Desperately searching for a fresh dose of chatter about risk metrics? You’re in luck. In my latest article for Financial Advisor, I consider a few of the possibilities for replacing, or at least supplementing the Sharpe ratio, the granddaddy or risk measures. The story’s in the March issue, although you can find the online version here.
Consumer Spending Up Sharply In February As Personal Income Growth Stays Sluggish
Consumer spending rose sharply in February, the Bureau of Economic Analysis reports. Unfortunately, income growth was weak again last month, raising fresh worries about the economic outlook.
Is Extremism In The Defense Of The Gold Standard An Economic Vice?
It’s human nature to emphasize the points that advance your claims while minimizing the facts that undermine it. We all do it in some degree, and sometimes for practical reasons, such as brevity. But there are limits to cherry picking the facts. At some point your credibility suffers if you go too far and slice your reasoning too thin. Yet that’s a risk that advocates for reviving the gold standard don’t seem to understand.
Another Four-Year Low For Jobless Claims
Initial jobless claims dropped to another four-year low last week, the Labor Department reports. That’s another sign that the labor market is likely to continue expanding, perhaps at a moderately faster rate than we’ve seen in recent months. New filings dropped 5,000 to a seasonally adjusted 359,000 for the week ending March 24. (Today’s update reflects an annual data revision going back to 2007 and so the latest numbers don’t correspond with last week’s report.)
Strategic Briefing | 3.29.12 | Oil Supply & Demand
A rational reason for high oil prices
James Hamilton (Econobrowser) | Mar 28
“There is no rational reason for high oil prices,” writes Ali Naimi, Saudi Arabian Minister of Petroleum and Mineral Resources, in today’s Financial Times. Well, I can think of one– if oil prices were lower, the world would want to consume more than is currently being produced.
Durable Goods Orders Rebound After January’s Slump
New orders for durable goods rose 2.2% last month, taking some of the sting out of January’s sharp 3.6% tumble. February’s rebound isn’t particularly impressive next to last November’s 4.2% surge, or even December’s 3.3% increase. But the latest pop was enough to support the year-over-year pace and keep it firmly in 10%-plus territory. In short, this crucial series—economist Bernard Baumohl
Anxiously Awaiting Friday’s Update On Personal Income
Personal disposable income growth has been slowing, a trend that threatens to derail the economic recovery–if it rolls on. Deciding if this hazard has reached the point of no return is still an open debate, which is why Friday’s update on income and spending for February will be closely analyzed for clues about the next phase for the business cycle.
The Rise of Robo Rebalancing
Tara Siegel Bernard tells us that automatic rebalancing options are becoming common at 401(k) plans, but the service is still a rarity for online brokerages. TD Ameritrade and Fidelity are among the handful of exceptions, she reports in The New York Times. In a perfect world, these options would be standard everywhere. Rebalancing, after all, is crucial for risk management and earning a decent risk premium through time. Making this essential task easier, by putting it on auto pilot, would be a huge plus for investors.
Chicago Fed: US Economic Activity “Near Average” In February
The plot thickens for deciphering the next move for the business cycle… or does it? The Chicago Fed National Activity Index (CFNAI)—a broad measure of the U.S. economy—slipped last month. “Two of the four broad categories of indicators that make up the index deteriorated from January, but of these two, only the production and income category made a negative contribution to the index in February,” the Chicago Fed reports. On the other hand, monthly numbers are noisy, which is why we’re told to pay closer attention to CFNAI’s three-month moving average, which “suggests that growth in national economic activity was above its historical trend.”
Strategic Briefing | 3.26.12 | What’s Next For The Labor Market?
Mild Winter Weather and Payroll Employment
Macroadvisers | Mar 22
To summarize, we estimate that unseasonably mild weather this winter has had a measurable effect on employment, with the level of employment in February 72 thousand above the level consistent with no deviation in weather from seasonal norms. Our model suggests that in the event weather in March returns to seasonal norms, the change in payroll employment will be reduced by 58 thousand. Furthermore, a continuation of seasonally normal weather into April would result in a further drag on the change in employment then of about 14 thousand. The result for March provides an estimate of the significant adjustment one should make to the headline employment number in March to more accurately judge the underlying strength of employment.