Friday, April 29, 2016

Consumer Confidence Surveys – As Of April 29, 2016

Doug Short had a blog post of April 29, 2016 (“Michigan Consumer Sentiment:  April Final Continue Slow Decline“) 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
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 2055.35 as this post is written

The U.S. Economic Situation – April 29, 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 April 22, 2016, with a last value of 18003.75):
(click on chart to enlarge image)(chart courtesy of StockCharts.com)
DJIA 1900-April 22, 2016
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2059.64 as this post is written

Employment Cost Index (ECI) – First Quarter 2016

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 April 29, 2016, the ECI for the first quarter was released.  Here is an excerpt from the April 29, 2016 Wall Street Journal article titled “U.S. Employment Costs Improve at Modest Rate in First Quarter“:
The employment-cost index, a broad measure of workers’ wages and benefits, grew a seasonally adjusted 0.6% during the first three months of 2016, the Labor Department said Friday. That matched the forecast of economists surveyed by The Wall Street Journal. The fourth-quarter gain was revised down to a 0.5% advance from an initial estimate of up 0.6%
Wages and salaries, reflecting more than two-thirds of compensation costs, advanced 0.7% last quarter. Benefits rose 0.5%.
From a year earlier, total compensation increased 1.9% during the quarter, a very slight deceleration from the 2% annual gain recorded in each of the prior three quarters.
Below are three charts, updated on April 29, 2016 that depict various aspects of the ECI, which is seasonally adjusted (SA):
The first depicts the ECI, with a value of 126.0:
ECIALLCIV_4-29-16 126.0
source: US. Bureau of Labor Statistics, Employment Cost Index: Total compensation: All Civilian[ECIALLCIV], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed April 29, 2016:
The second chart depicts the ECI on a “Percent Change from Year Ago” basis:
ECIALLCIV_4-29-16 126.0 Percent Change From Year Ago
The third chart depicts the ECI on a “Percent Change” (from last quarter) basis:
ECIALLCIV_4-29-16 126.0 Percent Change From Last Quarter
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2071.09 as this post is written

Thursday, April 28, 2016

Median Household Income Chart

I have written many blog posts concerning the worrisome trends in income and earnings.
Doug Short, in his April 28, 2016 post titled “March Real Median Household Income Inches Upward” 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) remains worrisome.
(click on chart to enlarge image)
median household income
As Doug mentions in his aforementioned 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 about where they were during the middle of the Great Recession.
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.
_________
I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site 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 2075.81 as this post is written

Velocity Of Money – Charts Updated Through April 28, 2016

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 1st quarter of 2016, and were last updated as of April 28, 2016.  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 = 1.315:
MZM money velocity
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 28, 2016:
Velocity of M1 Money Stock, current value = 5.848:
M1V_4-28-16 5.848
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 28, 2016:
Velocity of M2 Money Stock, current value = 1.458:
M2 money velocity
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 28, 2016:
_________
I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site 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 2075.81 as this post is written

Real GDP Chart Since 1947 With Trendline – 1st Quarter 2016

For reference purposes, below is a chart from Doug Short’s “Q1 GDP Advance Estimate at .5%, Worse Than Mainstream Forecasts” post of April 28, 2016, depicting Real GDP, with a trendline, as depicted.  This chart reflects the Gross Domestic Product Q1 2016 Advance Estimate (pdf) of April 28, 2016:
GDP-since-1947-with-regression 4-28-16
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2090.98 as this post is written

Wednesday, April 27, 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 April 21, 2016 update (reflecting data through April 15) is -.862.
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 April 27, 2016 incorporating data from January 5,1973 to April 22, 2016, on a weekly basis.  The April 22, 2016 value is -.67:
NFCI_4-27-16 -.67
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 27, 2016:
The ANFCI chart below was last updated on April 27, 2016 incorporating data from January 5,1973 to April 22, 2016, on a weekly basis.  The April 22 value is .16:
ANFCI_4-27-16 .16
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 27, 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 2088.51 as this post is written

Tuesday, April 26, 2016

Durable Goods New Orders – Long-Term Charts Through March 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 March 2016, updated on April 26, 2016. This value is $230,651 ($ 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 April 26, 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 2091.70 as this post is written

Money Supply Charts Through March 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 April 22, 2016 depicting data through March 2016, with a value of $13,975.4 Billion:
MZMSL March 2016
Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis:
MZMSL percent change from year ago
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 26, 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 April 21, 2016, depicting data through March 2016, with a value of $12,568.6 Billion:
M2SL March 2016
Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis:
M2SL percent change from year ago
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 26, 2016:
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2087.79 as this post is written

Friday, April 22, 2016

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – April 22, 2016 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 April 22, 2016 titled “ECRI Weekly Leading Index:  WLI Up 1.0 From Last Week.”  These charts are on a weekly basis through the April 22, 2016 release, indicating data through April 15, 2016.
Here is the ECRI WLI (defined at ECRI’s glossary):
ECRI WLI
This next chart depicts, on a long-term basis, the Year-over-Year change in the 4-week moving average of the WLI:
Dshort 4-22-16 - ECRI-WLI-YoY .75 percent
This last chart depicts, on a long-term basis, the WLI, Gr.:
ECRI 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 2089.13 as this post is written

Thursday, April 21, 2016

Updates Of Economic Indicators April 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 April 2016 Chicago Fed National Activity Index (CFNAI) updated as of April 21, 2016: (current reading of -.44; current reading of CFNAI-MA3 is -.18):
CFNAI-MA3
As of April 15, 2016 (incorporating data through April 8, 2016) the WLI was at 134.2 and the WLI, Gr. was at 2.5%.
A chart of the WLI,Gr., from Doug Short’s post of April 15, 2016, titled “ECRI Weekly Leading Index: WLI Up 1.0 From Last Week“:
ECRI WLI,Gr.
Here is the latest chart, depicting the ADS Index from December 31, 2007 through April 16, 2016:
ADS Index
The Conference Board Leading (LEI), Coincident (CEI) Economic Indexes, and Lagging Economic Indicator (LAG):
As per the April 21, 2016 press release, titled “The Conference Board Leading Economic Index (LEI) for the U.S. Increased,” (pdf) the LEI was at 123.4, the CEI was at 113.3, and the LAG was 120.9 in March.
An excerpt from the April 21 release:
With the March gain, the U.S. LEI’s six-month growth rate improved slightly but still points to slow, although not slowing, growth in the coming quarters,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “Rebounding stock prices were offset by a decline in housing permits, but nonetheless there were widespread gains among the leading indicators. Financial conditions, as well as expected improvements in manufacturing, should support a modest growth environment in 2016.”
Here is a chart of the LEI from Doug Short’s blog post of April 17 titled “Conference Board Leading Economic Index: Increase in March“:
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 2094.36 as this post is written

The Yield Curve – April 21, 2016

Many people believe that the Yield Curve is an important economic indicator.
On March 1, 2010, I wrote a post on the issue, titled “The Yield Curve As A Leading Economic Indicator.”
An excerpt from that post:
On the NY Fed link above, they have posted numerous studies that support the theory that the yield curve is a leading indicator.   My objections with using it as a leading indicator, especially now, are various.  These objections include: I don’t think such a narrow measure is one that can be relied upon;  both the yields at the short and long-end of the curve have been overtly and officially manipulated, thus distorting the curve; and, although the yield curve may have been an accurate leading indicator in the past, this period of economic weakness is inherently dissimilar in nature from past recessions and depressions in a multitude of ways – thus, historical yardsticks and metrics probably won’t (and have not) proven appropriate.
While I continue to have the above reservations regarding the “yield curve” as an indicator, I do believe that it should be monitored.
As an indication of the yield curve, below is a weekly chart.  The top plot shows the spread between the 10-Year Treasury and 2-Year Treasury, from January 1, 1990 through April 20, 2016.  The April 20, 2016 value is 1.05% (1.854% – .80%).   The bottom plot shows the S&P500:
(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)
Yield Curve
Additionally, below is a chart showing the same spread between the 10-Year Treasury and 2-Year Treasury, albeit with a slightly different measurement, using constant maturity securities.  This daily chart is from June 1, 1976 to April 19, 2016, with recessionary periods shown in gray. This chart shows a value of 1.02%:
spread 10-Year Treasury and 2-Year Treasury
source:  Federal Reserve Bank of St. Louis, 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity [T10Y2Y], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed April 20, 2016:
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2102.40 as this post is written

Wednesday, April 20, 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 April 14, 2016 update (reflecting data through April 8) is -.814.
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 April 20, 2016 incorporating data from January 5,1973 to April 15, 2016, on a weekly basis.  The April 15, 2016 value is -.63:
NFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 20, 2016:
The ANFCI chart below was last updated on April 20, 2016 incorporating data from January 5,1973 to April 15, 2016, on a weekly basis.  The April 15 value is .24:
ANFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 20, 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 2106.08 as this post is written

Tuesday, April 19, 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 April 15, 2016:
from page 20:
(click on charts to enlarge images)
S&P500 earnings
from page 21:
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 2094.34 as this post is written

S&P500 2015, 2016, 2017 & 2018 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 9c of “This Week In Earnings” (pdf) of April 15, 2016, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts.  For reference, the Year 2014 value is $118.78/share:
Year 2015 estimate:
$117.46/share
Year 2016 estimate:
$120.77/share
Year 2017 estimate:
$137.55/share
Year 2018 estimate:
$151.63/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 2094.34 as this post is written