In the latest political and economic landscape, several pivotal events and reports have emerged:

• Donald Trump and Bernie Sanders claim victory in New Hampshire | NY Times
• Janet Yellen set to testify before Congress amid concerns regarding Federal Reserve policy | WaPo
• US job openings reached nearly 5.6 million in December, close to record highs | CNBC
• Small business optimism in the US dropped to a two-year low in January | Fortune
• According to Redbook, US retail sales decreased by 2.6% in the first week of February compared to January | WSJ
• US wholesale inventories slightly dropped in December | RTT
• UK industrial output experienced a significant decline in December | MNI
• France’s industrial output showed unexpected weakness in December | MarketWatch
• Italy’s industrial production unexpectedly fell in December | RTT

The recent decline in US equities has led to a subsequent drop in Treasury yields. As the ongoing bear market in stocks progresses, investors have flocked to the safety of government bonds, driving the 10-year yield down to 1.75%—the lowest seen in about a year, according to daily data from Treasury.gov. At the same time, the 2-year yield, which closely reflects rate expectations, fell to 0.66%, marking its lowest point in almost four months.
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Key economic indicators have presented mixed signals:

• Federal labor index fell to its lowest level in 10 months in January | MarketWatch
• US Employment Trend Index increased in January, but at a slower rate | CB
• The world’s economy exhibited contrasting growth last year | NY Times
• OECD adviser warns that central banks may be making the global economy more vulnerable | Bloomberg
• India’s GDP grew by 7.3% in Q4 2015, surpassing China’s growth rate | AP
• Japanese bond yields have entered negative territory, following interest rate cuts | NY Times
• IEA revises upward its estimate for surplus oil supply due to increased OPEC output | Bloomberg

Last week, investors showed a strong preference for investment-grade bonds, as economic uncertainties led many to retreat from riskier assets. An analysis of the major asset classes through an ETF lens reveals starkly contrasting outcomes. The surge towards safe-haven investments resulted in considerable gains for multiple ETFs that track the fixed-income sector during the week ending February 5. Even the typically weak emerging-market government bonds experienced a positive turn. In contrast, stocks, REITs, and commodities faced significant declines.
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Recent employment data reveals the following:

• US job growth decelerated in January; the unemployment rate is now at an eight-year low | MarketWatch
• A lackluster jobs report raises concerns regarding the US economy | LA Times
• Yellen’s upcoming testimony aims to balance confidence and caution | Bloomberg
• A robust US dollar raises recession fears | Sydney Morning Herald
• US consumer credit increased by $21.3 billion in December | MarketWatch
• Concerns are growing over the stability of global growth | FT

● Shrinking the Earth: The Rise and Decline of American Abundance
By Donald Worster
Summary via publisher (Oxford University Press)
The discovery of the Americas around 1500 AD marked a significant turning point in human history. This event catalyzed the modern era of human ecology, prompting transformative shifts in almost every global society. This period was marked by the depletion of New World resources, leading to tragic outcomes for some and prosperity for others. In this influential work, distinguished environmental historian Donald Worster examines how complex dynamics relating to abundance and scarcity have influenced American society over the last 300 years. He explores the constraints nature imposes on human aspirations and questions whether America is transitioning from a culture of abundance to one of limits, and whether American consumption has increasingly become dependent on resources from the Global South.
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According to the latest report from the Labor Department, US companies added significantly fewer jobs last month than expected. Private payrolls increased by 158,000, which, while a positive figure, fell short of the consensus forecast of 180,000. The trend of year-over-year job growth continues to decline, indicating a potential slowing. Though the labor market still shows some momentum, there is growing concern that it may have peaked. This situation presents challenges as the overall growth trajectory is experiencing turbulence.
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What does a bear market for the US equity market entail? Current indicators suggest we may indeed be in one. Various signals, including a trusted quantitative tool—the Hidden Markov model (HMM)—are hinting at this possibility. While it’s still early to determine if the bear market has concluded, early signs can provide insight into what a market recovery might look like. Understanding the end of a bear market can pose challenges, yet the metrics that identified its onset may guide us toward spotting the emergence of a new bull market in the future.
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Recent reports illustrate some concerning trends in the labor market:

• Rising layoffs in the US indicate a decrease in labor market momentum | Reuters
• Job cuts surged to a six-month high | CNBC
• US factory orders fell significantly in December | AP
• Consumer Comfort Index remains stable, near a three-month high | Bloomberg
• The upcoming jobs report could either alleviate or intensify recession fears | WaPo
• Insights on potential recession scenarios for 2016 | NY Times

Looking ahead, January’s Labor Department report is anticipated to show an increase of 210,000 in US private nonfarm payrolls (seasonally adjusted). Although this figure reflects a sizeable drop compared to the previous month, it is still considered a healthy gain overall.
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