Here we go again? Another spring is here and suddenly the economic data is looking weak again. Private-sector nonfarm payrolls rose in March by a slim 121,000 on a seasonally adjusted basis. That’s roughly half as strong as we’ve been seeing in recent months. In February, for instance, private job growth was a much stronger 233,000. It’s safe to say that today’s number is a big disappointment and far below what most economists were expecting. Today’s jobs report also raises new concerns that the economy is weaker than it appeared in recent months, giving new strength to the arguments that the warm winter has been artificially juicing the numbers.
Author Archives: James Picerno
New Jobless Claims Fall Again Last Week
Initial jobless claims fell again last week, touching a new four-year low and signaling that the labor market will continue growing in the foreseeable future. For the week through March 31, new filings for unemployment benefits dropped 6,000 to a seasonally adjusted 357,000.
Will Job Growth Suffice?
Private-sector payrolls rose by 209,000 last month on a seasonally adjusted basis, according to yesterday’s ADP Employment Report. That’s pretty good, but is it good enough? The question resonates because while job growth has clearly perked up recently, at least compared with the modest pace for last year’s seven months through November, the faster rate of jobs creation hasn’t curtailed the slow deterioration in the year-over-year change in disposable personal income, at least not so far. Maybe that critical bit of progress is coming; if so, good news on this front is contingent on keeping payrolls rising at a healthy clip. Unfortunately, ADP’s estimate of March payrolls was a slight downshift from February. Granted, the change was slight—a net gain of 209,000 vs. 230,000 in February. That didn’t stop analysts from dispensing upbeat comments.
Untangling Inflation Worries
Inflation may be mild and falling, but that doesn’t stop anyone from worrying. A new survey by MFS Investment Management, for instance, reports that investors are more concerned about inflation over the next 12 months compared with their financial advisors. Sixty percent of investors surveyed say they’re worried about rising inflation over the next 12 months, according to the MFS Investing Sentiment Survey.
Conversely, only 41% of financial advisors think that rising inflation is a concern for investors in the year ahead.
The Beta Investment Report | High Yield Bond ETFs | 4.3.12
Here’s the latest installment of our ongoing review of ETFs that can be used to replicate the Global Market Index (GMI), a passive, unmanaged benchmark that’s comprised of the major asset classes. In the previous edition, we looked at broadly defined, investment-grade U.S. bond funds. Today’s focus is on high yield ETFs.
Strategic Briefing | 4.3.12 | Warm Weather & The Economy
The winter of our content? How much did weather skew U.S. data?
Irwin Kellner (MarketWatch) | Apr 3
All eyes will turn to the March employment data, to be released this Friday, to see if this improvement was real or merely a statistical illusion. The weather is usually more benign at this time of year, so any distortions from seasonal adjustments tend to be minimal. Nonfarm payrolls grew an average of 245,000 between December and February after expanding by an average of only 157,000 in the three prior months. That’s quite a jump. If March’s employment stats are as good or better than the previous three months, it could be sign that the winter’s improvement was real. But if March disappoints, it would mean that the strength over the winter was nothing but a chimera.
Manufacturing Activity Picks Up In March
The first major economic report for March suggests that the economy continued to expand last month thanks to manufacturing activity growing at a slightly faster rate. The ISM factory index rose to 53.4, up from 52.4 in February. A reading above 50 indicates a growing manufacturing sector.
Major Asset Classes | March 2012 | Performance Review
March was a mixed bag of performance for the major asset classes. REITs (MSCI REIT) were the big winner last month, posting a strong 5.2% gain, in sharp contrast with a 4.1% loss for a broad definition of commodities (DJ-UBS Commodity). Returns within the global equity space varied quite a bit too, with U.S. stocks (Russell 3000) advancing 3.1% as foreign markets in developed nations (MSCI EAFE) suffered a slight loss of 0.5% as emerging markets (MSCI EM) fell 3.3% in March (in US $ terms).
Book Bits | 3.31.2012
● Abundance: The Future Is Better Than You Think
By Peter H. Diamandis and Steven Kotler
Review via The New York Times
His thesis rests on a four-legged stool. The first idea is that our technologies in computing, energy, medicine and a host of other areas are improving at such an exponential rate that they will soon enable breakthroughs we now barely think possible. Second, these technologies have empowered do-it-yourself innovators to achieve startling advances — in vehicle engineering, medical care and even synthetic biology — with scant resources and little manpower, so we can stop depending on big corporations or national laboratories. Third, technology has created a generation of techno-philanthropists (think Bill Gates) who are pouring their billions into solving seemingly intractable problems like hunger and disease. And finally, we have what Diamandis calls “the rising billion.” These are the world’s poor, who are now (thanks again to technology) able to lessen their burdens in profound ways. “For the first time ever,” Diamandis says, “the rising billion will have the remarkable power to identify, solve and implement their own abundance solutions.”
Rethinking/Reinventing The Sharpe Ratio
Desperately searching for a fresh dose of chatter about risk metrics? You’re in luck. In my latest article for Financial Advisor, I consider a few of the possibilities for replacing, or at least supplementing the Sharpe ratio, the granddaddy or risk measures. The story’s in the March issue, although you can find the online version here.