Deflation risk seems to be making a comeback… again. Germany yesterday sold five-year government notes at a negative yield for the first time in its history. Meanwhile, China’s central bank this week warned that the threat of deflation is rising for the world’s second-largest economy. Europe and Japan, of course, continue to struggle with lowflation/deflation. The US is doing better, thanks largely to stronger growth, but inflation is low and may get lower still. “The problem is that aggregate prices are dipping in so many places at once,” The Economist reminds.
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● Yellen: Economic Future Doesn’t Pivot on Full Employment | MNI
● U.S. new home sales steady near multi-year highs | Reuters
● German consumer confidence at 13-year high despite crises | WaPo
● German Unemployment Rate Remains At Record Low | RTT
● US Mortgage Apps Continue Falling Despite Low Interest Rates | HousingWire
● Germany Sells Five-Year Debt at Negative Yield | NY Times

Fed Chairwoman Janet Yellen’s Senate testimony yesterday suggested that the central bank is still on track to hike rates later this year, courtesy of the stronger economic trend. But the big day may arrive later than previously assumed. It’s all about the data. “Provided that labor market conditions continue to improve,” the Fed will raise rates when it’s “reasonably confident that inflation will move back over the medium term toward our 2% objective,” she advised. But while the official line tells us to prepare for policy tightening at some point, there’s more talk in some corners that the business cycle is looking shaky again. Huh?
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● Yellen Puts Fed on Path to Lift Rates | WSJ
● Consumer confidence slides after big Jan. gain | USA Today
● U.S. services sector activity jumps in February: Markit | Reuters
● Case-Shiller: “The housing recovery is faltering” | HousingWire
● PMI: China mfg output at 4-mo high in Feb but export orders contract | Reuters
● Richmond Fed: Manufacturing Shows Growth Slowed | Bond Buyer

Fed Chairwoman Janet Yellen is scheduled for another chatfest in the Senate later today (starting at 10am EST), and it’s a safe bet that interest rates will be the main event. The big question on everyone’s mind, and the one the head of the central bank is sure to leave unanswered: When? Higher rates are coming, but no one knows the timing. Perhaps Janet is clueless as well. After all, there’s that incoming data issue to contend with and even the head of the world’s most influential central bank isn’t clairvoyant.
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● US existing home sales at nine-month low, supply limited | Reuters
● Greek Reform Proposals ‘Sufficient,’ EU Official Says | WSJ
● Dollar Strengthens as Fed’s Yellen Seen Signaling Higher Rates | Bloomberg
● Obama proposes tougher rules for retirement fund advice | LA Times
● Dallas Fed: Manufacturers feel effects of falling crude | San Antonio Express
● France Business Confidence fell marginally in February | RTT
● South Africa GDP Growth Accelerates to 4.1% in Q4 | Bloomberg

The US economy continued to grow at a strong “above-trend” pace through January, according to this morning’s update of the Chicago Fed National Activity Index. The three-month moving average of this business cycle benchmark (CFNAI-MA3) decelerated slightly to +0.33 last month vs. +0.34 in December, but the latest reading marks the third straight month of accelerated growth. In fact, the data for the November-through-January period mark the strongest three-month expansion for the US since 2006, based on CFNAI-MA3 data.
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The US economy is projected to grow 2.8% in this year’s first quarter, based on The Capital Spectator’s median point forecast for several econometric estimates (real seasonally adjusted annual rate). That’s marginally above the 2.6% gain for 2014’s fourth quarter.
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● Stocks rise, safe-haven Swiss franc falls on Greek deal | Reuters
● Greece set to stay in euro zone, say finance chiefs | CNBC
● German Ifo Business Confidence Rises Less Than Expected | RTT
● Fed rate rise timing back in the spotlight | Reuters
● Ports Increasingly Bustling Again After Tentative Labor Deal | AP

● Buy, Hold, and Sell!: The Investment Strategy That Could Save You From the Next Market Crash
By Ken Moraif
Summary via publisher (Wiley)
Protect your retirement from the next big crash with a New Twist on the Old Investment Strategy. For years, advisors have recommended that investors take a “buy and hold” approach to the market, but people over fifty can’t afford to rely on this strategy. Buy, Hold, & SELL! uncovers the myth of the “buy and hold” investment philosophy, and explains why it’s dangerously incomplete. Written by Ken Moraif, one of Barron’s top 100 Financial Advisors in the United States three years a row and who called the 2008 market crash in November of 2007, this book outlines an alternative strategy that better serves investors who are at retirement age. Written in easy-to-understand language and buoyed by Ken’s trademark humor, this guide shoots down the myths that keep investors in risky markets, and arms readers with the knowledge, motivation, and strategies that may help them survive-and even thrive-during the inevitable next bear market.
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