Monthly Archives: November 2015

The Encouraging Record (So Far) For Macro-Markets Risk Analysis

The US stock market has had a rough ride over the last three months. But if you averted your eyes from the volatility that started after Aug. 18 and checked the S&P 500 as of yesterday’s close (Nov. 10) it appeared that nothing much had changed. The fractional loss looks uneventful and so one might wonder what all the fuss was about? There’s been an enormous among of churning in the market since mid-August, but for the moment the dust has settled and from the perspective of the S&P 500 we’re right back where we started.
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Initial Guidance | 11 November 2015

● US import prices drop 0.5% in Oct, 4th decline in a row | MarketWatch
● US small business optimism index unchange in Oct | Reuters
● Redbook: US retail sales increase in first week of Nov | WSJ
● China’s industrial production growth falls to 6-mo low in Oct | Telegraph
● Retail spending in China ticks higher to 11% annual rate in Oct | IBT
● UK jobless rate falls to 8-year low in 3 months through Sep | BBC

Still Expecting A US Recession? The Numbers (Still) Beg To Differ

US recession risk continues to fade after running moderately higher in recent months. But a variety of business-cycle metrics have only hinted at trouble without crossing the Rubicon. The main concern was linked to higher market volatility. But the economic data merely wobbled without actually falling down. The lesson, once again, is that mastering the art/science of monitoring and evaluating the business cycle requires a methodology that’s based on a spectrum of data that minimizes the potential for confusing market noise with robust macroeconomic signals.
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Initial Guidance | 10 November 2015

● US Labor Mkt Conditions Index rises to 3mo high in Oct | EconoTimes
● Conference Board’s Employ. Trend Index points to “solid job growth” in Oct | CB
● Moody’s still projects sluggish growth for G20 nations | EconoTimes
● Int’l Energy Agency sees oil rising to $80/bbl by 2020 | WSJ
● Low inflation persists in China | Reuters
● French industrial output rises more than expected in Sep | Bloomberg
● Industrial production in Italy rises less than expected in Sep | RTT
● Japan’s Oct Eco Watchers Sentiment Index rises, first time in 3mos | MNI

Book Bits | 7 November 2015

● Why Minsky Matters: An Introduction to the Work of a Maverick Economist
By L. Randall Wray
Summary via publisher (Princeton University Press)
Perhaps no economist was more vindicated by the global financial crisis than Hyman P. Minsky (1919–96). Although a handful of economists raised alarms as early as 2000, Minsky’s warnings began a half-century earlier, with writings that set out a compelling theory of financial instability. Yet even today he remains largely outside mainstream economics; few people have a good grasp of his writings, and fewer still understand their full importance. Why Minsky Matters makes the maverick economist’s critically valuable insights accessible to general readers for the first time. L. Randall Wray shows that by understanding Minsky we will not only see the next crisis coming but we might be able to act quickly enough to prevent it.
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A Surprising Surge In US Job Growth In October

US private-sector employment rocketed higher in October, the Labor Department reports. Last month’s bigger-than-forecast 268,000 increase is the biggest monthly rise so far in 2015 and dramatically above the soft increases in the previous two months. The gain is strong enough to dispense the first improvement in the annual pace of growth since May. It remains to be seen if the bullish rebound survives future revisions and endures in the months ahead. But for the moment, today’s employment report just gave the Federal Reserve a green light to start rising interest rates.
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The Flawed “Logic” Of Letting Banks Implode

Some of the usual suspects were advocating bank failure earlier this week on Bloomberg TV as a policy roadmap for success during economic and financial crises. It’s a convenient recommendation because the idea’s inherent contrarian drama offers a veneer of logic and provides an entertaining talking point for television. Saving bankrupt entities from the laws of free-market gravity, after all, is grounded in economic logic, common sense and a pro-growth agenda. All true… except when it comes to banks. This isn’t open for debate. Banks are different and must be treated differently when the grim reaper is knocking. Hundreds of years of empirical evidence speak loud and clear on this point. Learning from history isn’t on everyone’s agenda, however. But no matter how many times you insist that down is up, the historical record remains unchanged.
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