Friday, August 1, 2014

U.S. Dollar Decline – August 1, 2014 Update

U.S. Dollar weakness is a foremost concern of mine.  As such, I have extensively written about it.  I am very concerned that the actions being taken to “improve” our economic situation will dramatically weaken the Dollar.  Should the Dollar substantially decline from here, as I expect, the negative consequences will far outweigh any benefits.  The negative impact of a substantial Dollar decline can’t be overstated, in my opinion.
The following three charts illustrate various technical analysis aspects of the U.S. Dollar, as depicted by the U.S. Dollar Index.
First, a look at the monthly U.S. Dollar from 1983.  This clearly shows a long-term weakness, with the blue line showing technical support until 2007:
(charts courtesy of StockCharts.com; annotations by the author)
(click on charts to enlarge images)
U.S. Dollar monthly chart
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Next, another chart, this one focused on the daily U.S. Dollar since 2000 on a LOG scale.  The red line represents a (past) trendline.  The gray dotted line is the 200-day M.A. (moving average):
U.S. Dollar daily chart
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Lastly, a chart of the Dollar on a weekly LOG scale.  There are some clearly marked channels, with a potential large, prominent triangle featured shown with the lower trendline depicted by the dashed light blue line):
U.S. Dollar weekly chart
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I will continue providing updates on this U.S. Dollar situation regularly as it deserves very close monitoring…
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1930.67 as this post is written

Wednesday, July 30, 2014

Real GDP Since 1960 With Trendline - 2nd Quarter 2014

For reference purposes, below is a chart from Doug Short depicting Real GDP, with a trendline, as depicted:
Real GDP with trendline
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1970.07 as this post is written

Velocity Of Money – Charts Updated Through July 30, 2014

Here are three charts from the St. Louis Fed depicting the velocity of money in terms of the MZM, M1 and M2 money supply measures.
All charts reflect quarterly data through the 2nd quarter of 2014, and were last updated as of July 30, 2014.  As one can see, one of the three measures is at an all-time low for the periods depicted:
Velocity of MZM Money Stock, current value = 1.383 :
MZMV 7-30-14
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 30, 2014:
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Velocity of M1 Money Stock, current value = 6.171 :
M1V 7-30-14
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed January 30, 2014:
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Velocity of M2 Money Stock, current value = 1.531 :
M2V 7-30-14
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 30, 2014:

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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1970.07 as this post is written

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 July 24, 2014 update (reflecting data through July 18) is -1.330.
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 July 30, incorporating data from January 5,1973 to July 25, 2014, on a weekly basis.  The July 25, 2014 value is -.99:
(click on chart to enlarge image)
NFCI 7-30-14 update
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 30, 2014:
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The ANFCI chart below was last updated on July 30, incorporating data from January 5,1973 to July 25, 2014, on a weekly basis.  The July 25, 2014 value is -.35:
(click on chart to enlarge image)
ANFCI 7-30-14 update
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 30, 2014:
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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.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1970.07 as this post is written

Tuesday, July 29, 2014

Median Household Income Chart

I have written many blog posts concerning the worrisome trends in income and earnings.
Doug Short, in his July 28, 2014 post titled “Real Median Household Income Rose .69 Percent in June” produced the chart below.  It is based upon data from Sentier Research, and it shows both nominal and real median household incomes since 2000, as depicted.  As one can see, post-recession real median household income (seen in the blue line since 2009) is especially worrisome.
(click on chart to enlarge image)
median household income
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As Doug mentions in his aforementioned blog post:
As the excellent data from Sentier Research makes clear, the mainstream U.S. household was struggling before the Great Recession. At this point, real household incomes are in worse shape than they were four years ago when the recession ended.
Among other items seen in his blog post is a chart depicting each of the two (nominal and real household incomes) data series’ percent change over time since 2000.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1978.91 as this post is written

Monday, July 28, 2014

The S&P500 Vs. The Shanghai Stock Exchange Composite Index – July 28, 2014

Starting on May 3, 2010 I have written posts concerning the notable divergence that has occurred between the S&P500 and Chinese (Shanghai Composite) stock markets.
The chart below illustrates this divergence; it shows the S&P500 vs. the Shanghai Composite on a daily basis, since 2006:
(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)
SPX vs. Shanghai Stock Exchange Composite Index
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It is notable that the Shanghai Composite led the SPX (S&P500) significantly in late ’08 – early ’09, yet it has been (generally) declining since that time.
I continue to find this divergence between the S&P500 and Shanghai Composite to be notable and disconcerting, on an “all things considered” basis.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1980.25 as this post is written

Friday, July 25, 2014

Durable Goods New Orders – Long-Term Charts Through June 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 June, last updated on July 25, 2014.  This value is 239,917 ($ Millions) :
(click on charts to enlarge images)
Durable Goods New Orders
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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 July 25, 2014;
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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 1978.18 as this post is written

Thursday, July 24, 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 July 18, 2014:
from page 19:
(click on charts to enlarge images)
CY Bottom-Up EPS vs. Top-Down Mean EPS (Trailing 26-Weeks) 
S&P500 EPS trends
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from page 20:
Calendar Year Bottom-Up EPS Actuals & Estimates
S&P500 annual earnings 2000-2015
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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 1989.68 as this post is written