● 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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● Weak US retail sales dampen sharp Q2 growth rebound hopes | Reuters
● US Import Prices Fall for 10th Straight Month | WSJ
● Atlanta Fed Survey Shows Inflation Expectations Up | Bond Buyer
● US business inventories barely rise, suggest Q1 GDP contraction | Reuters
● Weekly mortgage applications fall 3.5% in US as rates rise | CNBC
● India’s Wholesale Prices Fall for Sixth Consecutive Month | WSJ

Consumer spending was unchanged in April vs. the previous month, according to this morning’s release of the government’s retail sales report. Last month’s flat performance follows a strong rise of 1.1% in March, which suggests that a degree of payback may explain April’s lackluster results. Even so, it’s hard to overlook the deceleration in growth in the year-over-year comparison. Whatever’s weighing on retail sales, it’s looking increasingly pervasive and beyond a mere seasonal bump.
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The US economic trend remains moderately positive as of early May, based on a markets-based estimate of macro conditions. The Macro-Markets Risk Index (MMRI) closed at +6.7% yesterday (May 12), a middling value relative to the benchmark’s range for the year so far. The moderately positive reading implies that business cycle risk remains low. A decline below 0% in MMRI would indicate that recession risk is elevated; readings above 0% imply that the economy will expand in the near-term future.
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