Tuesday, September 30, 2014

Consumer Confidence Surveys – As Of September 30, 2014

Doug Short had a blog post of September 30, 2014 (“Consumer Confidence Drops“) in which he presents the latest Conference Board Consumer Confidence and Thomson/Reuters University of Michigan Consumer Sentiment Index charts.  They are presented below:
(click on charts to enlarge images)
Conference Board Consumer Confidence
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Michigan Consumer Sentiment
There are a few aspects of the above charts that I find highly noteworthy.  Of course, the continuing subdued absolute levels of these two surveys is disconcerting.
Also, I find the “behavior” of these readings to be quite disparate as compared to the other post-recession periods, as shown in the charts between the gray shaded areas (the gray areas denote recessions as defined by the NBER.)
While I don’t believe that confidence surveys should be overemphasized, I find these readings to be very problematical, especially in light of a variety of other highly disconcerting measures highlighted throughout this blog.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1972.29 as this post is written

Long-Term Charts Of The DJIA, Dow Jones Transports, S&P500, And Nasdaq Composite

StockCharts.com maintains long-term historical charts of various major stock market indices, interest rates, currencies, commodities, and economic indicators.
As a long-term reference, below are charts depicting various stock market indices for the dates shown.  All charts are depicted on a monthly basis using a LOG scale.
(click on charts to enlarge images)(charts courtesy of StockCharts.com)
The DJIA, from 1900-September 26, 2014:
DJIA
The Dow Jones Transportation Average, from 1900-September 26, 2014:
Dow Jones Transports
The S&P500, from 1925-September 26, 2014:
S&P500
The Nasdaq Composite, from 1978-September 26, 2014:
NASDAQ Composite
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1977.80 as this post is written

Monday, September 29, 2014

Money Supply Charts Through August 2014

For reference purposes, below are four charts depicting growth in the money supply.
The first shows the MZM (Money Zero Maturity), defined in FRED as the following:
M2 less small-denomination time deposits plus institutional money funds.
Money Zero Maturity is calculated by the Federal Reserve Bank of St. Louis.
Here is the “MZM Money Stock” (seasonally adjusted) chart, last updated on 9-25-14, depicting data through August 2014, with value $12,673.8 Billion:
MZM money supply
Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis:
MZM percent change from year ago
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed September 29, 2014:
The second shows M2, defined in FRED as the following:
M2 includes a broader set of financial assets held principally by households. M2 consists of M1 plus: (1) savings deposits (which include money market deposit accounts, or MMDAs); (2) small-denomination time deposits (time deposits in amounts of less than $100,000); and (3) balances in retail money market mutual funds (MMMFs). Seasonally adjusted M2 is computed by summing savings deposits, small-denomination time deposits, and retail MMMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.
Here is the “M2 Money Stock” (seasonally adjusted) chart, last updated on 9-25-14, depicting data through August 2014, with value $11,460.0 Billion:
M2 chart
Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis:
M2 percent change from year ago
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed September 29, 2014:
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1965.64 as this post is written

Friday, September 26, 2014

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – September 26, 2014 Update

As I stated in my July 12, 2010 post (“ECRI WLI Growth History“):
For a variety of reasons, I am not as enamored with ECRI’s WLI and WLI Growth measures as many are.
However, I do think the measures are important and deserve close monitoring and scrutiny.
The movement of the ECRI WLI and WLI, Gr. is particularly notable at this time, as ECRI publicly announced on September 30, 2011 that the U.S. was “tipping into recession,” and ECRI has reiterated the view that the U.S. economy is currently in a recession, seen most recently in these twelve publicly available sources :
Other past notable year 2012 reaffirmations of the September 30, 2011 recession call by ECRI were seen (in chronological order) on March 15 (“Why Our Recession Call Stands”) as well as various interviews and statements the week of May 6, including:
Also, subsequent to May 2012:
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Below are three long-term charts, from Doug Short’s blog post of September 26, 2014 titled “ECRI Recession Watch:  Weekly Update.”  These charts are on a weekly basis through the September 26 release, indicating data through September 19, 2014.
Here is the ECRI WLI (defined at ECRI’s glossary):
ECRI WLI
This next chart depicts, on a long-term basis, the Year-over-Year change in the 4-week moving average of the WLI:
Dshort 9-26-14 - ECRI-WLI-YoY 2.3 percent
This last chart depicts, on a long-term basis, the WLI, Gr.:
ECRI WLI,Gr.
_________
I post various economic indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1985.30 as this post is written

Thursday, September 25, 2014

Durable Goods New Orders – Long-Term Charts Through August 2014

Many people place emphasis on Durable Goods New Orders as a prominent economic indicator and/or leading economic indicator.
For reference, below are charts depicting this measure.
First, from the St. Louis Fed site (FRED), a chart through August, last updated on September 25, 2014.  This value is 245,433 ($ Millions) :
(click on charts to enlarge images)
Durable Goods New Orders
Here is the chart depicting this measure on a “Percentage Change from a Year Ago” basis:
Durable Goods New Orders percent change from year ago
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Manufacturers’ New Orders:  Durable Goods [DGORDER]; U.S. Department of Commerce: Census Bureau; accessed September 25, 2014;
_________
I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1968.23 as this post is written

Forewarning Pronounced Economic Weakness

In the post of September 11, 2014 ("Additional Thoughts Concerning The Economic Situation") I stated:
There are an array of indications and other “warning signs” – many readily apparent – that the current level of economic activity and financial market performance is accompanied by exceedingly perilous dynamics.
While some of these indications are plainly evident, others are less obvious, and many are unapparent.  Many of these indications of deep-seated economic problems are featured and discussed throughout this site.  However, many are not.
Many of these disparate indicators - of various levels of importance - do serve as readily apparent warnings.  While these warnings do not, at least yet, signal the immense level of danger in the economic and financial system - which I have previously stated dwarfs that preceding and during the Great Depression - they do serve to indicate various problem areas and pernicious dynamics.
One area of concern is that of "deflationary pressures," of which I have discussed previously.  I have been using the term "deflationary pressures" as a term to describe deflationary manifestations within an environment that is still overall inflationary but heading towards deflation.  [note: to clarify, for purposes of this discussion, when I mention "deflation" I am referring to the CPI going below zero.]  While such deflationary pressures seem to be most evident in other areas such as Europe, there are also many such deflationary pressures in the United States.  These are seen in various areas, including various commodities and also some aspects of retail.
Among commodities' price movements that I find especially notable is the price of silver, which has fallen from roughly $50 in early 2011 to a current price of $17.67, and weakness in iron ore prices, as discussed in the Bloomberg September 24 iron ore article as well as the September 5 Wall Street Journal article concerning iron ore .
The unemployment situation is another area with many indications of deep-seated problems.  While some choose to focus on the most popular measure - the unemployment rate (U-3) - this measure is suboptimal in many ways, and does not present a true depiction of the unemployment situation.  As well, other unemployment measures depicting recent improvement are not necessarily clear depictions of underlying economic strength due to the methodology of the measures and/or various underlying dynamics.  Two unemployment measures that do depict problematical conditions are that of the labor force participation rate and the "not in the labor force" statistic.
Regardless of current true levels of unemployment, the main focus should be on future employment and the quality of such, which is exceedingly worrisome given the overall economic dynamics.
Another indicator that I find notable is that seen in the ratio of two measures from the Conference Board. As seen below, as depicted in Haver's post of September 19 ("U.S. Leading Economic Indicators Index Continues to Improve") the ratio of the Coincident Composite Index to the Lagging Composite Index has been sinking for a while now, and is not far from the level seen in 2009:
Leading Economic Indicators Coincident To Lagging Ratio
While some prefer that "evidence" of forthcoming (severe) economic weakness be plainly evident and predicted in a widely available indicator or model, such has not been the case in prior economic recessions and depressions in post-1900 America, and certainly was not the case in 2008.  My analyses indicate that, in part due to the complexity of today's (global) economic and financial system, almost all will again suffer from such lack of warning.
As I stated in the aforementioned "Additional Thoughts Concerning The Economic Situation" post:
Cumulatively, the growing level of financial danger will lead to the next crash. Key attributes of this next crash is its outsized magnitude (when viewed from an ultra-long term historical perspective) and the resulting economic impact.  This next financial crash is of tremendous concern, as my analyses indicate it will lead to a Super Depression – i.e. an economy characterized by deeply embedded, highly complex, and difficult-to-solve problems.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1998.30 as this post is written

Wednesday, September 24, 2014

Chicago Fed National Financial Conditions Index (NFCI)

The St. Louis Fed’s Financial Stress Index (STLFSI) is one index that is supposed to measure stress in the financial system.  Its reading as of the September 18, 2014 update (reflecting data through September 12) is -1.222.
Of course, there are a variety of other measures and indices that are supposed to measure financial stress and other related issues, both from the Federal Reserve as well as from private sources.
Two other indices that I regularly monitor include the Chicago Fed National Financial Conditions Index (NFCI) as well as the Chicago Fed Adjusted National Financial Conditions Index (ANFCI).
Here are summary descriptions of each, as seen in FRED:
The National Financial Conditions Index (NFCI) measures risk, liquidity and leverage in money markets and debt and equity markets as well as in the traditional and “shadow” banking systems. Positive values of the NFCI indicate financial conditions that are tighter than average, while negative values indicate financial conditions that are looser than average.
The adjusted NFCI (ANFCI). This index isolates a component of financial conditions uncorrelated with economic conditions to provide an update on how financial conditions compare with current economic conditions.
For further information, please visit the Federal Reserve Bank of Chicago’s web site:
Below are the most recently updated charts of the NFCI and ANFCI, respectively.
The NFCI chart below was last updated on September 24, incorporating data from January 5,1973 to September 19, 2014, on a weekly basis.  The September 19, 2014 value is -.93:
(click on chart to enlarge image)
NFCI on 9-24-14
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed September 24, 2014:
The ANFCI chart below was last updated on September 24, incorporating data from January 5,1973 to September 19, 2014, on a weekly basis.  The September 19, 2014 value is -.41:
ANFCI on 9-22-14
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed September 24, 2014:
_________
I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1998.30 as this post is written

Tuesday, September 23, 2014

Current Economic Situation

With regard to our current economic situation, my thoughts can best be described/summarized by the posts found under the 40 “Building Financial Danger” posts.
My thoughts concerning our ongoing economic situation – with future implications – can be seen on the page titled “A Special Note On Our Economic Situation,” which has been found near the bottom of every blog post since August 15, 2010.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1985.26 as this post is written