Consumer Confidence Surveys – As Of October 30, 2015

Doug Short had a blog post of October 30, 2015 (“Michigan Consumer Sentiment: Down from October Preliminary“) 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)

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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.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2083.36 as this post is written

Employment Cost Index (ECI) – Third 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 October 30, 2015, the ECI for the third quarter was released.  Here are two excerpts from the October 30, 2015 Wall Street Journal article titled “U.S. Employment Costs Rise .6%, Suggesting New Wage Pressure“:

Wages and salaries for civilian workers, which reflect more than two-thirds of employee costs, grew 0.6% in July through September, while benefits rose 0.5%.

also:

Compensation costs can ebb and flow from quarter to quarter. On an annual basis, wages and benefits are growing modestly. Total compensation grew 2% in the third quarter, compared with a year earlier. That was the same pace as in the spring.

Below are three charts, updated on October 30, 2015 that depict various aspects of the ECI.

The first depicts the ECI, with a value of 124.5:

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/, October 30, 2015.

The second chart depicts the ECI on a “Percent Change from Year Ago” basis, showing a 1.89% increase Year-over-Year (YoY):

The third chart depicts the ECI on a “Percent Change” (from last quarter) basis, showing a .56% increase from the second quarter:

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2088.79 as this post is written

Velocity Of Money – Charts Updated Through October 29, 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 3rd quarter of 2015, and were last updated as of October 29, 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 = 1.333:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 29, 2015:

http://research.stlouisfed.org/fred2/series/MZMV

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Velocity of M1 Money Stock, current value = 5.911:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 29, 2015:

http://research.stlouisfed.org/fred2/series/M1V

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Velocity of M2 Money Stock, current value = 1.488:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 29, 2015:

http://research.stlouisfed.org/fred2/series/M2V

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2089.41 as this post is written

Real GDP Chart Since 1947 With Trendline – 3rd Quarter 2015

For reference purposes, below is a chart from Doug Short’s “Q3 GDP Advance Estimate at 1.5%, A Big Decline from Q2's 3.9%” post of October 29, 2015, depicting Real GDP, with a trendline, as depicted.  This chart reflects the Gross Domestic Product Q3 2015 Advance Estimate (pdf) of October 29, 2015:

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2084.97 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 October 22, 2015 update (reflecting data through October 16) is -.781.

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:

http://www.chicagofed.org/webpages/publications/nfci/index.cfm

Below are the most recently updated charts of the NFCI and ANFCI, respectively.

The NFCI chart below was last updated on October 28, 2015 incorporating data from January 5,1973 to October 23, 2015, on a weekly basis.  The October 23, 2015 value is -.71:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 28, 2015:

http://research.stlouisfed.org/fred2/series/NFCI

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The ANFCI chart below was last updated on October 28, 2015 incorporating data from January 5,1973 to October 23, 2015, on a weekly basis.  The October 23 value is .14:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 28, 2015:

http://research.stlouisfed.org/fred2/series/ANFCI

_________

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 2080.71 as this post is written

The S&P500 Vs. The Shanghai Stock Exchange Composite Index – October 28, 2015

For reference purposes, the chart below shows the S&P500 vs. the Shanghai Stock Exchange Composite Index on a daily basis, since 2006, with price labels:

(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2073.99 as this post is written

Durable Goods New Orders – Long-Term Charts Through September 2015

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 September, updated on October 27, 2015. This value is $231,080.0 ($ Millions):

(click on charts to enlarge images)

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Here is the chart depicting this measure on a “Percentage Change from a Year Ago” basis:

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 October 27, 2015;

http://research.stlouisfed.org/fred2/series/DGORDER

_________

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 2061.67 as this post is written

Money Supply Charts Through September 2015

For reference purposes, below are two sets of 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, updated on October 23, 2015 depicting data through September 2015, with a value of $13,590.8 Billion:

Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 27, 2015:

https://research.stlouisfed.org/fred2/series/MZMSL

The second set 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, updated on October 22, 2015, depicting data through September 2015, with a value of $12,195.0 Billion:

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 27, 2015:

https://research.stlouisfed.org/fred2/series/M2SL

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2062.72 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – October 23, 2015 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.

Below are three long-term charts, from Doug Short’s blog post of October 23, 2015 titled “ECRI Weekly Leading Index:  ‘Key Measure of Cyclical Growth is Weakening'.”  These charts are on a weekly basis through the October 23, 2015 release, indicating data through October 16, 2015.

Here is the ECRI WLI (defined at ECRI’s glossary):

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This next chart depicts, on a long-term basis, the Year-over-Year change in the 4-week moving average of the WLI:

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This last chart depicts, on a long-term basis, the 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 2070.02 as this post is written

The U.S. Economic Situation – October 23, 2015 Update

Perhaps the main reason that I write of our economic situation is that I continue to believe, based upon various analyses, that our economic situation is in many ways misunderstood.  While no one likes to contemplate a future rife with economic adversity, current and future economic problems must be properly recognized and rectified if high-quality, sustainable long-term economic vitality is to be realized.

There are an array of indications and other “warning signs” – many readily apparent – that current economic activity and financial market performance is accompanied by exceedingly perilous dynamics.

I have written extensively about this peril, including in the following:

“Building Financial Danger” (ongoing updates)

“A Special Note On Our Economic Situation”

“Forewarning Pronounced Economic Weakness”

“Thoughts Concerning The Next Financial Crisis”

“Was A Depression Successfully Avoided?”

“Has the Financial System Strengthened Since the Financial Crisis?”

“The Next Crash And Its Significance”

My analyses continues to indicate that the growing level of financial danger will lead to the next stock market crash that will also involve (as seen in 2008) various other markets as well.  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.

For long-term reference purposes, here is a chart of the Dow Jones Industrial Average since 1900, depicted on a monthly basis using a LOG scale (updated through October 16, 2015, with a last value of 17215.97):

(click on chart to enlarge image)(chart courtesy of StockCharts.com)

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2071.27 as this post is written

Updates Of Economic Indicators October 2015

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 October 2015 Chicago Fed National Activity Index (CFNAI) updated as of October 22, 2015:

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The ECRI WLI (Weekly Leading Index):

As of October 16, 2015 (incorporating data through October 9, 2015) the WLI was at 128.7 and the WLI, Gr. was at -2.2%.

A chart of the WLI,Gr., from Doug Short’s post of October 16, 2015, titled “ECRI Weekly Leading Index: 'Recession Kills Inflation'“:

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The Aruoba-Diebold-Scotti Business Conditions (ADS) Index:

Here is the latest chart, depicting the ADS Index from December 31, 2007 through October 17, 2015:

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The Conference Board Leading (LEI), Coincident (CEI) Economic Indexes, and Lagging Economic Indicator (LAG):

As per the October 22, 2015 press release, titled “The Conference Board Leading Economic Index (LEI) for the U.S. Declined Slightly,” (pdf) the LEI was at 123.3, the CEI was at 112.8, and the LAG was 119.0 in September.

An excerpt from the October 22 release:

“Despite September’s decline, the U.S. LEI still suggests economic expansion will continue, although at a moderate pace,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The recent weakness in stock markets, the manufacturing sector and housing permits was offset by gains in financial indicators, and to a lesser extent improvements in consumer expectations and initial claims for unemployment insurance. The U.S. economy is on track for moderate growth of about 2.5 percent in the coming quarters, despite the mixed global economic landscape.”

Here is a chart of the LEI from Doug Short’s blog post of October 22 titled “Conference Board Leading Economic Index Declined in September“:

_________

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 2045.94 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 October 15, 2015 update (reflecting data through October 9) is -.706.

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:

http://www.chicagofed.org/webpages/publications/nfci/index.cfm

Below are the most recently updated charts of the NFCI and ANFCI, respectively.

The NFCI chart below was last updated on October 21, 2015 incorporating data from January 5,1973 to October 16, 2015, on a weekly basis.  The October 16, 2015 value is -.65:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 21, 2015:

http://research.stlouisfed.org/fred2/series/NFCI

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The ANFCI chart below was last updated on October 21, 2015 incorporating data from January 5,1973 to October 16, 2015, on a weekly basis.  The October 16 value is .15:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 21, 2015:

http://research.stlouisfed.org/fred2/series/ANFCI

_________

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 2031.32 as this post is written

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 October 16, 2015:

from page 23:

(click on charts to enlarge images)

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from page 24:

_____

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 2033.57 as this post is written

S&P500 2015, 2016 & 2017 Annual EPS Estimates

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 October 19, 2015, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts.  For reference, the Year 2014 value is $118.78:

Year 2015 estimate:

$117.79/share

Year 2016 estimate:

$129.19/share

Year 2017 estimate:

$142.66/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 2033.66 as this post is written

Standard & Poor’s S&P500 Earnings Estimates For 2015 & 2016 – As Of October 14, 2015

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 October 14, 2015:

Year 2015 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $110.81/share

-From a “top down” perspective, operating earnings of N/A

-From a “bottom up” perspective, “as reported” earnings of $98.95

Year 2016 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $127.88/share

-From a “top down” perspective, operating earnings of N/A

-From a “bottom up” perspective, “as reported” earnings of $118.44/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 2031.12 as this post is written

Three Charts Of Recent S&P500 Price Volatility – October 19, 2015

This post is an update to past posts regarding stock market volatility.

While I track many different measures of volatility, I find the following charts to be both simple and clear in depicting the recent increased volatility in the stock market.

Overall, my analyses indicates that there are many reasons for this volatility, and the volatility is highly significant.

For reference purposes, shown below are three charts with y-axis price labels.

First, a one-year daily depiction of the S&P500 through Friday’s (October 16, 2015) close, with a 50-day moving average (MA50) depicted by the blue line:

(click on chart to enlarge image)(charts courtesy of StockCharts.com)

Second, a three-month daily depiction of the S&P500 through Friday's (October 16, 2015) close, with a 50-day moving average (MA50) depicted by the blue line:

(click on chart to enlarge image)(chart courtesy of StockCharts.com)

Third, a three-month depiction of the S&P500 in 60 minute intervals through Friday’s (October 16, 2015) close, with a 50-hour moving average (MA50) depicted by the blue line:

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2033.11 as this post is written

Broad-Based Indicators Of Economic Activity

The Chicago Fed National Activity Index (CFNAI) and the Aruoba-Diebold-Scotti Business Conditions Index (ADS Index) are two broad-based economic indicators that I regularly feature in this site.

The short-term and long-term trends of each continue to be notable.

Doug Short, in his blog post of October 15, 2015, titled “The Philly Fed ADS Index Business Conditions Index” displays both the CFNAI MA-3 (3-month Moving Average) and ADS Index (91-Day Moving Average) from a variety of perspectives.

Of particular note, two of the charts, shown below, denote where the current levels of each reading is relative to the beginning of past recessionary periods, as depicted by the red dots.

The CFNAI MA-3:

(click on charts to enlarge images)

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The ADS Index, 91-Day MA:

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Also shown in the Doug Short’s aforementioned post is a chart of each with a long-term trendline (linear regression) as well as a chart depicting GDP for comparison purposes.

_________

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 2012.24 as this post is written