The National Association of Realtors released data indicating a 2.7 percent decline in home sales for August. This was a surprise to many investors after a 4 month upturn in home sales figures and a 7.2 percent increase in July.

These surprising results heighten the anticipation of a coming end to the $8,000 tax credit for new homeowners expiring at the end of November. The Fed said on Wednesday that it would begin reducing purchases of mortgage-backed securities and that it would extend the program into the beginning of next year. While nationwide home sales are up and the inventory of unsold homes has dropped notably, sales are still down roughly 30 percent from the peak 4 years ago.

Commodities prices also fell sharply indicating that fears about disintegrating monetary fundamentals may be justified. In addition, Labor Department statistics clearly show a flagging job market despite conclusions regarding a 3

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Michael Dueker is Head Economist for North America at Russell Investments and a member of the Blue Chip forecasting panel. In February of 2008 he warned Econbrowser readers that it appeared unlikely that the economy was going to escape the slowdown without a recession. In December of 2008, he predicted in this forum that the recession would last until July or August of 2009, but that employment growth would not resume until March of 2010.

With that track record, we were very interested to learn the latest macroeconomic predictions stemming from Russell's Business Cycle Index, subject to the disclaimer that the content does not constitute investment advice or projections of the stock market or any specific investment.

Current business cycle estimates suggest the economy was out of recession by August 2009; an anemic recovery and a false threat of a double dip await

Michael Dueker

The latent variable behind the

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Firm’s exemptive filing covers actively and passively managed funds.

 

Another big name is targeting the ETF industry: Russell Investments has filed for sweeping exemptions with the Securities and Exchange Commission that would allow it to create actively managed as well as index-based ETFs.

The July 2 filing designates Russell Investment Management Company as the adviser to the funds and Russell Financial Services as the distributor. It makes several requests, beyond the basic operation of ETFs, such as allowing funds of funds operated by Russell to buy shares of the ETFs in amounts beyond what is normally allowed under SEC guidelines and allowing ETFs launched by Russell to use the firm’s own indexes.

The filing specifies that the funds could cover domestic stocks, international stocks or fixed income. It also says that the holdings of each fund for the prior day, whether passive or actively managed, will be made available on a daily basis.

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OMAHA, NE - Jun 29, 2009 - Green Plains Renewable Energy, Inc (NGM:GPRE) joined the broad-market Russell 3000(R) Index upon Russell Investments reconstituting its comprehensive set of U.S. and global equity indexes on June 26, 2009.

U.S. small-cap value stocks have been the worst performers so far this year, but recent history shows they could emerge as the frontrunners if the economy stages a recovery.

Of course, corporate earnings still face serious financial headwinds and investors could pay a steep price for getting in too early.

Nonetheless, Russell Investments recently examined the stock market’s performance during the five recessions that have hit the U.S. economy since 1980, including the current credit malaise. The research uncovered clear trends in how growth and value stocks perform during recessions.

On average, “value has underperformed relative to growth during periods of economic contraction,” according to the report.

“This relative underperformance has reversed almost immediately when the economy bottomed out and turned upward, and value has markedly outperformed growth in the early periods of economic expansion,” Russell said.

“This pattern has been strongest in the

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Oil ETF Grows Too Big?

The enormous growth of the U.S. Oil Fund (NYSE: USO) since the second half of last year has made it difficult for the fund to hide its monthly automatic rollover in front-month contracts, according to this Dow Jones News Service story.

On Friday, it rolled over such a huge number that analysts are blaming it for influencing prices.

You can read the story here.

 

Dividend Focused ETFs

John Spence of MarketWatch takes a survey of ETFs that focus on dividends on the market.

You can read the story here.

 

More On Jim Cramer’s Record

Considering you might’ve read on these pages last September Jim Wiandt’s blog, “Why Jim Cramer’s A Moron,” how could we not bring the latest Barron’s cover story?

It’s titled “Cramer’s Star Outshines His Stock Picks.”  (Seeking Alpha has an interesting commentary about how this story differs from the magazine’s last review of

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Michael Dueker is a senior portfolio strategist at Russell Investments and formerly was an assistant vice president in the Research Department at the Federal Reserve Bank of St. Louis. Michael is also a member of the Blue Chip forecasting panel. In early February 2008, Michael submitted a piece to Econbrowser that correctly predicted the onset of the current recession, using a model-based forecast. We are pleased that that he is now presenting forecasts from the same Qual VAR model concerning the recession's trough date and the magnitude of a jobless recovery to follow, subject to the disclaimer that the content is the responsibility of the author and does not represent official positions of Russell Investments and does not constitute investment advice.

Current business cycle forecasts see a July or August 2009 trough and a jobless recovery until March 2010

by Michael Dueker

In analyzing the current recession, it is

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State Street Global Advisors' SDPRs offer the only two Japanese equity ETFs based on this index series. The annual rebalancing of the Russell/Nomura Japanese stock indexes just concluded, resulting in more than 30% turnover rates for each series in the benchmarking family. The Russell/Nomura Total Value Index had 212 deletions and 176 additions, while the Russell/Nomura Total Growth Index had 270 deletions and 136 additions. Those changes represented capitalization turnover ratios of 30.9% for value, and 33.3% for growth, among the highest-ever index rebalancing for the Russell Investments and Nomura Securities' Japanese equity benchmarks since their launch in 1981. There are Japanese stock exchange-traded funds from Barclays Global Investors' iShares family, Northern Trust's NETS and from WisdomTree Investments. However, State Street Global Advisors' SDPRs offers the only two Japanese equity ETFs based on this index series: the SPDR Russell/Nomura PRIME Japan ETF (NYSE Arca: JPP) and the Russell/Nomura Small Cap Japan ETF (NYSE Arca: JSC). JPP ...