There are many ways to monitor recession risk, but any one indicator in isolation is flawed. Context in the form of reviewing a wide variety of metrics is essential for minimizing noise. But in the search of early warning signs of trouble it’s useful to focus on the labor market, which is arguably the key driver of economic strength and weakness. Caution is still required, but a particular measure of the ebb and flow of payrolls is signaling a warning and so it’s worthwhile to take a closer look. For a big-picture measure of how the labor market is faring in terms of the business cycle I favor ..read more

Housing is among the most interest-rate sensitive sectors of the economy. It’s also one of the most cyclical and crucial inputs for the business cycle. On that basis, one could reasonably expect that the sharp runup in interest rates over the past two years would have crushed the trend in housing prices. For a while that was the effect, but the dramatic slide in the year-over-year change in US house prices is accelerating again. The reflation is moderate so far, at least compared with 2021-2022. But it’s notable that housing prices are once more looking resilient after the Federal Reserve’s mo ..read more

* US economic growth will continue to weaken until Fed cuts rates: Morningstar * Rents expected to be last hurdle in taming global inflation * Fed may need to hold rates steady in 2024, says Minneapolis Fed President * US consumer credit growth slowed in March * Federal subsidies for semi firms to fuel industry growth, report projects… * Semiconductor ETF (SMH) trades near record high: Renewable energy sources generate 30% of the world’s electricity, estimates Ember, a consultancy. “The renewables future has arrived,” says Dave Jones, global insights director at Ember. “Solar in particular is ..read more

The upside momentum in the US stock market so far this year continues to be led by rallies in communications services and energy shares, based on a set of ETFs through Monday’s close (May 6). Both sectors are outperforming the broad market and their counterparts. Communication Services Select Sector SPDR Fund (XLC) and Energy Select Sector SPDR Fund (XLE) are tied for first place in 2024’s performance run. Each fund is posting a 12.2% year-to-date return. The gains reflect moderate premiums over the broad market’s 9.0% increase this year, based on SPDR S&P 500 ETF (SPY). All but one of the ..read more

* Global economic growth at 10-month high in April: PMI survey * America’s fiscal outlook is troubling, but largely ignored on campaign trail * Sahm Indicator rises for 3rd month in April, closer to recession tipping point * Renters’ expectations of owning home fall to record low: NY Fed survey * US 10yr Treasury yield falls for 5th straight dat to lowest level since Dec: The Employment Trends Index (ETI), a leading indicator for the jobs market, forecasts a slowing labor market. The indicator, compiled by The Conference Board, has been sliding since its peak in March 2022. “The ETI fell in A ..read more

April was a rough month for investors, but the rebound in asset prices in the early days of May has revived expectations that the worst has passed. A key catalyst for the turnaround in sentiment: Friday’s US payrolls data, which posted a substantially softer-than-expected rise in April. The crowd views the news as a net positive because it lifts the odds that the Federal Reserve will cut interest rates this year. Even if this view is correct, which is open for debate, it’s not without risk for markets. Much depends on how fast and how far the US economy slows. A modest degree of cooling will p ..read more

* Hard-landing risk for US economy is rising again, predicts Citi economist * Eurozone business activity expands at fastest pace in almost a year * China is a key factor in gold’s rally * AI could fuel a spike in demand for natural gas, advises Wells Fargo * US economy appears to be cooling as hiring slows more than expected in April: The softer-than-expected rise in US payrolls for April has revived expectations for rate cuts this year. “At last there is evidence of some weakness in the US jobs market,” says Neil Birrell, chief investment officer at Premier Miton Investors. “Rate cuts will m ..read more

● The Complete Guide to Portfolio Performance: Appraise, Analyze, Act Pascal François and Georges Hubner Summary via publisher (Wiley) An intuitive and effective desk reference for performance measurement in asset and wealth management. In The Complete Guide to Portfolio Performance: Appraise, Analyse, Act, a team of finance professors with extended practical experience deliver a hands-on desk reference for asset and wealth managers suitable for everyday use. Intuitively organized and full of concrete examples of the real-world implementation of the concepts discussed within, the book provides ..read more

Preliminary estimates of second-quarter US GDP activity suggest output may stabilize after two straight quarters of slower growth, based on the median for a set of nowcasts compiled by CapitalSpectator.com. This estimate should be viewed cautiously this early in the current quarter, but for now the current data suggest that economic activity may be set to normalize after post-pandemic volatility. Output for the April-through-June period is currently projected to increase 1.9% (seasonally adjusted real annual rate), a modest improvement over Q1’s 1.6 advance. If today’s median Q2 nowcast is cor ..read more

* Global economy in 2024 will rise 3.1%, matching 2023’s gain, OECD forecasts * Global manufacturing activity holds on to slight expansion in April via PMI survey * US factory orders rose for a second month in March * US labor costs rose sharply in Q1 as worker productivity growth slowed * US jobless claims at historically low levels: Policy-sensitive US 2-year Treasury yield dropped for a second day on Thursday (May 2). This widely watched rate fell to 4.95% after briefly topping 5% earlier in the week for the first time this year ..read more