Private nonfarm payrolls in the US are projected to increase by 197,000 (seasonally adjusted) in February over the previous month in tomorrow’s Wednesday’s update of the ADP Employment Report, based on The Capital Spectator’s average point forecast for several econometric estimates. The average projection reflects a moderately lesser increase vs. January’s gain.
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Managing risk via tactical asset allocation (TAA) offers a number of encouraging paths for limiting the hefty drawdowns that take a toll on buy-and-hold strategies. But what looks good on paper can get ugly in the real world. There’s a relatively easy fix, of course: consider the total number of trades associated with a strategy as another dimension of risk.
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The crowd’s appetite for risky assets extended for a second week, at least in some corners, based on a set of proxy ETFs representing the major asset classes. US junk bonds took the lead for the five trading days through Feb. 26, building on the previous week’s gain. But the revival didn’t include foreign assets from a US-dollar perspective. Other than fractional gains for foreign real estate securities and equities in developed markets, all of last week’s red ink was concentrated in offshore markets via various shades of foreign bonds and emerging-market stocks.
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● US Personal Income & Spending Up More Than Expected In Jan | RTT
● US Q4 GDP revised up due to inventory adjustment | Bloomberg
● US Consumer Sentiment Drops Less Than Initially Estimated In Feb | RTT
● Eurozone CPI inflation goes negative for YoY headline trend in Feb | Bloomberg
● German retail sales up more than expected in Jan | ShareCast
● Shares fall on G20 disappointment, Fed hike worries | Reuters

What are the economic stakes tied to the outcome of this November’s US Presidential election? Minds will differ, but surely the answer is somewhere north of zero. Unfortunately, monitoring the political factor in real time can be a messy and mind-numbing affair, thanks to a sea of commentary and reportage—most of which is little more than guesses and intuition repackaged as serious analysis. But if you’d like to cut through the noise and focus on the numbers to develop a relatively objective assessment of how the political winds are trending, The Capital Spectator recommends the following two-step daily regimen that takes all of 60 seconds.
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● The Empire Of Things: How We Became a World of Consumers, from the 15thC to the 21stC
By Frank Trentmann
Review via The Independent
Trentmann has written a suitably gigantic book for a gigantic subject but the mass of detail he provides never overwhelms. This is a book that can be dipped into and enjoyed at leisure. The first half, in which he describes how the consumer culture took off, is especially fascinating. You can’t not learn something new here.
He closes his epic tale on a sombre note, warning that unless a cultural revolution takes place, which frees us from our addiction to buying, consuming and then throwing things away, we risk submerging the entire planet in waste. Judging by our record so far, don’t hold out your hopes.
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The US economic trend looks a bit firmer in the wake of today’s update on personal income and spending for January and revised numbers for last year’s fourth-quarter GDP data. Notably, the year-over-year trend for income and spending kicked higher at the start of 2016. Macro risk is still elevated relative to the broad trend six months ago, especially from a global perspective. But for the moment there’s a modestly stronger tailwind blowing in the published numbers for the US—news that eases fears for assuming that the world’s largest economy is sliding into a new recession.
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The US economy’s stall speed expansion in last year’s fourth quarter is on track to accelerate in Q1, according to a variety of estimates. There’s disagreement about the strength of the revival, but a diverse set of forecasts are in agreement that Q1 economic activity will strengthen in the “advance” estimate that the Bureau of Economic Analysis will publish on Apr. 29.
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● US Jobless Claims Inched Up, But Still Point to Robust Job Market | WSJ
● Strong US durable goods orders in Jan offer hope for mfg | Reuters
● Consumer sentiment in US holding steady near 3-mo high last week | Bloomberg
● Kansas City Fed composite mfg index falls to 7-year low in Feb | KC Fed
● Eurozone economic sentiment drops more than expected in Feb | Reuters
● Global Finance Leaders Meet as Economic Skies Darken | NY Times

The preliminary numbers for the US macro profile in February look wobbly, based on this week’s updates of purchasing managers’ indexes (PMIs) for the services and manufacturing sectors. But before we go down that rabbit hole consider this: there’s no sign of trouble in today’s weekly report on initial jobless claims. This leading indicator for the labor market and the economy generally is still signaling a positive trend for the US. The darker message in the PMI data suggests otherwise, which means that one side or the other will soon give way and confirm the opposing outlook. Meantime, let’s review today’s claims data.
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