Housing starts are expected to total 1.157 million units (seasonally adjusted annual rate) in tomorrow’s January update, according to The Capital Spectator’s average point forecast of several econometric estimates. The projection represents a modest increase over the previous month’s level of residential construction activity.
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If the Atlanta Fed’s GDP nowcast for US economic activity in the first quarter is accurate, the macro trend is accelerating in the new year after a weak Q4. If the GDPNow model’s prediction holds, we’ll also have confirmation that Mr. Market laid an egg with his recent recession warning.
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● ECB’s Draghi hints at more stimulus | USA Today
● German ZEW Indicator of Economic Sentiment Continues to Deteriorate | ZEW
● Saudi Arabia and Russia Agree To Oil-Output Freeze | Bloomberg
● US Recession Risks Bubbling Up But How Probable Is That Outcome? | Forbes
● UK inflation rises to 12-mo high in Jan | MNI
● Left-Leaning Economists Question Cost of Bernie Sanders’s Plans | NY Times

The safe-haven trade remained in force during last week’s trading activity for the major asset classes, based on a set of proxy ETFs. Bonds were the clear winner for the five trading days through Feb. 12, with the SPDR Barclays International Treasury ETF (BWX) leading fixed-income higher for the second week in a row with a solid 1.4% total return. The modestly weaker US dollar has been a factor in boosting performance of foreign bonds in unhedged terms. Note that the US Dollar Index has eased in each of the past two weeks. Meanwhile, US REITS (VNQ) posted last week’s biggest decline among the major asset classes, tumbling 4.4% for the week just passed.
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● Strong US consumer spending counters recession fears | Reuters
● US Consumer Sentiment Unexpectedly Deteriorates In February | RTT
● US inventory-to-sales ratio hits highest level since 2009 | Reuters
● China’s Exports Fall More Than Forecast | RTT
● Chinese Start to Lose Confidence in Their Currency | NY Times
● For Some, It’s Time to Look Overseas Again | NY Times
● Oil Near $30 as Iran Loads for Europe, China Imports Fall | Bloomberg

● Postcapitalism: A Guide to Our Future
By Paul Mason
Review via The Guardian
Mason, like Marx, believes that capitalism will collapse under the weight of its own internal contradictions. These include unsustainable levels of debt on the part of both individuals and nations (“2008 was the tremor in advance of the earthquake”). In addition, the rise of information technology will corrode market mechanisms, erode property rights and destroy the relationship between wages, property and work. All this, plus burgeoning inequality, the inevitability of climate change and continued population growth, will open up the possibility of a brave new world. The alternative, warns the author, is chaos.
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US retail sales rose a moderate 0.2% in January, the Census Bureau reports. The gain offers another clue for thinking that the stock market’s plunge this year may be a false warning about the near-term macro outlook. In fact, when you look at retail spending’s year-over-year rate, today’s release shows a modest acceleration in the trend. To be fair, the early data for the January economic profile had been previously hinting at the probability that this year’s first month would escape the clutches of an NBER-defined recession. Today’s report strengthens that view. February, of course, remains a mystery in terms of the available hard data at this point. Meanwhile, reviewing a broad set of indicators that reflects activity through last month—excluding market data—still aligns with an assumption that US economic growth will roll on.
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The battle between macro and markets rages on. Yesterday’s update of the ADS Index—a US business-cycle metric published by the Philadelphia Fed—remained comfortably in growth territory, in part due to yesterday’s upbeat report on jobless claims (one of the index’s six components). A markets-based estimate of the US economic trend, by contrast, continues to price in a new recession, based on the Macro-Markets Risk Index (MMRI), which aggregates four corners of the financial and commodities realm in an effort to gauge the crowd’s outlook. (See here for MMRI’s design details.)
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● US jobless claims fall to lowest level in 7 weeks | Bloomberg
● US Consumer Comfort Index holds close to a 3-mo high | Bloomberg
● Fed won’t backpedal on interest rates, Janet Yellen says | NY Times
● Yellen: Negative rates not “off the table” | USA Today
● Sweden cuts rates deeper into negative territory | Reuters
● Eurozone GDP rises 0.3% Q3, matching Q4’s pace | MarketWatch
● German economy ends 2015 on solid note | DW

No change is expected for US retail sales in tomorrow’s January report vs. the previous month, according to The Capital Spectator’s average point forecast for several econometric estimates. The average prediction marks a slight improvement vs. the fractional decline posted in the previous month.
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