Tuesday, August 4, 2015

Charts Of Equities’ Performance Since March 9, 2009 And January 1, 1980 – August 4, 2015 Update

In the March 9, 2012 post (“Charts of Equities’ Performance Since March 9, 2009 And January 1, 1980“) I highlighted two charts for reference purposes.
Below are those two charts, updated through the latest daily closing price.
The first is a daily chart of the S&P500 (shown in green), as well as five prominent (AAPL, IBM, WFM, SBUX, CAT) individual stocks, since 2005.  There is a blue vertical line that is very close to the March 6, 2009 low.  As one can see, both the S&P500 performance, as well as many stocks including the five shown, have performed strongly since the March 6, 2009 low:
(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)
chart of stocks
This next chart shows, on a monthly LOG basis, the S&P500 since 1980.  I find this chart notable as it provides an interesting long-term perspective on the S&P500′s performance.  The 20, 50, and 200-month moving averages are shown in blue, red, and green lines, respectively:
(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)
S&P500 chart

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The Special Note summarizes my overall thoughts about our economic situation
SPX at 2097.38 as this post is written

August 4, 2015 Gallup Poll Results On Economic Confidence – Notable Excerpts

On August 4, 2015 Gallup released the poll results titled “U.S. Economic Confidence Index drops to -12 in July.”
Notable excerpts include:
Gallup's Economic Confidence Index declined to an average of -12 in July from -8 in June. This is the lowest monthly average since last October, and is a noticeable departure from the +3 average in January.
also:
Gallup's Economic Confidence Index is the average of two components: Americans' ratings of the current economy and their views of whether the economy is improving or getting worse. The former component dropped only slightly, while the latter had a large drop last month.
The current conditions component averaged -6 in July, slightly below the -4 of June. The July average was the result of 25% of Americans rating the current economy as "excellent" or "good" and 31% rating it as "poor." In July, 39% of Americans said the economy was "getting better," while 56% said it was "getting worse." This resulted in an economic outlook score of -17, the lowest since August 2014.
Here is an accompanying chart of the two components (Sub-Indexes) of the Gallup Economic Confidence Index, discussed above:
Gallup Economic Confidence Subindexes
Here is an accompanying chart of the Gallup Economic Confidence Index:
Gallup U.S. Economic Confidence Index - Monthly Averages
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 2097.60 as this post is written

Monday, August 3, 2015

U.S. Dollar Decline – August 3, 2015 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, and the red line representing a (past) trendline:
(charts courtesy of StockCharts.com; annotations by the author)
(click on charts to enlarge images)
U.S. Dollar monthly chart
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
Lastly, a chart of the Dollar on a weekly LOG scale.  There are two clearly marked channels, with possible technical support depicted by the dashed light blue line:
U.S. Dollar weekly
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 2096.74 as this post is written

Employment Cost Index (ECI) - Second Quarter 2015

While the concept of Americans' incomes can be defined in a number of ways, many prominent measures continue to show disconcerting trends.
One prominent measure is the Employment Cost Index (ECI).
Here is a description from the BLS document titled "The Employment Cost Index:  what is it?":
The Employment Cost Index (ECI) is a quarterly measure of the change in the price of labor, defined as compensation per employee hour worked. Closely watched by many economists, the ECI is an indicator of cost pressures within companies that could lead to price inflation for finished goods and services. The index measures changes in the cost of compensation not only for wages and salaries, but also for an extensive list of benefits. As a fixed-weight, or Laspeyres, index, the ECI controls for changes occurring over time in the industrial-occupational composition of employment.
On July 31, 2015, the ECI for the second quarter was released.  Here is an excerpt from the July 31, 2015 Wall Street Journal article titled "U.S. Labor Costs Rise at Slowest Pace in Three Decades":
The employment-cost index, a broad measure of workers’ wages and benefits, climbed a seasonally adjusted 0.2% in the second quarter from the first quarter, the Labor Department said Friday. That marked the smallest quarterly gain since record keeping began in 1982. Economists surveyed by The Wall Street Journal expected a 0.6% increase.
Below are three charts, updated on July 31, 2015 that depict various aspects of the ECI.
The first depicts the ECI, with a value of 123.8:
ECI
US. Bureau of Labor Statistics, Employment Cost Index: Total compensation: All Civilian[ECIALLCIV], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/ECIALLCIV/, August 2, 2015.
The second chart depicts the ECI on a "Percent Change from Year Ago" basis, showing a 1.98% increase Year-over-Year (YoY):
ECI percent change from year ago
The third chart depicts the ECI on a "Percent Change" (from last quarter) basis, showing a .16% increase from the first quarter:
ECI quarterly percentage change

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The Special Note summarizes my overall thoughts about our economic situation
SPX at 2103.84 as this post is written

Friday, July 31, 2015

Consumer Confidence Surveys – As Of July 31, 2015

Doug Short had a blog post of July 31, 2015 (“Michigan Consumer Sentiment: Small Decline but Still Positive Trend“) 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
University of Michigan Consumer Sentiment
There are a few aspects of the above charts that I find highly noteworthy.  Of course, until the recent sudden upswing, the continued subdued absolute levels of these two surveys was 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 site.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 2111.86 as this post is written

Stock Market Capitalization To GDP – Through Q2 2015

“Stock market capitalization to GDP” is a notable and important metric regarding stock market valuation.  In February of 2009 I wrote of it in “Does Warren Buffett’s Market Metric Still Apply?
Doug Short has recently published a post depicting this “stock market capitalization to GDP” metric.
As seen in his July 30, 2015 post titled “Market Cap to GDP:  The Buffett Valuation Indicator Remains in Levitation Mode” he shows two different versions, varying by the definition of stock market capitalization. (note:  additional explanation is provided in his post.)
For reference purposes, here is the first chart, with the stock market capitalization as defined by the Federal Reserve:
(click on charts to enlarge images)
market cap to GDP
Here is the second chart, with the stock market capitalization as defined by the Wilshire 5000:
Market Cap to GDP
As one can see in both measures depicted above, “stock market capitalization to GDP” is at notably high levels from a long-term historical perspective.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 2111.40 as this post is written

Thursday, July 30, 2015

Velocity Of Money – Charts Updated Through July 30, 2015

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 2015, and were last updated as of July 30, 2015.  As one can see, two of the three measures are at an all-time low for the periods depicted:
Velocity of MZM Money Stock, current value = 1.346:
MZM money supply chart
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 30, 2015:
Velocity of M1 Money Stock, current value = 5.956:
M1 money velocity chart
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 30, 2015:
Velocity of M2 Money Stock, current value = 1.494:
M2 money supply chart
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 30, 2015:
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 2108.63 as this post is written

Real GDP Chart Since 1947 With Trendline – 2nd Quarter 2015

For reference purposes, below is a chart from Doug Short’s “Q2 GDP Advance Estimate at 2.3%, Close to Mainstream Forecasts” post of July 30, 2015, depicting Real GDP, with a trendline, as depicted.  This chart reflects the Gross Domestic Product Q2 2015 Advance Estimate (pdf) of July 30, 2015:
GDP since 1947 with regression
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 2108.08 as this post is written