Housing starts are expected to total 940,000 in tomorrow’s update for June, based on The Capital Spectator’s average econometric forecast (seasonally adjusted annual rate). The projection represents a moderate increase vs. the previously reported 914,000 for May. Meanwhile, The Capital Spectator’s average projected gain for June is slightly below the numbers in several consensus forecasts drawn from surveys of economists.
A Slower Rate Of Growth For Retail Sales In June, But The Annual Pace Rises
Retail sales increased 0.4% in June, which is below the consensus forecast, but that shortfall is less about a weaker pace of spending vs. overly optimistic expectations among economists for this morning’s number. In any case, don’t pay too much attention to one number, particularly one that has little relevance for assessing the broader macro picture. On the other hand, take note that the year-over-year trend in retail spending inched higher for the third month in a row, offering another clue for thinking that business cycle risk remains low.
US Industrial Production: June 2013 Preview
Tomorrow’s report on industrial production for June is projected to post a 0.2% gain vs. the previous month, based on The Capital Spectator’s average econometric forecast. The expected increase represents a modest improvement vs. the unchanged reading for the previously reported May figure. Meanwhile, the Capital Spectator’s average projection for June is in the middle of expectations relative to three consensus forecasts based on surveys of economists.
What Should We Expect For Long Run Risk Premiums?
If you built a portfolio with a market-value weighted mix of all the major asset classes, what risk premium would you expect? I’m looking for a 5.2% return, give or take. To be more precise, my current equilibrium-based forecast of total return (less the risk-free rate) for the Global Market Index (GMI) is 5.2% these days.
Book Bits | 7.13.13
● Act of Congress: How America’s Essential Institution Works, and How It Doesn’t
By Robert G. Kaiser
Review via The New York Times
It’s no surprise this institution would attract Robert G. Kaiser, who grew up in the capital and has spent half a century at The Washington Post. Kaiser’s new book, “Act of Congress,” chronicles the making of the enormous financial reform bill that became law in 2010. Although Kaiser constantly bemoans the lack of civility and rise of petty politicking in Congress, it’s clear that at its most functional, the body reminds him of the Washington of his youth, when serious-minded men of good will toiled in the national interest. Financial reform is proof that even in its current, degraded form, Congress can still occasionally serve this higher purpose.
US Retail Sales: June 2013 Preview
Monday’s update on US retail sales for June is projected to increase by 0.4% vs. the previous month, according to The Capital Spectator’s average econometric forecast. That compares with a 0.6% gain reported by the Census Bureau for May. Meanwhile, the Capital Spectator’s average projection for June is well below a consensus forecast based on recent survey of economists.
Jobless Claims Rose Last Week, But The Trend Is Still Favorable
New applications for unemployment benefits unexpectedly increased during the first week of July, although the pop is probably noise. July data tends to be distorted by so-called retooling activity in the auto sector, and so week-to-week comparisons at this time of year are suspect–more so than usual. Even if you take today’s number as gospel, there’s still plenty of room for optimism. Reviewing year-over-year comparisons, which strips out most of the seasonally volatility, suggests that moderate growth in the labor market remains intact and may even be set for something better in the months ahead.
Rebalancing Software For Financial Advisors
The July issue of Financial Advisor magazine carries a story–“The Final Frontier”–written by yours truly on the topic of asset allocation. The main takeway: look often for boosting the odds of finding optimal rebalancing opportunities. The target audience is financial advisors, who must grapple with the rebalancing challenges that come with overseeing dozens if not hundreds of portfolios in real time. That’s a job for one of the various specialized rebalancing software packages on the market these days. The good news for individuals is that an Excel spreadsheet and an Internet connection will do just fine, courtesy of the fact that it’s relatively easy to monitor one or two portfolios with technology circa 1985. Professionals managing other people’s money, by contrast, are increasingly held to a substantially higher standard when it comes to prudent oversight policies.
Jobless Claims: A Vital Number For Macro & Markets Analysis
Tomorrow’s weekly update on initial jobless claims will draw the usual crowd in search of clues on the outlook for the business cycle, but there’s another reason that new filings for unemployment benefits deserve careful scrutiny. Claims data provide another robust perspective on projecting the near-term outlook for the stock market.
Asset Allocation & Rebalancing Review | 9 July 2013
US stocks continue to impress in absolute and relative terms in 2013. For the year so far (through July 9), no other major asset class even comes close. Based on a proxy ETF, the total return for US equities in 2013 is nearly 17%. Using history as a guide, that’s the equivalent of earning nearly twice the long-run performance in six months. Enjoy it while it lasts. At the opposite end of the spectrum: emerging market stocks, which are deeply in the red by almost 14%.