Some analysts have been predicting a collapse in sales for the US economy. One prominent economist announced in a recent round of TV interviews that sales generally were in the process of “rolling over.” On that assumption, the economy is in recession, he explained. But a funny thing happened on the way to the collapse: sales have held up, and even turned up. Yesterday’s November update on wholesale trade figures is the latest data point that contradicts the pessimistic view on the macro trend.
Jobless Claims Increased Slightly Last Week, But The Trend Remains Encouraging
Today’s weekly update on jobless claims is a good example of how the inherent noise in this data series can mislead us if we’re overly focused on the most recent data points. New filings for jobless benefits rose 4,000 last week to a seasonally adjusted 371,000, pushing claims up to the highest level in a month. The rise is a modest surprise relative to expectations, which projected a slight decline, although the previous week’s total was revised down and so the net effect is close to neutral. In any case, today’s numbers look a bit discouraging, but a deeper review paints a substantially brighter picture.
Context Is (Still) King For Portfolio Design & Management
It happened again. I was reading a story about the apparent hazards that are expected to derail an asset class that’s in my portfolio and I thought, gee, I better sell. The article presented a strong case for seeing red in the near future. But then I remembered that the asset class is just one piece of my diversified portfolio, and that my rebalancing strategy will take care of any extremes in the various components. Thinking about the big picture for my personal asset allocation reminded me that the article wasn’t all that applicable to my situation after all. Once again, my initial emotional reaction turned out to be not so helpful after all in money matters.
Weekly Jobless Claims: 5 January 2013 Preview
Tomorrow’s weekly update on jobless claims is expected to report a modest decline from the previous estimate, according to The Capital Spectator’s average econometric forecast. New claims are projected to slip 5,000 to a seasonally adjusted 367,000 for the week through January 5. That’s roughly in line with consensus forecasts via surveys of economists.
Mediocrity Strikes Again
It’s true for stocks, it’s true for bonds—yes, it’s even true for hedge funds. As The Economist reminds, delivering market-beating performance over time relative to a conventional asset mix is tough, and the financial wizards in the land of hedge funds aren’t immune. “A simple-minded investment portfolio—60% of it in shares and the rest in sovereign bonds—has delivered returns of more than 90% over the past decade, compared with a meagre 17% after fees for hedge funds,” the magazine reports. Sound familiar?
U.S. Economic Profile | 1.08.13
The US economy continued to grow in December. That’s the message from the incoming numbers for last month, echoing the analysis from our previous update a month ago. Although several key reports for December are still missing, the numbers published so far suggest that the economy ended 2012 on an upbeat note. Anything’s possible, of course, when it comes to yet-to-be published and revised indicators. But the early analysis of the December economic profile tells us that the odds remain low that the end of last year will mark the start of a new recession.
Q4:2012 US GDP Nowcast Update | 1.07.2013
The US economy is expected to grow 1.6% in 2012’s fourth quarter, according to The Capital Spectator’s average econometric nowcast. That’s up slightly from the previous 1.5% nowcast, published on December 17. The current outlook for 1.6% growth looks sluggish when compared with the 3.1% rise for Q3, as reported by the Bureau of Economic Analysis (BEA). The official Q4 data is scheduled for release on January 30, when the BEA will publish its initial GDP estimate for the last three months of 2012. (GDP percentage changes are quoted as real seasonally adjusted annual rates.)
Book Bits | 1.5.13
● The Physics of Wall Street: A Brief History of Predicting the Unpredictable
By James Owen Weatherall
Review via Kirkus Reviews
A young physicist and contributor to Slate and Scientific American, Weatherall (Logic and Philosophy of Science/Univ. of California, Irvine) was puzzled when experts began blaming the 2008 economic collapse on physicists who created complex financial instruments for Wall Street. He wondered: What do physicists have to do with the economy? The author explains how physicists have been predicting the unpredictable on Wall Street for 30 years, accounting for such hedge-fund successes as Jim Simons’ Renaissance Technologies, whose staff, loaded with physics and math doctorates, produced a remarkable 2,478.6 percent return in the decade from 1988 to 1998.
US Labor Dept Says Private Sector Jobs Rose 168k In December
Private-sector payrolls increased by a seasonally adjusted 168,000 in December, the Labor Department reports. That’s a bit shy of my average econometric forecast that was published yesterday, and considerably lower than the ADP estimate of last month’s rise in payrolls. Nonetheless, today’s jobs report reflects a modest pace of growth that provides another encouraging data point for expecting that the full December economic profile will show an economy that continues to expand.
US Nonfarm Private Payrolls: Dec 2012 Preview
A monthly increase of 177,000 for private nonfarm payrolls in December is expected in tomorrow’s update (8:30am eastern) from the Labor Department, based on The Capital Spectator’s average econometric forecast. That estimate is higher by roughly 20,000 to 30,000 compared with a pair of consensus forecasts published by Econoday.com and Briefing.com.