Private nonfarm payrolls in the US are projected to increase by 213,000 (seasonally adjusted) in tomorrow’s December update of the ADP Employment Report, based on The Capital Spectator’s median point forecast for several econometric estimates. The median projection is marginally above November’s increase.
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The expected risk premium for the Global Market Index (GMI) continued to trend lower through December. GMI — an unmanaged, market-value weighted mix of the major asset classes — is now projected to earn an annualized 3.6% over the “risk-free” rate for the long term. (For details on the equilibrium-based methodology that’s used to generate the forecasts, see the summary below). Today’s updated estimate, which is based on data through the close of last month, fell 30 basis points from November’s 3.9% projection. But if yesterday’s sharp drop in financial and commodity markets persists in the days ahead, GMI’s expected risk premium will probably rebound in the near-term future. Meanwhile, using data through the end of 2014 suggests that GMI’s anticipated return over the risk-free rate suffered another decline last month.
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● Dow plummets 331 as oil drops below $50 | USA Today
● Eurozone PMI: slowest growth in over a year in Q4 | Markit
● Greece vs Europe: who will blink first? | Telegraph
● 2014 car sales best in U.S. since ’06 | Detroit News
● German inflation falls to five-year low | BBC
● Gold Surges as Flight to Safety Spurs Longest Run Since October | Bloomberg

US real estate investment trusts (REITs) led the performance race in December among the major asset classes, rising a healthy 1.9% in the final month of 2014, based on the MSCI REIT Index. US REITs were also the top performer for the calendar year among the major asset classes.  For the rest of the field, returns in December were mostly flat to negative. The big loser last month and for 2014 as well: commodities, broadly defined (Bloomberg-UBS Commodity Index). The US stock market was flat last month, although for year just passed US equities earned a respectable 12.6% (Russell 3000). That’s a comparatively soft gain relative to the stellar advance for US market in the last few years, but it’s above average in comparison with long-term results.
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● Euro zone Sentix investor confidence improves to 5-month high | Investing.com
● UK construction PMI falls to lowest since July 2013 | Reuters
● Euro touches a nine-year low against US dollar | BBC
● Spain Jobless Claims Fall Most Since 1998 | RTT News
● Samaras Warns of Euro Exit Risk as Greek Campaign Starts | Bloomberg
● Oil hits 5-1/2-year lows on supply glut | Reuters

● Balanced Asset Allocation: How to Profit in Any Economic Climate
By Alex Shahidi
Summary via publisher (Wiley)
The conventional portfolio is prone to frequent and potentially devastating losses because it is NOT balanced to different economic outcomes. In contrast, a truly balanced portfolio can help investors reduce risk and more reliably achieve their objectives. This simple fact would surprise most investors, from beginners to professionals. Investment consultant Alex Shahidi puts his 15 years of experience advising the most sophisticated investors in the world and managing multi-billion dollar portfolios to work in this important resource for investors.
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The Capital Spectator is signing off for the rest of the year and trading in the usual routine for a week in Italy. After a year-end diversion of walking amid the grandeur that was ancient Rome, indulging in gastronomy, and otherwise soaking in the local environs in one of the world’s great cities, The Capital Spectator will return on Monday, January 5, 2015. Ciao. All the best for year ahead… Happy New Year!

● Former Fed Governor Kohn: US Economy Looks Good for 2015, But… | Newsmax
● Japan 10-Year JGB Yield Hits Fresh Record Low of 0.300% | MNI
● Japan Inflation Slows More Than Expected; Ind. Output Falls Unexpectedly | RTT
● Japan Nov Retail Sales Up for 5th Month But Slower on Weather | MNI
● Oil Rises as Fighting Intensifies Around Libya’s Biggest Port | Bloomberg
● Ruble rebounds sharply from lows as exporters sell dollars | Reuters
● Oil contracts suggest traders expect higher prices | Houston Chronicle

Joyeux Noel
 Zalig Kerstfeast 
   Frohe Weihnachten
      Feliz Navidad
       Kala Christouyenna
          Buone Feste Natalizie

As the year approaches its finale, money managers are celebrating their triumphs (and minimizing any failures). The good news is that there’s ample opportunity for emphasizing the former. Barring a year-end surprise, US stocks and bonds in particular are on track to end 2014 with solid gains. Wall Street won’t be shy in taking most if not all of the credit for juicing the value of client portfolios. But let’s take a minute and recognize the primary source for the gains over the past year: economic growth

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