Book Bits | 4 June 2016

● The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
By Ruchir Sharma
Summary via publisher (W.W. Norton)
Shaped by his twenty-five years traveling the world, and enlivened by encounters with villagers from Rio to Beijing, tycoons, and presidents, Ruchir Sharma’s The Rise and Fall of Nations rethinks the “dismal science” of economics as a practical art. Narrowing the thousands of factors that can shape a country’s fortunes to ten clear rules, Sharma explains how to spot political, economic, and social changes in real time. He shows how to read political headlines, black markets, the price of onions, and billionaire rankings as signals of booms, busts, and protests. Set in a post-crisis age that has turned the world upside down, replacing fast growth with slow growth and political calm with revolt, Sharma’s pioneering book is an entertaining field guide to understanding change in this era or any era.
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Labor Dept: US Job Growth Slows To A Crawl In May

US job growth fell hard last month, the Labor Department reports. Private-sector payrolls increased by a thin 25,000 in May, the smallest monthly gain in five years. Even adding the estimated loss of 30,000-plus workers due to the Verizon strike last month still leaves payrolls in a dire state via the latest monthly profile. It could be noise, of course–it’s always hazardous to make assumptions about the economy from one data point. Nonetheless, the sight of the year-over-year growth rate in private employment dipping below the 2% mark for the first time in two years suggests that the recent deceleration in the labor market recovery is picking up speed.
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Risk Premia Forecasts: Major Asset Classes | 3 June 2016

The expected risk premium for the Global Market Index (GMI) continued to tick higher in May. For the third consecutive month, GMI’s projected return for the long run over the risk-free rate increased vs. the previous month’s estimate.  GMI—an unmanaged market-value weighted mix of the major asset classes—is projected to earn an annualized 3.5% risk premium in the long term, which is moderately higher vs. last month’s estimate. (For details on the equilibrium-based methodology that’s used to generate the forecasts each month, see the summary below.)
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ADP: A Mild Rebound For US Private Payrolls In May

Private-sector job growth in the US remained modest in May, according to this morning’s update of the ADP Employment Report. Although companies added slightly more workers last month vs. April, the monthly increase—173,000 175,000—was still close to the slowest advance on a month-to-month basis over the last three years. Two other employment releases—the government’s jobless claims data and Challenger Gray’s job cuts report—offer more encouraging data. Overall, it’s fair to say that the latest employment figures offer an upbeat profile, but with several caveats.
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A Rate Hike And Falling Inflation Expectations?

The Federal Reserve is considering another rate hike, perhaps as early as this month, but the Treasury market’s estimate of future inflation signals skepticism from the vantage of government bond traders. The implied forecast, based on the yield spread between nominal and inflation-indexed Treasury yields, is inching lower again. The recent decline suggests that the odds for squeezing monetary policy at the central bank’s June 14-15 FOMC meeting may be lower than hawkish Fed comments of late imply.
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