● Obama Urged by Former U.S. Officials to Arm Ukrainian Forces | Bloomberg
● U.S. consumer spending in December weakest since 2009 | Reuters
● US ISM Mfg Index: Slower Than Expected Growth In January | RTT
● US Factories Brace for Oil Shock as Growth Cools | Bloomberg
● US Construction Spending Rose 0.4 Percent in December | AP/ABC
● PMI: UK construction growth unexpectedly rebounds in January | Reuters

US real estate investment trusts (REITs) remained the performance leader among the major asset classes in the first month of the new year. The MSCI REIT Index climbed a strong 6.8% in January (total return); for the trailing one-year period, US REITs are up a sizzling 33.5%. Meanwhile, January’s biggest loser: foreign high-yield bonds, which tumbled 5.7%, based on the Markit Global ex-US High Yield Index. As for US stocks, the new year arrived with a thud for the formerly soaring asset class: the Russell 3000 Index shed 2.8% last month.
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● China Mfg PMI: Operating conditions deteriorate fractionally in Jan | Markit
● Germany Mfg PMI: Output,new orders rise at slightly stronger rates | Markit
● Eurozone Mfg PMI: Output ticks higher at start of 2015 | Markit
● Oil prices fall on weak Chinese data, U.S. refinery strikes | Reuters
● MNI Survey: Japan Q4 GDP +3.7% Annualized, 1st Rise in 3 Qtrs | MNI
● US Demographics and GDP: 2% is the new 4% | Calculated Risk

The ISM Manufacturing Index is expected to decline slightly to 55.0 in tomorrow’s update (Feb. 2) for January vs. the previous month, based on The Capital Spectator’s median point forecast for several econometric estimates. The prediction is still well above the neutral 50.0 mark and so the current outlook remains firmly in growth territory for this benchmark of economic activity in the US manufacturing sector.
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US personal consumption spending for December is projected to rise 0.3% vs. the previous month in tomorrow’s update (Feb. 2), based on The Capital Spectator’s median point forecast for several econometric estimates. The prediction reflects a substantial slowdown in growth relative to November’s 0.6% advance. Note, however, that the previously released data on retail sales reflects a decline for December—a decline that implies that a downside surprise is higher than usual in tomorrow’s report. Not surprisingly, using a model based on retail sales alone anticipates that personal consumption spending will slide in December (see table below).
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● The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order
By Paul Vigna and Michael J. Casey
Review via The Washington Post
To their ample credit, Paul Vigna and Michael J. Casey, veteran Wall Street Journal reporters, resist the common temptation to hype their trendy subject. They’ve written a reported explainer that patiently documents bitcoin’s rise, acknowledges its flaws and highlights its promise. Smart and conscientious, “The Age of Cryptocurrency” is the most thorough and readable account of the short life of this controversial currency.
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US GDP growth fell short of expectations in last year’s fourth quarter, the government reports. National output increased 2.6% in the final three months of 2014 vs. the previous quarter (seasonally adjusted annual rate). The consensus forecast was looking for something better—a 3.2% rise, according to Econoday.com’s survey of economists.
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Housing remains a weak spot for the US economy, as suggested by yesterday’s news of a bigger-than-expected tumble in December’s Pending Home Sales Index, a forward-looking measure of demand. The National Association of Realtors (NAR) said that the benchmark slid 3.7% last month. The year-over-year trend looks better, with the latest data showing the fourth straight month of growth in annual terms. There’s also room for mild optimism due to the recent fall in mortgage rates and upbeat numbers in the labor market. But as we’ll see, the sluggish profile in housing of late reflects isn’t limited to pending sales data.
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● US jobless claims drop sharply to near 15-year low | Reuters
● US Consumer Comfort Index Rises to Highest Since July 2007 | Bloomberg
● US Pending Home Sales Unexpectedly Tumble 3.7% In December | RTT
● Eurozone Inflation Falls to Lowest Level Since 2009 | NY Times
● Eurozone Leading Index Higher For Second Straight Month | Conference Board
● Germany Retail Sales Growth Slows In Dec | Alliance/M-star

After reading today’s weekly update on jobless claims the Fed’s comment yesterday that “economic activity has been expanding at a solid pace” carries more weight. Indeed, new filings for unemployment benefits dropped by a staggering 43,000 last week to a seasonally adjusted 265,000—the lowest in nearly 15 years. The shortened business week due to the Martin Luther King holiday no doubt played a role, but for the moment it’s hard to spin today’s numbers into anything other than a positive sign for the economy.
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