►Richmond Fed’s Lacker Wants High Threshold For More Fed Action
Jon Hilsenrath/Wall Street Journal
“Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, sees modest growth in 2011, little change in inflation and little to spur the Fed to take new actions to support the economy.”
►IMF Meetings Should Target Double-Dip Risk
Mohamed A. El-Erian (Pimco)/Bloomberg
“Many topics are being teed up for next month’s annual meetings of the International Monetary Fund and World Bank in Washington, a gathering that will draw about 190 country representatives. There is a substantial risk of disappointment, one that would be detrimental to the welfare of billions around the world over time.”
RETAIL SALES RISE IN AUGUST
If you’re looking for fresh news that the risk of deflation/economic deterioration is gaining momentum, you won’t find it in today’s retail sales report for August. The advance estimates indicate a seasonally adjusted rise of 0.4% last month vs. July, the Census Bureau reported today. That’s the second monthly rise for U.S. retails sales and the highest percentage gain since March.
STOCKS UP, SO IS THE MONEY SUPPLY. A CONNECTION?
September has been a good month for equities, so far. The S&P 500 jumped nearly 7% for the month through Sep. 13. For the moment, the disinflationary/deflationary scare of the summer is over. Or is it merely taking a breather? There’s no assurance that the crowd won’t turn risk averse once more. It’s all about incoming economic data…still. But looking at the latest trend in money supply figures and the slight jump in the market’s inflation expectations suggest that there’s something more in the rise in equity prices than rank speculation.
YOU (STILL) CAN’T PROVE ANYTHING IN ECONOMICS
Mark Thoma, a professor of the dark art/science who teaches economics at the University of Oregon, neatly summarizes what everyone knows and few discuss: you can persuasively make a case for just about anything in the dismal science, but proving it is something else. Meantime, it’s all about organizing facts.
BUY & HOLD, ASSET ALLOCATION AND REBALANCING
Is the buy-and-hold portfolio strategy dead? Morningstar has been discussing the question lately, and the answer is that, well, it’s complicated.
BERNANKE’S READING LIST
What’s on Fed chairman Ben Bernanke’s reading list these days? He was asked that question earlier this month during testimony to the Financial Crisis Inquiry Commission, the government’s investigative posse charged with finding the smoking guns that triggered the financial crisis of 2008 and its evil twin, the Great Recession. One recommendation from the nation’s central banker in chief: Lords of Finance: The Bankers Who Broke the World
IT’S OFFICIAL: OBAMA PICKS GOOLSBEE AS ECO ADVISER
As expected, President Obama chose Austan Goolsbee as the new head of the White House Council of Economic Advisers. He is the replacement for the outgoing Christina Romer. Goolsbee, as AP reports today, “is already a central player on the Obama economic team, having served on the three-member economic council since the start of the administration. His relationship with Obama dates back to the 2008 presidential campaign, when he served as a senior economic policy adviser.”
THE NEW PUBLISHING SCHEDULE FOR THE BETA INVESTMENT REPORT
FYI for my newsletter subscribers…
Starting in September, The Beta Investment Report is published in multiple editions throughout each month. Previously, the newsletter was published in single monthly editions. Issues sent to subscribers so far this month:
9 September 2010 (Vol. 2 No. 9.5) “ETF, ETN & Index Fund News”
8 September 2010 (Vol. 2 No. 9.4) “Fund Focus: Foreign Gov’t Bonds
In Developed Markets”
3 September 2010 (Vol. 2 No. 9.3) “Rebalancing & Bonds”
2 September 2010 (Vol. 2 No. 9.2) “Economic Review”
1 September 2010 (Vol. 2 No. 9.1) “Risky Assets Take A Hit In August”
HOUSING & THE GREAT RECESSION
Steven Gjerstad (presidential fellow at Chapman University) and economics professor Vernon Smith (also at Chapman) connect the dots between the housing market and the business cycle in a recent study. Unfortunately, they don’t like what they see in the current climate. As they explain in an op-ed in The Wall Street Journal that summarizes their research, “If there is no recovery in housing expenditures, confirmed by a recovery in consumer durable goods expenditures, then there is no economic recovery.” And in case you were wondering, there’s no housing recovery to speak of at the moment.
JOBLESS CLAIMS DROP SHARPLY. CAN WE BELIEVE IT?
Seasonally adjusted jobless claims fell last week by 27,000—the biggest weekly drop in nearly two months and quite a bit more than the 2,000 retreat that economists generally were expecting. The news is a breath of fresh air for the business cycle, although it comes with some caveats. Nonetheless, the headline trend for the moment looks quite a bit better today: new filings for unemployment benefits dropped to 451,000 for the week through September 4, the lowest since early July.