New residential construction in December rose substantially more than expected, posting a 12.1% increase last month (seasonally adjusted annual rate). Yours truly and several consensus forecasts were looking for a solid but considerably lesser growth rate of around 3.0%, as I noted yesterday. The key point, of course, is that the housing recovery remains on track, as today’s update reminds in rather convincing terms.
Research Review | 1.17.2013 | Asset Allocation
Strategic Asset Allocation: The Global Multi-Asset Market Portfolio 1959-2011
Ronald Doeswijk (Robeco), et al.| November 2012
The portfolio of the average investor contains important information for strategic asset allocation purposes. This portfolio shows the relative value of all assets according to the market crowd, which one could interpret as a benchmark or the optimal portfolio for the average investor. We determine the market values of equities, private equity, real estate, high yield bonds, emerging debt, non-government bonds, government bonds, inflation linked bonds, commodities, and hedge funds. For this range of assets, we estimate the invested global market portfolio for the period 1990-2011. For the main asset categories equities, real estate, non-government bonds and government bonds we extend the period to 1959-2011. To our understanding, we are the first to document the global multi-asset market portfolio at these levels of detail for such a long period of time.
Industrial Production Increased Moderately In December
Industrial production increased 0.3% in December, which is a slightly faster pace than expected. Nonetheless, the general forecast of a slowdown in growth for last month proved to be accurate. That’s not a surprise, given the sharp 1.0% rise in industrial production in November, which was primarily due to an unsustainable snapback after the weather-related interruptions from Hurricane Sandy in October. Overall, industrial activity continues to grow a modest pace. December’s report brings another positive contribution to the year-end economic profile. With today’s update, there’s even a stronger case for arguing that the economy ended 2012 in an expansion mode. But the latest news on the industrial front also raises some new challenges for thinking about January’s numbers and beyond.
Housing Starts: December 2012 Preview
Housing starts in December are expected to rise 3.1% on a seasonally adjusted monthly basis, according to The Capital Spectator’s average econometric forecast. That compares with a 3.0% decline in the previous report. The projection is roughly in line with consensus forecasts from economists.
Weekly Jobless Claims: 12 January 2013 Preview
Initial claims for jobless benefits will decline slightly in tomorrow’s weekly update, based on The Capital Spectator’s average econometric forecast. New claims for the week through January 12 will dip to 369,000 on a seasonally adjusted basis vs. the previously reported 371,000. The projection is in line with consensus forecasts via surveys of economists.
Retail Sales Deliver Another Positive Number For December’s Economic Profile
Retail sales beat expectations with a moderately strong 0.5% rise in December (seasonally adjusted), the Census Bureau reports. After stripping out gasoline sales, retail purchases rose even more, advancing 0.8% for the month. The numbers look encouraging on a year-over-year basis too, with retail sales advancing 4.7% for the 12 months through December. That’s up a decent amount from November’s 4.1% annual rate. The main takeaway in is that retail sales ended 2012 on a strong note, which puts another nail in the coffin for predictions that the economy wouldn’t escape last year without stumbling into a new recession.
US Industrial Production: Dec 2012 Preview
Tomorrow’s report on industrial production (08:30am eastern) for December is projected to post a modest 0.1% gain, according to The Capital Spectator’s average econometric forecast. That’s a sluggish pace compared with November’s strong 1.1% increase. Economists generally anticipate a 0.2% rise for December’s industrial production, based on consensus forecasts.
One Man’s View From The Top: The Top 100 Finance Blogs
Brett Scott, an ex-derivatives broker who now blogs at Suitpossum, asks: “What are the 100 Top (Anglo-Saxon) Finance Blogs?” His answer (in the form of a “Pseudo-Scientific Study”) includes the digital explorations of yours truly (I’m honored), along with a wide array of sites ranging from the popular to the relatively obscure. It’s always fun to dig through these lists to discover new blogs and find an excuse to reconnect with familiar sites that, for one reason or another, have fallen off the radar. One intriguing blog on the list that caught my eye, and somehow managed to elude your editor until now: The Research Puzzle.
US Retail Sales: Dec 2012 Preview
Tomorrow’s report on retail sales for December (8:30am eastern) is projected to show a 0.3% gain for the month, according to The Capital Spectator’s average econometric forecast. That’s slightly higher than the 0.2% consensus forecast from several surveys of economists. In November, retail sales rose 0.3%, the government reported last month.
Book Bits | 1.12.13
● Successful Investing Is a Process: Structuring Efficient Portfolios for Outperformance
By Jacques Lussier
Summary via publisher, Wiley
What do you pay for when you hire a portfolio manager? Is it his or her unique experience and expertise, a set of specialized analytical skills possessed by only a few? The truth, according to industry insider Jacques Lussier, is that, despite their often grandiose claims, most successful investment managers, themselves, can’t properly explain their successes. In this book Lussier argues convincingly that most of the gains achieved by professional portfolio managers can be accounted for not by special knowledge or arcane analytical methodologies, but proper portfolio management processes whether they are aware of this or not. More importantly, Lussier lays out a formal process-oriented approach proven to consistently garner most of the excess gains generated by traditional analysis-intensive approaches, but at a fraction of the cost since it could be fully implemented internally.
