Housing starts are expected to increase marginally to an annual pace of 1.069 million units in tomorrow’s update for February, according to The Capital Spectator’s median point forecast for several econometric estimates. The projection represents an incrementally higher level of residential construction vs. January’s data.
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Output in the industrial sector increased at a slower rate than expected last month—0.1% vs. the 0.3% gain projected in Econoday.com’s consensus forecast. A darker picture emerges when we focus on the manufacturing component, which represents the lion’s share of industrial activity. So-called factory output slumped 0.2% last month, the third consecutive monthly decline, the Federal Reserve reports.
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In the previous post on using R for portfolio analysis and design, we discovered that global diversification across asset classes has been modestly beneficial relative to a basic 60%/40% US stock/bond allocation. The global aspect didn’t add a lot of value because US equities during the sample period—from 2004 onward—generally delivered strong results, particularly over the last five years. But the future may not be so kind to a US-centric portfolio and so it’s reasonable to wonder if global diversification may be more productive in the years ahead. On that note, if we’re holding an international portfolio across asset classes, what are the possibilities for managing risk with a more aggressive process vs. a simple rebalancing program? As one possibility, let’s consider how a momentum-factor model compares vs. the basic rebalancing strategy. As a preview, this backtest looks quite encouraging for keeping drawdowns to a minimum while capturing the bulk of the upside returns via staying fully invested in the asset mix.
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● Low wages, high dollar test Fed’s patience | Global Post
● US business confidence drops to post-crisis low in February | Markit
● Global recovery fragile, India a bright spot: IMF’s Lagarde | Reuters
● Global business confidence, hiring intentions slip to post-crisis low | Markit
● Chinese business optimism strengthens to 1-year high | Markit
● German business sentiment improves markedly | Markit
● Swiss Producer & Import Prices Fall Most Since Late 2009 | RTT