Monthly Archives: April 2016

Commodity Prices Rise For 3rd Week In A Row

Last week’s performance leader: commodities, which posted a gain for the third week in a row, based on a set of ETFs that track the major asset classes. The rise has barely made a dent in the steep year-over-year loss that still weigh on commodities overall. But the rally so far this year for prices of raw materials generally is the strongest since the bear market started pinching these markets in 2014.
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Initial Guidance | 25 April 2016

● PMI: Weakest upturn in US mfg since Sep 2009 | Markit
● Fed seen holding rates this week with hike still on horizon | Reuters
● Lackluster GDP throws wrench into Fed’s rate-hike plans | Market Watch
● US Financial Stress Index just below “significant stress” level | Cleveland Fed
● Bond investors are taking bigger risks than ever before | Bloomberg
● German Business Confidence Weakened in April | Bloomberg
● The High Investing Fees You Don’t See Can Hurt You | NY Times
● Middle East Economies Facing Oil Revenue Falls, IMF Says | WSJ

Book Bits | 23 April 2016

● A Future Beyond Growth: Towards a steady state economy
Edited by Haydn Washington, Paul Twomey
Summary via publisher (Routledge)
A Future Beyond Growth explores the reason why the endless growth economy is fundamentally unsustainable and considers ways in which society can move beyond this to a steady state economy. The book brings together some of the deepest thinkers from around the world to consider how to advance beyond growth. The main themes consider the deep problems of the current system and key aspects of a steady state economy, such as population; throughput and consumerism; ethics and equity; and policy for change. The policy section and conclusion bring together these various themes and indicates how we can move past the growth economy to a truly sustainable future.
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Research Review | 22 Apr 2016 | Risk Analysis

The Market Portfolio is NOT Efficient: Evidences, Consequences and Easy to Avoid Errors
Pablo Fernandez (University of Navarra), et al.
March 16, 2016
The Market Portfolio is not an efficient portfolio. There are many evidences that tell us that: the equal weighted indexes have beaten their market-value weighted indexes for many years, many easy-to-build portfolios (some “smart-beta”, “multifactors”) have beaten market-value weighted indexes. We document evidences about seven Equal weighted indexes that have had higher returns than the corresponding market-value weighted index: S&P500, MSCI Emerging Markets, FTSE 100, MSCI World. MSCI, DAX 30 and IBEX 35. However, many finance and investment books still recommend to diversify in the same relative proportions as in a broad market index such as the Standard & Poor’s 500, many funds compare their performance with the return of market-value weighted indexes. Without homogeneous expectations, the market portfolio cannot be an efficient portfolio for all investors.
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Initial Guidance | 22 April 2016

● US Jobless claims fall to 42-year low | MarketWatch
● Chicago Fed National Activity Index Ticks Lower in Mar | 24/7 Wall St
● Philly Fed Index Unexpectedly Returns To Negative Territory In Apr | RTT
● US Leading Economic Index ticks up in March | Conference Board
● US Consumer Comfort Index fell last week | Bloomberg
● US House Price Index edges up in Feb | Builder Mag
● PMI: Eurozone stuck in slow growth rut at start of Q2 | Markit
● BOJ Officials Consider Negative Rate on Loans | Bloomberg

Chicago Fed: US Economic Output Continued To Slow In March

US economic activity continued to decelerate in March, according to this morning’s update of the Chicago Fed National Activity Index (CFNAI)—a multi-factor benchmark that tracks dozens of indicators. The index’s three-month average (CFNAI-MA3) eased to -0.18, a three-month low. That’s still well above the tipping point (-0.70) that marks the start of new recessions. Yet today’s update reaffirms the view that US growth slowed in the first quarter—a slowdown that’s expected to deliver a disappointing Q1 GDP report when the Bureau of Economic Analysis publishes its “advance” report next week.
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Tactical Models Under Pressure As US Stocks Rebound

The US stock market may be on the verge of decisively throwing off its bear-market shackles and making fools of analysts (including yours truly) who’ve been issuing cautious commentary in recent months. It’s also been clear for more than a month that a previously issued markets-based warning on US business-cycle risk has been wrong, at least so far. As yesterday’s broad-minded review of economic indicators relates, the US economy wasn’t in recession in March, based on data published to date. In the wake of the equity market’s rally in recent weeks, the call that stocks were at risk of a bear market may be about to fade too.
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Initial Guidance | 21 April 2016

● US home sales rebound signals strong spring selling season | Reuters
● US mortgage applications: refi gains offset by purchase losses | HousingWire
● Global Stocks Rally With Commodities | Bloomberg
● Stock market gives little sign this bull run will stop soon | MarketWatch
● When Discredited Policies Make Sense | Narayana Kocherlakota via Bloomberg
● Draghi to mount defence of ECB in face of German criticism | Reuters

Chicago Fed Nat’l Activity Index: March 2016 Preview

The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to tick higher in tomorrow’s March update, based on The Capital Spectator’s average point forecast for several econometric estimates. The average projection for -0.02 reflects a slight improvement over the previous month. The forecast for March anticipates that US economic activity is running slightly below the historical trend rate of growth.
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