● Superforecasting: The Art and Science of Prediction
By Philip E. Tetlock and Dan Gardner
Review via Inverse
Phil Tetlock believes we can predict the future — we, us, anyone. In his new book, Superforecasting: The Art and Science of Prediction, the Wharton management professor and psychologist makes the case that futurists are skilled, not special. Normal people can make boggling accurate predictions if they just know how to go about it right and how to practice.
Tetlock backs up his crystal ball populism with data: He’s spent the better part of the last decade testing the forecasting abilities of 20,000 ordinary Americans in The Good Judgment Project on topics ranging from melting glaciers to the stability of the Eurozone, only to find that the amateur predictions were more accurate — if not more so — than those of the pundits and so-called forecasting ‘experts’ the media so often defers to.
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Today’s payrolls report from Washington is ugly. The crowd was expecting that today’s jobs report from the Labor Department would show that US companies added 200,000 positions in September. Instead, the release shows that private payrolls increased by a weak 118,000. The good news is that the year-over-year trend is still ahead by a healthy 2.2% through last month. Unfortunately, the annual pace continues to decelerate. Does this add up to a recession signal for the US? No, not yet, but today’s update doesn’t help boost confidence that the worst will be avoided. As I’ve been discussing for the past month or so, macro risk for the US has been rising lately, even if it still falls short of a clear and reliable signal that the business cycle has turned negative (see here and here, for instance). Today’s employment report tips the scales a bit further toward a bearish outlook for the economy.
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The recent market turbulence has knocked the health care sector from its leadership role in performance terms among the major US equity sectors. The crown has passed to consumer discretionary stocks, based on trailing one-year total return data for a set of ETF proxies. Although all corners of the US equity market have lost ground since August, the selling has reshuffled the leadership structure, leaving the Consumer Discretionary SPDR ETF (XLY) firmly at the front of the horse race.
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● US jobless claims rise, but stick close to 15-year low | Bloomberg
● US ISM Mfg Index in Sep slips to lowest level since January | WSJ
● US Mfg PMI in Sep at second-lowest level since Oct 2013 | Markit
● US construction spending in Aug rises to in over 7 years | USN&WR
● US consumer comfort index rises to highest level since mid-Jul | Bloomberg
● Global Mfg PMI growth dips to two-year low in Sep | Markit

Private nonfarm payrolls in the US are projected to increase by 177,000 (seasonally adjusted) in tomorrow’s September report from the Labor Department, based on The Capital Spectator’s average point forecast for several econometric estimates. The prediction reflects a modest improvement over the weak 140,000 gain in August.
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One forecast for a weak US economy in the final months of the year just got weaker. The outlook for third-quarter GDP growth in the US was cut in half today in the widely followed GDPNow algorithm that’s published by the Atlanta Fed. The previous estimate for a 1.8% rise was already tepid–well below Q2’s solid 3.9% advance. But the new forecast for the third quarter quarter that begins today withered even further, slipping to a thin 0.9% (seasonally adjusted annual rate).
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US jobless claims rose last week, the Labor Department reports, although new filings remain close to four-decade lows. Despite the latest jump, today’s news suggests that the labor market is still expanding. As a result, any blowback from the recent turmoil in global markets and diminished expectations for the world economy has yet to make a serious dent in the forward momentum for the US macro trend.
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September was another rough month for most of the major asset classes. The main exception: US real estate investment trusts (REITs), which popped 3.0% last month (MSCI REIT Index). The safe haven of fixed income also provided some relief. Investment-grade bonds in the US and in foreign developed markets inched higher as renewed concerns about global growth convinced the crowd to run for cover. Otherwise, red ink was the dominant theme as the third quarter stumbled to an end.
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● ADP: US private payrolls rise a solid 200k in Sep | RTT
● US mortgage apps fell last week after previous surge | HousingWire
● Chicago PMI tumbles in September–lowest since 2009 | 24/7 Wall Street
● Official China Mfg PMI from gov’t ticks higher in September | CNBC
● IMF head sees another downgrade for global economic growth | NY Times
● Modest growth for Eurozone Mfg PMI in Sep Confirmed at 52.0 | Markit
● Markit’s China Mfg PMI revised up slightly to 47.2 | CNBC

The ISM Manufacturing Index is expected to fall to 50.6 in tomorrow’s update for September vs. the previous month, based on The Capital Spectator’s average point forecast for several econometric estimates. The prediction is fractionally above the neutral 50.0 mark. The estimate still translates into a forecast for growth for this benchmark of economic activity in the US manufacturing sector, but just barely.
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