Private nonfarm payrolls in the US are projected to increase 235,000 (seasonally adjusted) in tomorrow’s June update from the Labor Department, according to The Capital Spectator’s median econometric point forecast. The expected monthly rise is moderately higher than the previously reported increase of 216,000 for May.
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Private nonfarm payrolls increased 281,000 in June over the previous month, according to this morning’s ADP Employment Report—substantially more than expected and the biggest monthly gain since November 2012. The consensus forecast was looking for +213,000, according to Econoday.com. Today’s release certainly looks encouraging for thinking that tomorrow’s official payrolls report from the Labor Department will also deliver upbeat news. Yet it’s still premature to argue that momentum for jobs has shifted into a higher gear.
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Private nonfarm payrolls in the US are projected to increase 180,000 (seasonally adjusted) in June over the previous month in tomorrow’s release of the ADP Employment Report, based on The Capital Spectator’s median econometric point forecast. The expected gain is incrementally higher than the previously reported increase for May.
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June was another strong month for returns across the board. Red ink was banished among the major asset classes for the third time this year on a monthly calendar basis. The big winner last month: emerging market stocks, which climbed 2.7% on a total return basis in June–the fifth straight monthly gain for this slice of equities. Ignoring the perennially flat performance of cash (3-month T-bills), last month’s “loser”: US investment-grade bonds in broad terms via the Barclays Aggregate Index, which advanced a mere 0.05% in June.
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The ISM Manufacturing Index is expected to increase to 55.5 in tomorrow’s update for June—a marginal gain vs. the previous month, based on The Capital Spectator’s median econometric forecast.
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Keeping interest rates for too low for too long risks another financial crisis, warns the Bank for International Settlements (BIS) in its newly published annual report. The concern is that while economic growth is still modest at best, financial markets are “extraordinarily buoyant”, in no small part due to extraordinarily easy monetary policies around the globe. The disconnect, if left unchecked, threatens to foster bubbles that could eventually reverse and create new macro troubles, the BIS says.
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● The Mystery of Market Movements: An Archetypal Approach to Investment Forecasting and Modelling
By Niklas Hageback
Summary via publisher, Wiley
There has long been a notion that subliminal forces play a great part in causing the seemingly irrational financial bubbles, which conventional economic theory, again and again, fails to explain. However, these forces, sometimes labeled ‘animal spirits’ or ‘irrational exuberance, have remained elusive – until now. The Mystery of Market Movements provides you with a methodology to timely predict and profit from changes in human investment behaviour based on the workings of the collective unconscious. Niklas Hageback draws in on one of psychology’s most influential ideas – archetypes – to explain how they form investor’s perceptions and can be predicted and turned into profit.
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Yesterday’s personal income and spending report for May matched expectations on the income side of the ledger but fell short of the consensus forecast for consumption. Some analysts warn that the surprisingly weak growth rate for spending last month (+0.2% vs. the consensus forecast of +0.4%) casts a shadow over the projected snapback in second-quarter GDP. But focusing on the monthly income and spending data can be misleading–especially if we’re looking at one monthly release. By contrast, the year-over-year changes offer a more reliable measure of the trend and by that yardstick the latest release offers another round of modest encouragement.
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Professor Robert Shiller at Yale says that the US stock market may be in nosebleed territory. “It looks to me like a peak,” he tells Yahoo Finance. Using his cyclically adjusted price-to-earnings ratio (CAPE), he notes that the current reading of roughly 26 has been higher only three times since the late-18th century: 1929, 2000, and 2007.
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Tomorrow’s update on US personal consumption spending for May is expected to show a gain of 0.5% vs. the previous month, based on The Capital Spectator’s median econometric forecast. That’s well above the 0.1% decline reported for April.
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