The Federal Reserve is currently considering a new set of stringent banking regulations aimed at enhancing the stability of the financial system during future crises. This initiative is commendable, particularly because it’s widely recognized that another economic event will inevitably occur. However, economic interventions come with significant considerations, especially regarding the persistent risk of moral hazard. Effectively, there is no enduring fix for managing banking risks while simultaneously reducing the likelihood of bank runs and encouraging prudent investment and lending in the private sector. The ideal approach to regulation that satisfies both these competing goals is always shifting, influenced by the natural fluctuations found within the business cycle.
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In tomorrow’s update for March, housing starts are projected to reach 930,000, based on the Capital Spectator’s median econometric forecast (seasonally adjusted annual rate). This estimate indicates a modest increase compared to the previously reported figure of 907,000 for February.
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The Federal Reserve is expected to report a 0.2% increase in US industrial production for March compared to the previous month, according to the Capital Spectator’s median econometric forecast. This anticipated growth represents a deceleration from the 0.6% rise noted for February.
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The resilience of the US stock market is noteworthy. Despite various risks looming across the globe, the American equity market continues to thrive and remains a front-runner among the major asset classes. Although bearish trends emerge occasionally (including last week’s sell-off), most downturns have proven temporary. In fact, the bulls regained control yesterday, demonstrating a modest recovery in stock values.
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Following the recent release of my new book, Nowcasting The Business Cycle
Retail sales surged in March, climbing by 1.1%, marking the strongest monthly increase in over a year. This development provides further evidence suggesting that the recent economic slowdown was likely a temporary situation influenced by weather conditions. Indeed, today’s statistics also rekindled the year-over-year trend in retail spending. Presently, March is shaping up to be a significant turning point for the overarching state of the US economy.
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The recent downturn in the US stock market poses an important question: Is this the onset of a bear market or merely a correction within an ongoing bull market? Currently, there is a substantial argument suggesting that this latest weakness is temporary. Why is that? Although long-term momentum is diminishing, it remains average. This analysis may evolve, and the upcoming week could be critical for refining our outlook.
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For tomorrow’s March report, US retail sales are anticipated to increase by 0.4% compared to the previous month, according to the Capital Spectator’s median econometric forecast. This forecast indicates a slight acceleration from the previously reported 0.3% increase for February. Additionally, the median projection for March falls short of three consensus estimates based on recent economist surveys.
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● The Divide: American Injustice in the Age of the Wealth Gap
By Matt Taibbi
Review via The LA Times
In his sixth book, “The Divide: American Injustice in the Age of the Wealth Gap,” Matt Taibbi opens with a stark observation: “Poverty goes up; Crime goes down; Prison population doubles.” This statement encapsulates what he describes as the distorted reality of modern America, where the principles of law have been undermined by corporate greed and a systemic mistreatment of the underprivileged.
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Momentum plays a significant role as a risk factor in the short-term (up to around one year), as numerous studies have shown. This can sometimes complicate the identification of useful signals for effective portfolio management on a daily basis. A central challenge lies in defining momentum. There are various options, such as returns or the comparison of a current security price to its moving average—whether that be 20-, 50-, or 200-day moving averages, or perhaps a combination of them. To introduce some clarity amidst numerous options, I prefer to evaluate momentum indicators for the major asset classes with a dual approach, using defined short- and long-term periods for prices against a set of exponential moving averages (EMAs).
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