Tuesday, June 30, 2020

Consumer Confidence Surveys – As Of June 30, 2020

Advisor Perspectives had a post of June 30, 2020 (“Consumer Confidence Up in June“) that displays 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 sudden upswing in 2014, 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 notable, especially in light of a variety of other highly disconcerting measures highlighted throughout this site.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 3080.88 as this post is written

St. Louis Fed Price Pressures Measures Through June 2020

For reference, below is a chart of the St. Louis Fed Price Pressures Measures - Deflation Probability [FRED STLPPMDEF] through June 2020.
While I do not necessarily agree with the current readings of the measure, I view this as a proxy of U.S. deflation probability.
A description of this measure, as seen in FRED:
This series measures the probability that the personal consumption expenditures price index (PCEPI) inflation rate (12-month changes) over the next 12 months will fall below zero.
The chart, on a monthly basis from January 1990 – June 2020, last updated on June 26, 2020:
Deflation Probability
Here is this same deflation probability measure since 2008:
Deflation Probability since 2008
source:  Federal Reserve Bank of St. Louis, Deflation Probability [STLPPMDEF], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed June 29, 2020: https://fred.stlouisfed.org/series/STLPPMDEF
_________
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 3053.24 as this post is written

Thursday, June 25, 2020

Durable Goods New Orders – Long-Term Charts Through May 2020

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 May 2020, updated on June 25, 2020. This value is $194,419 ($ 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, with a last value of -17.9%:
DGORDER 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 June 25, 2020;
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 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 3083.76 as this post is written

Wednesday, June 24, 2020

The U.S. Economic Situation – June 24, 2020 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 June 19, 2020, with a last value of 25871.46):
(click on chart to enlarge image)(chart courtesy of StockCharts.com)
DJIA since 1900
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 3131.29 as this post is written

Monday, June 22, 2020

Updates Of Economic Indicators June 2020

The following 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 June 2020 Chicago Fed National Activity Index (CFNAI) updated as of June 22, 2020:
The CFNAI, with current reading of 2.61:
CFNAI
source:  Federal Reserve Bank of Chicago, Chicago Fed National Activity Index [CFNAI], retrieved from FRED, Federal Reserve Bank of St. Louis, June 22, 2020;
https://fred.stlouisfed.org/series/CFNAI
The CFNAI-MA3, with current reading of -6.65:
CFNAIMA3
source:  Federal Reserve Bank of Chicago, Chicago Fed National Activity Index: Three Month Moving Average [CFNAIMA3], retrieved from FRED, Federal Reserve Bank of St. Louis, June 22, 2020;
https://fred.stlouisfed.org/series/CFNAIMA3
As of June 19, 2020 (incorporating data through June 12, 2020) the WLI was at 132.2 and the WLI, Gr. was at -9.9%.
A chart of the WLI,Gr., from the Advisor Perspectives’ ECRI update post of June 19, 2020:
ECRI WLI,Gr.
ADS Index
The Conference Board Leading (LEI), Coincident (CEI) Economic Indexes, and Lagging Economic Indicator (LAG):
As per the June 18, 2020 Conference Board press release, titled “The Conference Board Leading Economic Index (LEI) for the U.S. Improved in May” the LEI was at 99.8, the CEI was at 95.3, and the LAG was 111.4 in May.
An excerpt from the release:
“In May, the US LEI showed a partial recovery from its sharp decline over the previous three months, as economic activity began to pick up again,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “The relative improvement in unemployment insurance claims is responsible for about two-thirds of the gain in the index. The improvements in labor markets, housing permits, and stock prices also buoyed the LEI, but new orders in manufacturing, consumers’ outlook on the economy, and the Leading Credit Index™ still point to weak economic conditions. The breadth and depth of the decline in the LEI between February and April suggest the economy at large will remain in recession territory in the near term.”
Here is a chart of the LEI from the Advisor Perspectives’ Conference Board Leading Economic Index update of June 18, 2020:
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 3111.86 as this post is written

Saturday, June 20, 2020

Money Supply Charts Through May 2020

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 June 18, 2020 depicting data through May 2020, with a value of $20,821.9 Billion:
MZM Money Supply chart
Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 29.9%:
MZM Money Supply Percent Change From Year Ago chart
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed June 19, 2020;
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 June 18, 2020, depicting data through May 2020, with a value of $18,044.0 Billion:
M2 Money Supply chart
Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 23.1%:
M2 Money Supply Percent Change From Year Ago chart
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed June 19, 2020;
https://research.stlouisfed.org/fred2/series/M2SL
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 3097.74 as this post is written

Thursday, June 18, 2020

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” report of June 12, 2020:
from page 22:
(click on charts to enlarge images)
trends of S&P500 earnings forecasts
from page 23:
S&P500 EPS 2010-2021
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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 3114.99 as this post is written

Wednesday, June 17, 2020

S&P500 EPS Estimates 2020-2022 As Well As Prior Years

As many are aware, Refinitiv 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 24 of the “S&P500 Earnings Scorecard” (pdf) of June 17, 2020, 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/share; the Year 2016 value is $118.10/share; the Year 2017 value is $132.00/share; the Year 2018 value is $161.93/share; and the Year 2019 value is $162.93/share:
Year 2020 estimate:
$125.48/share
Year 2021 estimate:
$164.00/share
Year 2022 estimate:
$187.07/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 3135.58 as this post is written

Standard & Poor’s S&P500 EPS Estimates 2020 & 2021 – June 4, 2020

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 June 4, 2020:
Year 2020 estimates add to the following:
-From a “bottom up” perspective, operating earnings of $109.71/share
-From a “top down” perspective, operating earnings of N/A
-From a “bottom up” perspective, “as reported” earnings of $92.06/share
Year 2021 estimates add to the following:
-From a “bottom up” perspective, operating earnings of $161.80/share
-From a “top down” perspective, operating earnings of N/A
-From a “bottom up” perspective, “as reported” earnings of $145.28/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 3122.16 as this post is written

Chicago Fed National Financial Conditions Index (NFCI)

The St. Louis Fed’s Financial Stress Index (STLFSI2) is one index that is supposed to measure stress in the financial system.  Its reading as of the June 11, 2020 update (reflecting data through June 5, 2020) is -.3833.
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 June 17, 2020 incorporating data from January 8, 1971 through June 12, 2020, on a weekly basis.  The June 12 value is -.59:
NFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed June 17, 2020: 
http://research.stlouisfed.org/fred2/series/NFCI
The ANFCI chart below was last updated on June 17, 2020 incorporating data from January 8, 1971 through June 12, 2020, on a weekly basis.  The June 12 value is -.07:
ANFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed June 17, 2020: 
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 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 3125.26 as this post is written

Friday, June 12, 2020

S&P500 Price Projections – Livingston Survey June 2020

The June 2020 Livingston Survey (pdf) published on June 12, 2020 contains, among its various forecasts, a S&P500 forecast.  It shows the following price forecast for the dates shown:
June 30, 2020  3050.0
Dec. 31, 2020  3117.50
June 30, 2021 3215.0
Dec. 31, 2021  3280.0
These figures represent the median value across the forecasters on the survey’s panel.
_____
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 3014.73 as this post is written