● US New-Home Sales Jump to Highest Level in Over 8 Years | NY Times
● Richmond Fed: Manufacturing activity slowed in May | Richmond Fed
● Americans’ confidence in the US economy remains steady in mid-May | Gallup
● ECB’s Villeroy: Brexit Risks High for UK and Eurozone | MNI
● China’s currency fixing weakens against US$ to 5yr low | Bloomberg
● The Longer the Correction, the Longer the Bounce Back | WSJ
● German consumer morale inches higher heading into June | Reuters
Monthly Archives: May 2016
Is The Case For A June Rate Hike Premature?
The Federal Reserve continued to press ahead yesterday with its public relations effort of talking up the possibility of a rate hike, perhaps as early as next month. The latest addition to the hawkish-chattering club is the Philly Fed’s Pat Harker, who advised on Monday that “I can easily see the possibility of two or three rate hikes over the remainder of the year.” The comment follows similar remarks from central bankers in recent days, including the New York Fed’s Bill Dudley, who said that “if I’m convinced that my own forecast is on track, then I think a tightening in the summer, the June-July time frame, is a reasonable expectation.”
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Initial Guidance | 24 May 2016
● Markit PMI shows US manufacturing stagnant in May | MarketWatch
● Philly Fed’s Harker: June Hike Appropriate With Stronger Economy | MNI
● Progress toward full employment has stalled | FedWatch
● When Elections Aren’t About the Economy | NY Times
● Billions in US taxes may go unreported, study finds | WaPo
Foreign Developed-Market Stocks In The Lead Last Week
Stock markets in the developed world outside the US led the major asset classes higher last week, based on a set of proxy ETFs. Vanguard FTSE Developed Markets (VEA) posted an 0.8% total return for the five trading days through May 20, delivering a slightly stronger performance vs. the rest of the field.
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Initial Guidance | 23 May 2016
● US existing home sales rise 1.7% in April | MarketWatch
● Fed’s Rosengren tells FT: US ‘on the verge’ of meriting June rate hike | Reuters
● Euro-Area Growth Seen Slowing via PMI survey | Bloomberg
● Brexit ‘would spark year-long recession’, UK Treasury warns | BBC
● Bookmaker odds suggest UK will remain in EU | OCA
● Japan’s economy remains on a “moderate recovery” track | MNI
Book Bits | 21 May 2016
● The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism
By Arun Sundararajan
Summary via publisher (MIT Press)
Sharing isn’t new. Giving someone a ride, having a guest in your spare room, running errands for someone, participating in a supper club—these are not revolutionary concepts. What is new, in the “sharing economy,” is that you are not helping a friend for free; you are providing these services to a stranger for money. In this book, Arun Sundararajan, an expert on the sharing economy, explains the transition to what he describes as “crowd-based capitalism”—a new way of organizing economic activity that may supplant the traditional corporate-centered model. As peer-to-peer commercial exchange blurs the lines between the personal and the professional, how will the economy, government regulation, what it means to have a job, and our social fabric be affected?
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Hawkish Fed Chatter And Another Slide In Base Money Supply
A second interest rate hike may be near, advised New York Fed President Bill Dudley on Thursday. “If I’m convinced that my own forecast is on track, then I think a tightening in the summer, the June-July time frame, is a reasonable expectation.” The release of Fed minutes from the last policy meeting fall in line with that thinking. So, too, does the April update on real (inflation-adjusted) base money supply (M0), which contracted in year-over-year terms in April, marking the third decline in the past four months.
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Initial Guidance | 20 May 2016
● Fed’s Dudley points to interest rate hike in June or July | MarketWatch
● Jobless claims fall back to earth in mid-May | MarketWatch
● US Leading Economic Index Rises More Than Expected In April | RTT
● Philly Fed Mfg Index Unexpectedly Fell In May | RTT
● Chicago Fed Index: US Economic Growth Picked Up in April | Chicago Fed
● Bloomberg Consumer Comfort Index rises in mid-May | Seeking Alpha
Chicago Fed: 3-Month US Macro Trend Remains Sluggish In April
Economic growth in the US eased in April to a four-month low, according to this morning’s update of the three-month average of the Chicago Fed National Activity Index (CFNAI-MA3). The reading for last month dipped to -0.22, the lowest since last December’s -0.28 reading.
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Bear-Market Risk For US Equities Remains Elevated
The bear-market bias that’s been lurking for the US stock market since last autumn remains intact, according to several econometric applications. Although equities overall continue to trade near all-time highs, the mild downward slope in pricing in recent months suggests that the market’s capacity to rally is wearing thin. What would kill the bear-market threat? A convincing run of strong economic reports. Granted, the macro trend isn’t terrible, as outlined in yesterday’s US economic profile. But the numbers aren’t particularly encouraging either. The net result: the market’s in a state of limbo, waiting for a convincing signal, for good or ill. But as long as the incoming macro figures are mixed, as they have been this year, the bear-market bias for equities will roll on. After a powerful and long-running bull market for 2009-2015?, the crowd needs a higher level of convincing to keep the party going at this late date.
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