Wednesday, April 23, 2014

Trends Of S&P500 Earnings Forecasts

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.
FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.
For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of April 17, 2014:
from page 19:
(click on charts to enlarge images)
CY Bottom-Up EPS vs. Top-Down Mean EPS (Trailing 26-Weeks) 
S&P500 earnings estimates
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from page 20:
Calendar Year Bottom-Up EPS Actuals & Estimates
S&P500 earnings 2001-2015
_____
I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1879.55 as this post is written

Tuesday, April 22, 2014

S&P500 Earnings Estimates For Years 2014, 2015, And 2016

As many are aware, Thomson Reuters publishes earnings estimates for the S&P500.  (My other posts concerning S&P earnings estimates can be found under the S&P500 Earnings label)
The following estimates are from Exhibit 12 of “The Director’s Report” (pdf) of April 21, 2014, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts:
Year 2014 estimate:
$118.66/share
Year 2015 estimate:
$132.31/share
Year 2016 estimate:
$146.13/share
_____
I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1871.89 as this post is written

Standard & Poor’s S&P500 Earnings Estimates For 2014 & 2015 – As Of April 17, 2014

As many are aware, Standard & Poor’s publishes earnings estimates for the S&P500.  (My posts concerning their estimates can be found under the S&P500 Earnings label)
For reference purposes, the most current estimates are reflected below, and are as of April 17, 2014:
Year 2014 estimates add to the following:
-From a “bottom up” perspective, operating earnings of $120.00/share
-From a “top down” perspective, operating earnings of $123.36/share
-From a “top down” perspective, “as reported” earnings of $117.10/share
Year 2015 estimates add to the following:
-From a “bottom up” perspective, operating earnings of $137.26/share
-From a “top down” perspective, operating earnings of N/A
-From a “top down” perspective, “as reported” earnings of N/A
_____
I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1871.89 as this post is written

Monday, April 21, 2014

Updates Of Economic Indicators April 2014

Here is an update of various indicators that are supposed to predict and/or depict economic activity. These indicators have been discussed in previous blog posts:
The April 2014 Chicago Fed National Activity Index (CFNAI)(pdf) updated as of April 21, 2014:
CFNAI-MA3
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As of April 17, 2014 (incorporating data through April 11, 2014) the WLI was at 134.9 and the WLI, Gr. was at 3.9%.
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Here is the latest chart, depicting the ADS Index from December 31, 2007 through April 12, 2014:
ADS Index
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As per the April 21, 2014 press release, the LEI was at 100.9 and the CEI was at 108.3 in March.
An excerpt from the April 21 release:
“The LEI rose sharply again, the third consecutive monthly increase,” said Ataman Ozyildirim Economist at The Conference Board. “After a winter pause, the leading indicators are gaining momentum and economic growth is gaining traction. While the improvements were broad-based, labor market indicators and the interest rate spread largely drove the March increase, offsetting the negative contribution from building permits. And, for the first time in many months, the consumer outlook is much less negative.” “
_________
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 1868.16 as this post is written

Thursday, April 17, 2014

St. Louis Financial Stress Index – April 17, 2014 Update

On March 28, 2011 I wrote a post (“The STLFSI“) about the St. Louis Fed’s Financial Stress Index (STLFSI) which is supposed to measure stress in the financial system.  For reference purposes, the most recent chart is seen below.  This chart was last updated on April 17, incorporating data from December 31,1993 to April 11, 2014, on a weekly basis.  The April 11, 2014 value is -1.084:
(click on chart to enlarge image)
STLFSI
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Here is the STLFSI chart from a 1-year perspective:
St. Louis Financial Stress Index
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 17, 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 1864.85 as this post is written

Chicago Fed National Financial Conditions Index (NFCI)

Each week I have been posting two charts of the St. Louis Fed’s Financial Stress Index (STLFSI), which is supposed to measure stress in the financial system.
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:
Here are the most recently updated charts of the NFCI and ANFCI, respectively.
The NFCI chart below was last updated on April 16, incorporating data from January 5,1973 to April 11, 2014, on a weekly basis.  The April 11, 2014 value is -.93:
(click on chart to enlarge image)
NFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 17, 2014:
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The ANFCI chart below was last updated on April 16, incorporating data from January 5,1973 to April 11, 2014, on a weekly basis.  The April 11, 2014 value is -.53:
(click on chart to enlarge image)
ANFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 17, 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 1862.31 as this post is written

Wednesday, April 16, 2014

Disturbing Charts (Update 14)

I find the following charts to be disturbing.   These charts would be disturbing at any point in the economic cycle; that they (on average) depict such a tenuous situation now – 58 months after the official (as per the September 20, 2010 NBER BCDC announcement) June 2009 end of the recession – is especially notable.
These charts raise a lot of questions.  As well, they highlight the “atypical” nature of our economic situation from a long-term historical perspective.
All of these charts (except one, as noted) are from the Federal Reserve, and represent the most recently updated data.
The following eight charts are from the St. Louis Federal Reserve:
(click on charts to enlarge images)
Housing starts (last updated 3-18-14):
Housing Starts
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The Federal Deficit (last updated 3-14-14):
Federal Deficit
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Federal Net Outlays (last updated 3-14-14):
Federal Net Outlays
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State & Local Personal Income Tax Receipts  (% Change from Year Ago)(last updated 3-27-14):
ASLPITAX
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Total Loans and Leases of Commercial Banks (% Change from Year Ago)(last updated 4-11-14):
Total Loans and Leases Percent Change From Year Ago
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Bank Credit – All Commercial Banks (% Change from Year Ago)(last updated 4-11-14):
Total Bank Credit Percent Change From Year Ago
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M1 Money Multiplier (last updated 4-10-14):
Money Multiplier
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Median Duration of Unemployment (last updated 4-4-14):
Median Duration of Unemployment
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This next chart is from the CalculatedRisk.com blog post of April 4, 2014, titled “March Employment Report:  192,000 Jobs, 6.7% Unemployment Rate” and it shows (in red) the relative length and depth of this downturn and subsequent recovery from an employment perspective:
CR 4-4-14 -  EmployRecMar2014
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This last chart is of the Chicago Fed National Activity Index (CFNAI, and its 3-month moving average CFNAI-MA3) and it depicts broad-based economic activity (last updated 3-24-14):
CFNAI MA-3
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I will continue to update these charts on an intermittent basis as they deserve close monitoring…
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1842.98 as this post is written

Monday, April 14, 2014

Deflation Probabilities

While I do not agree with the current readings of the measure – I think the measure dramatically understates the probability of deflation, as measured by the CPI – the Federal Reserve Bank of Atlanta maintains an interesting data series titled “Deflation Probabilities.”
As stated on the site:
Using estimates derived from Treasury Inflation-Protected Securities (TIPS) markets, described in a technical appendix, this weekly report provides two measures of the probability of consumer price index (CPI) deflation through 2018.
A chart shows the trends of the probabilities.  As one can see in the chart, the readings are volatile.
As for the current weekly reading, the April 10, 2014 update states the following:
The 2013–18 deflation probability—based on the 5-year TIPS issued in April and the 10-year TIPS issued in July 2008—was 0 percent on April 9, where it has been since early September. The 2012–17 deflation probability is also 0 percent as of April 9.
Prices of Treasury Inflation-Protected Securities (TIPS) with similar maturity dates can be used to measure probabilities of a net decline in the consumer price index over the five-year period starting in early 2013 or the five-year period starting in early 2012.
I plan on providing updates to this measure on a regular interval.
_________
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 1815.69 this post is written