Monthly Archives: November 2014

Initial Guidance | 6 November 2014

● GOP’s Senate takeover could facilitate tax reform, trade accords | LA Times
● German Sep industry orders disappoint, fuelling Q3 growth fears | Reuters
● In Japan, Moves to Stimulate Economy Reach a Critical Stage | NY Times
● Mario Draghi’s efforts to save EMU have hit the Berlin Wall | Telegraph
● US Service Sector Activity Expands At Slower Rate In October | RTT
● Slow Recovery in Wages Continues Despite Strong Jobs Growth | Cleveland Fed

ADP: Another Solid Gain For Jobs In October

Private-sector jobs in the US posted another solid advance in October, according to this morning’s release of the ADP Employment Report. In line with expectations, companies added a net 230,000 positions last month on a seasonally adjusted basis, a bit more than September’s healthy 225,000 increase. More importantly, the year-over-year trend for ADP’s payrolls data inched higher again. The slightly stronger annual pace follows a similar pattern in the government’s data through September. Is the long-awaited acceleration in job growth finally here? Friday’s update from the Labor Department may provide an answer. Meantime, the case for thinking positively is on the march.
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Downsizing Market Stress

The Republican brand is up this morning and Mr. Market’s stress level is down. Is there a connection? Probably not, but for the moment the pairing is conspicuous. Then again, if the GOP has a pro-growth agenda that makes a difference in the real economy, well, maybe there’s a degree of logic behind the market’s bullish makeover of late. We’ll see. In any case, Republicans took control of the US Senate and extended their hold on the House of Representatives in yesterday’s election. Meantime, last month’s surge in volatility continues to subside as of yesterday (Nov. 4).
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ADP Employment Report: October 2014 Preview

Private nonfarm payrolls in the US are projected to increase 212,000 (seasonally adjusted) in tomorrow’s October update of the ADP Employment Report, based on The Capital Spectator’s median econometric point forecast. The expected monthly gain is marginally below September’s increase.
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Risk Premia Forecasts | 4 November 2014

The projected risk premium for the Global Market Index (GMI) inched lower again in October vs. the previous month. GMI, an unmanaged, market-value weighted mix of the major asset classes, is currently expected to earn an annualized 4.0% over the “risk-free” rate for the long term (for details on the methodology, see summary below). Today’s forecast is slightly below last month’s 4.3% estimate.
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Does Slower Growth Mean Higher Investment Risk?

The US economy has been looking moderately stronger lately, but worries about slow growth for the long run endure—a topic I dig into in my latest article for Financial Advisor. According to some economists, the US is destined for deceleration relative to its historical economic record. If true, the headwinds for money management and earning a risk premium may be set to blow a bit harder… perhaps much harder. As a result, financial advisors (and investors generally) may be inclined (forced?) to assume more risk in their portfolio strategies to compensate for a lesser tailwind in the macro trend.

Major Asset Classes | Oct 2014 | Performance Review

October was an unusually volatile month for most of the world’s markets relative to recent history, but when the dust cleared there were several winners. US REITs, in particular, ended the month with a hefty gain. In fact, the MSCI REIT Index’s 10% surge in October is the biggest monthly advance in four years. Otherwise, October’s gains were less spectacular, albeit decent. US stocks (Russell 3000), for instance, closed out the month with a respectable 2.7% increase.
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