Housing starts in December rose a bit more than expected, the US Census Bureau reports, but the modestly upbeat news was marred by the decline in new building permits in last year’s final month. As a result, the overall profile for these leading indicators remains muddled at best. On a year-over-year basis the trend certainly looks sluggish, in contrast with the generally brighter news from other key economic reports in recent months.
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Once upon a time there was only one factor—the market, a la the capital asset pricing model. But after a half century of crunching the numbers since CAPM was born, “now we have a zoo of new factors,” as Professor John Cochrane observed a few years ago. In theory, identifying more factors opens the door for building superior risk-adjusted portfolios. But some practitioners worry that “the proliferation of factors is deeply troubling,” as Research Affiliates explained recently. Why? Because not all factors are created equal and securitizing what looks like a productive risk premium on paper is tricky when it comes to real-world results.
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● US Homebuilder confidence declines slightly in January | Housingwire
● UK Sep-Nov Jobless Rate Falls More Than Expected | RTT
● Bonds, shares, gold supported ahead of expected ECB action | Reuters
● Brent crude oil rises above $48.50, but outlook remains weak | Reuters
● Gold Prices Top $1,300 an Ounce for First Time in Five Months | Bloomberg
● Behind Drop in Oil Prices, Washington’s Hand | NY Times