Retail sales rose in April—the seventh consecutive monthly increase, the government reported. Meanwhile, industrial production also rose last month—the third straight rise and the strongest since January. On a year-over-year basis, both measures are up sharply, suggesting that the broad trend in the economic recovery rolls on.
“DYNAMIC ASSET ALLOCATION” ON THE RECOMMENDED LIST
Online MBA, a business education website, listed my book–Dynamic Asset Allocation
STILL NO SIGN OF DOWNWARD MOMENTUM IN JOBLESS CLAIMS
Jobless claims dipped last week by a meager 4,000 to a seasonally adjusted 444,000, the Labor Department reported this morning. But even that spare decline is less than it seems. The previous week’s claims were revised up by 4,000, making the last two weeks more or less a wash, depending on whether you’re feeling statistically generous or not.
THE DOLLAR’S UP, AND SO IS GOLD. A WARNING SIGN?
Gold is trading at a record high today—roughly $1240/oz as we write this morning. The standard interpretation is that the metal is pricing in higher inflation in the years ahead. That’s an accurate reading of gold’s message, but the analysis is more complicated than usual once you consider the metal’s trend of late in context with other markets and the global economic climate. In the short term, the rising demand for gold is also telling us that the risk is rising (again) for a new wave of deflation in the months ahead.
INFLATION WILL “SAVE” THE EURO
Fiat currencies ultimately succumb to the follies of government largess, but the denouement rarely comes quickly. So it goes that the rumors of the euro’s death have been premature.
RATIONAL ASSET PRICING COMPLICATIONS
Is momentum investing irrational? Momentum here is defined as the persistence of recent pricing trends to continue in the short-term future. It’s not a trick question, but it’s complicated. As financial economics continues to identify “factors” (or alternative betas, if you prefer), the new insight both helps and hinders the effort to clarify the truth about asset pricing. One the one hand, documenting the case that securities prices are driven by more than the “market” beta represents an attack against modern portfolio theory and the efficient market hypothesis. Yet the same smoking guns can also be used to defend EMH. The momentum factor offers an intriguing example.
SUNDAY EXCERPTS: 5.9.2010
Greece, the risks and ramifications…
SATURDAY LINK LIST: 5.8.2010
Healthcare deficits, muni bubbles, PIGS, the problem with Europe’s currency, and thinking about interest rates as a mechanism for reflecting market information…
APRIL’S JOB GROWTH IS THE HIGHEST IN 4 YEARS
The news arrived just in the nick of time. Nonfarm payrolls surged by 290,000 last month (seasonally adjusted), the biggest rise in four years. This is good news—great news, in fact, as it suggests that the labor market is in fact recovering with substantial momentum. Given yesterday’s wave of market selling around the globe, the news comes at a crucial moment in the business cycle. Indeed, the outlook would indeed appear bleak if today’s employment numbers were low or (gasp!) negative.
JOBLESS CLAIMS DIP AGAIN. WILL TOMORROW’S LABOR MARKET UPDATE CONFIRM THE TREND?
Today’s weekly update on jobless claims offers a glimmer of hope that there’s enough growth momentum in the economy to push new filings lower in the weeks ahead. But after reading yesterday’s disappointing ADP employment report, we’re not expected any sudden bursts of good news. Tomorrow’s jobs report from the Labor Department may suggest otherwise, of course. But for the moment, it’s still touch and go with payrolls.