Actively managed asset allocation products are hot. The supply is growing rapidly and there’s a broad variety of strategies to choose from. The product designs range from conservative balanced funds to aggressive trading-oriented strategies and they’re available in open-end mutual funds and ETF formats. But some things never change, and so it’s still hard to beat a passive benchmark of all the major asset classes. That headwind alone doesn’t necessarily mean that you should shun actively managed multi-asset class funds, but it’s a reminder that there’s no free lunch in this corner of investment products. In other words, all the standard caveats that apply to active single-asset class funds apply here. Your mission, if you choose to accept it, is figuring out if you can overcome the odds.
Category Archives: Uncategorized
Jobless Claims Fall Again…To A New Four-Year Low
Initial jobless claims dropped again last week, slipping 13,000 to a seasonally adjusted 348,000, the Labor Department reports. That’s the lowest number of new filings for unemployment benefits since March 2008. The trend, in other words, is still sending a strong signal that the labor market recovery—and economic growth—will roll on.
Expecting More From Housing
Last week I wondered if the housing sector had finally hit bottom. There’s a good case for arguing “yes,” although the bigger question is whether housing will be a contributor to overall economic growth? That’s still a mystery in terms of timing, but the odds are looking better for the optimistic outlook is increasingly relevant. Perhaps we’ll find some fresh clues in the update for January’s housing starts, scheduled for release later this morning. The consensus forecast calls for a moderate increase over December, according to Briefing.com.
Is Gold Really An Inflation Hedge?
Earlier today I wrote that macro history raises serious questions about returning the monetary system to a gold standard, a goal that some pundits (and a few Republican candidates for president) advocate. Looking to gold as a cure for economic volatility rests partly on the assumption that the metal is a reliable inflation hedge through time. But as it turns out, gold’s inflation-hedging attributes may not be as durable as conventional wisdom claims. As The Free Exchange at Economist.com notes, there’s a “gold puzzle” in them ‘thar hills.
Industrial Production Was Flat In January
Industrial production was basically unchanged last month, the Federal Reserve reports. Economists were expecting a substantial rise and so today’s update was a negative surprise. Is that a sign of trouble for the economy? No, not really, at least not yet. Industrial production alone isn’t all that valuable as a forward-looking measure of the business cycle, although it does tend to confirm other warning signs when recession risk is rising. By that standard, there’s not much going on here since the annual pace of industrial production is still growing at a healthy clip. If you’re looking for a smoking gun that tells us the economy’s set to tumble, you won’t find it here. Sure, it could be the start of something worrisome, but it might just as easily turn out to be noise, and so the net result at the moment is that today’s data point is more or less a wash.
Papering Over The Gold Standard’s Flaws
Pushing for a return to the gold standard as a cure for economic volatility is the new new thing in populist circles these days. Holding out the promise of a kinder, gentler business cycle needs no introduction. Several Republican presidential candidates have embraced the idea, and there’s no shortage of pundits jumping on gold’s bandwagon, including former Wall Street Journal editor George Melloan, who proclaims: “Let’s return to the gold standard” in The American Spectator. Alas, the cure is an illusion, and one that’s based on a misreading of economic history. Hard money talk can whip up a crowd, but a sober reading of the past on this topic leaves lots of questions–questions that Melloan and others of his persuasion rarely address.
A January Thaw For Retail Sales
Retail sales rose 0.4% last month, the government reports. That’s below what many economists were forecasting, but predictions aside there’s nothing particularly troubling with the latest numbers. Indeed, the revival in January’s retail sales growth after December’s sluggish pace is welcome news.
The Forecast File: US Retail Sales For January
Retail Sales in U.S. Probably Rose by the Most in Four Months
Bloomberg | Feb 14
Sales at U.S. retailers probably rose in January by the most in four months, led by growing demand for autos, economists said before a report today. The projected 0.8 percent increase would follow a 0.1 percent December advance, according to the median forecast of 82 economists surveyed by Bloomberg News.
Is The New Abnormal On Its Last Legs?
The recent rise in the stock market has been accompanied by an increase in inflation expectations. That’s a healthy sign while we’re trapped in the new abnormal. One day the stock market and inflation expectations will go their separate ways, but not yet. Meantime, the economy’s still struggling to break free of post-crisis gravity and so it still requires the assistance from higher inflation expectations.
Book Bits For Saturday: 2.11.2012
● Coming Apart: The State of White America, 1960-2010
By Charles Murray
Review via LA Times
Charles Murray’s new book is hardly the bombshell that placed him on the Politically Incorrect Ten Most Wanted list 18 years ago when he co-wrote “The Bell Curve” with Richard J. Herrnstein in 1994. But by providing a data-driven argument for inequality’s cultural and sociological roots, “Coming Apart: The State of White America, 1960-2010” arrives just in time for the central political and policy debate in the 2012 elections: What is the nature of the widening gap between the rich and everyone else — and what can, or should, be done about it?
