The pace of US growth slowed more than expected in October, according to this morning’s update of the Chicago Fed National Activity Index. The three-month moving average for this benchmark of 85 indicators slipped to a negative 0.01 reading last month from +0.12 in September. Led by weakness in “production-related indicators,” today’s release “suggests that growth in national economic activity was near its historical trend,” according to the press release.
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There’s a pernicious rumor making the rounds that economic and market forecasts are accurate. There’s also a misguided notion embraced in some corners that all predictions are worthless at all times under all conditions. Both of these extreme views are unproductive, bordering on dangerous. Yes, peering into the future is hazardous work and it’s a field that’s burdened with an excess of landmines. But avoiding what can be a nasty business is impossible when it comes to the money game. Thinking clearly about forecasting, as a result, is crucial. Unfortunately, a sober-minded perspective on this hot-button topic seems to be the exception to the rule in a world that’s awash with projections.
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● German Business Confidence Unexpectedly Gains in November | Bloomberg
● Euro near two-year low as investors bet on more ECB easing | Reuters
● All eyes on oil: What will OPEC do this week? | CNNMoney
● China Cuts Interest Rates For First Time Since 2012 | RTT
● US Week Ahead: Q3 GDP, MNI Chicago, Durables, Housing Data | MNI
● Putin stands by hawkish Russian central bank – for now | Reuters

● Putin’s Kleptocracy: Who Owns Russia?
By Karen Dawisha
Review via The Wall Street Journal
Systemic embezzlement, skimming, fraud and personal enrichment through power—these have long been assumed about Vladimir Putin ‘s inner circle, but they have not been comprehensively laid out until now. Karen Dawisha’s book made headlines in April, five months before it was published, when Cambridge University Press backed out of publication in Britain, fearing English libel laws. “Putin’s Kleptocracy: Who Owns Russia?” delivers precisely the kind of meticulously researched evidence one would hope for in a work preceded by such controversy.
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The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to decelerate to a +0.11 reading in the October update that’s scheduled for release on Monday (Nov. 24), based on The Capital Spectator’s median econometric point forecast for several econometric estimates. The projection is moderately below the +0.25 value for September, which reflected above-average economic growth for the US relative to the historical trend. Only values below -0.70 indicate an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Using today’s estimate for October as a guide, CFNAI’s three-month average is expected to remain at a level that’s historically associated with growth at an above-trend pace.
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In the horse race among the major asset classes, there’s not much competition for first place at the moment. US REITs remain in the lead for the trailing one-year period (250 trading days), and by a wide margin, based on our standard list of ETF proxies for the key slices of global markets. In other words, US stocks have been demoted recently to second place,  and by more than a trivial degree. Vanguard Total Stock Market ETF (VTI), which tracks a broad measure of US equities, is still sitting on a handsome gain for the past year (+15.0%), but it’s well below the 24% surge for Vanguard REIT ETF (VNQ).
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Paul Krugman seems to be having a supply-side-economics moment… sort of. Raising taxes, the NY Times columnist and Nobel laureate has been arguing lately, threatens Japan’s fragile economic recovery. “Shinzo Abe is doing the right thing, seeking to delay the next rise in consumption taxes,” Krugman wrote on his blog yesterday. “This is good economic policy….”
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● US Leading Economic Index Increased Again In October | Conference Board
● US October consumer prices flat; core CPI up 0.2% | USA Today
● Eurozone Nov Flash Consumer Confidence Falls Unexpectedly | RTT
● UKIP, Populist Anti-E.U. Party, Wins 2nd Seat in Britain’s Parliament | NY Times
● Obama declares ‘lawful action’ to protect 5M immigrants | USA Today
● Japan PM seeks referendum on ‘Abenomics’ in snap election | Reuters

The first hint that the global economy’s recent weakness is creeping into the US arrived in today’s preliminary November update of the Markit US Manufacturing Purchasing Managers Index (PMI). This survey of business conditions in the manufacturing sector reflected slower growth for this month’s flash estimate. Dipping to 54.7, the PMI’s slide — the third monthly decline in a row — shows that manufacturing activity in the US increased this month at the slowest pace since January.
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New filings for unemployment benefits fell 2,000 to a seasonally adjusted 291,000 for the week through November 15, the Labor Department reports. It’s a relatively minor change, but today’s update provides more evidence that the broad slide in jobless claims rolls on. The latest reading remains close to the 14-year low of 266,000 for the week through October 11, 2014. Stepping back and looking at the historical record, claims are near the lowest levels recorded over the last 40 years. Suffice to say, this leading indicator for the labor market—and for the economy generally—continues to flash a bullish signal.
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