● US home sales rebound indicates a robust spring selling season | Reuters
● US mortgage applications: refinancing gains balanced by purchase losses | HousingWire
● Global stocks surge alongside commodities | Bloomberg
● Stock market shows little sign of a slowdown in the current bull run | MarketWatch
● Evaluating Discredited Policies | Narayana Kocherlakota via Bloomberg
● Draghi defends the ECB against German critique | Reuters
The three-month average of the Chicago Fed National Activity Index (CFNAI) is anticipated to show a slight increase in tomorrow’s update for March. This projection, based on various econometric forecasts compiled by The Capital Spectator, suggests an average reading of -0.02, marking a minor improvement from the previous month. The forecast indicates that US economic activity is currently running marginally below the historical trend growth rate.
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Recent economic indicators suggest that US growth has decelerated in the first quarter. However, the decline is not severe enough to signal a recession based on a wide array of data released through March. Although estimates for first-quarter GDP project otherwise, the evidence remains weak for asserting that a downturn commenced last month when analyzing the data from a comprehensive perspective.
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The probability of the Federal Reserve announcing a rate hike at its upcoming monetary policy meeting next week is virtually non-existent, according to data from the Fed funds futures market. As of April 19, the chance that the central bank will raise the current range of 0.25% to 0.50% during the April 27 FOMC meeting is minimal, based on CME data. However, the year-over-year change in the real (inflation-adjusted) monetary base (M0) presents a different narrative, indicating that the central bank’s policy tightening approach is consistent into March.
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● US housing data contributes to weaknesses observed in Q1 GDP growth | Reuters
● GDPnow estimate for US growth in Q1 remains steady at +0.3 | Atlanta Fed
● NY Fed nowcast for Q1 GDP growth in the US is +0.8% | NY Fed
● Redbook reports US retail sales up 0.8% month-to-date compared to last year | MNI
● US Economic Confidence Index remains stable at -12 | Gallup
● Global oil production disruptions have increased oil prices | Oilprice.com
If the Federal Reserve was seeking additional reasons to delay a second interest rate hike, today’s March report on residential construction provides it. Housing starts fell last month, a disappointing divergence from market predictions for a slight increase. This follows last week’s lackluster data on retail spending and industrial performance at the end of the first quarter.
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Building confidence in the performance of a portfolio strategy, be it self-created or derived from a third-party model, is a complex yet crucial task. While there’s no single solution, a key element in analyzing return and risk—especially with regard to drawdowns and tail risks—involves generating synthetic performance histories through a method called bootstrapping. This technique simulates returns by utilizing actual results in order to produce thousands of alternative scenarios on how future outcomes might develop. A crucial insight in this realm of Monte Carlo analysis is recognizing that bootstrapping tests can be executed in various ways. Specifically, block bootstrapping emerges as a superior method for asset pricing because it accounts for the fact that market returns demonstrate autocorrelation. This means that the momentum—both positive and negative—occurring in the short term cannot be overlooked, unlike in standard bootstrapping.
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● US homebuilder confidence remains stable in April | Bloomberg
● Dow exceeds 18,000 for the first time in nine months | MarketWatch
● Boston Fed’s Rosengren states that ‘gradual’ rate increases are ‘absolutely appropriate’ | MNI
● Americans show highest confidence in Sanders and Kasich regarding the economy | Gallup
● Corporate defaults reach their highest rate since the 2009 financial crisis | USA Today
● Silver prices surge to their highest in 10 months, boosting gold values | Reuters
Housing starts are projected to reach 1.160 million units (seasonally adjusted annual rate) in the upcoming March report, according to The Capital Spectator’s average point forecast from various econometric estimates. This figure indicates a slight decline compared to the levels of residential construction activity observed last month.
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International stocks experienced significant gains last week (in unhedged US dollar terms), with emerging-market equities leading the way. Developed markets outside the US closely followed. In contrast, bonds faced losses during the five trading days ending April 15, particularly foreign corporate bonds which saw the largest decline among the major asset classes, based on several proxy ETFs.
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