Jeff Troutner of Equius Partners laments that too many investment advisors too often succumb to the temptations of extreme and overly active portfolio strategies despite the rise of indexing. Indeed, he suggests that indexing has been hijacked and perverted. “Thousands of advisors, who long ago convinced themselves and their ever-changing clientele of their intellectual superiority over ‘the market’—only to be consistently humbled by it—have shifted their strategies from individual stock picking to ETF picking with a market timing overlay.”
What Are Econ Bloggers Thinking?
The Kauffman Foundation’s released its new quarterly review of economic bloggers, which includes the two cents from yours truly. As a preview, the survey reports:
“Economics bloggers seem more pessimistic in their outlook on the U.S. economy than they were at the beginning of 2011, though 85 percent believe overall conditions are mixed, facing recession, or in recession. For an economy in which growth is the norm, 32 percent of respondents think that the U.S. economy is worse than official statistics indicate, and only 5 percent believe it is better. When asked to describe the economy using five adjectives, ‘uncertain’ remains the most frequently used term to describe the economy.”
Back To The Rock & The Hard Place?
The stock market has been famously described as a discounting machine. The machine isn’t flawless and so there’s always a risk that the forecast du jour is misleading. But it’s been right enough of the time to inspire monitoring Mr. Market’s real-time outlook, if only as one of several tools for looking ahead. The first challenge is filtering out the noise in the short term. We can start by reviewing rolling 12-month percentage changes in equities and comparing that with the equivalent for the economic trend.
Book Bits For Saturday: 5.7.2011
● From Financial Crisis to Global Recovery
By Padma Desai
Summary via publisher, Columbia University Press
Using the same presentation and detail that has earned her such wide-ranging acclaim for her previous books, Padma Desai explains in a course-friendly way the complexities of economic policy and financial reform. She merges a compelling narrative with scholarly research to teach and to engage the reader. Paul Krugman described Desai’s 2003 volume, Financial Crisis, Contagion, and Containment: From Asia to Argentina
April Job Growth Improves As Jobless Rate Ticks Up
This morning’s update on nonfarm payrolls for April brings some good news. Job growth accelerated last month to a net rise of 268,000 (seasonally adjusted) vs. March’s 231,000 gain. In fact, April’s pop was the best monthly increase in payrolls since the recession ended.
What Are Commodity Prices Telling Us Now?
Yesterday’s selling wave that slashed commodities prices is a reminder that this is a volatile asset class and so its value is limited as an input for setting monetary policy. Once again, we have a real-world lesson in why central banks focus on core inflation, which strips out food and energy prices. It’s hardly reasonable to ignore commodities in monitoring future inflation expectations, but it’s easy to go overboard with reading too much into raw materials prices.
Initial Jobless Claims Surge To 8-Month High
The news in this morning’s update on new weekly jobless claims is bad. In fact, it’s the worst report for this series since the recession ended in mid-2009. The Labor Department argues, according to Bloomberg, that the unusually big jump in claims was due to “auto-plant shutdowns and other unusual events that seasonal variations failed to take into account.” In any case, new filings for unemployment benefits surged last week by a seasonally adjusted 43,000–the biggest weekly jump in more than two years. As a result, claims hit 474,000 for the week through April 30, the highest since last August.
ADP: April Private Payrolls Rise, But At Slowest Pace In Months
It’s still growing, but job creation slowed last month, according to today’s release of the ADP Employment Report. Nonfarm private jobs rose by 179,000 in April on a seasonally adjusted basis–down from March’s gain of 207,000. That’s strong enough to offer convincing evidence that the labor market is still expanding with enough forward momentum to keep the party going in the months ahead. But it’s also true that last month’s gain was the smallest since last November’s tepid 122,000 rise.
Talking About Monetary Policy & The Economy
I’ll be one of five panelists chatting up the outlook for the economy in tomorrow’s teleconference at noon eastern hosted by Focus. Here are the details on how to listen in…
The March Rebound
All the major economic reports for March are in and it’s clear that the setback in February was reversed, and then some.