A day to relax, reflect–and give thanks. An autumn feast that’s inspired by the first banquet shared by the Plymouth colonists and Wampanoag Indians in 1621 is right as rain for your editor at this moment. After playing catch-up in the wake of Hurricane Sandy, it’s been a long month and so the opportunity to reconsider all that’s been won, and lost, in America is a welcome break from the routine. As one of the “classic” Thanksgiving essays republished in The Wall Street Journal over the years observes: “We can remind ourselves that for all our social discord we yet remain the longest enduring society of free men governing themselves without benefit of kings or dictators. Being so, we are the marvel and the mystery of the world, for that enduring liberty is no less a blessing than the abundance of the earth.”
Jobless Claims Fell Sharply Last Week
The ranks of the newly unemployed tumbled last week, as expected. The previous update on weekly filings for jobless benefits reported a dramatic surge, but many analysts–including yours truly–argued that the spike was weather related and so it probably wasn’t a sign that the business cycle was slipping over the edge. Today’s news provides some statistical support for that relatively optimistic perspective.
A Perverse Relationship: Equity Prices & Inflation Expectations
The stock market and the market’s implied inflation forecast are still a perverse couple. That’s no surprise, given the anxiety over the fiscal cliff, the economic outlook, the Middle East, and all the rest. The new abnormal, in short, is still with us and probably will be for the foreseeable future. That’s no surprise, even if this reality shocks some observers who continue to consider inflation from a pre-2008 perspective.
The Housing Recovery Rolls On
The housing sector continues to revive, according to this morning’s update on housing starts and newly issued residential building permits. Residential construction increased 3.6% in October over the previous month, the Census Bureau advises. Last month’s permits total total slipped 2.7%, but that’s not a worry at this point because this metric, which offers a clue about future construction activity, is still advancing at a robust pace generally.
Strategic Briefing | 11.20.12 | Housing & The Economy
Steady US housing recovery is boosting economy
Associated Press | Nov 19
The housing market’s recovery still has a long way to go. But for now, it’s helping prop up an economy that’s being squeezed by a global slowdown and looming spending cuts and tax increases. Joseph LaVorgna, an economist at Deutsche Bank, estimates that the housing recovery could boost U.S. economic growth by a full percentage point next year. That’s because a stronger housing market would mean more jobs, especially in industries like construction, and more consumer spending.
U.S. Economic Trend Update | 11.19.12
Will the fiscal cliff drag us over the edge? Is the festering crisis in Europe going to explode with severe repercussions for the U.S. economy? Do the wars in the Middle East pose a threat too? All of these risk factors are at the top of the list of things to worry about. The good news is that the economy has, or had, a tailwind, based on the current lineup of economic and financial indicators. That’s no guarantee that economic growth will survive in an increasingly risky world. But hasty decisions about the economy can take a heavy toll as well.
Book Bits | 11.17.12
● Post Modern Investment: Facts and Fallacies of Growing Wealth in a Multi-Asset World
By Garry Crowder, Thomas Schneeweis, and Hossein Kazemi
Summary via publisher, Wiley
There have been a lot of big changes in the investment world over the past decade, and many long-cherished beliefs about the structures and performance of various investments no longer apply. Unfortunately the news seems not to have reached many thought leaders and investment professionals who persist in trying, and failing, to apply 20th-century thinking to 21st-century portfolio management. Nowhere is this more true than when it comes to the subject of alternative investments. Written by an all-star team of investment management experts, this book debunks common myths and misconceptions about most classes of alternative investments and offers valuable advice on how to develop investment management and asset allocation strategies consistent with the new realities of the ever-changing world of alternative investments.
Is Industrial Production’s October Slide Another Storm-Related Victim?
Industrial production slumped last month, and the official blame again points to Hurricane Sandy. That’s the third time this week that weak economic data has reportedly been assaulted by the recent storm that tore through the Northeast U.S. Earlier in the week we were told that retail sales were victimized by the big blow, and the same was said of yesterday’s awful news on initial jobless claims. Is the hurricane narrative just a convenient excuse to minimize a weakening economy? Maybe, but it’s hard to say for sure until we see more data that’s free and clear of any weather-related mischief.
Mr. Market Smells A Rat
Anxiety is on the rise in assuming that the fiscal cliff will bring trouble for the economy if the $500 billion in scheduled tax hikes and spending cuts is allowed to kick in come January. But guess what? The pain has already started, courtesy of the forward-looking focus of the capital markets.
Stormy Statistical Subterfuge & Jobless Claims
It looks like a macro disaster, but it’s not. It’s still unnerving to see last week’s jobless claims soar, but the aftershock of Hurricane Sandy is probably the cause. That implies that new filings for jobless benefits will drop sharply in the weeks ahead and return to levels associated with the slow-growth trend that was interrupted by the weather earlier this month.