Wednesday, May 24, 2017

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 May 18, 2017 update (reflecting data through May 12, 2017) is -1.496.
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 May 24, 2017 incorporating data from January 5,1973 through May 19, 2017, on a weekly basis.  The May 19, 2017 value is -.82:
NFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed May 24, 2017:
The ANFCI chart below was last updated on May 24, 2017 incorporating data from January 5,1973 through May 19, 2017, on a weekly basis.  The May 19 value is -.44:
ANFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed May 24, 2017:
_________
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 2402.09 as this post is written

Tuesday, May 23, 2017

Median Household Income Chart

I have written many blog posts concerning the worrisome trends in income and earnings.
Doug Short, in his May 23, 2017 post titled “April Real Median Household Income Shows Encouraging Growth,” 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)
Monthly Median Household Income chart
As Doug mentions in his aforementioned post, regarding the change in real median household incomes:
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 Great Recession.
Among other items seen in his 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 2398.42 as this post is written

Money Supply Charts Through April 2017

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 May 19, 2017 depicting data through April 2017, with a value of $14,809.5 Billion:
MZMSL_5-19-17
Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 5.2%:
MZMSL_5-19-17 5.2 Percent Change From Year Ago
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed May 23, 2017:
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 May 18, 2017, depicting data through April 2017, with a value of $13,431.3 Billion:
M2SL_5-18-17
Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 6.0%:
M2SL_5-18-17 Percent Change From Year Ago
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed May 23, 2017:
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2394.02 as this post is written

The U.S. Economic Situation – May 23, 2017 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 May 18, 2017, with a last value of 20,804.84):
(click on chart to enlarge image)(chart courtesy of StockCharts.com)
DJIA 1900-May 18, 2017
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2394.02 as this post is written

Monday, May 22, 2017

Updates Of Economic Indicators May 2017

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 May 2017 Chicago Fed National Activity Index (CFNAI) updated as of May 22, 2017:
The CFNAI, with current reading of .49:
CFNAI_5-22-17 .49
Federal Reserve Bank of Chicago, Chicago Fed National Activity Index [CFNAI], retrieved from FRED, Federal Reserve Bank of St. Louis, May 22, 2017;
The CFNAI-MA3, with current reading of .23:
CFNAI-MA3_5-22-17 .23
Federal Reserve Bank of Chicago, Chicago Fed National Activity Index: Three Month Moving Average [CFNAIMA3], retrieved from FRED, Federal Reserve Bank of St. Louis, May 22, 2017;
As of May 19, 2017 (incorporating data through May 12, 2017) the WLI was at 144.5 and the WLI, Gr. was at 5.0%.
A chart of the WLI,Gr., from Doug Short’s ECRI update post of May 19, 2017:
ECRI WLI,Gr.
Here is the latest chart, depicting the ADS Index from December 31, 2007 through May 13, 2017:
ADS Index
The Conference Board Leading (LEI), Coincident (CEI) Economic Indexes, and Lagging Economic Indicator (LAG):
As per the May 18, 2017 press release, titled “The Conference Board Leading Economic Index (LEI) for the U.S. Increased in April” (pdf) the LEI was at 126.9, the CEI was at 115.2, and the LAG was 124.1 in April.
An excerpt from the  release:
“The recent trend in the U.S. LEI, led by the positive outlook of consumers and financial markets, continues to point to a growing economy, perhaps even a cyclical pickup,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “First quarter’s weak GDP growth is likely a temporary hiccup as the economy returns to its long-term trend of about 2 percent. While the majority of leading indicators have been contributing positively in recent months, housing permits followed by average workweek in manufacturing have been the sources of weakness among the U.S. LEI components.”
Here is a chart of the LEI from Doug Short’s Conference Board Leading Economic Index update of May 18, 2017:
Conference Board LEI
_________
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 2392.93 as this post is written

Friday, May 19, 2017

S&P500 And VIX Chart – Through May 18, 2017

For reference purposes, below is a 1-year chart of the S&P500 and VIX through Thursday's (May 18, 2017) close.  The closing price for the S&P500 was 2365.72 and the VIX had a closing value of 14.66.  Price labels as well as moving averages are also shown:
(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)
S&P500 and VIX
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2365.72 as this post is written

Thursday, May 18, 2017

Walmart’s Q1 2018 Results – Comments

I found various notable items in Walmart’s Q1 2018 management call transcript (pdf) dated May 18, 2017.  (as well, there is Walmart’s press release of the Q1 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 3, wrt Walmart U.S.: :
Comp store sales grew 1.4 percent and comp store traffic improved 1.5 percent. We got off to a slower start than expected, due in part to delayed federal tax refund checks, but saw sales strengthen throughout the quarter. We also continued to manage the business well from an inventory and availability standpoint.
comments from Doug McMillon, President and CEO, page 4:
In U.S. eCommerce, we like the traction and we are working hard to make even more improvements. Walmart.com launched two new initiatives in the quarter. First, we made the change to shipping terms at the beginning of the quarter. Customers don’t have to pay a membership fee to get two-day shipping on millions of items. Second, we recently began offering customers pick-up discounts on non-store items. Our stores are located within 10 miles of nearly 90 percent of the U.S. population—so this is convenient for many of our customers, and also saves them money when they order online and pick it up during their visit to our stores.
comments from Brett Biggs, EVP & CFO, page 7:
Gross profit margin increased 1 basis point during the quarter. The rate for Walmart U.S. was flat, while Walmart International was up slightly.
comments from Brett Biggs, EVP & CFO, page 8, wrt Walmart U.S.:
You will recall in our fourth quarter comments that the first quarter started out slower than anticipated from a sales standpoint, due in part to the delayed issuance of federal income tax refund checks. As anticipated, our sales strengthened as the quarter progressed, delivering comp sales growth of 1.4 percent, led by an increase in customer traffic of 1.5 percent. This marks the 10th consecutive quarter of positive comp traffic. On a twoyear stacked basis, comp traffic is up 3 percent. Average ticket declined slightly primarily due to lower sales of higher ticket items at the beginning of the quarter, as well as continued price investment. Additionally, the grocery business continued to improve with food categories delivering the strongest quarterly comp sales performance in more than three years, due in part to a lack of market deflation in food, excluding price investments.
comments from Brett Biggs, EVP & CFO, page 9, wrt Walmart U.S.:
Gross margin rate was flat in the quarter. Savings from procuring merchandise and the acceleration of post-holiday markdowns taken in the fourth quarter benefited the margin rate, but this was offset by investments in price and the mix effects from our growing e-commerce business.
_____
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2357.03 as this post is written

Wednesday, May 17, 2017

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 May 11, 2017 update (reflecting data through May 5, 2017) is -1.451.
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 May 17, 2017 incorporating data from January 5,1973 through May 12, 2017, on a weekly basis.  The May 12, 2017 value is -.84:
NFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed May 17, 2017:
The ANFCI chart below was last updated on May 17, 2017 incorporating data from January 5,1973 through May 12, 2017, on a weekly basis.  The May 12 value is -.47:
ANFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed May 17, 2017:
_________
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 2363.03 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 May 12, 2017:
from page 19:
(click on charts to enlarge images)
S&P500 EPS estimates 2017 & 2018
from page 20:
annual S&P500 EPS
_____
I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site 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 2400.67 as this post is written

Tuesday, May 16, 2017

S&P500 EPS Forecasts 2017 Through 2019

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 May 15, 2017, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts.  For reference, the Year 2014 value is $118.78/share, the Year 2015 value is $117.46, and the Year 2016 value is $118.10/share:
Year 2017 estimate:
$131.48/share
Year 2018 estimate:
$147.02/share
Year 2019 estimate:
$161.40/share
_____
I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site 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 2402.32 as this post is written

Standard & Poor’s S&P500 Earnings Estimates For 2017 And 2018 – As Of May 4, 2017

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 May 4, 2017:
Year 2017 estimates add to the following:
-From a “bottom up” perspective, operating earnings of $129.71/share
-From a “top down” perspective, operating earnings of N/A
-From a “bottom up” perspective, “as reported” earnings of $119.12/share
Year 2018 estimates add to the following:
-From a “bottom up” perspective, operating earnings of $146.75/share
-From a “top down” perspective, operating earnings of N/A
-From a “bottom up” perspective, “as reported” earnings of $133.71/share
_____
I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site 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 2402.32 as this post is written

Friday, May 12, 2017

Philadelphia Fed – 2nd Quarter 2017 Survey Of Professional Forecasters

The Philadelphia Fed 2nd Quarter 2017 Survey of Professional Forecasters was released on May 12, 2017.  This survey is somewhat unique in various regards, such as it incorporates a longer time frame for various measures.
The survey shows, among many measures, the following median expectations:
Real GDP: (annual average level)
full-year 2017:  2.1%
full-year 2018:  2.5%
full-year 2019:  2.1%
full-year 2020:  2.3%
Unemployment Rate: (annual average level)
for 2017: 4.5%
for 2018: 4.3%
for 2019: 4.4%
for 2020: 4.5%
Regarding the risk of a negative quarter in real GDP in any of the next few quarters, mean estimates are 8.4%, 10.9%, 14.0%, 17.1% and 17.2% for each of the quarters from Q2 2017 through Q2 2018, respectively.
As well, there are also a variety of time frames shown (present quarter through the year 2026) with the median expected inflation (annualized) of each.  Inflation is measured in Headline and Core CPI and Headline and Core PCE.  Over all time frames expectations are shown to be in the 1.2% to 2.4% range.
_____
I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site 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 2390.19 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – May 12, 2017 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 ECRI update post of May 12, 2017 titled “ECRI Weekly Leading Index…”  These charts are on a weekly basis through the May 12, 2017 release, indicating data through May 5, 2017.
Here is the ECRI WLI (defined at ECRI’s glossary):
This next chart depicts, on a long-term basis, the Year-over-Year change in the 4-week moving average of the WLI:
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 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 2389.74 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 May 11, 2017, titled “The Philly Fed ADS Index Business Conditions Index Update” 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)
CFNAI-MA3
The ADS Index, 91-Day MA:
ADS Index
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 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 2389.03 as this post is written

Thursday, May 11, 2017

The May 2017 Wall Street Journal Economic Forecast Survey

The May 2017 Wall Street Journal Economic Forecast Survey was published on May 11, 2017.  The headline is “Economists Say President Donald Trump's Agenda Would Boost Growth - a Little.”
I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.
An excerpt:
Early on, White House officials have reportedly considered penciling in growth rates as high as 3.2% a year. But the respondents to the Journal’s survey—a mix of academic, financial and business economists who regularly produce professional forecasts—say numbers so high will be hard to attain, because the policies under consideration just might not pack that punch.
As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 15.27%. The individual estimates, of those who responded, ranged from 0% to 33%.  For reference, the average response in April’s survey was 15.79%.
As stated in the article, the survey’s respondents were 59 academic, financial and business economists.  Not every economist answered every question.  The survey occurred on May 5, 2017 to May 9, 2017.
The current average forecasts among economists polled include the following:
GDP:
full-year 2017:  2.2%
full-year 2018:  2.5%
full-year 2019:  2.1%
Unemployment Rate:
December 2017: 4.4%
December 2018: 4.2%
December 2019: 4.4%
10-Year Treasury Yield:
December 2017: 2.79%
December 2018: 3.29%
December 2019: 3.59%
CPI:
December 2017:  2.2%
December 2018:  2.4%
December 2019:  2.3%
Crude Oil  ($ per bbl):
for 12/31/2017: $51.66
for 12/31/2018: $54.52
(note: I highlight this WSJ Economic Forecast survey each month; commentary on past surveys can be found under the “Economic Forecasts” category)
_____
I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily 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 2391.07 as post is written