Private nonfarm payrolls in the US are projected to increase by 133,000 (seasonally adjusted) in tomorrow’s October update from the Labor Department, according to The Capital Spectator’s average econometric point forecast. The projected gain is slightly higher than the reported increase of 126,000 for September. Meanwhile, The Capital Spectator’s average October projection is slightly higher than a pair of consensus forecasts, based on surveys of economists.
Monthly Archives: November 2013
Q3 GDP Delivers An Upside Surprise
The US economy picked up speed in the third quarter, or so today’s initial estimate of Q3 GDP shows. The economy expanded by 2.8% in the three months through September vs. the previous quarter, based on a seasonally adjusted annualized real rate. That’s quite a bit better than the consensus forecast of 2.0% and The Capital Spectator’s 2.1% average econometric nowcast. The faster pace of growth in Q3 was driven largely by “a deceleration in imports and accelerations in private inventory investment and in state and local government spending,” according to the Bureau of Economic Analysis. But it’s unclear if this is a sign that the economic growth will continue to improve. For one thing, consumer spending remains tepid, according to today’s report. Still, it’s hard to argue that the economy is slowing via the data du jour. In a separately released report today, new filings for jobless benefits dropped again last week. Overall, today’s news reinforces the message that the economy continues to grow at a moderate pace with minimal signs of distress on the immediate horizon.
Macro-Markets Risk Index: 12.2% | 11.07.2013
The US economic trend has rebounded in early November after slumping during the past two months, according to a markets-based profile of macro conditions. The Macro-Markets Risk Index (MMRI) closed at 12.2% on Wednesday, Nov. 6—a level that suggests that business cycle risk remains low. One interpretation of the benchmark’s revival is that it reflects optimism that the end of last month’s government shutdown removes a weight on the economy. The current 12.2% value is nearly twice as high as the lowest reading for the year to date—7.5% posted in mid-September—and comfortably above the 0% danger zone. If MMRI falls under 0%, that would be a sign that recession risk is elevated. By comparison, readings above 0% imply a bias for economic growth.
The Biggest Little Secret In Money Management
It happens all the time. A new strategy emerges from the obscure recesses of the research caverns and morphs into an ETF, mutual fund, or a separate account program. Or perhaps it’s outlined on an investor’s blog for all the world to see. Sometimes there are glowing reviews fueled by compelling back-tests. For the most successful strategies that spawn products, there are big inflows of assets. There’s usually plenty of hype too. But when you peel back the details and drill down into the core of the strategy du jour, you’ll typically find a familiar combination of variables: rebalancing with one or more factor tilts.
Cutting Through Market Noise With Boxplots
Separating the noise from the signal is the bane of modern investment analytics. An excess of opinion and data confound and complicate our capacity to focus on the key decisions for designing and managing investment portfolios. One of my favorite tools for cutting through the clutter is a graphical tool known as boxplots. If I could only choose one charting methodology for analyzing performance data, I’d go with boxplots. Here’s why.
Q3:2013 US GDP Nowcast: +2.1% | 11.04.2013
US GDP is expected to rise 2.1% in this year’s third quarter (real seasonally adjusted annual rate), according to The Capital Spectator’s average econometric nowcast. Today’s revision is slightly higher than the previous 2.0% average nowcast for Q3, which was published on September 25. The government’s initial estimate of this year’s Q3 GDP is scheduled for release this Thursday, Nov. 7.
Book Bits | 11.2.13
● Keynes’s Way to Wealth: Timeless Investment Lessons from The Great Economist
By John F. Wasik
Summary via publisher, McGraw-Hill
Few people know, however, that he was also a daring, steel-nerved investor who built a multi-million-dollar fortune in the stock market while providing financial counsel to the likes of Winston Churchill and FDR. Now, you can learn from–and imitate–Keynes’s success by examining the story of his life and investment strategies, masterfully told by awardwinning author John F. Wasik. As you follow Keynes from his early years with the Bloomsbury Group, through two world wars and the Great Depression Keynes’s theories and practices come to life by way of the historic and personal events that shaped them. Like today’s investors, Keynes faced markets roiled by panic, inflation, deflation, widespread unemployment, and war–and he developed a core set of principles to prosper in every climate.
ISM Manufacturing Index Inches Higher For October
Manufacturing output surprised the crowd with an upbeat number in today’s ISM Manufacturing report for October. This cyclical slice of the US economy expanded a slightly faster rate last month, according to ISM’s index, leaving this benchmark at 56.4–its highest level in 2-1/2 years. That’s something of a shock vis-a-vis the consensus forecast, which warned of a substantial decline for this benchmark to 55.0. That overall prediction from economists contrasts with yesterday’s econometric projection on these pages that anticipated a steady reading for today’s October’s release by way of a slight uptick to 56.3.
Major Asset Classes | October 2013 | Performance Review
October has a reputation for trouble when it comes to market behavior, but you wouldn’t know it from looking at last month’s numbers. There was minimal turbulence in asset prices in October. Aside from commodities, the major asset classes posted another solid batch of gains, building on September’s bull run. The Global Market Index (GMI) posted a 2.8% increase last month, leaving it higher on the year by a solid 12.0%.