● Success and Luck: Good Fortune and the Myth of Meritocracy
By Robert H. Frank
Summary via publisher (Princeton University Press)
How important is luck in economic success? No question more reliably divides conservatives from liberals. As conservatives correctly observe, people who amass great fortunes are almost always talented and hardworking. But liberals are also correct to note that countless others have those same qualities yet never earn much. In recent years, social scientists have discovered that chance plays a much larger role in important life outcomes than most people imagine. In Success and Luck, bestselling author and New York Times economics columnist Robert Frank explores the surprising implications of those findings to show why the rich underestimate the importance of luck in success—and why that hurts everyone, even the wealthy.
Continue reading →

Company payrolls increased by a lower-than-expected 171,000 last month, the US Labor Department reports–the weakest gain in three months. The crowd had been looking for stronger results near +200,000. Instead, this morning’s update falls in line with ADP’s April profile of weaker growth.
Continue reading →

The US economy is struggling to regain momentum after GDP growth stumbled in the first quarter to the slowest pace in two years. The preliminary numbers available to date for last month paint a mixed profile for Q2’s start (see here and here, for instance), but economists are expecting that today’s employment report for April (due later today at 8:30am eastern) will reaffirm that moderate growth will prevail. If the crowd is wrong and labor-market growth falters—as it did in ADP’s estimate for April—the news will add more stress to an already wobbly macro trend.
Continue reading →

● US Jobless Claims Rise to Highest Level in 5 Weeks | Bloomberg
● Challenger: US job cuts accelerated in April | CNBC
● US Consumer Comfort Index falls to lowest level since Dec | Bloomberg
● US job market at a crossroads? | Reuters
● Hedge funds haven’t delivered on their promise | The Economist
● US Mortgage Rates Back Near 2016 Lows | MarketWatch
● Trump says he would likely replace Yellen once her term ends | AP

US private nonfarm payrolls in April are projected to increase by 204,000 (seasonally adjusted) over the previous month in tomorrow’s Labor Dept. report, based on The Capital Spectator’s average point forecast for several econometric estimates. The prediction represents a modest improvement over the previous month’s increase.
Continue reading →

It’s not terrible, but today’s updates on layoffs for April imply that growth is fading for the US labor market. Deciding if the deceleration will roll on–or give way to firmer numbers–is unknown at this point. Until or if upcoming releases bring deeper clarity, for good or ill, it’s still reasonable to assume that modest growth is the path of least resistance. But this morning’s numbers follow yesterday’s surprisingly weak profile of US private-sector payrolls via ADP’s estimate. The negative news is partly offset by upbeat survey reports for the US services sector for April. Nonetheless, the employment data isn’t moving in the right direction at the moment. Will tomorrow’s official job report for April tell us otherwise? Yes, according to the consensus forecast via Econoday.com. While we’re waiting for Friday’s news, let’s dig into the details on the latest figures for jobless claims and job cuts.
Continue reading →

Yesterday’s discouraging numbers on job growth in April via the ADP Employment Report raise doubts about a rebound in US growth for the second quarter. But if you’re looking for reasons to keep hope alive, Wednesday’s survey data for the services sector fits the bill.
Continue reading →

● ADP reports US private-sector job gains slowed in April | MarketWatch
● US ISM Non-Mfg Index climbs to 4-month high in April | Bloomberg
● PMI: US service sector growth in April accelerates to 3-mo high | Markit
● US factory orders rose modestly in March | AP
● US Productivity Fall in Q1 for 2nd straight quarter | Bloomberg
● US mortgage applications fell 3.4% last week | CNBC
● Survey based US Job Creation Index steady in Apr, near record high | Gallup
● China Services PMI growth slows to a crawl in April | Markit
● Global air passenger traffic slows in March | IATA

Employment growth at US companies slowed in April to the weakest gain in three years, according to this morning’s update from ADP. The private sector added only 156,000 positions to payrolls last month in seasonally adjusted terms—well below expectations for a gain of nearly 200,000. Today’s data raises new questions about expectations for a second-quarter rebound in economic activity following the weak Q1 GDP report. The numbers du jour also revive the focus on a question I asked last week: Will Job Growth Kill The Bear-Market Signal For Stocks?
Continue reading →

Vanguard founder John Bogle gave a powerful speech last month at the Q Group’s Spring Seminar that lays out the case (again) for favoring basic indexing and shunning complexity in matters of portfolio design and management. As Morningstar’s John Rekenthaler points out, Bogle wields the weapon of “basic math” with devastating effect on the expectations of investment managers who aspire to rocket science in the pursuit of performance glory. Anyone who’s familiar with Bogle’s long-running advice to keep it simple and favor plain-vanilla index funds will find the usual red meat here. Nonetheless, the latest sermon from one of index investing’s founding fathers makes for awkward reading for those inclined to challenge the great man. As a sample, consider the following excerpts from last month’s oration on “David and Goliath: Who Wins The Quantitative Battle?”:
Continue reading →