No change is expected for US industrial production in tomorrow’s April report vs. the previous month, according to The Capital Spectator’s median point forecast for several econometric estimates. The median prediction of flat performance represents an improvement over March’s steep 0.6% decline. April forecasts of industrial activity based on recent surveys of economists range from a modest decrease to a slight gain for the monthly comparison.
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Wall Street Journal columnist Jason Zweig recently issued “a split decision in the passive vs. active brawl” for the “Great Fund Debate” between Vanguard founder John Bogle and newsletter writer James Grant. That’s a curious verdict because Bogle has the numbers in his corner while Grant relies primarily on rhetoric and the hope that the disappointing history for active management could be different in the years ahead.
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● Weak US retail sales dampen sharp Q2 growth rebound hopes | Reuters
● US Import Prices Fall for 10th Straight Month | WSJ
● Atlanta Fed Survey Shows Inflation Expectations Up | Bond Buyer
● US business inventories barely rise, suggest Q1 GDP contraction | Reuters
● Weekly mortgage applications fall 3.5% in US as rates rise | CNBC
● India’s Wholesale Prices Fall for Sixth Consecutive Month | WSJ

Consumer spending was unchanged in April vs. the previous month, according to this morning’s release of the government’s retail sales report. Last month’s flat performance follows a strong rise of 1.1% in March, which suggests that a degree of payback may explain April’s lackluster results. Even so, it’s hard to overlook the deceleration in growth in the year-over-year comparison. Whatever’s weighing on retail sales, it’s looking increasingly pervasive and beyond a mere seasonal bump.
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The US economic trend remains moderately positive as of early May, based on a markets-based estimate of macro conditions. The Macro-Markets Risk Index (MMRI) closed at +6.7% yesterday (May 12), a middling value relative to the benchmark’s range for the year so far. The moderately positive reading implies that business cycle risk remains low. A decline below 0% in MMRI would indicate that recession risk is elevated; readings above 0% imply that the economy will expand in the near-term future.
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● March US job openings decline to 4.99 million | MarketWatch
● US Retail Sales Flat in 1st Week of May From April: Redbook | Nasdaq
● US Small-Business Owners Were More Upbeat and Ready to Hire in April | WSJ
● Eurozone Q1 GDP Growth Picks Up | RTT
● German economy slows more than expected in Q1 as trade drags | Reuters
● French Q1 GDP increased strongly: +0.6% after 0.0% | Insee
● Eurozone industrial production decelerated in March | FT

US retail sales are expected to rise 0.2% in tomorrow’s April report vs. the previous month, according to The Capital Spectator’s median point forecast for several econometric estimates. The median prediction reflects a substantial deceleration in growth vs. the previous month’s 0.9% advance. Recent surveys of economists also project a considerably lesser rate of growth for retail spending in April.
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US payrolls bounced back in April, rising a solid 223,000 after March’s dismal gain of just 85,000. The news cheered the crowd and renewed faith in the case for macro optimism. But if the second-quarter is on the path of recovery after a rough winter, it’s not obvious in the Federal Reserve’s 19-factor Labor Market Conditions Index (LMCI), which ticked lower again in April and posted its second-consecutive negative reading.
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● Fed’s Labor Market Conditions Index At 3-Year Low In April | Action Forex
● Conference Board Employment Trends Index Ticks Up in April | CB
● U.K. Industrial Output Unexpectedly Rises Most in 6 Months | Bloomberg
● Fed’s Dudley: Interest Rate Increases Will Mark Regime Shift | Bloomberg
● No respite in sell-off of low-risk bonds | Reuters
● Bank of France: French economy will grow 0.3% in Q2 | RTT

Buy on the rumor, sell on the news. That ancient bit of trading advice seems to describe last week’s data for Treasury yields. In the days leading up to Friday’s report on payrolls for April, the benchmark 10-year yield increased to a new year-to-date high on Wednesday, only to slump when the better-than-expected jobs report arrived. The conventional wisdom interprets April’s solid job gains as a convincing signal that the economy is rebounding after a weak first quarter. In turn, the upbeat outlook has renewed forecasts that the Fed will lift interest rates later this year. Maybe, although the Treasury market seems to be having second thoughts… again.
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