As we start the new year, attention turns to the performance of the U.S. economy, which shows mixed signals. Below are some recent reports that highlight these trends:

• ● U.S. retail sales concluded 2015 on a disappointing note | USA Today
• ● December industrial output in the U.S. drops for the third consecutive month | Reuters
• ● Consumer sentiment in the U.S. continues to improve in January | RTT
• ● Q4 growth outlook for the U.S. revised down to a sluggish 0.6% | Atlanta Fed
• ● Calls for a rate increase dwindle as markets decline; speculation about a Fed reversal arises | Reuters
• ● Brent oil prices plunge to a 12-year low below $28 amid rising Iranian oil production | Bloomberg
• ● Taiwan’s new leader confronts economic challenges and China’s influence | NY Times

The recent downturn in markets across various asset classes raises questions about its implications for investors. Whether to modify a portfolio hinges significantly on one’s risk management strategy.

Having a well-defined risk management approach is essential for every investment portfolio. It acts as the financial mind guiding investment decisions and facilitating navigation through volatile market conditions. Therefore, now is an opportune time to revisit and reinforce foundational principles of effective risk management in managing traditional investment portfolios.
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● The Power and Independence of the Federal Reserve
By Peter Conti-Brown
Summary via publisher (Princeton University Press)
The independence of the Federal Reserve is often regarded as a fundamental aspect of its identity, vital for ensuring that monetary policy decisions remain untouched by electoral influences. However, do we genuinely comprehend what “Federal Reserve independence” entails? Through numerous examples from the Fed’s rich history, “The Power and Independence of the Federal Reserve” reveals that much of the common understanding surrounding the nation’s central bank is misguided. Legal scholar and financial historian Peter Conti-Brown offers a comprehensive examination of the Fed’s role in government, its internal structure, and its interactions with key players such as the president, Congress, economists, and banking officials.
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The latest December updates on retail sales and industrial production in the U.S. present disappointing figures. Both indicators faced negative comparisons last month, casting further doubt on the robustness of the U.S. economy. However, there is marginally good news in the year-over-year comparisons. Nonetheless, it remains hard to ignore the decline reflected in these metrics as the previous year wrapped up.
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In recent weeks, Treasury yields have experienced a dramatic reversal. The 2-year yield, which is typically most responsive to changing rate expectations, has decreased this month, dipping to 0.90% as of January 14—its lowest level in about a month. Meanwhile, the benchmark 10-year yield has dropped even further, now standing at 2.10%, the lowest since late October.
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● Monthly U.S. jobless claims reached the highest level since July | MarketWatch
● Jobless claims in the U.S. increased by 7,000 last week, yet remain near historic lows | USA Today
● Consumer Comfort Index in the U.S. improved last week, reaching a three-month high | Bloomberg
● Chinese stock markets regress to December 2014 levels | Reuters
● ECB minutes indicate potential for further monetary easing | RTT
● Analysis of the UK shows a decline in construction in November, impacting GDP | MNI
● A new model-based approach to dating financial stress events | Vox

Forecasts indicate that U.S. retail sales are likely to rise by 0.2% in the upcoming December report compared to the previous month, according to The Capital Spectator’s average point forecast from various econometric models. This prediction aligns with the growth rate observed last month.
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Predictions suggest that U.S. industrial production may report no change in the forthcoming December figures compared to the previous month, as per The Capital Spectator’s average forecast from various econometric models. This estimation reflects a slight improvement compared to the previously recorded 0.2% decline in November.
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The recent rise in junk bond yields serves as a cautionary indicator of increasing recession risks, comments Martin Fridson, a fund manager at Lehmann Livian Fridson Advisors. “While I am not an economic forecaster,” he stated to Bloomberg on Tuesday, “this is the sentiment that the market is expressing.” Fridson points out, “There are many caveats, but if one accepts all underlying assumptions, it’s a rather striking assertion,” reflecting his extensive insight into the high-yield bond landscape.
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● The U.S. economy expands even as wages remain stagnant, according to the Fed’s Beige Book | Bloomberg
● Mortgage applications in the U.S. rebound by 21% | NBC
● One-year inflation outlook among U.S. businesses dips to 1.8% | Atlanta Fed
● U.S. foreclosures reached a nine-year low in 2015, but increased in some oil-dependent regions | MNI
● A survey reveals that Americans view government and economic issues as the top problems facing the U.S. | Gallup
● Fed officials suggest that China’s economy may slow the pace of U.S. interest rate hikes | Reuters
● The German economy defied the 2015 global slowdown with stronger growth | Bloomberg