The latest figures from the Bureau of Economic Analysis indicate a modest increase in US personal income and spending for February. However, the year-over-year growth rate has shown a slowdown in both areas. While the trend remains positive—supporting continued economic expansion in the near future—current data suggests that significant growth is less likely in the first quarter, which appears to be sluggish.
After five consecutive weeks of rising prices, the major asset classes faced a downturn last week, as reported through several proxy ETFs. For the first time in over a month, losses were prevalent during the previous trading week. The shortened four-day trading period ending on March 24 witnessed broad declines, marking the largest setback since early February.
● US GDP growth in Q4:2015 has been revised to 1.4% | BEA
● Consumer spending contributed to Q4 growth | The Hill
● US corporate profits declined in 2015 for the first time since 2008 | MarketWatch
● Q1:2016 GDP growth estimate falls to 1.4% according to the GDPNow Model | Atlanta Fed
● NABE survey indicates slower US growth is anticipated in 2016 | MNI
● Analysis: Why isn’t the economy recovering more robustly? | Time
● Is the global economy starting to gain momentum? | FT (Gavyn Davies)
● The Overtaxed Investor: Slash Your Tax Bill & Be A Tax Alpha Dog
By Philip DeMuth
Summary via Amazon
In today’s low-return landscape, being tax-savvy is crucial. High investment taxes can significantly eat away at profits. Hence, taxes should be at the forefront of an investor’s considerations, not an afterthought. Phil DeMuth, a nationally recognized investment advisor, decodes the complicated tax code to help avoid potential pitfalls. He provides straightforward guidelines to help you navigate the challenges, all presented in an engaging manner. If your tax strategy isn’t proactive, you’re essentially sending a generous check to the U.S. Treasury every April 15 unnecessarily. DeMuth illustrates how to minimize your tax obligations legally, potentially saving substantial funds that could be better used for your family, enjoyment, or retirement.
Speculative Fever: Investor Contagion in the Housing Bubble
Patrick J. Bayer (Duke University), et al.
February 1, 2016
Historical cases abound of new investors flocking to a booming asset market, only to experience losses when it eventually declines. While the theory of investor contagion in asset bubbles has been examined extensively in literature, empirical evidence has been lacking. This paper investigates the recent surge and decline in the US housing market, showing that many novice investors jumped in due to observing local investment activities. Those who were “infected” by this trend notably performed worse than their more seasoned counterparts.
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● US Durable Goods Orders fell by 2.8% in February | AP
● US Weekly Jobless Claims remain steady but increased slightly last week | RTT
● PMI reports mild growth in the US services sector for March | Markit
● Manufacturing activity remains sluggish in the KC Fed region for March | KC Star
● US Consumer Comfort Index drops back to early 2016 levels | Bloomberg
● CNBC analysis: A skeptical view on GDP figures | CNBC
The value and momentum factors have received significant recognition as synergistic sources of risk premia for structuring and managing equity portfolios. AQR’s influential paper “Value and Momentum Everywhere” contributed to the popularization of this concept, demonstrating applications beyond equities. The investment management community has embraced these ideas, evident in a recent outline by Jack Vogel at Alpha Architect, discussing “Why Investors Should Combine Value and Momentum.” Several investment funds, including the recently introduced Cambria Value and Momentum ETF (VAMO), focus on this strategy.
● US new home sales experienced a rise in February, particularly in the West | Reuters
● A decline in US mortgage applications was again seen, attributed to weak refinancing | NMN
● The rising dollar is impacting commodities as the Fed hints at tightening | Reuters
● Americans maintain a positive outlook for the job market | Gallup
● Insights into the Fed’s often misunderstood dot plot | Bloomberg
● The challenges monetary policy might face in the next recession | WaPo
Expectations for the US economy indicate a potential for slightly improved growth in the first quarter of this year compared to the subdued 1.0% GDP increase recorded in Q4 of last year (adjusted for seasonal variations). While this anticipated growth may not be impressive, analysts maintain a hopeful outlook for the forthcoming “advance” Q1 GDP report expected from the Bureau of Economic Analysis on April 28.
● Brussels was the target of an attack affecting all of Europe | New Yorker
● PMI indicates a slow pace of US manufacturing growth continues in March | Markit
● The Richmond Fed reports that regional manufacturing expanded in March | Richmond Fed
● According to Redbook, US retail sales saw a year-over-year increase for the week ending March 19 | TE
● The FHFA US Home Price Index increased by 0.5% in January | 24/7 Wall St
● Philly Fed’s Harker suggests it’s time to move forward with additional rate hikes | MNI
### Conclusion:
In summary, the recent economic data highlights a mixed outlook for the US economy, with some areas showing modest growth while others face challenges. As decisions are made moving forward, understanding these trends will be essential for investors and policymakers alike. Tracking developments in consumer spending, asset performance, and overall economic indicators will be crucial in the coming weeks.