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Posts Tagged ‘economic indicators’

The Albert Edwards Exploration Diary, Day 423

Joshua M Brown found the latest entry in the diary of a frustrated bear in search of negative data showing the economy is headed for a downturn in The Albert Edwards Exploration Diary, Day 423. – Ilene 

Courtesy of Joshua M Brown, The Reformed Broker 

2 Decembre Anno Domini 2010

This morning I awoke to a cable from the nearest village informing me that Cyber Monday shopping stateside broke all kinds of records.  I’ve also been informed that PMIs from around the world are now in expansionary territory in unison.  Even jobs data is getting a tiny bit better, week by week…

But still I forge ahead.  I will scour the ends of the earth to find indicators that cast economic conditions in a negative light.  I will climb the highest peaks and plumb the depths of the Seven Seas in search of Depressionary evidence – no matter how obscure.  I will measure the second derivative change in Chinese eel sales on the wharves of Tianjin.  I will document the savings rates of retired sailors in Marseilles.  I will stop at nothing to make the numbers agree with my orneriness – this I swear to you, faithful client of Societe Generale.

Although my employer SocGen, the bankroller of my exploration, appears to be losing faith in my stubborn jeremiads, I must continue until I am proven correct.  I must plow on in my search for negative data until I am vindicated, even if global markets triple and quadruple before the next down cycle.

One day, the recovery will falter.  And on that day, I will be redeemed.

Yours in Perma-Bearishness,

Albert

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The ECRI Weekly Leading Index

The ECRI Weekly Leading Index 

Courtesy of Doug Short 

Today the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) registered negative growth for the 15th consecutive week, coming in at -9.2, a slight improvement over last week’s -10.1. The index had been hovering around -10 for the previous five weeks. The latest weekly number is based on data through September 10.

The magnitude of decline from the peak in October 2009 is unprecedented in the Institute’s published data back to 1967. Recently, however, the Institute has disclosed that two earlier decades of data not available to the general public contained comparable declines in WLI growth (in 1951 and 1966) when no recession followed (HT Barry Ritholtz).

The Published Record

The ECRI WLI growth metric has had a respectable (but by no means perfect) record for forecasting recessions. The next chart shows the correlation between the WLI, GDP and recessions.

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Click for a larger image

A significant decline in the WLI has been a leading indicator for six of the seven recessions since the 1960s. It lagged one recession (1981-1982) by nine weeks. The WLI did turned negative 17 times when no recession followed, but 14 of those declines were only slightly negative (-0.1 to -2.4) and most of them reversed after relatively brief periods.

Three of the false negatives were deeper declines. The Crash of 1987 took the Index negative for 68 weeks with a trough of -6.8. The Financial Crisis of 1998, which included the collapse of Long Term Capital Management, took the Index negative for 23 weeks with a trough of -4.5.

The third significant false negative came near the bottom of the bear market of 2000-2002, about nine months after the brief recession of 2001. At the time, the WLI seemed to be signaling a double-dip recession, but the economy and market accelerated in tandem in the spring of 2003, and a recession was avoided.

The Latest WLI Decline

The question, of course, is whether the latest WLI decline is a leading indicator of a recession or a false negative. The published index has never dropped to the current level without the onset of a recession. The deepest decline without a near-term recession was in the Crash of 1987, when the index slipped…
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July Seasonally Adjusted Retail Sales “Mixed Bag”; Manufacturing Output Rises Led by Auto Sector

July Seasonally Adjusted Retail Sales "Mixed Bag"; Manufacturing Output Rises Led by Auto Sector

Courtesy of Mish

Excluding autos and gas retail sales ran out of steam in July 2010. Please consider the SpendingPulse Report July Retail Sales Show Mixed Results.

After several months of sales slowdown, total retail sales have stabilized somewhat, although overall growth has slowed sharply since earlier this year. In fact, growth in July headline numbers was driven largely by an increase in spending on gasoline, which is why the ex-auto ex-gasoline number is a better barometer to measuring the underlying health in retail spending.

July’s growth rate excluding auto and gasoline leaves the three-month average year-to-year growth rate of retail sales at 1.0%, well below the 3.5% for the prior three months. The ex-auto year-over-year numbers tell a similar story of a shallow and stabilizing trough, with the unadjusted three-month average year-over-year growth rate slowing to 1.6% compared to the 6.5% average growth rate for the previous three months.

The first table above compares June and July 2010 vs. the same month in 2009.

The second table shows July 201o vs. June 2010 seasonally adjusted. For an alleged recovery, these are weak numbers.

Industrial Production up 1 Percent, Led by Autos

Inquiring minds are taking a look at the July Federal Reserve Industrial Production and Capacity Utilization report.

Industrial production rose 1.0 percent in July after having edged down 0.1 percent in June, and manufacturing output moved up 1.1 percent in July after having fallen 0.5 percent in June. A large contributor to the jump in manufacturing output in July was an increase of nearly 10 percent in the production of motor vehicles and parts; even so, manufacturing production excluding motor vehicles and parts advanced 0.6 percent.

The production of consumer goods moved up 1.1 percent, as the output of consumer durables jumped 4.9 percent: Production for all of its major components advanced. In addition to a gain of 8.8 percent in the output of automotive products, which was mainly due to a large increase in light truck assemblies, the indexes for home electronics and for miscellaneous goods increased 1.3 and 1.5 percent, respectively; the index for appliances, furniture, and carpeting moved up 0.5 percent.

Among components of consumer nondurables, the output of non-energy nondurables declined 0.2 percent, and the output of consumer energy products moved up


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10 LEADING ECONOMIC INDICATORS THAT ARE ROLLING OVER

10 LEADING ECONOMIC INDICATORS THAT ARE ROLLING OVER

Boston train wreck

Courtesy of The Pragmatic Capitalist

Via David Rosenberg at Gluskin Sheff:

1. The ECRI weekly leading index growth rate peaked on October 9, 2009 (at 28.54%; now at 9.0%).

2. The Conference Board’s LEI peaked at 109.4 in March (109.3 in April).

3. ISM orders/inventory ratio peaked at 1.805 in August 2009 (1.33 in April).

4. University of Michigan consumer expectations peaked on September 2009 (at 73.5) – now at 65.3 in May.

5. The UofM index of big-ticket consumer purchases peaked in February-March at 136; is down to 129 as of May.

6. Jobless claims bottomed at 442k on March 11.  They had peaked at 651k on March 28, 2009.  But they are back at 471k, which is where they were back on December 19, 2009 so the improvement has stalled out.  Not only that, but to keep 472k into perspective, claims were at 453k the week after 9/11 (and the economy back then was eight months into recession).  Yes, yes, employment has been rising of late; however, keep in mind that nonfarm payrolls are in the index of coincident indicators; claims are in the index of leading indicators.  Please let’s not drive looking through the rear window.

7. Single-family building permits peaked at 542k (annual rate) in March (were 484k in April).

8. Mortgage purchase applications peaked on April 30th at 291.3 and now are at a 13-year low of 192.1 even though mortgage rates have come down 20 basis points since the nearby high.

9. Auto production peaked at 7.8 million units (seasonally adjusted annual rate) in January – was at 7.2 million in April.

10. Electrical utility output was down 0.1% YoY as of May 15th.  Could be another early sign that the production revival is behind us.

Source: Gluskin Sheff 


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GDP Contraction Coming In Second Quarter 2010?

GDP Contraction Coming In Second Quarter 2010?

Courtesy of Mish

I have been speaking with Rick Davis at the Consumer Metrics Institute about leading economic indicators. Davis claims his data leads the GDP by about 17 weeks while noting that other so-called "leading indicators" are merely a reflection on the stock market and yield curve.

Davis captures his data solely from online transactions of real consumers, in real time.

Here are a four charts. The first chart shows the Consumer Conference Board LEI, not the Consumer Metrics Index.

Consumer Conference Board LEI vs. S&P 500

Davis writes:

Is the conference board LEI really leading anything or is it merely a reflection of the stock market? A look at the actual values of the LEI and the S&P 500 over the last four years confirms the indicator is really a coincident indicator for the equity markets, published once a month, three weeks in arrears.

Weighted Composite Index (WCI) vs. S&P 500

The above chart shows the Consumer Metrics Weighted Composite Index (WCI) vs. the S&P 500 Index. Watch what happens when the above data is offset by 5 months.

WCI vs. S&P 500 Shifted 5 Months

The Consumer Metrics website shows most of the WCI components advancing. However, housing and consumer spending account for roughly 60% of the index and those are contracting.

It is hard to make a case on the basis of so little data, but at least since 2006 we see evidence of actual leading.

However, the stock market does not always follow the economy nor is the stock market a leading indicator of the economy.

Please see Is the Stock Market a Leading Indicator? for a discussion.

Thus, as interesting as the above chart may be, I would not recommend using Consumer Metrics Data to project stock market movements. However, when a stock market is as lofty as this one, and a recovery is priced in that is not likely to happen, I would expect the stock market to decline if the economy tanks.

Daily Growth Index (DGI) vs. BEA GDP

The above chart shows Consumer Metrics Daily Growth Index (DGI) plotted against GDP.

According to Davis the DGI is 91-Day moving average of the WCI that corresponds to a trailing ‘quarter’, and is translated from a 100-base number into a +/- percentage. For example 99 on the WCI would roughly correspond…
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Zero Hedge

Thomas Piketty's "Sensational" New Book

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Hunter Lewis via The Mises Economic blog,

This 42 year economist from French academe has written a hot new book: Capital in the Twenty-First Century. The US edition has been published by Harvard University Press and, remarkably, is leading the best seller list, the first time that a Harvard book has done so. A recent review describes Piketty as the man “who exposed capitalism’s fatal flaw.”

So what is this flaw? Supposedly under capitalism the rich get steadily richer in relation to everyone else; inequality gets worse and worse. It is all baked into the cake, unavoid...



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Phil's Favorites

French Telecom Company Does Biggest Junk Bond Sale Ever; Bidding Wars for Junk; AOL Flashback

Courtesy of Mish.

With central bankers globally suppressing interest rates, the such for yield elsewhere is on. One of the places investors have turned is speculative junk bond offerings.

Please consider French Company Does Biggest Junk Bond Sale Ever.
Numericable (NUM), which provides cable and internet service in France and other European markets, sold a record amount of high-yield bonds Wednesday with some priced in dollars and others in euros.

It's sold $7.78 billion and €2.25 billion in notes that yield 5% or more, according to a statement from Altice, the multinational telecom group that owns Numericable. Altice issued $2.9 bill...



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Chart School

Get Ready for Europe to Print

Courtesy of Doug Short.

Summary:

  • Core Eurozone CPI inflation rate falls to 0.70%, a multi-decade low
  • This occurs at a time when the PIGS' average unemployment rate rests near 24%
  • Deflation threat in Europe real as GDP in Europe likely to peak this year
  • European hawks moving towards dovish side of the fence, opening door for more QE
  • Implications: stronger European stock market, stronger USD, weaker commodity prices, stronger global growth

Back in February I laid the groundwork for why we should expect to see the European Central Bank (ECB) massively expand its balance sheet (see article). The case for expecting to see the ECB print is only increasing as core Eurozone inflation is c...



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All About Trends

Mid-Day Update

Reminder: David 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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Insider Scoop

Yum! Brands Conference Call Highlights; All About China

Courtesy of Benzinga.

Related YUM China Drives Yum! Brands Q1 Earnings - Analyst Blog Market Sentiment Flat Due To A Barrage Of Unimpressive Q1 Earnings Reports - Economic Highlights Rallying Ahead of Earnings (Fox Business)

Yum! Brands (NYSE: YUM) reported its first quarter earnings on April 23, 2014. Shares of the company are down 0.86 percent or $...



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Market Shadows

Soy Numero Uno

Soy Numero Uno

By Paul Price of Market Shadows

Bunge Limited (BG) is the world’s largest processor of soybeans. It is also a major producer of vegetable oils, fertilizer, sugar and bioenergy.

When commodities got hot in 2007-08, Bunge’s EPS shot up and the stock followed, rising 185% in 19 months.

The Great Recession took its toll on operations, dropping EPS to a low of $2.22 in 2009.  Since then profits have recovered.  They ranged from $4.62 - $5.90 in the latest three years. 2014 appears poised for a large increase. Consensus views from multiple sources see BG earning $7.04 - $7.10 this year and then $7.83 - $7.94 in 2015.

...



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Option Review

Casino Stocks LVS, WYNN On The Run Ahead of Earnings

Shares in Las Vegas Sands Corp. (Ticker: LVS) are up sharply today, gaining as much as 5.7% to touch $80.12 and the highest level since April 4th, mirroring gains in shares of resort casino operator Wynn Resorts Ltd. (Ticker: WYNN). The move in Wynn shares appears, at least in part, to follow a big increase in target price from analysts at CLSA who upped their target on the ‘buy’ rated stock to $350 from $250 a share. CLSA also has a ‘buy’ rating on Las Vegas Sands with a $100 price target according to a note from reporter, Janet Freund, on Bloomberg. Both companies are scheduled to report first-quarter earnings after the closing bell on Thursday.

...

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Sabrient

What the Market Wants: Market Poised to Head Higher: 3 Stocks to Consider

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

Courtesy of David Brown, Sabrient Systems and Gradient Analytics

Yesterday, the market continued its winning ways for the fifth consecutive day.  The S&P 500 closed within 1% of its all-time high, and the DJI was even closer to its all-time high.  Healthcare, Energy and Technology led the sectors while Financials, Telecom, and Utilities finished slightly in the red.  All three sectors in the red are typically flight-to-safety stocks, so despite lower than average volume, the market appears poised to make new highs.

Mid-cap Growth led the style/caps last week, up 2.87%, and Small-cap Growth trailed, up 2.22%. This week will bring well over 100 S&P 500 stocks reporting their March quarter earn...



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OpTrader

Swing trading portfolio - Week of April 21st, 2014

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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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly. Click here and sign in with your PSW user name and password, or sign up for a free trial.

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Digital Currencies

Facebook Takes Life Seriously and Moves To Create Its Own Virtual Currency, Increases UltraCoin Valuation Significantly

Courtesy of ZeroHedge. View original post here.

Submitted by Reggie Middleton.

The Financial Times reports:

[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process. 

The authorisation from Ireland’s central bank to become an “e-money” institution would allow ...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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Pharmboy

Here We Go Again - Pharma & Biotechs 2014

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

Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.

And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference.  Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014?  The Biotech ETF beat the S&P by better than 3 points.

As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...



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