Payrolls at US companies posted another respectable gain in February, advancing 212,000 over the previous month, according to this morning’s update of the ADP Employment Report. The increase is a bit soft relative to the consensus forecast, but the gain still reflects a healthy bias for expansion. Reviewing the numbers in context with recent history, however, shows that the pace of growth is slowing in the private sector. Is that a sign that the US economy’s acceleration of late is fading? Maybe, maybe not—another couple of months will bring deeper clarity. Meantime, there’s a bit more anxiety about the potential risk that the macro trend is slipping back into a familiar pattern in the wake of the Great Recession: sluggish growth.
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A recent paper (“Evaluating Trading Strategies”) on the hazards of backtesting in The Journal of Portfolio Management has been receiving a fair amount of attention lately, inspiring some folks to go off the deep end and argue that econometric analysis of investment strategies is always a bad idea. That’s a bit much for the simple reason that the only alternative to backtesting is blindly throwing money at markets without the benefit of perspective. Yes, backtesting can be dangerous when designed without best practices in mind. But in the grand scheme of investing, we’re all relying on one form of backtesting or another.
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● Eurozone Retail Sales Surge In January | WSJ
● Eurozone Composite PMI: economic growth at 7-month high | Markit
● Harsh Winter Weather Bit Into US Auto Sales in February | NY Times
● Germany Services PMI: Sharpest rise for 5 months in Feb | Markit
● UK Services PMI: Strong growth of service sector sustained | Markit
● US firms in China expect less rosy times as economy slows | Reuters
● India surprises with second interest rate cut | BBC