It’s the first day of summer and your editor is slipping out the back door for a week-long vacation. France, to be precise, starting with a few days in Paris and then down to Montpellier, on the coast near Spain. Given the scenic and gastronomic distractions (not to mention the wine), it’s best to assume that blogging will be light to non-existent (with an emphasis on the latter) for the week ahead. I’ll be back with the usual fare, starting Monday, July 1, kicking off my (hopefully) triumphant return with an update to the monthly profile of the major asset classes. Meanwhile, until further notice, it’s summertime and the livin’ is easy…
Monthly Archives: June 2013
Book Bits | 6.21.13
● The Norm Chronicles: Stories and Numbers About Danger
By David Spiegelhalter
Review via The Economist
Risk is everywhere. From tabloid headlines insisting that coffee causes cancer (yesterday, of course, it cured it) to stern government warnings about alcohol and driving, the world is teeming with goblins. For each one there is a frighteningly precise measurement of just how likely it is to jump from the shadows and get you. “The Norm Chronicles”, a new book from Michael Blastland, a journalist in love with statistics, and David Spiegelhalter, a statistician, aims to help data-phobes find their way through this blizzard of risks.
Macro-Markets Risk Index | 6.21.2013
A markets-based profile of US economic conditions continues to deteriorate in June, although business cycle risk still looks low from an historical perspective. Nonetheless, the Macro-Markets Risk Index (MMRI) closed yesterday (June 20) at 7.6%, the lowest since last August. The sharp decline in MMRI in recent weeks looks troubling–if it continues. For now, the index is still well above the danger zone of 0%, although the margin of comfort is shrinking rapidly. If MMRI falls under 0%, that would be a sign that recession risk is elevated. By comparison, readings above 0% equate with economic growth.
Q2:2013 US GDP Nowcast | 6.21.2013
US GDP is expected to rise 2.1% (real seasonally adjusted annual rate) for this year’s second quarter, according to The Capital Spectator’s average econometric nowcast. Today’s update is slightly lower than the previous 2.3% nowcast average for Q2, published on May 28.
Jobless Claims & US PMI Data Still Signal Modest Growth
Today’s updates on US economic data is a bit of a yawn, but that’s okay because the numbers are still trending positive, albeit moderately so. The initial June estimate of the manufacturing purchasing managers index from Markit Economics ticked down to 52.2 from May’s 52.3, but that’s still well above the neutral 50 mark and so this benchmark tells us that the sector is still growing at a decent if unspectacular pace. Meanwhile, initial jobless claims last week jumped by 18,000 to a seasonally adjusted 354,000, but the worst you can about this series at this point is that it’s treading water. Then again, the year-over-year trend for new unemployment filings remains continues to fall at a healthy rate and so today’s numbers still point to modest healing for the labor market.
Asset Allocation & Rebalancing Review | 19 June 2013
The great divergence of returns among the major asset classes rolls on in 2013. Indeed, the range of performance has widened since the previous edition of Asset Allocation & Rebalancing Review. US stocks are still at the top of the list while emerging market equities continue to toil in red ink at the bottom on a year-to-date basis. The only change in the extremes is that the leading return is higher and the trailing return is lower.
Housing Starts In May Rebound After April’s Sharp Correction
New residential construction in the US increased last month to a seasonally adjusted annual rate of 914,000, which is nearly 7% higher than April’s count. Meanwhile, newly issued building permits declined 3.1% in May to a seasonally adjusted 974,000 annual pace vs. the previous month. Nonetheless, the housing recovery is still very much alive and kicking. But today’s numbers are a reminder that growth is probably slowing, which is only natural as new supply moves in line with demand. The last year or so has been about playing catch-up with demographics, but the big adjustments are probably behind us. The cycle for housing construction, in other words, is maturing.
US Housing Starts: May 2013 Preview
Housing starts are expected to total 929,000 in tomorrow’s update for May, based on The Capital Spectator’s average econometric forecast (seasonally adjusted annual rate). That’s a moderate increase vs. the previously reported 853,000 for April. Meanwhile, The Capital Spectator’s average projected gain for May is slightly below the numbers in several consensus forecasts drawn from surveys of economists.
US Economic Profile | 6.17.13
Economic news in recent months has been somewhat mixed, but the broad trend continues to look encouraging. The May profile of the economy, using the numbers published so far, shows few signs of stress, based on today’s update of The Capital Spectator’s Economic Trend Index (ETI) and Economic Momentum Index (EMI), which are comprised of 14 economic and financial indicators. As a result, business cycle risk remains low and so it’s unlikely that the NBER will eventually declare May as the start of a new recession, as suggested by the current data sets available.
Book Bits | 6.15.13
● Keeping Up with the Quants: Your Guide to Understanding and Using Analytics
By Thomas H. Davenport and Jinho Kim
Summary via publisher, Harvard Business Press
Welcome to the age of data. No matter your interests (sports, movies, politics), your industry (finance, marketing, technology, manufacturing), or the type of organization you work for (big company, nonprofit, small start-up)–your world is awash with data. As a successful manager today, you must be able to make sense of all this information. You need to be conversant with analytical terminology and methods and able to work with quantitative information. This book promises to become your “quantitative literacy” guide–helping you develop the analytical skills you need right now in order to summarize data, find the meaning in it, and extract its value. In “Keeping Up with the Quants,” authors, professors, and analytics experts Thomas Davenport and Jinho Kim offer practical tools to improve your understanding of data analytics and enhance your thinking and decision making.
