The Treasury market’s 10-year inflation forecast is slipping…again. That’s no surprise, given the renewed concerns of late on the deflation front (see here and here, for instance). Unsurprising, perhaps, but still troubling.
Author Archives: James Picerno
SPENDING & INCOME RISE IN MAY, BUT ECONOMIC RISK IS STILL LURKING
The markets tanked last month, signaling trouble ahead. Yet consumer spending and income rose in May, the government reported this morning. Were the bears wrong? Maybe, but that’s not yet obvious, despite the gains in today’s economics stats.
EMERGING MARKET EQUITY ALLOCATIONS
“The rapid growth of emerging economies has led to a shift in economic power,” the OECD reported earlier this month, offering quantitative support for what everyone already knows. “Forecasts based on analysis by late economist Angus Maddison suggest that the aggregate economic weight of developing and emerging economies is about to surpass that of the countries that currently make up the advanced world.” The economic and financial turmoil of late is accelerating the trend, according to analysis from the OECD.
GOOD NEWS, BAD NEWS & STILL WAITING…
Last week’s new jobless claims dropped by a strong 19,000 to a seasonally adjusted 457,000, the Labor Department reported today. That’s a welcome change, but it’s too early to say if this is the start of a new round of declines or just more statistical noise of bouncing around in a range. If recent history is a guide, prepare yourself for the latter.
THE FINER POINTS OF BEING WRONG
Most interviews with money managers are all about success and how wonderful the ABC Fund’s performance has been over the years. But once in a while you find a discussion on the opposite end of the spectrum, and maybe that’s a good thing if you can learn more from mistakes than from victories. In any case, author Kathryn Schulz–no stranger to analyzing mistakes via her book Being Wrong: Adventures in the Margin of Error
MINIMIZING THE THREAT OF “LUCK”
Carl Richards, a financial planner who blogs for The New York Times, laments the fact that equity investing has been distinctly unimpressive over the past decade plus. Earning a risk premium in the stock market “is a function of pure luck,” writes the founder of Prasada Capital.
A DEATH EXAGGERATED
Is modern portfolio theory (MPT) dead? Yes, according to many pundits and strategists. There have always been skeptics of modern finance, although membership in this club has risen sharply in recent years, thanks to the surge in market volatility and the steep losses posted by the major asset classes during late-2008 and early 2009. A popular argument is that multi-asset class diversification didn’t spare investors from unusually big declines, ergo, MPT failed. By that standard, the case for abandoning conventional asset pricing theory looks compelling. There’s just one problem: It’s wrong.
ONE ANALYST’S TAKE ON THE RECESSION RISK
(RE)CONSIDERING INVESTMENT NEWSLETTERS
Dow Jones sent me an email this morning inviting yours truly to partake of the enlightened analysis in The Hulbert Financial Digest, a newsletter edited by Market Hulbert that evaluates other investment newsletters. No doubt thousands received similar invites. But while it was one more marketing effort, the email was intriguing for what it says about published efforts at trying to beat the market.
THE TRENDLESS TREND IN JOBLESS CLAIMS
Today’s update on weekly jobless claims is more of the same. New filings for unemployment benefits continue to bounce around in the seasonally adjusted weekly range of 450,000-500,000. That’s been true all year, and today’s report doesn’t change anything. The longer this goes on, the stronger the case for thinking that the rebound in the labor market is going to be sluggish—perhaps more so than even the generally muted expectations of a month ago.