Throughout March, U.S. equities have been experiencing a downward trend, with no sector being spared from the sell-off. Notably, healthcare stocks have shown impressive relative strength amid this broader market retreat. In contrast, the energy sector remains the weakest segment among major equity sectors, based on a review of 252-day trailing periods leading up to March 11, calculated using our typical set of ETF proxies.
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● U.S. mortgage applications dip in early March following losses in February | HousingWire
● Euro reaches a new 12-year low against the dollar | MarketWatch
● South Korea surprises analysts with a rate cut amid faltering growth | Reuters
● German consumer prices bounce back in February as expected | RTT
● France experiences a decline in consumer prices for the second consecutive month | RTT
● Technocrats scheduled to arrive in Athens Thursday after initial Brussels discussions | Ekathimerini
U.S. retail sales for February are projected to increase by 0.5% compared to the previous month, according to the median forecast within several econometric estimates from The Capital Spectator. This anticipated growth marks a notable rebound from January’s decline of 0.8%.
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The potential for the Federal Reserve to initiate interest rate hikes in the near future remains a hot topic among investors and in the news. However, the current outlook from the Treasury market paints a more complex picture. While market rates have rebounded since the lows of late January and early February, yields have recently pulled back from their peak levels, indicating persistent uncertainty regarding the timing of any changes in Fed policy.
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● U.S. job openings reach their highest level in 14 years | WSJ
● Small business optimism in the U.S. rises slightly in February | 24/7 Wall St
● Wholesale inventories in the U.S. increase as labor market tightens | Reuters
● China sees a slowdown in industrial output and retail sales growth | RTT
● UK industrial production decreases by 0.2% in December | Guardian
● ECB’s Draghi states that actions will return inflation to target levels | Bloomberg
The outlook for economic growth in the U.S. remains encouraging, as evidenced by a markets-based assessment of the macroeconomic trend. The Macro-Markets Risk Index (MMRI) registered at +6.8% on March 9. This benchmark’s readings throughout the year have held within a narrow range of approximately +5% to +10%, suggesting sustained growth. A decline below 0% in the MMRI would signal increased recession risk, while readings above 0% indicate that the economy is expected to expand in the near future.
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● The Fed’s labor market conditions index experiences a slowdown in February | MarketWatch
● U.S. Employment Trends Index shows an increase in February | Conference Board
● OECD reports that Eurozone growth is gaining momentum while others remain stable | Reuters
● Unexpected rise in French industrial output in January | RTT
● China rebounds in consumer inflation for February | Reuters
● EU and Greece set to engage in technical discussions on loans Wednesday | Reuters
Tactical asset allocation (TAA) presents both a solution and a challenge. On one hand, dynamic management of asset allocation can provide superior risk control and potentially enhanced returns compared to a passive strategy. On the other hand, the diversity of strategies for managing real-time asset allocation creates uncertainty about which approach will outperform in the coming times. This uncertainty shouldn’t deter investors from considering TAA but serves as a caution about its potential risks compared to simpler rebalancing methods like annual adjustments to target weights.
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● NABE survey reveals that business economists support a U.S. interest rate hike this year | NY Times
● German exports see the largest decline in five months as of January | Reuters
● China achieves a record-high trade surplus with stronger-than-expected exports | RTT
● U.S. oil production continues to surge | Econobrowser
● Bank of France revises Q1 French GDP forecast down to +0.3% from +0.4% | MNI
● What’s Your Future Worth?: Using Present Value to Make Better Decisions
By Peter Neuwirth
Excerpt via publisher (Berrett-Koehler)
Most individuals contemplate the future consequences of their decisions. However, the actuarial viewpoint enhances this process by employing Present Value, enabling a more systematic evaluation of choices while considering outcomes rarely thought about. Specifically, using Present Value encourages us to envision not only the anticipated impact but also all the potential futures that might arise from each decision. More crucially, it allows us to assess the timing of when these outcomes may occur.
In summary, adopting the actuarial perspective involves a systematic approach to future thinking and the utilization of Present Value—the present-day worth of future possibilities—to make more informed decisions.
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This collection of articles provides insights into the current economic landscape, highlighting both challenges and opportunities facing various sectors. From the resilience of healthcare stocks to fluctuating retail sales and evolving Federal Reserve policies, these elements paint a complex picture of the market. Understanding these dynamics is crucial for making informed investment decisions.