● US auto sales rise to the highest pace in a decade in August
● US ISM Mfg Index: growth slips to 2-year low in August
● US Mfg PMI: growth at 22-month low in August
● US construction spending rises to post-recession high in July
● PMI: Global mfg output in August decelerates to slowest pace in 28 months

Private nonfarm payrolls in the US are projected to increase by 194,000 (seasonally adjusted) in tomorrow’s August update of the ADP Employment Report vs. the previous month, based on The Capital Spectator’s average point forecast for several econometric estimates. The average projection reflects a modestly stronger gain vs. July’s advance.
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US economic risk increased at the end of August, according to a markets-based estimate of macro conditions. The Macro-Markets Risk Index (MMRI) closed at +0.4% yesterday (August 31) after briefly slipping into mildly negative territory for several days last week. MMRI’s temporary dip into the red in late-August marks the first negative readings since early 2012. It’s important to note that while a markets-based view of the business cycle has turned cautious lately, there’s no confirming support in the hard economic data–at least not based on published numbers to date.
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August was a painful month for most markets around the world. Other than fractional gains in foreign bond markets (mainly in developed countries), last month delivered a deep shade of red ink far and wide. The big loser: stocks in emerging markets (MSCI EM Index), which shed a hefty 9.0% in August–the biggest monthly setback in more than three years.
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● Dallas Fed Index: General Business Activity Index tumbles in August
● Chicago PMI ticks down to 54.4 for Aug, but remains in solid growth territory
● Eurozone PMI: manufacturing activity steady at moderate growth level in August
● China PMI: factory output falls sharply in August
● Eurozone unemployment rate ticks down to 10.9% in August
● Germany’s jobless population falls more than expected in August
● IMF anticipates weaker-than-expected global growth due to China

The ISM Manufacturing Index is expected to tick higher to 53.0 in tomorrow’s update for August vs. the previous month, based on The Capital Spectator’s average point forecast for several econometric estimates. The prediction is moderately above the neutral 50.0 mark and so the current outlook still translates into a forecast of growth for this benchmark of economic activity in the US manufacturing sector.
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Fed Vice Chairman Stanley Fischer over the weekend laid out the rationale for raising US interest rates in the near future, perhaps as early as next month. His reasoning boils down to two main arguments. One, “the economy has continued to recover and the labor market is approaching our maximum employment objective.” Meanwhile, inflation is still low—“persistently below” the Fed’s 2% target, he recognized in a speech on Saturday. But that won’t last, he explained, advising that “there is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further.”
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● US personal income & spending rise in July
● US consumer sentiment slips to 3-month low in August
● A Fed rate hike in September? Maybe, says Fed Vice Chairman Fischer
● Eurozone flash estimate of annual inflation in Aug: stable but close to flat at 0.2%
● German retail sales accelerate, rising 1.4% in August
● Italy retail spending falls for second month in August
● Japan industrial output slides 0.6% in July

● Making Sense of Markets: An Investor’s Guide to Profiting Amidst the Gloom
By Kevin Gardiner
Summary via publisher (Palgrave Macmillan)
Making Sense of Markets argues that received wisdom is still far too pessimistic, and that investment opportunities have been missed as a result. It suggests that the great panic of 2008 had its roots in finance, not a flawed global economy, and it tackles some popular concerns – debt, demography, Western decadence for example – head-on, showing succinctly why they have been overdone. The book will then explain how investors can take advantage of these insights in building a long-term investment portfolio. It pays particular attention to behavioral influences such as the interaction of media and markets. It suggests that the conventional view of investing as a search for an optimal portfolio – as opposed to a satisfactory one – is misplaced. It argues that conventional financial analysis, not investors’ living standards, may be the long-term casualty of the latest seizure in capital markets.
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Consumer spending and income continued to post moderate gains, according to this morning’s update for July from the US Bureau of Economic Analysis. Inflation remained tame in the report, with the personal consumption expenditures index higher by only 0.3% from a year earlier. Otherwise the numbers du jour reaffirm the view that a solid if modest US expansion was intact through last month.
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