Political turmoil swirling around President Trump reached critical mass on Wednesday, triggering a selloff in the US stock market. One concern is that the administration’s pro-growth policy proposals are vulnerable if the White House is forced to address the chaos, much of it self-inflicted, that threatens to overwhelm Washington.
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Author Archives: James Picerno
The Limits Of One-Indicator Recession Analysis
The search for a silver bullet in business-cycle analysis is a hardy perennial. But it’s a search that’s almost certainly destined for failure.
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Mixed Messages In Treasury Market For Rate Outlook
Judging by futures prices, the market’s expecting that the Federal Reserve will raise interest rates again at next month’s monetary policy meeting. That’s also the implied outlook in the 2-year yield (considered to be the most-sensitive spot on the yield curve for rate expectations), which is close to a post-recession high. But the Treasury market’s softer inflation forecasts still leave room for debate about what comes next.
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Emerging-Markets Stocks Rise To 2-Year High
Equities in emerging markets advanced last week, posting the best performance among the major asset classes and touching a two-year high, based on a set of exchange-traded products.
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Book Bits | 13 May 2017
By Gary Saul Morson and Morton Schapiro
Summary via publisher (Princeton University Press)
Economists often act as if their methods explain all human behavior. But in Cents and Sensibility, an eminent literary critic and a leading economist make the case that the humanities, especially the study of literature, offer economists ways to make their models more realistic, their predictions more accurate, and their policies more effective and just. Gary Saul Morson and Morton Schapiro trace the connection between Adam Smith’s great classic, The Wealth of Nations, and his less celebrated book on The Theory of Moral Sentiments, and contend that a few decades later Jane Austen invented her groundbreaking method of novelistic narration in order to give life to the empathy that Smith believed essential to humanity.
Stock Market Volatility and Recessions: A Primer
The unusually low level of stock market volatility has drawn widespread attention recently as the crowd tries to decipher what it means for equity investing and the economy. One of the interpretations is that low vol is a sign that recession risk is low. That’s true, at least at the moment. But the historical connection between market volatility and the business cycle is too unstable for drawing general lessons about recession risk. In other words, it’s dangerous to assume from volatility alone that the near-term outlook for the US economy is rosy. The opposite is true too: a spike in vol by itself doesn’t always signal a new recession.
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Cleaning Out The Factor Zoo
The explosion of financial research in recent years has uncovered an expanding assortment of alpha-generating possibilities that presumably offer a shortcut for enhancing returns over and above a market index. But as a growing list of studies reminds, you can drive a bus through the gap between the reported laundry list of factors and those that pass the smell test.
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What’s The Deal With Low Stock Market Volatility?
The so-called fear gauge of the US equity market – the VIX Index — fell to a two-decade low this week. Analysts are divided on what it means. By some accounts, it’s the calm before the storm. But others say it’s a sign that the good times will roll on, at least for a while.
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US Q2 GDP Growth Expected To Rebound
Tepid economic growth in the first quarter is on track to revive in Q2, according to estimates from several sources. Although the forecasts are wide-ranging at the moment, the unifying factor is a widespread view that output will pick up in the second quarter after a sluggish start to the year.
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Foreign Developed-Market Stocks Surged Last Week
Equity markets in developed countries ex-US rose sharply again last week, posting the biggest increase among the major asset classes for the five trading days through May 5, based on a set of exchange-traded products.
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