Friday, February 26, 2021

Consumer Confidence Surveys – As Of February 26, 2021

Advisor Perspectives had a post of February 26, 2021 (“Michigan Consumer Sentiment…“) 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 Index

While I don’t believe that confidence surveys should be overemphasized, I find these readings and trends 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 3824.36 as this post is written

Thursday, February 25, 2021

Durable Goods New Orders – Long-Term Charts Through January 2021

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 January 2021, updated on February 25, 2021. This value is $256,578 ($ Millions):

(click on charts to enlarge images)

Durable Goods New Orders DGORDER

Second, here is the chart depicting this measure on a “Percentage Change from a Year Ago” basis, with a last value of 6.3%:

Durable Goods New Orders 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 February 25, 2021; 
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 3902.59 as this post is written

Tuesday, February 23, 2021

Money Supply Charts Through January 2021

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 February 11, 2021 depicting data through January 2021, with a value of $21,971.2 Billion:

MZMSL

Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 28.3%:

MZMSL Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed February 23, 2021; 
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 February 11, 2021, depicting data through January 2021, with a value of $19,395.3 Billion:

M2SL

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 25.8%:

M2SL Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed February 23, 2021; 
https://research.stlouisfed.org/fred2/series/M2SL

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 3876.50 as this post is written

The U.S. Economic Situation – February 23, 2021 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 February 19, 2021, with a last value of 31494.32):

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

DJIA monthly since 1900

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 3876.50 as this post is written

Monday, February 22, 2021

Updates Of Economic Indicators February 2021

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 February 2021 Chicago Fed National Activity Index (CFNAI) updated as of February 22, 2021:

The CFNAI, with a current reading of .66:

CFNAI .66

source:  Federal Reserve Bank of Chicago, Chicago Fed National Activity Index [CFNAI], retrieved from FRED, Federal Reserve Bank of St. Louis, February 22, 2021; 
https://fred.stlouisfed.org/series/CFNAI

The CFNAI-MA3, with a current reading of .47:

CFNAIMA3 .47

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, February 22, 2021; 
https://fred.stlouisfed.org/series/CFNAIMA3

The ECRI WLI (Weekly Leading Index):

As of February 19, 2021 (incorporating data through February 12, 2021) the WLI was at 149.4 and the WLI, Gr. was at 21.2%.

A chart of the WLI,Gr., from the Advisor Perspectives’ ECRI update post of February 19, 2021:

ECRI WLI,Gr.

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

The ADS Index, from 11-1-2019 through 2-13-21:

ADS Index

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

As per the February 22, 2020 Conference Board press release, titled “The Conference Board Leading Economic Index (LEI) for the U.S. Increased in January” the LEI was at 110.3, the CEI was at 103.3, and the LAG was 106.2 in January.

An excerpt from the release:

“While the pace of increase in the U.S. LEI has slowed since mid-2020, January’s gains were broad-based and suggest economic growth should improve gradually over the first half of 2021,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “As the vaccination campaign against COVID-19 accelerates, labor markets and overall growth are likely to continue improving through the rest of this year as well. The Conference Board now expects the U.S. economy to expand by 4.4 percent in 2021, after a 3.5 percent contraction in 2020.” 

_________

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 3876.50 as this post is written

Friday, February 19, 2021

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – February 19, 2021 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 Advisor Perspectives’ ECRI update post of February 19, 2021 titled “ECRI Weekly Leading Index Update.”  These charts are on a weekly basis as of the February 19, 2021 release, reflecting data through February 12, 2021.

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:

ECRI YoY of the Four-Week Moving Average

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 3927.36 as this post is written

CEO Confidence Surveys 1Q 2021 – Notable Excerpts

On February 18, 2021, The Conference Board released the Q1 2021 Measure Of CEO Confidence.   The overall measure of CEO Confidence was at 73, up from 64. [note:  a reading of more than 50 points reflects more positive than negative responses]

Notable excerpts from this February 18, 2021 Press Release include:

Current Conditions

CEOs’ assessment of general economic conditions remained positive overall in Q1:

  • 67 percent of CEOs reported economic conditions were better compared to six months ago, down slightly from 70 percent
  • However, only 10 percent said conditions were worse, down from 21 percent

CEOs remained optimistic about conditions in their own industries in Q1 compared to the prior survey:

  • 68 percent of CEOs reported conditions in their industries were better compared to six months ago, unchanged from the September survey
  • However, only 8 percent said conditions were worse in their own industries, down from 20 percent  

Future Conditions

Expectations about the short-term economic outlook improved considerably in Q1 over the previous survey:

  • 82 percent of CEOs expected economic conditions to improve over the next six months, up from 63 percent
  • Moreover, only 7 percent expected conditions to worsen, down from 15 percent

CEOs’ expectations regarding short-term prospects in their own industries also improved in Q1:

  • 78 percent of CEOs anticipated improved conditions in their industry, up from 65 percent
  • 7 percent expected conditions to worsen, down from 11 percent

On December 7, 2020, the Business Roundtable released its most recent CEO Economic Outlook Survey for the 4th Quarter of 2020.   Notable excerpts from this December 7, 2020 release, titled “Business Roundtable CEOs…“:

In this quarter’s survey – a composite index of CEO plans for capital spending and hiring and expectations for sales over the next six months – the overall Index was 86.2, an increase of 22.2 points compared to Q3 2020. This indicates a gradual economic recovery from the historic disruption of the COVID-19 pandemic during the second quarter. The Index now stands above its historical average of 81.5. 

also:

In their first estimate of 2021 U.S. GDP growth, CEOs projected 1.9 percent growth for the year.

Additional details can be seen in the sources mentioned above.

_____

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 3926.43 as this post is written

Thursday, February 18, 2021

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 February 18, 2021 update (reflecting data through February 12, 2021) is -.9186:

STLFSI2

source: Federal Reserve Bank of St. Louis, St. Louis Fed Financial Stress Index [STLFSI2], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed February 18, 2021: https://fred.stlouisfed.org/series/STLFSI2

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 February 18, 2021 incorporating data from January 8, 1971 through February 12, 2021, on a weekly basis.  The February 12 value is -.64392:

NFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed February 18, 2021:  
http://research.stlouisfed.org/fred2/series/NFCI

The ANFCI chart below was last updated on February 18, 2021 incorporating data from January 8, 1971 through February 12, 2021, on a weekly basis.  The February 12, 2021 value is -.54150:

ANFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed February 18, 2021:  
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 3897.04 as this post is written

Wednesday, February 17, 2021

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 February 12, 2021:

from page 26:

(click on charts to enlarge images)

S&P500 expected earnings

from page 27:

S&P500 EPS 2011-2022

_____

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 3921.94 as this post is written