The major asset classes lost ground last week, with one exception: foreign high-yield bonds. Otherwise, red ink dominated the broad categories of global markets for the five trading days through Oct. 28, based on a set of proxy ETFs.
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Monthly Archives: October 2016
Book Bits |29 October 2016
● No More Work: Why Full Employment Is a Bad Idea
By James Livingston
Summary via publisher (University of North Carolina Press)
For centuries we’ve believed that work was where you learned discipline, initiative, honesty, self-reliance–in a word, character. A job was also, and not incidentally, the source of your income: if you didn’t work, you didn’t eat, or else you were stealing from someone. If only you worked hard, you could earn your way and maybe even make something of yourself. In recent decades, through everyday experience, these beliefs have proven spectacularly false. In this book, James Livingston explains how and why Americans still cling to work as a solution rather than a problem–why it is that both liberals and conservatives announce that “full employment” is their goal when job creation is no longer a feasible solution for any problem, moral or economic.
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Is The Labor Market Conditions Index Forecasting A Recession?
Inferring recession probabilities from one indicator is a dodgy way to monitor business-cycle risk, but it’s forever popular. Last week I criticized an effort to estimate recession risk by using the ISM Manufacturing Index in isolation; today we focus on a similar attempt to use the Labor Market Conditions Index (LMCI) as the basis for deciding if the US economy has slipped over to the dark side.
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Should We Believe The Bond Market’s Rising Inflation Forecast?
The Federal Reserve has been trying to raise inflation for eight years with, so far, muted results. But some analysts think we’re at an inflection point and pricing pressures will continue to strengthen. The Treasury market’s implied inflation estimate seems to agree, supported by moderately firmer numbers in the official inflation statistics.
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Market Data Hints At Higher Rate-Hike Odds
The Federal Reserve isn’t expected to raise interest rates at next week’s policy meeting, but the Nov. 1-2 gathering will be closely watched for signs that the central bank is preparing to make a move when it reconvenes in December.
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Economists Expect A Moderate Rebound For US Q3 GDP Growth
The US economy is on track to expand at the fastest rate in more than a year in the third quarter, according to projections for this Friday’s “advance” GDP report from the Bureau of Economic Analysis. A range of estimates anticipate that quarterly output will top 2% (seasonally adjusted annual rate). If the prediction holds up, output is set to break free of the sluggish pace of roughly 1.0% that’s prevailed in each of the previous three quarters.
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Chicago Fed: US Growth Trend Dips To 4-Month Low In September
The broad US economic trend decelerated in September for a second month in a row, according to today’s update of the three-month average of the Chicago Fed National Activity Index (CFNAI-MA3). The benchmark dipped to -0.21 last month, the lowest reading since May. The below-zero data indicates that economic activity remains moderately below the historical trend rate, although the rebound in the macro trend since the spring has stumbled in the last two months of the third quarter.
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Broad-Based Rally Lifted Most Markets Last Week
Markets roared back to life last week, rebounding after widespread losses in the previous week. The big winner for the five trading days through Oct. 21: emerging market stocks, which led the rally among a set of proxy ETFs representing the major asset classes. Meanwhile, last week’s losers were limited to fractional losses in foreign corporate bonds and commodities.
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Book Bits |22 October 2016
● Quantitative Momentum: A Practitioner’s Guide to Building a Momentum-Based Stock Selection System
By Wesley R. Gray and Jack R. Vogel
Summary via publisher (Wiley)
Quantitative Momentum brings momentum investing out of Wall Street and into the hands of individual investors. In his last book, Quantitative Value, author Wes Gray brought systematic value strategy from the hedge funds to the masses; in this book, he does the same for momentum investing, the system that has been shown to beat the market and regularly enriches the coffers of Wall Street’s most sophisticated investors. First, you’ll learn what momentum investing is not: it’s not ‘growth’ investing, nor is it an esoteric academic concept. You may have seen it used for asset allocation, but this book details the ways in which momentum stands on its own as a stock selection strategy, and gives you the expert insight you need to make it work for you. You’ll dig into its behavioral psychology roots, and discover the key tactics that are bringing both institutional and individual investors flocking into the momentum fold.
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Can We Intelligently Estimate Recession Risk?
Media chatter about economic recessions tends to come in three flavors. One is the rarely seen diligent species that considers how the macro trend is evolving currently, and may evolve over the next month or so, based on a diversified set of metrics. Then there’s the long-run forecast that makes a valiant effort to divine the future a year or more in advance. The third alternative, which is by far the most popular flavor, is to zero in on one or two indicators, usually as a prelude to declaring that the end is nigh… any day now. But only one of the three is relatively reliable while the other two can safely be labeled as lighted-hearted diversions bordering on entertainment.
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