The Book of Matthew foresees that the last will be first, and the first will be last. Investors will recognize the prophecy as the restless rotation in the realm of asset classes—a concept that even the blind can see in this year’s market’s action.
Author Archives: James Picerno
Chicago Fed Nat’l Activity Index: July 2013 Preview
The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to remain unchanged at -0.26 in tomorrow’s update for July, according to The Capital Spectator’s average econometric forecast. Values below -0.70 indicate an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Based on today’s estimate, CFNAI’s three-month average is projected to remain at a level that’s historically associated with economic expansion, albeit at a below-trend rate, in the July report, which is scheduled for release on Tuesday, August 20.
US Economic Profile | 8.19.13
Business cycle risk remains low, according to the July update of the Economic Trend (ETI) and Momentum indexes (EMI). Both benchmarks, which measure the broad trend in the economy via 14 economic and financial indicators, continue to post values that are well above their respective danger zones. That’s a strong signal for anticipating that the NBER will not declare July as the start of a new recession, or so the latest numbers suggest.
A Brief Holiday…
They say that August is a lazy month, and so who are we to argue? The Capital Spectator is taking a brief holiday for the rest of the week. We’ll be back on Monday, August 19 with the usual fare. Cheers!
US Housing Starts: July 2013 Preview
Housing starts are expected to total 882,000 in Friday’s update for July, based on The Capital Spectator’s average econometric forecast (seasonally adjusted annual rate). The projection represents a moderate increase vs. the previously reported 836,000 for June. Meanwhile, The Capital Spectator’s average expected gain for July is slightly lower vs. several consensus forecasts drawn from surveys of economists.
Thinking About Investing When Interest Rates Are Rising
The benchmark 10-year Treasury Note yield is near a one-year high. The upward bias of late is a reminder, albeit a mild one at the moment, that the long-anticipated run of higher interest rates has arrived. All the usual caveats apply, but we’ve probably seen the bottom in rates. This isn’t the end of the world, but it’s the start of a new era.
US Industrial Production: July 2013 Preview
Tomorrow’s report on industrial production for July is projected to post a 0.2% gain vs. the previous month, based on The Capital Spectator’s average econometric forecast. The expected increase is slightly below the previously reported rise of 0.3% for June. Meanwhile, the Capital Spectator’s average projection for July is at the low end of expectations relative to three consensus forecasts based on surveys of economists.
Retail Spending’s Growth Rate Slows In July
US retail sales increased 0.2% in July, in line with expectations, albeit a touch lower than some forecasts anticipated. Nonetheless, that’s a sluggish gain and well below June’s 0.6% rise. On the other hand, let’s not overlook the fact that retail spending advanced for the fourth month in a row through July. In fact, save for March, retail sales have increased every month this year.
Another Nail In The Coffin For Peak Oil
The theory of peak oil suffered another blow with the recent news that global crude oil production increased to a new all-time high in April 2013, the latest set of output numbers from the US Energy Information Administration (EIA). Production touched 76.348 million barrels per day in April, inching above the previous global peak of 76.036 million bbl/day in December 2012. The new era of increased oil supply, in other words, continues to find broad support in the data.
The Rise Of Momentum
Many financial analysts have argued in recent years that the capital markets—stocks, in particular—have changed quite a lot in the 21st century. That’s not surprising, given the fact that there are a host of new players on the scene. The rise of hedge funds, algorithmic trading outfits, and a broad array of other short-term-focused quant shops have altered the landscape. It would be shocking to discover otherwise. Indeed, there’s a whole lot of trading going on, in some cases measured in fractions of a second. What has this evolution wrought? One result is an intensified state of short-and-medium term price momentum.