Europe’s economic crisis could be mutating again
Barry Eichengreen (The Guardian) | Dec 10
Deflation could be replacing debt as the main problem – and there’s nothing to suggest the ECB is up to the job.
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A Case Of Macro Mood Disorder
Today’s economic reports look strikingly bipolar. First the good news: retail sales rose a healthy 0.7% in November vs. the previous month—a bit faster than The Capital Spectator’s average econometric forecast but in line with the consensus outlook. This morning’s update on initial jobless claims is another story. Filings for unemployment benefits surged 68,000 last week to a seasonally adjusted 368,000—the highest since early October. What’s going on here? Should we cheer, cry, or take the middle road and assume that we’re in another period of mixed messages and rising uncertainty? For some perspective, let’s dive into the numbers.
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Will Low Inflation Delay The Taper Decision?
It seems that crowd is increasingly inclined to expect that the Federal Reserve will begin to slow its bond-buying program next week, at the conclusion of its FOMC policy meeting on Wednesday, Dec. 18. Yesterday’s sharp drop in the US stock market is one sign that the Mr. Market is preparing for a change in the monetary weather in a few days. But is this fate? One reason for remaining a skeptic: inflation, which still looks quite low relative to the Fed’s target.
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Macro-Markets Risk Index: 13.0% | 12.11.2013
The US economic trend, after strengthening in late-October through mid-November, has pulled back from its recent highs in the last several weeks, based on a markets-based profile of macro conditions. The Macro-Markets Risk Index (MMRI) closed at 13.0% on Tuesday, Dec. 10, a level that still suggests that business cycle risk remains low. The current 13.0% value is well above the lowest reading for the year to date—7.5% in mid-September—and comfortably above the 0% danger zone. If MMRI falls under 0%, that would be a sign that recession risk is elevated. By comparison, readings above 0% imply a bias for economic growth.
US Retail Sales: November 2013 Preview
US retail sales are expected to rise 0.5% in Thursday’s update (Dec. 12) for November vs. the previous month, according to The Capital Spectator’s average econometric forecast. The prediction is slightly higher than the previously reported 0.4% increase for October. Meanwhile, the Capital Spectator’s average projection for November is slightly below consensus estimates based on recent surveys of economists.
Asset Allocation & Rebalancing Review | 10 Dec 2013
It’s the gift that keeps on giving: US stocks. Equities in these United States are up 30% year-to-date, based on our ETF proxy (Vanguard Total Stock Market (VTI)). It’s debatable if this asset class is precariously defying gravity or accurately reflecting stronger fundamentals. In any case, it’s a sight to behold. A 30% gain for a trailing US equities isn’t unprecedented, but it’s neither common nor enduring. Whatever the future holds, this much is clear: if your strategy was light on US stocks this year, your results probably look a bit pale against passive strategy benchmarks that hold market-value weights for this year’s leader.
Q4:2013 US GDP Nowcast: +2.0% | 12.09.2013
This year’s fourth-quarter US GDP is expected to increase 2.0% (real seasonally adjusted annual rate), according to The Capital Spectator’s revised average econometric nowcast. The projected growth rate is slightly higher than the previous 1.9% estimate, which was published on November 18. The government’s initial estimate of this year’s Q4 GDP is scheduled for release on January 30.
Technical Issues As The Capital Spectator Migrates To WordPress
In the coming days (weeks?) I’ll be attempting to transition The Capital Spectator to WordPress from the existing MovableType platform. As a result, the site may go dark at times as I wrestle with the tech gods and work through the inevitable bugs that will pop up.
Book Bits | 12.7.13
● Going Viral
By Karine Nahon and Jeff Hemsley
Summary via publisher, Polity
We live in a world where a tweet can be instantly retweeted and read by millions around the world in minutes, where a video forwarded to friends can destroy a political career in hours, and where an unknown man or woman can become an international celebrity overnight. Virality: individuals create it, governments fear it, companies would die for it. So what is virality and how does it work? Why does one particular video get millions of views while hundreds of thousands of others get only a handful? In Going Viral, Nahon and Hemsley uncover the factors that make things go viral online. They analyze the characteristics of networks that shape virality, including the crucial role of gatekeepers who control the flow of information and connect networks to one another. They also explore the role of human attention, showing how phenomena like word of mouth, bandwagon effects, homophily and interest networks help to explain the patterns of individual behavior that make viral events.
Payrolls & Personal Spending Rise As Income Dips
The labor market expanded again last month: private payrolls increased 196,000 in November, moderately more than expected, based on The Capital Spectator’s average econometric projection. Even so, last month’s gain fell short of October’s revised 214,000 rise, although the pace of growth in November still suggests that the economy is creating jobs at a slightly faster rate these days compared with the lesser gains in recent history. Meanwhile, today’s update on personal income and spending brings mixed news. Personal consumption expenditures advanced 0.3% in October—in line with expectations. Disposable personal income, however, retreated 0.2%–the first monthly instance of red ink since January.