● US existing home sales have reached their highest rate in 18 months | USA Today
● US mortgage applications increase for the fourth time in five weeks | ON
● PMI: German growth slows slightly at the beginning of Q2 | Markit
● PMI: Eurozone growth faces a slight decline at the start of the second quarter | Markit
● Eurozone consumer confidence unexpectedly weakens in April | RTT
● German consumer morale improves modestly heading into May | Reuters
● PMI: Manufacturing activity in China drops to a one-year low | Markit
● PMI: Conditions worsen for Japanese manufacturers | Markit
The Fiscal Times suggests that “the housing market is poised for an upswing.” This optimistic perspective is bolstered by recent increases in sales. This encouraging forecast is set to face scrutiny this week with the impending monthly reports on existing home sales (scheduled for today at 10 am Eastern) and new home sales due tomorrow. Given the backdrop of recent economic data indicating a notable slowdown in US growth during the first quarter, the implications are significant.
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● Greek bank shares tumble as the ECB contemplates drastic measures | Telegraph
● Greek finance minister: Progress is being made in creditor negotiations | Bloomberg
● Italian retail sales decline in February; disappointing 0.1% year-over-year growth | Istat
● Italian industrial orders rise in February | RTT
● Bank of England unanimously agrees on rates, expressing optimism for the Eurozone | Reuters
● China experiences its first default by a state-owned company | WSJ
● UK trader arrested for fraud in relation to the US ‘flash crash’ | BBC
The March report from the Chicago Federal Reserve National Activity Index indicates that US economic activity has been somewhat lackluster in the first quarter of this year. It is too early to conclude that this deceleration signifies anything more than another hurdle in the ongoing and somewhat troubled recovery. This seems to be the prevailing sentiment reflected in Treasury yields.
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● US economic activity in March experiences a significant slowdown due to manufacturing | IBD
● The US economy continues to show disappointing trends | Bloomberg
● Fed’s Bill Dudley: attentiveness to global liquidity challenges while indicating 3.5% rates | Telegraph
● ZEW: German economic outlook index drops in April – first decline since October 2014 | ZEW
● ZEW: Eurozone economic outlook index shows a slight uptick in April | ZEW
● Hopes for a Greek Riga deal diminish | Reuters
Economic activity in March has fallen to its lowest level in 31 months, as reported in this morning’s update from the Chicago Fed National Activity Index. The three-month moving average of this key economic indicator (CFNAI-MA3) declined to -0.27 last month from February’s -0.12. This latest figure marks the lowest reading since August 2012 for CFNAI-MA3, further signaling a downturn in the macro trend for the US during the first quarter of this year. This index clearly indicates a level of economic activity that is significantly below the historical trend (i.e., below zero).
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The unusually broad range for the recent performances of the major asset classes, represented by our standard ETF proxies, has tightened somewhat. This compression can primarily be attributed to recent weakness in US real estate investment trusts (REITs). Despite this pullback, securitized real estate continues to lead for the one-year trailing period (250 trading days) up to Friday, April 17, with the Vanguard REIT (VNQ) ahead by nearly 18%. This, however, represents a decline from the nearly 30% surge noted in last month’s update.
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● US leading indicators suggest a slowing growth trend | Reuters
● US consumer sentiment improves in April | Reuters
● US consumer prices increase, signaling emerging inflation | WSJ
● China’s central bank begins reformative stimulus measures | CNN
● China’s banking decisions raise global concerns | Sydney Morning Herald
● Eurozone recovery likely to enhance UK economic growth, according to a new report | Guardian
● Dealing with China: An Insider Unmasks the New Economic Superpower
By Henry M. Paulson
Interview with the author on CNBC
Former Treasury Secretary Hank Paulson stated in an interview on CNBC’s “Squawk Box” that the growth model supporting China’s economy is losing momentum. Paulson, the author of the book “Dealing With China: An Insider Unmasks the New Economic Superpower,” noted that the second largest economy in the world is becoming overly dependent on exports and municipal debt to develop infrastructure.
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The three-month average of the Chicago Fed National Activity Index (CFNAI) is anticipated to rise slightly to -0.07 in the upcoming March update set for Monday (April 20). This projection is minimally above February’s -0.08, which indicated a modestly below-average growth rate for the US compared to historical trends. Only readings below -0.70 signify an “increasing likelihood” of a recession, according to guidelines from the Chicago Fed. Based on the current estimate for March, the CFNAI’s three-month average is expected to signal a growth rate that remains slightly beneath historical trends.
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