US retail sales are expected to rise 0.3% in tomorrow’s update for October vs. the previous month, according to The Capital Spectator’s average econometric forecast. That compares with the previously reported 0.1% decline for September. Meanwhile, the Capital Spectator’s average projection for October is moderately higher than estimates in consensus forecasts based on recent surveys of economists.
Daily Archives: November 19, 2013
You Say Bubble, I Say Fluctuating Risk Premia
David Stockman says that “we have bubbles everywhere” in markets, including stocks, junk bonds and housing. But one man’s bubble is another man’s time-varying risk premium that reflects a fluctuating expected return that’s linked in no small degree with the business cycle. Whew! Yes, one’s easier to say and the other’s a mouthful. Yet these two narratives are essentially telling us the same thing. But if you’re looking to drum up media exposure, you’re better off talking about bubbles instead of fluctuating risk premia. Bubbles offer more dramatic opportunity for interesting TV conversations. As a practical matter for managing money, however, looking at the markets through a framework of fluctuating risk premia has far more appeal.