ride that began in the fall of 2008, individual stock investing has become far more challenging. Think of a golf swing – hit it right and it goes long and straight, hit it wrong and you’ll end up far off in the weeds. But – like much else in life – golf swings become habits when done right. Investing should be no different. What works should become habit, and each and every investor should develop his or her own set of habits for success. Peter Sander in this book reveals a set of twenty five habits that lie behind his own personal investing success, habits loyal to the value investing principles of Benjamin Graham, Warren Buffett and others. These 25 habits – or your own version thereof – will help you hit your investments long and straight.
Industrial Production Slips 0.1% In January
Industrial production fell 0.1% in January, the Federal Reserve reports, delivering a moderately worse-than-expected reading for the start of the year. Is that a sign of trouble for the business cycle in 2013? Possibly, but we’ll need to see more dark news from this and other indicators before the broad picture issues a clear warning. For now, it’s best to consider the latest data point for industrial production as a normal fluctuation within a slow-growth context.
Four Market Indicators Suggest That US Recession Risk Is Low
When recession risk is high, what signals do you expect from the markets? The empirical record and a deep library of research tell us to look for the following: a stock market that’s posting negative year-over-year returns; a credit spread that’s rising vs. year-earlier levels; a Treasury yield spread that’s currently negative; and annual increases in oil prices. If all four danger signals were present, our cyclical goose would probably be cooked. But that’s not the case at all. In fact, none of those warning conditions currently exist.
US Industrial Production: Jan 2013 Preview
Tomorrow’s report on industrial production (08:30am eastern) for January is projected to post a modest 0.2% gain, according to The Capital Spectator’s average econometric forecast. That’s a slightly slower rate of growth vs. December’s 0.3% increase. Economists generally anticipate a 0.2%-0.3% rise for December’s industrial production, based on consensus forecasts.