● Frontier: Exploring the Top Ten Emerging Markets of Tomorrow
By Gavin Serkin
Summary via publisher (Wiley)
This insightful guide, “Frontier,” equips investors with the strategies needed to navigate untapped markets. With valuable expertise on recognizing opportunities and minimizing risks, the book presents firsthand experiences with prominent fund managers like Mark Mobius and teams from Morgan Stanley. It evaluates countries, equities, and bonds over a five- to ten-year horizon, guiding investors toward the most promising investment locations.
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The outlook for a resurgence in the U.S. economy during the second quarter faced setbacks following the release of the April industrial production report. According to the Federal Reserve, production fell by 0.3% last month, marking the fifth consecutive monthly decline. The annual growth rate is also waning, with year-over-year change dropping to 1.9% for the 12 months ending in April—this is the first reading below the 2% threshold in nearly three years.
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While U.S. growth nearly stalled in the first quarter, jobless claims suggest that a robust economic recovery may be on the horizon. Last week, new unemployment filings decreased by 1,000, landing at a seasonally adjusted 264,000, which is close to a 15-year low. The four-week average for claims, a more stable measure of this volatile indicator, also reached a new 15-year low. This downward trend hints that the recent sluggishness in the economy could soon pave the way for a period of stronger growth.
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● Jobless Claims in the U.S. Decrease, While 4-Week Average Maintains a 15-Year Low | Bloomberg
● Consumer Comfort in the U.S. Declines for the Fifth Consecutive Week | Bloomberg
● Reality Check: U.S. Mall Managers Say Consumer Confidence is Improving | MNI
● U.S. Producer Prices Decline Again in April | MarketWatch
● The U.S. Dollar Appears Set for Another Weekly Loss | MarketPulse
● The Euro, Making a Comeback, Reaches a Three-Month High | NY Times
Expectations for U.S. industrial production to remain stable were set ahead of yesterday’s April report, according to The Capital Spectator’s median forecast based on various econometric estimates. The prediction indicates no change from the prior month, reflecting an improvement from March’s significant 0.6% decrease. Forecasts for April’s industrial activity, derived from recent economic surveys, vary from a slight decrease to a minimal increase for the month.
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Wall Street Journal columnist Jason Zweig recently delivered a “split decision” in the ongoing debate between passive and active investment strategies, focusing on the “Great Fund Debate” featuring Vanguard founder John Bogle and newsletter writer James Grant. This conclusion is intriguing, considering Bogle’s strong data backing while Grant relies largely on persuasion and the hope for a better future within active management, which has typically disappointed in the past.
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● Weak U.S. Retail Sales Create Concerns for Q2 Growth Projections | Reuters
● U.S. Import Prices Drop for the Tenth Consecutive Month | WSJ
● Atlanta Fed Survey Indicates Rising Inflation Expectations | Bond Buyer
● U.S. Business Inventories See Minimal Increase, Hinting at Q1 GDP Contraction | Reuters
● Weekly Mortgage Applications Drop 3.5% in the U.S. as Rates Climb | CNBC
● India’s Wholesale Prices Decline for the Sixth Consecutive Month | WSJ
According to the latest government retail sales report released this morning, consumer spending was stagnant in April compared to the previous month. This flat performance follows a strong increase of 1.1% in March, leading to speculation that the lackluster results in April might be a correction. Still, the deceleration in year-over-year growth is notable. Whatever challenges are impacting retail sales appear to be widespread and not merely seasonal fluctuations.
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The U.S. economic landscape appears to be moderately positive as of early May, based on a market-based assessment of macroeconomic conditions. The Macro-Markets Risk Index (MMRI) closed at +6.7% yesterday (May 12), indicating a stable position within the year’s benchmark range. This moderately upbeat reading suggests that the risk of a business cycle downturn remains low. A value falling below 0% on the MMRI indicates an elevated risk of recession, while readings above 0% suggest the economy is poised for short-term expansion.
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● March U.S. Job Openings Fall to 4.99 Million | MarketWatch
● U.S. Retail Sales Remain Flat in the First Week of May Compared to April: Redbook | Nasdaq
● Small-Business Owners in the U.S. Express Increased Optimism and Hiring Intentions in April | WSJ
● Eurozone Q1 GDP Growth Accelerates | RTT
● German Economic Output Slows More Than Anticipated in Q1 Due to Trade Pressures | Reuters
● Strong Growth in French Q1 GDP: +0.6% Following 0.0% | Insee
● Eurozone Industrial Production Slowed in March | FT
### Conclusion
The articles highlight a mixed economic landscape in the U.S., with declining industrial production and retail sales, yet promising signs in jobless claims and the Macro-Markets Risk Index suggesting potential recovery. As investors navigate these volatile conditions, awareness and adaptability remain key to making informed decisions in a fluctuating market.
