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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When Opportunity Knocks, Answer the Door.

 

When Opportunity Knocks, Answer the Door.

Courtesy of Paul Price at Guru Focus

Market action can tell you a lot about the probability of a buyout proposal actually going through.

Hong Kong-based Zoomlion Heavy Industries had made a firm offer to acquire Terex (NYSE:TEX) after raising its offer from $30 to $31, outbidding Finnish company Konocranes Plc’s (KNCRY) earlier all-stock takeover bid, recently worth only about $20 for each TEX share.

Terex’s approximately $25/share market price told us that traders were skeptical that a deal would go through. 

Management at Terex had hedged its...



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Zero Hedge

"Bill Clinton Was Here": The Elite One-Percent's 'Orgy Island' Exposed

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Shepard Ambellas of IntellliHub

The Elite One-Percent’s ‘Orgy Island’ Exposed

If you can name it — it has likely taken place this the lavish private island off the coast of Puerto Rico which boasts a beautifully landscaped plush luxury estate complete with its own helipad, privy only to certain members of the global elite.

Owned by ...



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Chart School

Respectable Finish To Week

Courtesy of Declan.

Semiconductors were the star of the week.  The index cleared Match/April congestion and posted six consecutive winning days in a row. Technicals are all in the green and the index is above all key moving averages. Weakness will be a buying opportunity; a test of the 50-day MA would be a good start.


The Russell 2000 managed to regain the prior rising channel. Technicals are positive although it still has to make up relative ground against the Nasdaq. The index hasn't yet cracked new highs but one more days gain may be en...

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Market News

Breaking News And Best Of The Web

Courtesy of John Rubino.

China’s growth slows further. Japan ramps up the stimulus, bolstering the thesis that huge deficits are the next big financial mistake. The government’s fake numbers become a campaign issue. Charles Hugh Smith on why pension funds (that is, your retirement) are doomed. Great interviews with James Rickards and Helen Chaitman. Oil stabilizes and gold continues to correct. Look for next week’s COT report to be a lot less bearish. Bitcoin gets a serious cryptocurrency competitor. Trump clinches the nomination, but won’t debate Sanders. Clinton gets some bad legal news.

Best Of The Web

Here’s why all pension funds are doomed, doomed, doomed… – OfTwoMinds.com

...

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ValueWalk

Brian Bares on His Favorite Investment Books and Resources

By Jacob Wolinsky. Originally published at ValueWalk.

Brian Bares on His Favorite Investment Books and Resources

Here are some books he recommends

Berkshire Hathaway letters 

...



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Kimble Charting Solutions

Gold Mining Stocks- Most dangerous time to own them in years?

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

The rally in mining stocks since the first of the year has been very impressive.

The rally has taken Gold Miners ETF GDX up to test the 23% retracement of the collapse over the past 5-years. At the same time it is hitting the 23% level, two other resistance lines are being put to a test, with momentum at the highest levels in the past 5-years.

Joe Friday Just The Facts...



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Insider Scoop

Graham Media Group To Buy WCWJ, CW affiliate In Jacksonville, NBC Affiliate in Roanoke

Courtesy of Benzinga.

Graham Media Group, Inc., a Graham Holdings Company (NYSE: GHC) subsidiary, said it struck a deal with Nexstar Broadcasting Group, Inc. and Media General, Inc. to purchase WCWJ, a CW affiliate television station in Jacksonville, Florida and WSLS, an NBC affiliate television station in Roanoke, Virginia for $60 million in cash and the assumption of certain liabilities.

The agreement to acquire Nextar Broadcasting included pension obligations. Graham Media Group, Inc. would continue to operate both stations under their current network affiliations.

Graham Media said the acquisition is subject to approval by the FCC, other regulatory appr...



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OpTrader

Swing trading portfolio - week of May 23rd, 2016

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

The Biggest Bitcoin Arbitrage Ever?

Courtesy of Chris at CapitalistExploits

Do you remember when you were growing up and all your friends were allowed Atari game consoles but you weren’t?

Well, I do and the things seemed as foreign to me as Venus. Mostly because the little time I managed to spend on the gaming consoles when my friends weren’t hogging them I found it all a bit silly. I never “got” computer games, and to this day still have poor comprehension of things like Angry Birds.

I suspect that many people around the world view Bitcoin in the same way as I view Angry Birds: with mild amusement and a general lack of understanding as to what the hell all the fuss is about.

I was thinking of this since a buddy of mine recently started ...



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All About Trends

Mid-Day Update

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

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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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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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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