Wednesday, November 30, 2016

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 November 23, 2016 update (reflecting data through November 18) is -1.064.
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 November 30, 2016 incorporating data from January 5,1973 through November 25, 2016, on a weekly basis.  The November 25, 2016 value is -.77:
NFCI 11-30-16
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 30, 2016:
The ANFCI chart below was last updated on November 30, 2016 incorporating data from January 5,1973 through November 25, 2016, on a weekly basis.  The November 25 value is -.20:
ANFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 30, 2016:
_________
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 2203.25 as this post is written

Tuesday, November 29, 2016

House Prices Reference Chart

As a reference for long-term house price index trends, below is a chart, updated with the most current data (through September) from the CalculatedRisk blog post of November 29, 2016 titled “Real Prices and Price-to-Rent Ratio in September”:
(click on chart to enlarge image)
Nominal U.S. home price indexes
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2204.66 as this post is written

Consumer Confidence Surveys – As Of November 29, 2016

Doug Short had a blog post of November 29, 2016 (“Consumer Confidence Rebounds in November“) 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.
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2203.19 as this post is written

Corporate Profits As A Percentage Of GDP

In the last post (“3rd Quarter 2016 Corporate Profits“) I displayed, for reference purposes, a long-term chart depicting Corporate Profits After Tax.
There are many ways to view this measure, both on an absolute as well as relative basis.
One relative measure is viewing Corporate Profits as a Percentage of GDP.  I feel that this metric is important for a variety of reasons.  As well, the measure is important to a variety of parties, including investors, businesses, and government policy makers.
As one can see from the long-term chart below (updated through the third quarter), (After Tax) Corporate Profits as a Percentage of GDP is at levels that can be seen as historically (very) high.  While there are many reasons as to why this is so, from a going-forward standpoint I think it is important to recognize both that such a notable condition exists, as well as contemplate and/or plan for such factors and conditions that would come about if (and in my opinion “when”) a more historically “normal” ratio of Corporate Profits as a Percentage of GDP occurs.  This topic can be very complex in nature, and depends upon myriad factors.  In my opinion it deserves far greater recognition.
(click on chart to enlarge image)
U.S. after tax corporate profits as a percentage of GDP
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 29, 2016
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2199.17 as this post is written

3rd Quarter 2016 Corporate Profits

Today's (November 29, 2016) GDP release (Q3, 2nd Estimate)(pdf) was accompanied by the BLS Corporate Profits report for the 3rd Quarter.
Of course, there are many ways to adjust and depict overall Corporate Profits.  For reference purposes, here is a chart from the St. Louis Federal Reserve (FRED) showing the Corporate Profits After Tax (without IVA and CCAdj) (last updated November 29, 2016, with a value of $1693.9 Billion):
U.S. Corporate Profits After Tax
Here is the Corporate Profits After Tax measure shown on a Percentage Change from a Year Ago perspective:
U.S. Corporate Profits Percent Change From Year Ago
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Corporate Profits After Tax [CP]; U.S. Department of Commerce: Bureau of Economic Analysis; accessed November 29, 2016; https://research.stlouisfed.org/fred2/series/CP
_________
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 2200.96 as this post is written

Wednesday, November 23, 2016

Durable Goods New Orders – Long-Term Charts Through October 2016

Many people place emphasis on Durable Goods New Orders as a prominent economic indicator and/or leading economic indicator.
For reference, below are two charts depicting this measure.
First, from the St. Louis Fed site (FRED), a chart through October 2016, updated on November 23, 2016. This value is $239,367 ($ Millions):
(click on charts to enlarge images)
durable goods new orders
Second, 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 November 23, 2016;
_________
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 2197.34 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 November 23, 2016 update (reflecting data through November 18) is -1.064.
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 November 23, 2016 incorporating data from January 5,1973 through November 18, 2016, on a weekly basis.  The November 18, 2016 value is -.71:
NFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 23, 2016:
The ANFCI chart below was last updated on November 23, 2016 incorporating data from January 5,1973 through November 18, 2016, on a weekly basis.  The November 18 value is .09:
ANFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 23, 2016:
_________
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 2199.00 as this post is written

The U.S. Economic Situation – November 23, 2016 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)
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 November 18, 2016, with a last value of 18867.93):
(click on chart to enlarge image)(chart courtesy of StockCharts.com)
DJIA since 1900
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2202.94 as this post is written

Monday, November 21, 2016

Updates Of Economic Indicators November 2016

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 November 2016 Chicago Fed National Activity Index (CFNAI) updated as of November 21, 2016: (current reading of CFNAI is -.08; current reading of CFNAI-MA3 is -.27):
CFNAI
As of November 18, 2016 (incorporating data through November 11, 2016) the WLI was at 139.2 and the WLI, Gr. was at 6.2%.
A chart of the WLI,Gr., from Doug Short’s ECRI update post of November 18, 2016:
ECRI WLI, Gr.
Here is the latest chart, depicting the ADS Index from December 31, 2007 through November 12, 2016:
ADS Index
The Conference Board Leading (LEI), Coincident (CEI) Economic Indexes, and Lagging Economic Indicator (LAG):
As per the November 18, 2016 press release, titled “The Conference Board Leading Economic Index (LEI) for the U.S. Increased,” (pdf) the LEI was at 124.5, the CEI was at 114.3, and the LAG was 122.9 in October.
An excerpt from the  release:
“The U.S. LEI increased in October for a second consecutive month. Although its six-month growth rate has moderated, the index still suggests that the economy will continue expanding into early 2017,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The interest rate spread and average weekly hours were the main drivers of October’s improvement, helping to offset some of the weaknesses in claims for unemployment insurance and new orders.”
Here is a chart of the LEI from Doug Short’s Conference Board Leading Economic Index update of November 18:
Conference Board LEI
_________
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 2198.18 as this post is written

Money Supply Charts Through October 2016

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 November 18, 2016 depicting data through October 2016, with a value of $14,515.4 Billion:
MZMSL_11-18-16
Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis:
MZMSL_11-18-16 Percent Change From Year Ago
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 21, 2016:
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 November 17, 2016, depicting data through October 2016, with a value of $13,137.5 Billion:
M2SL_11-17-16
Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis:
M2SL_11-17-16 Percent Change From Year Ago
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 21, 2016:
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2181.90 as this post is written

10-Year Treasury Yields – Two Long-Term Charts As Of November 21, 2016

I have written extensively about U.S. interest rates and their importance.  Rising interest rates have substantial ramifications for many aspects of the current-day economy.  My commentaries with regard to interest rates and the bond bubble are largely found under the "bond bubble" label.   From an intervention perspective commentary is found under the "Intervention" label.
Lately interest rates, including the 10-Year Treasury yield, have been sharply increasing.  An excerpt from the November 18, 2016 Bloomberg article titled "Bond Traders Sound Alarm Amid Worst Rout Since 2001:"
The Treasury 10-year note yield rose 58 basis points over the past two weeks, or 0.58 percentage point, to 2.35 percent, according to Bloomberg Bond Trader data. It was the biggest climb for a similar period since 2001.
As a reference, here is a long-term chart of the 10-Year Treasury yield since 1980, depicted on a monthly basis, LOG scale:
(click on charts to enlarge images)(charts courtesy of StockCharts.com; chart creation and annotation by the author)
10-Year Treasury Yields
Here is a long-term chart of the 10-Year Treasury yield since 2008, depicted on a daily basis, LOG scale:
10-Year Treasury Yield since 2008
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2181.90 as this post is written

Friday, November 18, 2016

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 November 11, 2016:
from page 18:
(click on charts to enlarge images)
S&P500 earnings trends
from page 19:
S&P500 annual earnings
_____
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 2187.12 as this post is written

Thursday, November 17, 2016

S&P500 Annual EPS Estimates Years 2016 Through 2018

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 20 of the “S&P500 Earnings Scorecard” (pdf) of November 17, 2016, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts.  For reference, the Year 2014 value is $118.78/share and the Year 2015 value is $117.46:
Year 2016 estimate:
$118.49/share
Year 2017 estimate:
$132.56/share
Year 2018 estimate:
$147.63/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 2186.63 as this post is written

Standard & Poor’s S&P500 Earnings Estimates For 2016 & 2017 – As Of November 11, 2016

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 November 11, 2016:
Year 2016 estimates add to the following:
-From a “bottom up” perspective, operating earnings of $109.29/share
-From a “top down” perspective, operating earnings of N/A
-From a “bottom up” perspective, “as reported” earnings of $99.61/share
Year 2017 estimates add to the following:
-From a “bottom up” perspective, operating earnings of $130.88/share
-From a “top down” perspective, operating earnings of N/A
-From a “bottom up” perspective, “as reported” earnings of $122.14/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 2186.41 as this post is written

Walmart’s Q3 2017 Results – Comments

I found various notable items in Walmart’s Q3 2017 management call transcript (pdf) dated November 17, 2016.  (as well, there is Walmart’s press release of the Q3 results and related presentation materials)
I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly management call comments; these previous posts are found under the “paycheck to paycheck” label.
Here are various excerpts that I find most notable:
comments from Doug McMillon, President and CEO, page 4:
Comp store sales grew 1.2 percent in Walmart U.S., driven by a traffic increase of 0.7 percent. Greg Foran, our U.S. leadership team and our associates continue to execute our plan to win, and it’s working. Our customer satisfaction scores continue to improve, and the team did a great job of managing the flow of inventory again this quarter. Comp store inventory was down approximately 6 percent and in-stock levels are up.
comments from Brett Biggs, EVP & CFO, page 8:
During this transformational time, a key priority remains using our financial strength to provide strong cash returns to shareholders in the form of dividends and share repurchases. In the quarter, we paid approximately $1.5 billion in dividends and repurchased 19.6 million shares for approximately $1.4 billion. Year-to-date, we have now returned $10.9 billion to shareholders. As of the end of the third quarter, we have utilized approximately $8.7 billion of the current $20 billion share repurchase authorization.
comments from Brett Biggs, EVP & CFO, page 9:
As a result, operating income declined 11.3 percent for the quarter. Excluding last year’s lease accounting adjustment, operating income would have declined 9.8 percent.

_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2187.49 as this post is written

Wednesday, November 16, 2016

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 November 10, 2016 update (reflecting data through November 4) is -1.042.
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 November 16, 2016 incorporating data from January 5,1973 through November 11, 2016, on a weekly basis.  The November 11, 2016 value is -.67:
NFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 16, 2016:
The ANFCI chart below was last updated on November 16, 2016 incorporating data from January 5,1973 through November 11, 2016, on a weekly basis.  The November 11 value is .05:
ANFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 16, 2016:
_________
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 2175.90 as this post is written