● Confidence Among U.S. Homebuilders Unexpectedly Fell in May | Bloomberg
● ZEW: German economic sentiment drops unexpectedly | MarketWatch
● Eurozone inflation confirmed flat y/y in Apr, core inflation inches higher | Reuters
● U.K. Inflation Falls Below Zero for First Time Since 1960 | Bloomberg
● Euro, bond yields tumble as ECB hints at faster buying pre-summer | Reuters
● EC chief denies Greek rescue plan as negotiations reach ‘final stages’ | Telegraph

Housing starts are expected to total 949,000 units (seasonally adjusted annual rate) in tomorrow’s update for April, according to The Capital Spectator’s median point forecast for several econometric estimates. The projection represents a moderate gain in residential construction vs. March.
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Last week’s disappointing economic news has raised new worries about business cycle risk for the US. It’s still premature to assume the worst, but it’s clear that there’s still not much support for a strong second-quarter rebound after Q1’s weak performance. That could change in the updates in the weeks ahead. Meantime, the macro profile for April looks weak.
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● US Industrial Production Falls for Fifth Straight Month In April | WSJ
● US consumer sentiment posts big miss in May, lowest in 7 months | CNBC
● Chicago Fed President: Fed Shouldn’t Begin Raising Rates Until 2016 | Bloomberg
● China’s new home prices fall for eighth month | BBC
● Oil Advances Above $60 as Islamic State Captures Key Iraqi City | Bloomberg
● ECB Should Retain Pace Of QE, ECB Exec. Board Memver Mersch Says | RTT

● Frontier: Exploring the Top Ten Emerging Markets of Tomorrow
By Gavin Serkin
Summary via publisher (Wiley)
Frontier helps investors successfully navigate markets that are yet to “emerge,” with expert advice on spotting opportunities and minimising risks. With first-hand insights into frontier markets as we travel with big-name fund managers from Mark Mobius to Morgan Stanley, this practical guide ranks countries, stocks and bonds on a five- to ten-year horizon to steer investors toward the most promising destinations.
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The case for a second-quarter revival in the US economy took another blow in today’s April report on industrial production. Output slumped 0.3% last month, marking the fifth-straight decline for the monthly comparison, the Federal Reserve reports. The annual pace continues to slide as well, with the year-over-year change dipping to 1.9% for the 12 months through April—the first reading below the 2% line in nearly three years.
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US growth ground to nearly a halt in the first quarter, but jobless claims continue to anticipate a solid pace of growth going forward. New filings for unemployment ticked lower by 1,000 last week to a seasonally adjusted 264,000, which is close to a 15-year low. The four-week average for claims, which is considered a more reliable measure of this volatile leading indicator, actually touched a new 15-year low last week. The downward bias suggests that the economy’s recent sluggish behavior will soon give way to a stronger run of growth.
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● Jobless Claims in U.S. Fall as 4-Week Average at 15-Year Low | Bloomberg
● Consumer Comfort in U.S. Declines for a 5th Consecutive Week | Bloomberg
● Reality Check: US Mall Mgrs Say Consumer Confidence Edging Up | MNI
● US producer prices slump again in April | MarketWatch
● U.S. Dollar Headed for Another Weekly Loss | MarketPulse
● Euro, Clawing Its Way Back, Hits 3-Month High | NY Times

No change is expected for US industrial production in tomorrow’s April report vs. the previous month, according to The Capital Spectator’s median point forecast for several econometric estimates. The median prediction of flat performance represents an improvement over March’s steep 0.6% decline. April forecasts of industrial activity based on recent surveys of economists range from a modest decrease to a slight gain for the monthly comparison.
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Wall Street Journal columnist Jason Zweig recently issued “a split decision in the passive vs. active brawl” for the “Great Fund Debate” between Vanguard founder John Bogle and newsletter writer James Grant. That’s a curious verdict because Bogle has the numbers in his corner while Grant relies primarily on rhetoric and the hope that the disappointing history for active management could be different in the years ahead.
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