● Job Openings in US Rose in November | Bloomberg
● US Small Business Optimism Ticks Higher in Dec | 24/7 Wall St
● US Redbook: Jan sales growth slows during clearance week | MNI
● China trade data eases concerns about economy | Reuters
● Eurozone Industrial Output Falls More Than Forecast in Nov | RTT
● Obama’s State of Union Optimism at Odds With Voter Anxiety | Bloomberg

Do you know where the risk in your portfolio is coming from? Well, of course, you do. After all, you designed the portfolio and so the asset weights reflect the risk contribution. A 50% weighting in stocks translates into a 50% contribution to risk for the portfolio overall, right? That’s a reasonable first approximation, but it’s a crude estimate and one that’s prone to error as market conditions change—particularly for a strategy that holds a mix of asset classes. For a precise profile of the relative contributions from each piece of the portfolio—an essential piece of intelligence for risk management—we’ll have to go deeper into the analytical toolkit.
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● Fed’s US Labor Conditions Index Rises to 2.9 in Dec | Bond Buyer
● Employment trends index for US rebounds in Dec | CB
● Atlanta Fed President Lockhart expects US economy to grow in 2016 | Atlanta BC
● Atlanta Fed’s ‘GDP Now’ Forecast Much Lower than Consensus | Barron’s
● UK Industrial Output Plunges Most in Almost 3 Years | Bloomberg
● German Machine Orders Rise For 2nd Straight Month In Nov | MNI
● Oil prices tumble 3% to just over $30 | Reuters
● RBS cries ‘sell everything’ as deflationary crisis nears | Telegraph

David Stockman points out that last week’s news of a surprisingly strong gain in payrolls in December is primarily due to seasonal adjustment. The impressive 292,000 seasonally adjusted surge dwindles to a tepid 11,000 advance in unadjusted terms. He’s rightly skeptical about the value of viewing economic data over short-term windows through a seasonally adjusted lens. What he doesn’t mention is that the antidote to noise, at least in part, is the year-over-year comparison. Watching job creation (or the lack thereof) by this yardstick is a useful and generally reliable filter for monitoring the trend. In fact, looking at the latest jobs report in annual terms for raw and seasonally adjusted results reveals virtually identical gains: roughly 1.9% advances on both counts in December vs. the year-earlier level.
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The year began with a thud for most of the major asset classes, based on total returns for a set of proxy ETFs. Investment-grade US bonds edged higher in the first five trading days through Jan. 8. Thanks in part to a slightly weaker dollar last week, foreign government bonds in developed markets and foreign junk advanced slightly as well. But the red ink was otherwise dominant.
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● Robust US payrolls in Dec brighten economic outlook | Reuters
● Consumer Borrowing in US Rises at Slowest Pace in 10 Months | Bloomberg
● US Wholesale Inventories Unexpectedly Drop 0.3% In Nov | RTT
● Why the Fed needs to prepare for the worst right now | Larry Summers (WaPo)
● Are we in a recession already? Not yet | MarketWatch
● China Inflation Rises Slightly In Dec, PPI down | RTT
● China Retreat From US Bonds Prompts Shrugs | Bloomberg

● The Rise and Fall of American Growth:
The U.S. Standard of Living since the Civil War
By Robert Gordon
Review via The Wall Street Journal
In his new book, “The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War,” Northwestern University economist Bob Gordon argues that the century between 1870 and 1970 was exceptionally good for U.S. households (particularly 1920 to 1950) but that the years since 1970 have been disappointing and the future looks disappointing too.
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US companies increased payrolls by a strong 275,000 (seasonally adjusted) in December, according to this morning’s employment report from the Labor Department. The gain beat the consensus forecast by a wide margin and introduces a timely round of optimism after a bearish start for markets so far in the new year.
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The US stock market this week suffered its worst four-day start to a new year in history through yesterday’s close (Jan. 7). In other words, expected return posted its biggest gain ever over the latest four-day January kick-off. It’s hard to say exactly how much expected return increased or when or if such a theoretical shift in ex ante peformance will translate into real money. But at a time of heightened volatility (again) in markets around the world, the antidote to fear is a sober helping of perspective and a reasonable plan for managing risk.
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● Applications for Jobless Benefits in US Decreased Last Week | Bloomberg
● Dec job cuts in US fall to 15-year low: Challenger | CNBC
● Percentage of US adults working full time ticks up to 45.3% in Dec | Gallup
● Consumer confidence in the US climbs to a 12-week high | Bloomberg
● German Industrial Production Falls Unexpectedly In Nov | MNI
● Can US Remain an Island of Stability in Global Economy? | NY Times
● China stocks up on Friday | Reuters