Correction: Please note the correction in the data table below, as of 5/5/2016. An earlier version of the table used incorrect asset class labels in the far left-hand corner. The data was correct but mis-identified. The labeling has been corrected. Apologies. –JP

The expected risk premium for the Global Market Index (GMI) increased for the second straight month in April, rising to the highest level since last November. GMI—an unmanaged market-value weighted mix of the major asset classes—is projected to earn an annualized 3.3% over the “risk free” rate in the long term–moderately above 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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● US ISM Mfg Index stays positive, but just barely in Apr | Reuters
● PMI: US mfg output close to stagnation in Apr | Markit
● US construction spending +0.3% in Mar–highest level in over 8 years | AP
● US Consumer Spending Increases in Apr, according to survey | Gallup
● US GDPNow forecast for Q2 GDP: +1.8% | Atlanta Fed
● China’s Caixin manufacturing PMI slips again in Apr | MarketWatch
● Reserve Bank of Australia cuts cash rate to fight deflation | Financial Review

Global markets continued to rebound in April. Other than US REITs, which fell modestly in the kick-off to the second quarter, all the major asset classes posted gains last month, building on March’s strong rally. Leading the way: commodities broadly defined. The Bloomberg Commodity Index surged 8.5% in April, dispensing the biggest monthly increase in nearly six years. The snapback in commodity prices last month also marks the second monthly gain for raw materials—the first set of back-to-back monthly increases in two years.
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● US Personal Income Rises Slightly More Than Expected In Mar | RTT
● US consumer spending growth slows in Mar despite higher income | LA Times
● Consumer sentiment for US edges lower in Apr | CNBC
● US labor costs rise modestly in first quarter | Reuters
● Chicago PMI falls to 50.4 in April, close to stagnation | MarketWatch
● PMI: Eurozone mfg growth is lacklustre in Apr; French downturn deepens | Markit
● China Mfg PMI unexpectedly slips in Apr as stimulus fades | MarketWatch
● Listen Carefully for Hints of the Next Global Recession | NY Times

● The Power of a Single Number: A Political History of GDP
By Philipp Lepenies
Summary via publisher (Columbia University Press)
Widely used since the mid-twentieth century, GDP (gross domestic product) has become the world’s most powerful statistical indicator of national development and progress. Practically all governments adhere to the idea that GDP growth is a primary economic target, and while criticism of this measure has grown, neither its champions nor its detractors deny its central importance in our political culture. In The Power of a Single Number, Philipp Lepenies recounts the lively history of GDP’s political acceptance—and eventual dominance. Locating the origins of GDP measurements in Renaissance England, Lepenies explores the social and political factors that originally hindered its use.
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It’s all about jobs now. Actually, it’s always been about jobs. But the stakes are even higher—perhaps more so than at any time since the Great Recession ended–in the wake of yesterday’s weak GDP report for the first quarter.
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● US Economy Expands 0.5% in Q1, Weakest in 2 Years | Bloomberg
● US Jobless Claims Rise but Remain Historically Low | WSJ
● Consumer confidence rebounded last week in US | Bloomberg
● KC Fed Mfg index still in red, but marks 2 mos of improvements | 24/7 Wall St
● Eurozone Q1 GDP +0.6%–much more than expected | Eurostat
● Obama Weighs His Economic Legacy | NY Times
● Is OPEC Preparing for End of the Oil Era? | Nation

US economic growth stumbled in this year’s first quarter, according to this morning’s estimate from the Bureau of Economic Analysis (BEA). The government’s first release of the Q1 GDP report revealed a weak gain of 0.5% (seasonally adjusted annual rate)–less than half the pace of the already sluggish 1.4% rise in last year’s Q4. A key factor behind the economy’s slowest quarterly advance in two years: softer consumer spending.
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The Federal Reserve left interest rates unchanged yesterday, as widely expected. But the possibility of a hike in June is lurking… maybe. “This latest [FOMC] statement has not laid out a strong position for a June rate hike,” Bill Irving, a Fidelity portfolio manager, tells Reuters. Meanwhile, the Treasury market is sending mixed signals. On the one hand, yields ticked lower, perhaps in anticipation of a weak first-quarter GDP report that’s due later today. But then there’s the sight of the Treasury market’s inflation expectations rising to the highest levels since last summer. It all adds up to a strange brew of market signals.
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● Fed signals no rush to hike rates as economy hits soft patch | Reuters
● Forget June. The Fed isn’t likely to hike until Dec | CNBC
● US Pending home sales +1.4% to 10-mo high in Mar | MarketWatch
● US mortgage applications fell 4.1% last week | HousingWire
● Bank of Japan shocks markets by voting against more stimulus | Guardian
● Be Afraid, Be Very Afraid If Investing for the Long Run | Bloomberg
● Is Gold More Productive Than Cash? | Merk Investments