In the upcoming report for August, industrial production in the US is anticipated to show a 0.3% increase from the previous month, according to the average econometric forecast from The Capital Spectator. This expected rise contrasts with the earlier report, which indicated that there was no change in industrial output for July. Furthermore, The Capital Spectator’s forecast for August falls slightly short of the consensus estimate derived from a survey of economists.
The growth rate of retail sales in the US slowed down again last month, according to reports from the Census Bureau. For the second consecutive month, consumer expenditure on retail goods and services rose at a diminished pace, increasing by only 0.2% in August compared to the previous month. This marks the smallest growth since April. However, it is worth noting that retail spending has grown for five months in a row—something that hasn’t occurred in two years. Despite this ongoing upward trend, the recent sluggishness has raised concerns regarding future performance.
Can we talk about a “rebound”? Mr. Market seems to think so. Asset prices have experienced a notable upward turn in September. At least some of the previously struggling markets have shown improvement, a contrast evident in today’s comparison with the latest update from August 28. This change is remarkable, especially considering the widespread negativity that marked the close of last month. While it’s uncertain whether this late revival will persist, the bulls have certainly made strides in gaining ground against the bears, albeit modestly.
The weekly update regarding initial jobless claims reveals a remarkably optimistic report. This could potentially be a pivotal moment, although it’s advisable to observe how the revisions to the data unfold over the next few weeks. Presently, it’s important to acknowledge that new applications for unemployment benefits have significantly decreased by 31,000, settling at a seasonally adjusted total of 292,000—the lowest level recorded since 2006! While there may be indications of a reporting glitch, as noted by Bloomberg, we should focus on the data as it stands, keeping in mind that fluctuations could occur next week.
Forecasts suggest that US retail sales are likely to increase by 0.4% in the forthcoming update for August, as per The Capital Spectator’s econometric average. This projection marks an improvement from the previously reported 0.2% gain in July. Additionally, this August forecast remains at the lower end when compared to recent consensus estimates derived from economists’ surveys.
On this 12th anniversary of 9/11, we honor the fallen heroes and their families and friends. We remember… always.
Can I see another’s woe,
And not be in sorrow too?
Can I see another’s grief,
And not seek for kind relief?
–William Blake, “On Another’s Sorrow”
Central bankers typically refrain from discussing portfolio management; however, San Francisco Fed President John Williams broke the mold during a recent speech. His remarks, titled “Bubbles Tomorrow and Bubbles Yesterday, but Never Bubbles Today,” explored monetary policy and the limitations a central bank faces in addressing market periods characterized by irrational exuberance. This is a timeless subject, as we often encounter “bubbles” in the market landscape. Although identifying such bubbles in real-time presents challenges, it serves as a reminder of the difficulties investors face when it comes to rebalancing their portfolios amid collective behavioral errors.
The Hudson Institute has recently published a new “Survey of Leading Economics Bloggers”. I took part in this endeavor, collecting insights on how my fellow economics bloggers perceive macroeconomic and related matters today. When asked to gauge business cycle risk for the upcoming months, the majority of the responses leaned towards perceptions of a “neutral/balanced probability” to “highly unlikely.” In line with this, the recent US Economic Profile published on this platform estimated the current risk to be more towards the “highly unlikely” category (“nowcasting”), a stance that has not shifted dramatically in my weekly updates (a new monthly profile will be released next week).
The emerging sector known as frontier markets—which encompasses smaller, less liquid segments of emerging markets—is gaining significant interest. This prompts the question: Should these markets be integrated into my asset allocation strategy? The answer may vary, largely depending on how a fund defines “frontier” as well as the current structure of your existing portfolio.
The Capital Spectator is launching a new weekly research service: The ETF Asset Class Performance Review. Subscription details can be found at CapitalSpectator.com/premium. This weekly newsletter offers insights into performance trends across major asset classes and their primary subcategories through a curated selection of ETFs. Check it out: the inaugural issue is complimentary at CapitalSpectator.com/premium. You can also find a dedicated link to the newsletter in the upper right corner of The Capital Spectator’s homepage under the “Premium Research” label.
