In recent headlines, various indicators reflect dynamic changes in the US economy:
- ● US consumer confidence has surged more than anticipated in December | USA Today
- ● US home prices continue to rise at an annual rate exceeding 5% as of October | NY Times
- ● US merchandise trade deficit decreased in November | Bloomberg
- ● Johnson Redbook reports a 2.1% uptick in US retail sales index for the third week of December | MNI
- ● State Street indicates an increase in global investor confidence for December | P&I
- ● Eurozone’s money supply growth showed a slowdown in November, although private lending improved | RTT
- ● IMF’s Lagarde warns of disappointing global growth in 2016 | Reuters
In our previous article regarding globally diversified portfolios, we evaluated the outcomes of implementing a momentum-based risk management system. The results indicated that a tactical overlay could yield positive results, contingent upon the specific details. Let’s delve deeper into our sample portfolio to analyze the fundamental factors at play that influence risk and returns.
Here are some more key developments:
- ● Dallas Fed manufacturing survey for December reveals gains in activity; however, the outlook has dulled | Bond Buyer
- ● Global markets face declines as the Chinese industry struggles | Telegraph
- ● The December Manufacturing PMI from China is expected to indicate its fifth consecutive month of contraction | Reuters
- ● Oil prices hover near an 11-year low due to oversupply and a decrease in demand | Reuters
- ● There are notable weaknesses remaining in the US economy | Jared Bernstein
- ● An examination of hidden challenges within economic research | John Cochrane
During the shortened trading week leading up to December 24, US equities regained their strong upward momentum, outperforming other major asset classes, according to a range of proxy ETFs. The Vanguard Total Stock Market ETF (VTI) achieved an impressive total return of 2.8% over the four days leading up to Christmas Eve. Following closely was the Vanguard FTSE Developed Markets ETF (VEA), which represents stocks from foreign developed nations.
Recent reports indicate several positive developments in the job market:
- ● US jobless claims have decreased, approaching the lowest levels seen in decades | MarketWatch
- ● The US Consumer Comfort Index has risen, nearing a two-month high | Bloomberg
- ● Despite steady progress in 2015, the economy is still not ‘normal’ | MarketWatch
- ● Concerns regarding interest rates in 2016 may be unwarranted | Barron’s
- ● Deutsche Bank anticipates greater volatility in the bond market ahead | Bloomberg
- ● Oil prices are declining towards $37, close to an 11-year low, due to excess supply | Reuters
With numerous captivating books published this past year, we present the second part of The Capital Spectator’s year-end review, which highlights some memorable titles from this year’s weekly Book Bits column. If you missed the first part, here’s Part I. We will conclude our retrospective next week with Part III.
Gloria in excelsis Deo
and on earth peace,
good will toward men
The forecast for fourth-quarter GDP growth appears uncertain at this time, but the positive indications from the labor market persist. Recent payroll figures have shown positive trends, and the latest report on unemployment claims suggests this trend is set to continue as we receive fresh data in the coming weeks.
Yesterday’s positive data on US personal income and spending provided some festive optimism; however, it didn’t translate into a positive revision for the Atlanta Fed’s fourth-quarter GDP estimate. The GDPNow forecast for Q4 growth has decreased to a modest 1.3% (seasonally adjusted annual rate) in the latest update (Dec. 23), down from the earlier estimate of 1.9%. This serves as a reminder that the US economic growth is poised to finish 2015 rather quietly.
Additional noteworthy updates include:
- ● US personal income increased in November, leading to a rise in consumer spending | Reuters
- ● Orders for durable goods in the US remained unchanged in November | MarketWatch
- ● New home sales in the US experienced a 4.3% increase in November | WSJ
- ● Consumer sentiment in the US picked up slightly in December | 24/7 Wall St
- ● Mortgage applications in the US surged by 7.3% during the week ending December 18 | HousingWire
