By Steve Keen
Review via NakedCapitalism
At first glance this book seems too small-sized at 147 pages. But like a well-made atom-bomb, it is compactly designed for maximum reverberation to blow up its intended target.
Explaining why today’s debt residue has turned the United States, Britain and southern Europe into zombie economies, Steve Keen shows how ignoring debt is the blind spot of neoliberal economics – basically the old neoclassical just-pretend view of the world. Its glib mathiness is a gloss for its unscientific “don’t worry about debt” message. Blame for today’s U.S., British and southern European inability to achieve economic recovery thus rests on the economic mainstream and its refusal to recognize that debt matters.
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Author Archives: James Picerno
US Payrolls Rebound In April, But 1-Year Trend Still Looks Wobbly
The pace of job creation picked up sharply in April, the Labor Department reports. The solid increase suggests that the weak gain in March, which was revised down, was an anomaly. That’s an encouraging sign, and for the moment it revives the view that the US labor market is still expanding at a healthy if unspectacular rate. Nonetheless, the latest numbers also reaffirm that the year-over-year comparison is still signaling a decelerating trend, which has been playing out over the past two years.
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Research Review | 5 May 2017 | Forecasting
Credit Spreads, Daily Business Cycle, and Corporate Bond Returns Predictability
Alexey Ivashchenko (University of Lausanne)
May 4, 2017
The part of credit spread that is not explained by corporate credit risk forecasts future economic activity. I show that the link with aggregate business risk and bond liquidity risk explains this finding. Once I project spreads on these two risk factors, which are readily measurable with the daily frequency, in addition to corporate credit risk, the forecasting power of the residual spread reduces substantially for some macro variables and disappears entirely for the others. Such residual, however, turns out to be an out-of-sample forecast of corporate bond market returns. An investment strategy based on such forecasts delivers risk-adjusted returns 50% higher than the corporate bond market.
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Tech Sector’s One-Year Momentum Takes Lead From Financials
Technology shares have taken the lead over stumbling financials in the one-year-return column, based on a set of proxy ETFs as of yesterday (May 3, 2017). Although financials are still sitting on a solid one-year gain, tech’s annual rise has moved decisively into first place among the major US equity sectors in recent days.
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Strong US Equity Returns Suggest It’s Time To Rebalance
The leadership of US equities in the horse race among the major asset classes is a sight to behold. By almost any yardstick, the stock market for the world’s biggest economy has been and remains a dominant force of financial nature among global markets.
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Risk Premia Forecasts: Major Asset Classes | 2 May 2017
The expected risk premium for the Global Market Index (GMI) fell in April, marking the first decline since last August. GMI, an unmanaged market-value weighted mix of the major asset classes, is projected to earn an annualized 5.2% (over the “risk-free” rate) in the long run – 20 basis points lower vs. last month’s estimate.
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Major Asset Classes | April 2017 | Performance Review
April was kind to global markets. Positive returns were widespread for the major asset classes last month, led by a strong gain for inflation-linked bonds in foreign markets. The only loser: broadly defined commodities, which dipped for a second month.
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Book Bits | 29 April 2017
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By Andrew W. Lo
Summary via publisher (Princeton University Press)
Half of all Americans have money in the stock market, yet economists can’t agree on whether investors and markets are rational and efficient, as modern financial theory assumes, or irrational and inefficient, as behavioral economists believe—and as financial bubbles, crashes, and crises suggest. This is one of the biggest debates in economics and the value or futility of investment management and financial regulation hang on the outcome. In this groundbreaking book, Andrew Lo cuts through this debate with a new framework, the Adaptive Markets Hypothesis, in which rationality and irrationality coexist.
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Fear Takes A Holiday As VIX Index Falls To 3-Year Low
The VIX Index – a widely followed measure of US stock market volatility — slid to a three-year low on Thursday (Apr. 28 27), suggesting that investors are unusually serene these days when it comes evaluating the outlook for risk. In fact, investor sentiment has almost never been calmer, according to the VIX. The all-time low for the so-called fear index, which dates to 1990, is 9.48 on Dec. 23, 1993, based on daily data. Considering recent history, it wouldn’t be surprising to see the VIX touch a new record low in the days ahead.
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Another Rate Hike By June?
The probability of another rate hike for the Fed’s policy meeting in June continues to tick higher, according to futures data, but no change in rates is expected at next week’s FOMC meeting.
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