Posts Tagged ‘Chicago Fed National Activity Index’

Bob Bronson on the Chicago Fed National Activity Index

Bob Bronson on the Chicago Fed National Activity Index 

Courtesy of Doug Short 

Earlier today I posted some charts on the Chicago Fed National Activity Index (CFNAI). A few hours later I received an email from Bob Bronson, a market historian whose theory of market cycles — the Bronson Asset Allocation Cycle (BAAC) — I featured a few months ago.

The email included the annotated chart below with the following comment:

"While Doug Short, who does excellent work, may be reluctant to draw any conclusions from the down sloping all-data linear best-fit line, with the addition of the currently much more negatively sloped midline (line arrows) of the high-low volatility envelope, we’re prepared to claim that the sharply deteriorating growth rate combination pattern clearly shows the U.S. economy is still in the grip of an an ultimately deflationary economic Supercycle Bear Market Period Winter, which we quantify both fundamentally and technically and forecasted more than 12 years ago. Track record and explanatory documentation are available on request from Bob Bronson."

Bob, thanks for the kind words. Yes, I’m somewhat reluctant to make a double-dip recession forecast. However, I do see it as a distinct possibility. I’ll be tracking this index over the next several months, and I’ll occasionally revisit your visual forecast to see how the numbers compare.  


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A Perspective on the Chicago Fed National Activity Index

A Perspective on the Chicago Fed National Activity Index 

Courtesy of Doug Short 

Over the past few days I’ve been studying the Chicago Fed’s National Activity Index (CFNAI), a monthly indicator designed to gauge overall economic activity and related inflationary pressure. It is a composite of 85 monthly indicators as explained in this background PDF file on the Chicago Fed’s website.

I generated the first chart below from the historical data dating from March 1967. The red dots show the indicator itself, which is quite noisy, and the 3-month moving average (CFNAI-MA3), which is more useful for showing trends. I’ve also highlighted official recessions, with the latest bounded by the St. Louis Federal Reserve’s estimated end date. The official end, of course, is the provenance of the National Bureau of Economic Analysis, which often makes its call after a year or more from the start or end. 

The next chart highlights the -0.7 level. The latest Chicago Fed release explains:

"When the CFNAI-MA3 value moves below -0.70 following a period of economic expansion, there is an increasing likelihood that a recession has begun. Conversely, when the CFNAI-MA3 value moves above -0.70 following a period of economic contraction, there is an increasing likelihood that a recession has ended."

With the exception of the 1973-75 recession, the -0.7 level has coincided fairly closely with recession boundaries. The 1973-75 event was perhaps an outlier because of the rapid rise of inflation following the 1973 Oil Embargo. Otherwise a cross below -0.7 level has synchronized within a month or two of a recession start. A cross above the level has lagged recession ends by 2-4 months. 

Here’s a chart of the CFNAI without the MA3 overlay — for the purpose of highlighting the high inter-month volatility. Consider: the index has ranged from a high 2.57 to a low of -4.78 with a average monthly change of 0.59. That’s 8% of the entire index range!

In the final chart I’ve let Excel draw a linear regression through the CFNAI data series. The slope confirms the casual impression of the previous charts that National Activity, as a function of the 85 indicators in the index, has been declining since the late 1960s. I’m reluctant to draw any conclusions from the slope, but…
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Troubling Hints From Fed and Banking System Balance Sheets

Courtesy of Lee Adler of Wall Street Examiner

The Fed’s balance sheet shrank slightly last week as there was a net paydown of MBS [mortgage backed securities]. That will be replaced when the Fed settles its MBS purchases at mid month as it does each month. The Fed has increased its replacement purchases over the past couple of months in order to get the balance sheet back to the unchanged level. Paydowns rose when rates fell earlier in the year and more people refinanced their mortgages. That wave has now ended and paydowns are receding. That will lead to lower Fed replacement purchases in the months ahead, which in turn will mean less support for stock and bond prices.

Bank loans continue to soar as banks lend more, and cash created by the BoJ and ECB flows into the US markets and US banks. The credit bubble continues...



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ValueWalk

Payday Lender Lobbying And Campaign Spending Top $15 Million For 2014 Election Cycle [Report]

View original post here.

High cost “quick-fix” consumer lenders reported spending more than $15 million to influence Washington decision-makers during the last election cycle, according to an updated report (view or download full report here) released today by Americans for Financial Reform.

The Online Lenders Alliance (OLA) and Community Financial Services Association (CFSA) led the way, with combined contributions of $3.8 million. Top spenders also included some of the major members of these trade associations – the large national chains that dominate the high-cost consumer lending world: ACE Ca...



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Zero Hedge

Merkel Just Turned The Screws On Greece: There Is Money, But The Deal Is Much Harsher Now (And No Debt Haircut)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Another day came and went with no breakthrough in negotiations between Athens and Brussels as new Greek FinMin Euclid Tsakalotos reportedly showed up to Tuesday's Eurogroup with nothing to discuss. 

With the ECB tightening the screws on Greek banks and the German finance ministry as well as German lawmakers tightening the screws on Angela Merkel, the Chancellor is drawing a hard line toward the Greeks in the face of calls for debt writedowns from the IMF, Greek PM Alexis Tsipras and the Greek people. 

  • MERKEL SAYS IF GREEK REFORM PROPOSALS ARE SATISFACTORY AND PRIOR  ACTIONS TAKEN, SHORT-TERM FINANCE CAN BE PROVIDED: RTRS
  • MER...


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Market News

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Financial Markets and Economy

Trade Deficit increased in May to $41.9 Billion (Calculated Risk)

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $41.9 billion in May, up $1.2 billion from $40.7 billion in April, revised. May exports were $188.6 billion, $1.5 billion less than April exports. May imports were $230.5 billion, $0.3 billion less than April imports.

'The Great Fall of China' is hitting other markets (Business Insider)

China's ...



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All About Trends

Mid-Day Update

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Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Kimble Charting Solutions

Interest rates attempting breakdown, after historic rally!

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

From the first of February to the end of June, the yield on the 10-year note shot up nearly 40%. This sharp rally hurt bond funds big time, as TLT suffered one of worst short-term declines in its history, falling 13% in a 16-weeks. (See post here and chart below) 

The strong rally in yields took them to the 2.5% level, where they hit dual resistance at (1) above. This dual resistance was its 2-year falling channel and the 61% level. Now yields could be breaking down from its historic yield ra...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker.

Please review a collection of WWW browsing results.Date Found: Friday, 05 June 2015, 03:53:56 PM

Click for popup. Clear your browser cache if image is not showing. Comment: FAIR QUESTION: is the Fed simply rising rates just so it badly crashes the economy and has the cover to launch QE4, the same way Russian sanctions crippled Germany's economy and led to the ECB's very first episode of bond monetization?

Date Found: Friday, 05 June 2015, 08:54:03 PM

Click for popup. Clear your browser cache if image is not showing. Comment: Zerohedge : This is the simplest way to describe Keynesianism: A slow steady rise up, with quick steps down towards where you came from.

Date Found: Saturday, 06 June 2015, 02:12:32 AM...

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Sabrient

Sector Detector: Bulls prepare for a new buying opportunity, courtesy of Greece

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

Of course, all eyes have been on Greece in an ongoing saga that, although critical to the Greeks, is mostly just an annoying distraction for global investors -- partly because it has been going on for so many years, with the proverbial can of inevitability continually being kicked down the road, and partly because there can be no winners in this intractable situation. Predictably, the electorate chose to follow the advice of the communists that they elected and reject the rigid bailout offer, calling the bluff of the IMF, ECB, and Eurozone and betting they will do whatever it takes to avoid losing one of its members. These are uncharted waters, and with the resultant s...



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OpTrader

Swing trading portfolio - week of July 6th, 2015

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

Bitcoin Surges After Initial Forecasts Show "No" Vote Ahead

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

If the early bitcoin markets are an indication of what will happen once New Zealand opens for illiquid FX trade, it will be a risk off kinda day.

And that doesn't even take into account the pandemonium that will be unleashed in China in a few hours after the PBOC just went all-in to halt the crashing stock market. What if it fails to get a green close before tomorrow's US open?

Source: ...



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Pharmboy

Baxter's Spinoff

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).

The Baxalta Spinoff

By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

In its recent filing with the SEC, Baxter provides:

“This information statement is being ...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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