In anticipation of tomorrow’s February report, US retail sales are projected to remain stable when compared to the previous month, based on an average forecast from The Capital Spectator which aggregates multiple econometric estimates. This forecast indicates a slight decline compared to the previous month’s sales increase.
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Last week saw a continuation of positive momentum for risky assets, as demonstrated by various proxy ETFs representing the major asset classes. This marks the fourth consecutive week of a risk-on attitude among investors. The ongoing rally is progressively reducing the losses reflected in the one-year return column, with the representation of winners and losers approaching parity.
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● Back From the Dead: Rate Hikes Are Getting Priced in Again | WSJ
● Fed’s Plans to Raise Rates Are Delayed, Not Derailed | NY Times
● Without Recessions, Americans Would Know Very Little Prosperity | Forbes
● Stocks For The Long Run? Maybe not | Fortune Financial
● Chinese Industrial Output Growth Slowest Since 2008 | RTT
● China Retail Sales Data Feels the Heat in Feb | CBN
● Germans Turn to Trump-Style Politics in Challenge to Merkel | Bloomberg
● Taxing the Rich: A History of Fiscal Fairness in the United States and Europe
By Kenneth Scheve and David Stasavage
Excerpt via publisher (Princeton University Press)
The decisions surrounding taxation for the wealthy can significantly influence a country’s long-term economic growth as well as resource allocation and opportunities. Given the high stakes of this issue, it is surprising how few comprehensive studies have been conducted on the taxation of the wealthy over an extended period. Most analyses have only focused on recent decades or individual nations. The previous thorough examination of this topic was published over a century ago by Edwin Seligman.
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Understanding Modern Portfolio Construction
Cullen O. Roche (Orcam Financial Group)
February 22, 2016
In the past 75 years, there have been significant advancements in finance, portfolio theory, and asset allocation strategies. Despite these developments, the process of creating a portfolio often relies on theoretical concepts that may not provide practical or realistic foundations. This paper reviews the evolution of these principles, creating a framework for better understanding portfolio construction and simplifying the process to make it more efficient and appropriate.
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● U.S. jobless claims hit a 5-month low as the labor market strengthens | Reuters
● US consumer confidence holds steady during the first week of March | Bloomberg
● US services sector shows resilience amid manufacturing downturn | WSJ
● ECB’s Draghi employs his last strategy to combat deflation | Telegraph
● UK inflation expectations decrease to 1.8%, falling below the BOE target | MNI
Recent economic indicators from the US suggest that the stock market turmoil experienced this year may not signal an imminent recession. Such volatility is not uncommon, as fluctuations in equity prices can often obscure accurate business-cycle analysis. Observing market movements without considering underlying economic data can be risky, particularly when real capital is involved. The key lies in finding a balance between the two approaches. Fortunately, there exist multiple indicators that offer reliable insights.
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● The revised GDPNow model estimate for US Q1 growth remains at +2.2% | Atlanta Fed
● US wholesale inventories increased in January as sales decreased | Reuters
● Slowing US economy contributes to global downturn | Markit
● Is Passive Investment Actively Hurting the Economy? | New Yorker
● How To Be Wrong As An Investor | Wealth of Common Sense
● Who Is to Blame for the Slowing Economy? | NY Times
● Google’s AI program defeats GO grandmaster | Wired
The Federal Reserve is expected to maintain its Fed Funds rate within the existing target range of 0.25% to 0.50% at the upcoming policy meeting, as reported by The Wall Street Journal’s John Hilsenrath, known for his deep connections in financial circles. Indicators suggesting that the central bank is likely to stand pat include recent data on critical Treasury yields, the Effective Fed Funds rate, and market perceptions of inflation.
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● Confidence among U.S. small-business owners declined in February | MarketWatch
● US Redbook Retail Sales Index increased by 0.7% in the first week of March | MNI
● Are Central Banks Truly Out of Ammunition? | Project Syndicate
● Fed Likely to Hold Rates Steady, Keeping April or June Options Open | WSJ
● UK industrial production saw a slight increase in January | MarketWatch
Overall, the latest economic reports indicate a complex landscape. While US retail sales show little change, risky assets are rallying, and the Fed appears cautious about rate hikes. Observers should carefully monitor these developments to understand their broader implications for the economy.
