● Greece has defaulted, while the eurozone prepares to discuss a new bailout plan…
● US consumer confidence increased in June, exceeding expectations…
● The US S&P/Case Shiller Home Price Index annual growth slowed to a 4.2% rise in April…
● PMI: The initial estimate for euro area manufacturing growth in June was confirmed…
● China’s manufacturing activity showed slight improvement in June.
The ISM Manufacturing Index is anticipated to dip slightly to 52.7 in the upcoming June update, according to The Capital Spectator’s average forecast from various econometric models. Nevertheless, this figure remains above the neutral index of 50.0, indicating a continued prospect for moderate growth within the US manufacturing sector.
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In the forthcoming June update of the ADP Employment Report, private nonfarm payrolls in the US are projected to grow by 200,000 (seasonally adjusted), based on The Capital Spectator’s average forecast drawn from several econometric estimates. This figure is slightly below the increase seen in May.
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The growing Greek crisis has prompted fresh discussions regarding the Federal Reserve’s timeline for its first interest rate hike since 2006. However, some analysts believe this is still largely a non-issue in the US. “This isn’t a ‘watch Greece’ scenario,” asserts Roberto Perli, a former Fed staff member now at Cornerstone Macro. “Even with turmoil in Greece, there are no indications of significant contagion, and that’s why the Fed’s stance remains unchanged.”
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We all engage in backtesting to some degree, but not all backtested strategies are equivalent. A prevalent and hazardous error involves 1) backtesting a strategy against historical data; 2) showcasing a favorable performance record; and 3) assuming that the process is complete. However, genuine testing necessitates more. Why? Because depending on a single dataset—even if it reflects real-world performance—rarely withstands scrutiny. What are the concerns? Your positive results might simply be a result of chance.
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● Greece teeters on the edge… again, yet with increased urgency, as the government closes banks and introduces capital controls, pushing the struggling nation closer to default and a potential hasty exit from the euro…
● Simultaneously, in the US, the University of Michigan’s Consumer Sentiment Index jumped to its highest point since January in this month’s preliminary findings. “An improving economy was the primary factor,” stated the chief economist for the survey…
● Eurozone economic confidence declined in June, as outlined by the European Commission’s revised survey data…
● Additionally, China reduced interest rates to an unprecedented low following a sharp downturn in the stock market.
● The Misfit Economy: Lessons in Creativity from Pirates, Hackers, Gangsters and Other Informal Entrepreneurs
By Alexa Clay and Kyra Maya Phillips
Review via Financial Times
The authors propose that pirates, hackers, and con artists, rather than traditional CEOs, should inspire today’s business leaders. This idea is central to “The Misfit Economy” by Alexa Clay and Kyra Maya Phillips.
The book emphasizes that “the free market doesn’t have a monopoly on innovation.”
To encourage finding your own “inner misfit,” they highlight five key principles: hustling (that is, recognizing opportunities and pursuing them); copying (which they refer to as “collective innovation”); and hacking (challenging the status quo while intimately understanding a system to dismantle it more effectively).
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As the second quarter comes to a close, the US economic trend remains moderately positive based on market-driven analyses of macroeconomic conditions. The Macro-Markets Risk Index (MMRI) closed at +4.8% yesterday (June 25). While this figure is nearing the lowest level of the last year and indicates a slowdown in growth, it still comfortably resides above zero. This suggests that the risk of a business cycle downturn remains relatively low. A reading below 0% in the MMRI would indicate elevated recession risks, whereas readings above 0% imply prospects for economic expansion in the near term. Evaluating price data from financial and commodity markets using a probit model also supports the conclusion that macro risk is low.
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● In May, US consumer spending recorded its largest gain in six years, while personal income also saw its strongest growth in 14 months…
● Additionally, initial jobless claims in the US remained under the 300,000 threshold for the sixteenth consecutive week…
● This resurgence in consumer spending “bodes well for second-quarter growth and broader economic momentum for the second half of the year, keeping a September rate hike firmly on the table,” stated Anthony Karydakis, chief economic strategist at Miller Tabak…
● Also, even the recently declining Bloomberg Consumer Comfort Index rebounded, showing its largest increase last week since April.
● On a slightly weaker note, Markit’s US Services PMI indicated a slower growth rate at Q2’s conclusion…
● Nonetheless, the Q2 GDP outlook improved marginally: the Atlanta Fed’s GDPNow estimate rose to 2.1% in the latest update—its highest projection for Q2 thus far.
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