Note from dshort: An outpatient medical procedure will delay my usual updates on today's Durable Goods and Personal Income and Outlays reports. But I hope to get them posted on Friday.

90 days to propel your practice forward: New research on making your resolutions stick Click to view

November 27th, 2014 Doug Short

LPL and Advisor Perspectives present a complimentary webinar:
Date: Tuesday, December 2, 2014
Time: 4:15 p.m. ET


In this webinar, you'll learn about new research that will allow you to stick to resolutions and build momentum in the first quarter of 2015 that will propel your business throughout the entire year. For more information and to sign up for the webinar, click here.

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Michigan Consumer Sentiment for November Slightly Trims Its Strong Preliminary Reading Click to view

November 26th, 2014 Doug Short

The Final University of Michigan Consumer Sentiment for November came in at 88.8, a bit off the 89.4 preliminary reading but up from from the October Final of 86.9. As finaly readings go, this is a post-recession high and the highest level since July 2007, over seven years ago. Today's number came in below the Investing.com forecast of 90.2.

See the chart below for a long-term perspective on this widely watched indicator.

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An Unexpected Jump in New Jobless Claims Click to view

November 26th, 2014 Doug Short

In the week ending November 22, the advance figure for seasonally adjusted initial claims was 313,000, an increase of 21,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 291,000 to 292,000. The 4-week moving average was 294,000, an increase of 6,250 from the previous week's revised average.

Today's seasonally adjusted number at 313K was substantially above the Investing.com forecast of 287K. The four-week moving average at 294K is now 15K above its 14-year interim low set three weeks ago.

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PCE Price Index: Headline and Core Remain Below Target Click to view

November 26th, 2014 Doug Short

The latest Headline PCE price index year-over-year (YoY) rate is 1.44%, unchanged from the previous month. The Core PCE index of 1.55% is is up slightly from the previous month's 1.49% YoY.

The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. I've highlighted the 12 months when Core PCE hovered in a narrow range around its interim low.

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Moving Averages: Month-End Preview Click to view

November 26th, 2014 Doug Short

Here is a preview of the monthly moving averages I track after the close of the last business day of the month. All three S&P 500 strategies are now signaling "invested" -- unchanged from last month. Two of the five of the Ivy Portfolio ETFs, the Vanguard FTSE All-World ex-US ETF (VEU) and the PowerShares DB Commodity Index Tracking (DBC, are signal "cash" -- also unchanged from last month.

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S&P 500 Snapshot: Dithering Near the Record High on Mixed Signals Click to view

November 25th, 2014 Doug Short

The S&P 500 traded in a bit of a confused fashion during the morning, oscillating between its 0.23% and -0.23% intraday peak and trough in the first two hours of trading. The Second Estimate of Q3 GDP beat forecasts with its upward revision from 3.5% to 3.9%. But Consumer Confidence unexpectedly dropped, probably not a welcome signal as we approach the holiday shopping season. The index then dithered through the day in a narrow range, the only drama being whether it would log its 47th record close of 2014. It did not.

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NYSE Margin Debt Declines in October Click to view

November 25th, 2014 Doug Short

Unfortunately, the NYSE margin debt data is about a month old when it is published. Following its February peak, real margin declined sharply for two months, -3.9% in March -3.2% in April and was flat in May. It then jumped 5.7% in June, its largest gain in 17 months. July saw a 0.9% decline, but number has drifted higher the two subsequent months, up 0.6% in August and 0.2% in September. However the October level is now 2.2% off the February peak.

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Market Cap to GDP: The Buffett Valuation Indicator Remains in Levitation Mode Click to view

November 25th, 2014 Doug Short

Note from dshort: I've updated this commentary to today's release of the Second Estimate for Q3 GDP.

Market Cap to GDP is a long-term valuation indicator that has become popular in recent years, thanks to Warren Buffett. Back in 2001 he remarked in a Fortune Magazine interview that "it is probably the best single measure of where valuations stand at any given moment."

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Visualizing GDP: A Look Inside the Q3 Second Estimate Click to view

November 25th, 2014 Doug Short

The chart below is my way to visualize real GDP change since 2007. I’ve used a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself....

Here is the latest overview from the Bureau of Labor Statistics:

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Real GDP Per Capita Now at 3.1% Click to view

November 25th, 2014 Doug Short

Earlier today we learned that the Second Estimate for Q3 2014 real GDP came in at 3.9 percent (rounded from 3.89 percent), up from 3.5 percent in the Advance Estimate. Real GDP per capita was lower at 3.1 percent (rounded from 3.09 percent).

Here is a chart of real GDP per capita growth since 1960. For this analysis I’ve chained in today’s dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis.

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Consumer Confidence Surprises to the Downside Click to view

November 25th, 2014 Doug Short

The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through November 13. The headline number of 88.7 was a surprising drop from the revised October final reading of 94.1, a downward revision from 94.5. Today's number was well below the Investing.com forecast of 95.9.

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Q3 GDP Second Estimate at 3.9% Beats Economists' Expectations Click to view

November 25th, 2014 Doug Short

The Second Estimate for Q3 GDP, to one decimal, came in at 3.9 percent, an increase from the Advance Estimate of 3.5 percent. Today's number beat mainstream economists' estimates, which were for a fractional decrease. For example, Investing.com had a forecast of 3.3 percent.

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Weekly Gasoline Price Update: Down Another Seven Cents Click to view

November 24th, 2014 Doug Short

It's time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny Regular dropped another seven cents and Premium six. Regular is now at its lowest price since November 2010. Will the price decline in gasoline boost discretionary spending as we approach the holiday season? Stay tuned!

According to GasBuddy.com, Hawaii has the highest cost at $3.88. The highest continental average price is in New York at $3.18. Missouri and South Carolina are tied for the cheapest Regular at $2.55.

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Understanding the CFNAI Components Click to view

November 24th, 2014 Doug Short

The Chicago Fed’s National Activity Index, which I reported on earlier today, is based on 85 economic indicators drawn from four broad categories of data:

  • Production & Income
  • Employment, Unemployment & Hours
  • Personal Consumption & Housing
  • Sales, Orders, & Inventories

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Gasoline Volume Sales, Demographics and our Changing Culture Click to view

November 24th, 2014 Doug Short

The Department of Energy's Energy Information Administration (EIA) data on volume sales is over two months old when it released. The latest numbers, through mid-September, are now available. However, despite the lag, this report offers an interesting perspective on fascinating aspects of the US economy. Gasoline prices and increases in fuel efficiency are important factors, but there are also some significant demographic and cultural dynamics in this data series.

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Chicago Fed: Economic Growth Moderated in October Click to view

November 24th, 2014 Doug Short

"Index shows economic growth moderated in October": This is the headline for today's release of the Chicago Fed's National Activity Index, and here are the opening paragraphs from the report:

"Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved down to +0.14 in October from +0.29 in September. Two of the four broad categories of indicators that make up the index decreased from September, and two of the four categories made negative contributions to the index in October."

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World Markets Weekend Update: The Rally Continues Click to view

November 23rd, 2014 Doug Short

The world market rally continued last week with six of the eight indexes on my watch list posting gains. Europe led the pack, with Germany's DAX up 5.18%, France's CAC 40 up 3.44% and the UK up 1.45%. Hong Kong's Hang Seng was the big loser with its -2.70% loss. The other negative performer was Japan's Nikkei 225. It's fractional -0.76% decline snapped not only a four-week string of gains, but also four weeks as the top performer.

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The Big Four Economic Indicators: Real Retail Sales Click to view

November 21st, 2014 Doug Short

Real Retail Sales will be especially interesting to watch over the coming months. The rather dramatic decline in gasoline prices in recent months will no doubt boost discretionary spending, and we're now entering the merry season holiday spending. After a strong August report, September real sales were surprisingly weak, but October has seen a partial bounce back in spending. Will holiday sales, with the advantage of lower gas prices, put this indicator on a trend of stronger growth? One potential obstacle would be another savage winter such as we saw last year.

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ECRI Recession Watch: Weekly Update Click to view

November 21st, 2014 Doug Short

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 133.2, up from the previous week's 132.0. The WLI annualized growth indicator (WLIg) is at -2.4, down from -2.9 the previous week.

ECRI's latest public statements have focused on Japan. The website now features a November 17th response to the announcement of Japan's Fourth Recession Since 2008.

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Five Decades of Middle Class Wages: Update Click to view

November 21st, 2014 Doug Short

Note from dshort: I've updated this series to include yesterday's release of the October Consumer Price Index.

Here's a perspective on personal income for production and nonsupervisory private employees going back five decades.

The Bureau of Labor Statistics has been collecting data on this workforce cohort since 1964. The government numbers provide some excellent insights on the income history of what we might think of as the private middle class wage earner.

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Vehicle Miles Traveled: A Structural Change in Our Behavior Click to view

November 21st, 2014 Doug Short

The Department of Transportation's Federal Highway Commission has released the latest report on Traffic Volume Trends, data through September.

Travel on all roads and streets changed by 2.3% (5.6 billion vehicle miles) for September 2014 as compared with September 2013. The less volatile 12-month moving average is up 0.19% month-over-month. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) is up 0.10% month-over-month and down 0.2% year-over-year.

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A Long-Term Look at Inflation Click to view

November 20th, 2014 Doug Short

The Consumer Price Index for Urban Consumers (CPI-U) released this morning puts the October year-over-year inflation rate at 1.66%, off the May 19-month high of 2.13%. It is well below the 3.86% average since the end of the Second World War and 29 percent below its 10-year moving average.

Let’s take a step back and look at the history of inflation over the past 140 plus years.

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Inflation: A Six-Month X-Ray View Click to view

November 20th, 2014 Doug Short

Here is a table showing the annualized change in Headline and Core CPI for each of the past six months. I’ve also included each of the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation.

We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components.

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What Inflation Means to You: Inside the Consumer Price Index Click to view

November 20th, 2014 Doug Short

Let’s do some analysis of the Consumer Price Index, the best known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart below illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U, which I’ll refer to hereafter as the CPI.

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Conference Board Leading Economic Index Increased Again in October Click to view

November 20th, 2014 Doug Short

The Latest Conference Board Leading Economic Index (LEI) for October is now available. The index rose 0.9 percent to 105.5. September was revised downward to 104.3 percent (2004 = 100). The latest number came in above the 0.6 percent forecast by Investing.com.

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Philly Fed Business Outlook: Growth Surges; General Activity Highest Since 1993 Click to view

November 20th, 2014 Doug Short

The Philly Fed's Business Outlook Survey is a monthly report for the Third Federal Reserve District, covers eastern Pennsylvania, southern New Jersey, and Delaware. The latest gauge of General Activity came in at 40.8, a surge over last month's 20.7. The 3-month moving average came in at 28.0, up from 23.7 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook slipped to 48.0 from last month's 54.5.

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Headline Consumer Price Index Remained Unchanged in October Click to view

November 20th, 2014 Doug Short

The Bureau of Labor Statistics released the October CPI data this morning. Year-over-year unadjusted Headline CPI came in at 1.66% (rounded to 1.7%), unchanged from the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.81% (rounded to 1.8%), slightly higher than the previous month's 1.73% (rounded to 1.7%). The non-seasonally adjusted month-over-month Headline number was down 0.25% (-0.25%), and the Core number was up 0.24%. On a seasonally-adjusted basis, the all items index was unchanged.

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Understanding Investor Anxiety: A Perspective on Diversification Click to view

November 19th, 2014 Doug Short

Diversification is a cornerstone of Modern Portfolio Theory and risk management. We spread our investments across a range of asset classes, rebalancing periodically, to ensure participation in the upside and reduce exposure to the downside. This is a time-honored strategy that works ... most of the time. But during the epic market downturn of the Financial Crisis, equity asset classes essentially marched in step to the same dismal drumbeat.

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Producer Price Index: A Small Bounce, But Inflation Remains Tame Click to view

November 18th, 2014 Doug Short

Today's release of the October Producer Price Index (PPI) for Final Demand came in at 0.2% month-over-month seasonally adjusted. That's a bounce from the previous month's -0.1% decline, which was first monthly decline since August of last year. Core Final Demand (less food and energy) was up 0.4% from last month.

The year-over-year change in Final Demand is up 1.5%, a slight decline from last month's YoY of 1.6%

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Empire State Manufacturing: Expansion Continues Click to view

November 17th, 2014 Doug Short

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions continued expanding at a stronger pace from the previous month. The headline number rose 4 points to 10.2, up from 6.2.

The Investing.com forecast was for a reading of 11.1.

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Census Bureau Revisions to Retail Sales Click to view

November 14th, 2014 Doug Short

Earlier today I posted my monthly update on Retail Sales. Those of us who routinely track this series know that the Advance Estimate will be followed by a second estimate next month and a third estimate the month after. How big are those revisions? Are they big enough to warrant skepticism about the Advance Estimate?

See for yourself. Here is a visualization of the cumulative change from the first to third estimates from January 2007 through August 2014, the most recent month for which we have all three data points.

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October Retail Sales: A Welcome Bounce from the September Dip Click to view

November 14th, 2014 Doug Short

The Advance Retail Sales Report released this morning shows that sales in October came in at 0.3% (0.34% at two decimals) month-over-month, up from -0.3% in September. Core Retail Sales (ex Autos) were at 0.3%, up from -0.02% (at two decimals) in September.

Today's numbers came in above the Investing.com forecast of 0.2% for both Headline and Core Sales.

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Treasury Snapshot (with QE Now in the Rear-View Mirror) Click to view

November 13th, 2014 Doug Short

We're now close to two weeks beyond the end of the Fed's QE, so let's take a quick look at what's been happening for US Treasuries. The yields on the 10-, 20- and 30 year Treasuries have generally trended downward since the end of 2013.

The latest Freddie Mac Weekly Primary Mortgage Market Survey today puts the 30-year fixed at 4.01%, well off its 4.53% 2014 peak during the first week of January but off its interim low of 3.92% last month.

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The Philly Fed ADS Business Conditions Index Click to view

November 13th, 2014 Doug Short

Note from dshort: I’ve updated my periodic look at the Philly Fed ADS Index through the September 19th release, which included the latest Initial Jobless Claims (for the week ending November 8th).

The Philly Fed’s Aruoba-Diebold-Scotti Business Conditions Index (hereafter the ADS index) is a fascinating but relatively little known real-time indicator of business conditions for the U.S. economy, not just the Third Federal Reserve District.

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Corporate Profit Margins versus Employee Compensation: A Rather Disturbing Comparison Click to view

November 12th, 2014 Doug Short

Yesterday's collection of Advisor Perspectives articles particularly caught my attention: "Why Jeremy Grantham is Right about Corporate Profit Margins." The article includes a number of fascinating graphs, the first of which is a snapshot of US Corporate Margins since 1947 calculated by dividing Corporate Profits after Tax by Gross National Product.

The article inspired me to produce a chart of the Profit-to-GNP ratio, but with an added and rather sobering overlay: Employee Compensation (wages and salaries), which I've likewise divided by GNP.

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Real Earnings of Private Employees: Excruciatingly Slow Improvement Click to view

November 12th, 2014 Doug Short

Here is a look at two key numbers in last week's monthly employment report for October:

  • Average Hourly Earnings
  • Average Weekly Hours
The government has been tracking the data for Production and Nonsupervisory Employees for decades. But coverage of Total Private Employees only dates from March 2006.

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Small Business Optimism: Moderate Improvement, But No Clear Direction Click to view

November 11th, 2014 Doug Short

The latest issue of the NFIB Small Business Economic Trends is out today. The November update for October came in at 96.1, up 0.8 points from the previous month. In characteristic style, today's report subtitle underscores the theme of the report: "Moderate Improvement, But No Clear Direction". The index is now at the 29.1 percentile in this series, below its post-recession 96.6 high in May and back to a level it last consistently achieved in October 2007, two months before the last recession.

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Continuing Proof of Structural Changes in the U.S. Workforce Click to view

November 11th, 2014 Doug Short

At this year's Jackson Hole Symposium, Fed Chair Janet Yellen delivered an extended analysis of "Labor Market Dynamics and Monetary Policy". Her speech essentially reviewed the ongoing debate over the mix of cyclical versus structural factors in employment since the Great Recession.

I've updated a series of charts that support my view that the U.S. workforce has undergone structural changes that are far more significant than the cyclical impact of a recession -- even the so-called "Great Recession".

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Demographic Trends in the 50-and-Older Work Force Click to view

November 10th, 2014 Doug Short

Note from dshort: I’ve updated this commentary with the latest numbers from last week’s Employment Report.

This is not the scenario that would have been envisioned a generation ago for the "Golden Years" of retirement. Consider: Today nearly one in three of the 65-69 cohort and almost one in five of the 70-74 cohort are in the labor force.

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Structural Trends in Employment by Age Group Click to view

November 10th, 2014 Doug Short

Note from dshort: I’ve updated this commentary with the latest numbers from last week’s Employment Report.

The Labor Force Participation Rate (LFPR) is a simple computation: You take the Civilian Labor Force (people age 16 and over employed or seeking employment) and divide it by the Civilian Noninstitutional Population (those 16 and over not in the military and or committed to an institution). The result is the participation rate expressed as a percent.

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Inside the World of Multiple Jobholders: Two Decades of Trends Click to view

November 10th, 2014 Doug Short

What are the long-term trends for multiple jobholders in the US? The Bureau of Labor Statistics has two decades of historical data to enlighten us on that topic, courtesy of Table A-16 in the monthly Current Population Survey.

At present, multiple jobholders account for around five percent of civilian employment. The survey captures data for four subcategories of the multi-job workforce, the current relative sizes of which I've illustrated in a pie chart.

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Ratio of Part-Time Employed Remains Substantially Higher Than the Pre-Recession Level Click to view

November 10th, 2014 Doug Short

Let's take a close look at last week's employment report numbers on Full and Part-Time Employment. The Labor Department has been collecting data on this metric since 1968, a time when only 13.5% of US employees were part-timers. That number peaked at 20.1% in January 2010. The latest data point, over four-and-a-half years later, is only modestly lower at 18.8% last month. If the pre-recession percentage is a recovery target, we still have a long way to go.

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Light Vehicle Sales Per Capita: A Better Look at the Long-Term Trend Click to view

November 9th, 2014 Doug Short

For the past few years I've been following a couple of transportation metrics: Vehicle Miles Traveled and Gasoline Volume Sales. For both series I focus on the population adjusted data. Let's now do something similar with the Light Vehicle Sales report from the Bureau of Economic Analysis. This data series stretches back to January 1976. Since that first data point, the Civilian Noninstitutional Population Age 16 and Over (i.e., driving age not in the military or an inmate) has risen 60.6%.

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The Civilian Labor Force, Unemployment Claims and Recession Risk Click to view

November 7th, 2014 Doug Short

Note from dshort: I’ve updated this commentary to include the latest labor force data in today’s employment report.

A long-term chart of the seasonally-adjusted 4-week moving average of Initial Claims gives a rather distorted view of the economy. Why? Because it doesn’t take into account the 104% growth in the Civilian Labor Force since January 1967. For a better understanding of the weekly Initial Claims data, let’s put the numbers in a ratio with the Civilian Labor Force.

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October New Jobs Disappointment Offset by Upward Revisions; Unemployment Rate Drops to 5.8% Click to view

November 7th, 2014 Doug Short

Today's report of 214K new nonfarm jobs in October was below the Investing.com forecast of 231K, but the lower number was more than offset by upward revisions to the new jobs for August (from 180K to 203K) and September (from 248K to 256K). The unemployment rate dropped a notch from 5.9% to 5.8%. Investing.com expected no change.

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Today’s Dow Now in Second Place Click to view

November 6th, 2014 Doug Short

It's been quite a while since I last updated the "Sweet Sixteen" inflation-adjusted Dow recoveries that I've been illustrating from time to time over the past five years. With yesterday's record close as an aftermath to the mid-term election results, it seems appropriate to have a look at the recovery since the Great Recession in the larger historical context of market recoveries.

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ISM Non-Manufacturing: Slower Growth in October Click to view

November 5th, 2014 Doug Short

Today the Institute for Supply Management published its latest Non-Manufacturing Report. The headline NMI Composite Index is at 57.1 percent, down from last month's 58.6 percent. Today's number came in below the Investing.com forecast of 58.0.

Here is the report summary:

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Anticipating the Employment Report for October Click to view

November 5th, 2014 Doug Short

With the election behind us, the economic mover and shaker this week is the Friday employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, probably the most publicized in the near term being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository).

Today we have the October estimate of 230K new nonfarm private employment jobs from ADP, which we can consider along with the estimate of 314K total new jobs from TrimTabs.

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Market Valuation, Inflation and Treasury Yields: Clues from the Past Click to view

November 4th, 2014 Doug Short

My monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a "normal" market environment -- one with normal business cycles, Federal Reserve policy, interest rates and inflation -- current valuation levels would be a serious concern.

But these are different times.

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Market Valuation Overview: A Bit Less Expensive (Thanks to the October Semi-Correction) Click to view

November 4th, 2014 Doug Short

Here is a summary of the four market valuation indicators I updated at the beginning of the month.

  • The Crestmont Research P/E Ratio
  • The cyclical P/E ratio using the trailing 10-year earnings as the divisor
  • The Q Ratio, which is the total price of the market divided by its replacement cost
  • The relationship of the S&P Composite price to a regression trendline

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Is the Stock Market Cheap? Click to view

November 3rd, 2014 Doug Short

Here is a new update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly average of daily closes for the past month, which is 1,937.27. The ratios in parentheses use the monthly close of 2,018.05. For the earnings, see the table below created from Standard & Poor's latest earnings spreadsheet.

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Crestmont Market Valuation Update Click to view

November 3rd, 2014 Doug Short

Quick take: Based on the October S&P 500 average of daily closes, the Crestmont P/E is now 86% above its arithmetic mean and at the 97th percentile of this fourteen-decade monthly metric.

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The Q Ratio and Market Valuation: New Update Click to view

November 3rd, 2014 Doug Short

Based on the latest Z.1 data, the Q Ratio at the end of the second quarter of 2014 was 1.12. As of the October close, the broad market was down 0.7% (based on VTI's monthly averages of daily closes). My latest estimate would put the ratio about 64% above its arithmetic mean and 76% above its geometric mean.

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ISM Manufacturing Index: Continued Expansion Click to view

November 3rd, 2014 Doug Short

Today the Institute for Supply Management published its monthly Manufacturing Report for October. The latest headline PMI was 59.0, a rise from Septembers 56.6 percent and above the Investing.com forecast of 56.2.

Here is the key analysis from the report:

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Regression to Trend: A Perspective on Long-Term Market Performance Click to view

November 3rd, 2014 Doug Short

Quick take: At the end of October the inflation-adjusted S&P 500 index price was 82% above its long-term trend, down from 88% above trend the previous month.


About the only certainty in the stock market is that, over the long haul, over performance turns into under performance and vice versa. Is there a pattern to this movement? Let’s apply some simple regression analysis to the question.

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The S&P 500, Dow and Nasdaq Since Their 2000 Highs Click to view

November 2nd, 2014 Doug Short

Here is a update in response to a standing request from a couple of sources that I also share with regular visitors to my Advisor Perspectives pages.

The request is for real (inflation-adjusted) charts of the S&P 500, Dow 30, and Nasdaq Composite. In response, I maintain two overlays — one with the nominal price, excluding dividends, and the other with the price adjusted for inflation based on the Consumer Price Index for Urban Consumers (which is usually just refer to as the CPI). The charts below have been updated through the September 30th close.

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Secular Bull and Bear Markets Click to view

November 2nd, 2014 Doug Short

Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? Without a crystal ball, we simply don’t know. One thing we can do is examine the past to broaden our understanding of the range of possibilities. An obvious feature of this inflation-adjusted is the pattern of long-term alternations between up-and down-trends.

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Moving Averages: Month-End Update Click to view

October 31st, 2014 Doug Short

Valid until the market close on November 28, 2014

The S&P 500 closed September with a monthly gain of 2.32%. All three S&P 500 MAs and three of the five the Ivy Portfolio ETF MAs are signaling "Invested".

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Two Measures of Inflation and Fed Policy Click to view

October 31st, 2014 Doug Short

Note from dshort: I've updated the accompanying charts with the latest Personal Consumption Expenditures price index from the Bureau of Economic Analysis. The annualized rate of change is calculated to two decimal places for more precision in the side-by-side comparison with the Consumer Price Index.

The BEA's Personal Consumption Expenditures Chain-type Price Index for September shows core inflation below the Federal Reserve's 2% long-term target at 1.48%, but for the past six months this indicator has hovered above its narrow range of the previous 12 months.

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The Latest on Real Disposable Income Per Capita Click to view

October 31st, 2014 Doug Short

With this morning's release of the September Personal Incomes and Outlays we can now take a closer look at "Real" Disposable Personal Income Per Capita.

The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator was significantly disrupted by the bizarre but predictable oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013.

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The "Real" Goods on the Today's Durable Goods Data Click to view

October 28th, 2014 Doug Short

Earlier today I posted an update on the October Advance Report on September Durable Goods New Orders. This Census Bureau series dates from 1992 and is not adjusted for either population growth or inflation.

Let's now review Durable Goods data with two adjustments. In the charts below the red line shows the goods orders divided by the Census Bureau's monthly population data, giving us durable goods orders per capita.

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Durable Goods Report for September: An Unexpected Contraction Click to view

October 28th, 2014 Doug Short

The October Advance Report on September Durable Goods was released this morning by the Census Bureau. Here is the Bureau's summary on new orders:

New orders for manufactured durable goods in September decreased $3.2 billion or 1.3 percent to $241.6 billion, the U.S. Census Bureau announced today. This decrease, down two consecutive months, followed an 18.3 percent August decrease. Excluding transportation, new orders decreased 0.2 percent. Excluding defense, new orders decreased 1.5 percent.

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What If Chained CPI Had Been Used to Calculate COLAs Since 2002? Click to view

October 22nd, 2014 Doug Short

Last year, President Obama's 2014 proposed budget recommended that, starting in 2015, COLAs should be calculated with the Chained Consumer Price Index for All Urban Consumers (Chained CPI). In this year's proposed budget for 2015, the President abandoned the proposed shift to the Chained CPI for Social Security adjustments.

Let's look at what the effect would have been over the years for a typical Social Security recipient if the Chained CP had been used since its inception.

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Chained CPI Versus the Standard CPI: Breaking Down the Numbers Click to view

October 22nd, 2014 Doug Short

The Consumer Price Index for Urban Consumers is the most familiar gauge of inflation in the US. The data for the non-seasonally adjusted series stretches back a century to January 1913. But in February of last year the big news was relative newcomer to the inflation metrics of the Bureau of Labor Statistics (BLS), the Chained CPI for Urban Consumers.

The reason the Chained CPI was a hot topic in the news in last year was that President Obama had proposed it in his 2014 budget as the method for determining cost of living adjustments for Social Security.

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Population-Adjusted Real Retail Sales: Another Perspective on the Economy Click to view

October 22nd, 2014 Doug Short

In real, population-adjusted terms, Retail Sales are at the level we first reached in December 2004.

Earlier this month, the Advance Retail Sales Report showed that sales in September declined 0.3% month-over-month, as I reported in my real-time update.

With the subsequent release of the Consumer Price Index, we can now dig a bit deeper into the "real" data, adjusted for inflation and against the backdrop of our growing population.

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A New Look at the Total Return Roller Coaster Click to view

October 20th, 2014 Doug Short

Note from dshort: I received a recent email on historical total returns that prompted an update to my Roller Coaster Return series. I've updated the charts below based on monthly data through the September close.

Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation?

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The Four Totally Bad Bear Recoveries: Where Are We Now? Click to view

October 17th, 2014 Doug Short

Note from dshort: At the request of The Advisory Group in San Francisco, here’s updated comparison of four major cyclical bear markets. The numbers are through yesterday’s close.

The chart series features an overlay of the Four Bad Bears in U.S. history since the market peak in 1929. They are: 1) the Crash of 1929, 2) the Oil Embargo of 1973, 2) The 2000 Tech bust and 4) the post-2007 Financial Crisis. The series includes nominal, real, total-return and real total-return comparisons.

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Millennials in Motion: Changing Travel Habits of Young Americans Click to view

October 14th, 2014 Doug Short

Regular visitors to this website are aware of my keen interest in long-term trends in Vehicle Miles Traveled, Gasoline Prices and Gasoline Volume Sales.

Today the U.S. PIRG (U.S. Public Interest Research Group) has released a fascinating study on the travel habits of Millennials (those born between 1983 and 2000) and the profound implications for transportation policy. The full report is available for download in PDF format at the U.S. PIRG website.

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Happiness Revisited: A Household Income of $75K? Click to view

September 25th, 2014 Doug Short

Note from dshort: I've updated this commentary in the wake of the Census Bureau's release last week of the 2013 annual household income data from the Current Population Survey.

One of my favorite discussions on APViewpoint, which addressed "The Sad State of Happiness" included an indirect reference to a popular 2010 academic study by psychologist Daniel Kahneman and economist Angus Deaton. Their topic was the correlation between annual household income and day-to-day contentment.

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Median Household Income by State: A Sobering Look at the Data Click to view

September 19th, 2014 Doug Short

The Census Bureau's annual household income reports for 2013 were published this week. I've now compiled a few tables for the 50 states and DC based on the Current Population Survey, a joint undertaking of the Census Bureau and Bureau of Labor Statistics, which includes annual data from 1984 to 2013. The details are fascinating, if somewhat sobering.

First, some context. The median US income in 2013 was $51,939, up from $22,415 in 1984 -- a 131.7% rise over the 29-year timeframe.

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Median Household Incomes by Age Bracket: 1967-2013 Click to view

September 17th, 2014 Doug Short

Earlier today I updated my commentary on household income distribution to include the Census Bureau's release of the 2013 annual data. My focus was on arithmetic mean (average) household incomes by quintile (and the top 5%) over the 46-year history of this data series. The analysis offered some fascinating insights into U.S. household incomes.

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U.S. Household Incomes: A 46-Year Perspective Click to view

September 17th, 2014 Doug Short

The Census Bureau has now released its annual report household income data for 2013. It is posted on the Census Bureau website. What I'm featuring in this update is an analysis of the quintile breakdown of data from 1967 through 2013 along with the statistics for the top 5%.

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Median Household Income Growth: Deflating the American Dream Click to view

September 16th, 2014 Doug Short

What is the single best indicator of the American Dream? Many would point to household income growth. The Census Bureau has now published some selected annual household income data in a new report: Income and Poverty in the United States: 2013. Last year the median (middle) household income was $51,939 -- a 1.8% year-over-year increase that shrinks to 0.3% when adjusted for inflation. Let's put the new release into a larger historical context.

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