US retail sales are expected to remain unchanged in tomorrow’s February report vs. the previous month, according to The Capital Spectator’s average point forecast for several econometric estimates. The average prediction marks a modest decline vs. the increase in the previous month.
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Positive momentum continued to lift risky assets last week, based on a set of proxy ETFs for the major asset classes. For the fourth straight week, the risk-on trade prevailed. The ongoing rally continues to pare the red ink in the trailing one-year-return column, which is inching closer to an even split between winners and losers.
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● Back From the Dead: Rate Hikes Are Getting Priced in Again | WSJ
● Fed’s Plans to Raise Rates Are Delayed, Not Derailed | NY Times
● Without Recessions, Americans Would Know Very Little Prosperity | Forbes
● Stocks For The Long Run? Maybe not | Fortune Financial
● Chinese Industrial Output Growth Slowest Since 2008 | RTT
● China Retail Sales Data Feels the Heat in Feb | CBN
● Germans Turn to Trump-Style Politics in Challenge to Merkel | Bloomberg

Understanding Modern Portfolio Construction
Cullen O. Roche (Orcam Financial Group)
February 22, 2016
Over the last 75 years there have been great strides in modern finance, portfolio theory and asset allocation strategies. Despite this progress the process of portfolio construction remains grounded in many theoretical concepts that can result in inappropriate or unrealistic frameworks. In this paper we provide an overview of the development of these ideas, construct a general foundation for understanding portfolio construction and produce a framework for simplifying, systematizing and streamlining the process in an attempt to establish a realistic and suitable process for portfolio construction.
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● U.S. jobless claims hit 5-mo low as labor mkt strengthens | Reuters
● US consumer confidence remains steady in 1st week of Mar | Bloomberg
● US services firms show resilience during mfg recession | WSJ
● ECB’s Draghi plays his last card to stave off deflation | Telegraph
● UK inflation expectations fall to 1.8%, below BOE target | MNI

Recent economic data for the US suggests that the stock market’s hissy fit this year has been a false signal for anticipating a new recession. That’s not surprising—the short-term noise in equity prices is a constant challenge for business-cycle analysis and so it’s not uncommon that market volatility will lead us astray at times. That’s always been the case and nothing’s changed. Looking to markets in isolation of hard economic numbers is a dangerous game if real money is at stake. The challenge is finding a happy medium. The good news is that there are several choices for relatively reliable signals.
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● Revised GDPNow model estimate for US Q1 growth holds at +2.2% | Atlanta Fed
● US wholesale inventories rose in Jan as sales tumbled | Reuters
● Faltering US economy leads global slowdown | Markit
● Is Passive Investment Actively Hurting the Economy? | New Yorker
● How To Be Wrong As An Investor | Wealth of Common Sense
● Who Gets the Blame for the Slowing Economy? | NY Times
● Google’s AI program beats GO grandmaster | Wired

The Federal Reserve will leave its Fed Funds rate unchanged at the current target range of 0.25% to 0.50% at its policy meeting next week, writes The Wall Street Journal’s John Hilsenrath–reportedly one of the most “well-connected” journalists on Fed matters. Supporting evidence for anticipating that the central bank will stand pat includes the recent numbers on key Treasury yields, the Effective Fed Funds rate and the market’s inflation expectations.
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● US small-business owners’ confidence eases in Feb | MarketWatch
● US Redbook Retail Sales Index up 0.7% in the first week of Mar | MNI
● Are Central Banks Really Out of Ammunition? | Project Syndicate
● Fed Likely to Stand Pat on Rates, Keep Options Open | WSJ
● UK industrial production ticked up in Jan | MarketWatch