Private nonfarm payrolls in the US are projected to increase by 231,000 (seasonally adjusted) in January over the previous month in tomorrow’s update of the ADP Employment Report, based on The Capital Spectator’s average point forecast for several econometric estimates. The average projection reflects a moderately lesser rise vs. December’s increase.
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The expected risk premium for the Global Market Index (GMI) remained subdued in January. GMI — an unmanaged, market-value weighted mix of the major asset classes — is projected to earn an annualized 2.9% return over the “risk-free” rate in the long term. (For details on the equilibrium-based methodology that’s used to generate the forecasts each month, see the summary below.) Today’s revised estimate, which is based on data through last month, matches the projection in the previous month’s update.
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● US Personal Income Rising, Spending Flat in Dec | 24/7 Wall St
● ISM: US mfg contracts for 4th straight month in Jan | MarketWatch
● PMI: Modest growth in US mfg picks up in Jan | Markit
● Slim rise for US construction spending in Dec | RTT
● Gallup: US consumer spending slips in Jan | Gallup
● Global Mfg growth is weak in Jan but ticks higher | Markit
● Eurozone unemployment ticks lower in Dec but so do factory prices | Reuters
● Republican Cruz bests Trump in Iowa race, Clinton edges out Sanders | Reuters

The risk-off trade continued to weigh on the major asset classes in January. The main exception: several slices of high-quality bonds popped last month, led by the 1.5% total return for inflation-indexed US Treasuries. But the bulk of performance data was skewed to the downside in the kick-off month for 2016.
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● US GDP fizzles in the fourth quarter | MarketWatch
● US consumer confidence cooled in January | Bloomberg
● Chicago PMI surges in January | MarketWatch
● PMI: China’s mfg sector contracts more than expected in Jan | Reuters
● Eurozone factory growth slows at start of 2016, PMI shows | Reuters
● Oil falls 2% on China data, fading prospect of OPEC action | Reuters

● Juggling with Knives: Smart Investing in the Coming Age of Volatility
By Jim Jubak
Review via Kirkus Reviews
Investment guru Jubak analyzes the growing volatility of both the financial markets and everyday life (jobs, housing, an aging population, climate change, etc.) and offers strategies for profiting in a topsy-turvy world… In this informative, often entertaining book, he details the many ways in which frequent zigzags since 2000 in the financial markets—especially abrupt changes of acceleration and direction—have combined with events in the housing, job, and retirements markets to increase our expectations about the degree of volatility in everyday life. Heightened volatility is now “embedded” in the stock market, writes Jubak.
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US economic output weakened in last year’s fourth quarter, according to this morning’s initial estimate of GDP. The pace decelerated to 0.7%, down from Q3’s 2.0% rise (seasonally adjusted annual rate). That’s the slowest pace since last year’s first quarter. The softer trend was broad based, showing up in virtually every corner of the major components in the calculation of the GDP data. The question now: Is the Q4 stumble a sign of things to come or just a slow patch that, as in previous years, will quickly right itself via stronger growth?
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A New York Times op-ed piece from earlier this week has reignited discussion about housing and the Federal Reserve as factors in the 2008-2009 Great Recession. Minds will differ on exactly how much of the financial crisis/economic contraction was triggered by the housing crisis. As for assigning blame to the Fed’s monetary policy, there’s a popular but misleading narrative that deserves attention: the central bank wasn’t culpable because it was cutting interest rates in late-2007 through 2008. True, but the Fed still deserves criticism based on other measures of monetary policy during that period—measures that arguably offer more insight for quantifying the central bank’s influence on the business cycle and for providing insight going forward for assessing macro risk.
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● US Jobless Claims Fall More Than Expected | Bloomberg
● US Durable-goods-orders slide in Dec, point to Q4 GDP slump | MarketWatch
● US Pending home sales rise just 0.1% in Dec | CNBC
● KC Fed Mfg Index Now Down 11 Straight Months through Jan | 24/7 Wall St
● Euro zone inflation jumps in Jan, core inflation up too | Reuters
● Bank of Japan Introduces Negative Interest Rate | RTT
● Zika Virus ‘Spreading Explosively’ in Americas, W.H.O. Says | NY Times

There’s good news and modestly bad news in today’s weekly update on initial jobless claims. Let’s start with the positive. New filings fell 16,000 last week to a seasonally adjusted 278,000. That’s an encouraging sign for two reasons: the latest slide pulls claims back from the six-month high in the previous update and pushes filings closer to the multi-decade low of 255,000 from last summer. Unfortunately, the latest decline isn’t enough to keep the year-over-year comparison from rising—the first annual increase, in fact, since last August.
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