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dshort – Advisor Perspectives

World Markets Weekend Update: The Rally Accelerates, Dominated by China

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May 23rd, 2015

All eight indexes on our world watch list posted gains over the past week, with China's Shanghai Composite surging 8.10%, the largest one week gain for any of the eight indexes in 2015. The two eurzone indexes were in distant second and third place with healthy gains approaching three percent. The Nikkei and SENSEX were not far being in the middle two percent range. At the botton of the list, the S&P 500 eked out a fractional 0.16% for the week, although it logged two record closes during the week.

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S&P 500 Snapshot: A Modest Loss on the Smallest Trading Range of 2015

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May 22nd, 2015

With the three-day Memorial Day weekend in the immediate offing, the S&P 500 spent the day in semi-vacation mode. The intraday high-low trading range of 0.29% was the smallest of the year. The peak coincided, not surprisingly, with Janet Yellen's "Outlook for the Economy" speech at 1 PM. In her speech, Ms. Yellen discounted economic projections with a rather stunning self-abnegation, especially so in coming from a Fed Chair.

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A Long-Term Look at Inflation

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May 22nd, 2015

The Consumer Price Index for Urban Consumers (CPI-U) released this morning puts the year-over-year inflation rate at -0.20%. It is substantially below the 3.84% average since the end of the Second World War and its 10-year moving average, now at 2.19%.

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Inflation: A Six-Month X-Ray View

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May 22nd, 2015

Here is a table showing the annualized change in Headline and Core CPI, not seasonally adjusted, for each of the past six months. Also included are 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: A Look Inside the Consumer Price Index

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May 22nd, 2015

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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ECRI: "Fed Rate Hike May Be Postponed Due to Inclement Data"

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May 22nd, 2015

Friday's release of the publicly available data from the Economic Cycle Research Institute (ECRI) puts its Weekly Leading Index (WLI) at 133.9, down slightly from 134.6 the previous week. The WLI annualized growth indicator (WLIg) is at 1.5, up from the previous week's 1.2, and off its interim low of -4.7 in mid-January.

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The Big Four Economic Indicators: Real Retail Sales

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May 22nd, 2015

The overall picture of the US economy had been one of slow recovery from the Great Recession. We had a conspicuous downturn during the winter of 2013-2014 and subsequent rebound. And weak Retail Sales and Industrial Production in recent months triggered a replay of the "severe winter" meme. However, we're now getting data points for Spring months, not the Winter, and as yet we're not seeing a rebound. Industrial Production has decline for five consecutive months and Real Retail Sales have contracted for four of the past five months.

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April Consumer Price Index: Core Inflation Remains Steady, Headline Deflation Worsens

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May 22nd, 2015

The Bureau of Labor Statistics released the April CPI data this morning. The year-over-year unadjusted Headline CPI came in at -0.20% (rounded to -0.2%), down from -0.07% (rounded to -0.1%) the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.81% (rounded to 1.8%), unchanged to one decimal place from the previous month's 1.75% (rounded to 1.8%).

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The Latest Philly Fed ADS Business Conditions Index

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May 21st, 2015

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, which covers eastern Pennsylvania, southern New Jersey, and Delaware. Thus it is comparable to the better-known Chicago Fed's National Activity Index.

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Understanding the CFNAI Components

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May 21st, 2015

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

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

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Philly Fed Business Outlook: Another Month of Modest Increase

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May 21st, 2015

The latest gauge of General Activity came in at 6.7, down from last month's 7.5. The 3-month moving average came in at 6.4, down from 5.9 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook was little unchanged at 33.9 versus the previous month's 35.5.

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Conference Board Leading Economic Index Increased Again in April

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May 21st, 2015

The Latest Conference Board Leading Economic Index (LEI) for April is now available. The index rose 0.7 percent, which follows a 0.4 percent March increase (an upward revision from 0.2 percent). The latest number came in aboove the 0.3 percent forecast by Investing.com.

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Existing-Home Sales Lose Momentum in April

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May 21st, 2015

This morning's release of the March Existing-Home Sales disappointed expectations, slipping to a seasonally adjusted annual rate of 5.04 million units from an upwardly revised 5.21 million in March (previously 5.19 million). The Investing.com consensus was for 5.24 million. The latest number represents a 3.3% decrease from the previous month but a 6.1% increase year-over-year.

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Chicago Fed: Economic Growth Increased Slightly In April

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May 21st, 2015

"Index shows economic growth increased slightly in April": 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:

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New Jobless Claims Rise by 10K, But 4-Week Moving Average Lowest Since April 15, 2000

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May 21st, 2015

Today's seasonally adjusted 274K new claims was a bit higher than the Investing.com forecast of 271K. The four-week moving average at 266,250 is a new interim low, the lowest since April 15, 2000 -- over 15 years ago.

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Vehicle Miles Traveled: A New Look at Our Evolving Behavior

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May 21st, 2015

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

"Travel on all roads and streets changed by 3.9% (9.8 billion vehicle miles) for March 2015 as compared with March 2014." The less volatile 12-month moving average is up 0.31% month-over-month and 2.64% year-over-year. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) is a smaller change, up 0.24% month-over-month and up only 1.48% year-over-year.

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Secular Trends in New Residential Building Permits and Housing Starts

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May 20th, 2015

Over the long haul the two series offer a compelling study of trends in residential real estate. Here is an overlay of the two series since the 1959 inception of the Starts data and the Permits data, which began being tracked a year later. The monthly data points are preserved as faint dots. The trends are illustrated with 6-month moving averages of data divided by the Census Bureau's mid-month population estimates.

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A New Look at the Total Return Roller Coaster

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May 20th, 2015

Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. 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? The purchasing power of your investment has increased to $18,300 for an annualized real return of 12.15%.

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New Residential Building Permits Rise 10.1% in April

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May 19th, 2015

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for April new residential building permits. The latest reading of 1.143M was well above the Investing.com forecast of 1.060M. Here is the opening of this morning's monthly report:

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New Residential Housing Starts Surge in April

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May 19th, 2015

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for April new residential housing starts. The latest reading of 1.135M was well above the Investing.com forecast of 1.019M. Here is the opening of this morning's monthly report:

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Weekly Gasoline Price Update: Up Another Five Cents

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May 18th, 2015

It's time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny, the price of Regular and premium both rose five cents. This is the fifth week of price increases after six weeks of little change. According to GasBuddy.com, California has the highest average price for Regular at $3.82, and its averaging $4.01 in Los Angeles. South Carolina has the cheapest at $2.38.

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NAHB Housing Market Index: Confidence Falls Two Points in May

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May 18th, 2015

The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of builder opinion on the relative level of current and future single-family home sales. It is a diffusion index, which means that a reading above 50 indicates a favorable outlook on home sales; below 50 indicates a negative outlook.

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WSJ Economists' May Forecasts for 10-Year Yields and the Fed Funds Rate

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May 18th, 2015

On Wednesday the Fed will release the FOMC Minutes for its April meeting. Meanwhile let's take a quick look at a couple of items in the May Wall Street Journal survey of economists, starting with where the Federal Reserve is headed with the Fed Funds Rate, which is currently hovering around 0.12 percent.

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Treasury Snapshot: With Equities at Record Highs, What About Treasuries?

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May 18th, 2015

With the S&P 500 hitting new highs on Thursday and Friday last week, let's take another look at Treasury Yields.The first chart shows the daily performance of several Treasuries and the Fed Funds Rate (FFR) since 2007. The source for the yields is the Daily Treasury Yield Curve Rates from the US Department of the Treasury and the St. Louis Fed's FRED repository for the Fed Funds Rate.

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Michigan Consumer Sentiment Takes a Dive

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May 15th, 2015

The University of Michigan preliminary Consumer Sentiment for May came in at 88.6, down from the 95.9 April final reading and well below the interim high of 98.1 in January. Investing.com had forecast 96.0 for the May preliminary.

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Empire State Manufacturing Conditions "Improved Slightly"

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May 15th, 2015

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 3.1 (3.09 to two decimals) shows an increase from last month's -1.2, which signals a return to modest improvement in activity. The Investing.com forecast was for a reading of 5.0.

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Producer Price Index for Final Demand Hits a New Low

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May 14th, 2015

Today's release of the March Producer Price Index (PPI) for Final Demand came in at -0.4% month-over-month seasonally adjusted. That follows the previous month's 0.2% increase. Core Final Demand (less food and energy) came in at -0.2% month-over-month following a 0.2% change the month before. The Investing.com forecasts were for 0.2% headline and 0.1% core. The year-over-year change in Final Demand is -1.3%, the lowest in the brief history of this data series.

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April Retail Sales: The Spring Rebound Goes Missing

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May 13th, 2015

The Advance Retail Sales Report released this morning shows that sales in April came in flat month-over-month, a situation that was enabled by an upward March revision from 0.9% to 1.1%. Core Retail Sales (ex Autos) came in at a disappointing 0.1%, with the March number tweaked upward from 0.4% to 0.7%. Today's numbers came in below the Investing.com forecast of 0.2% for Headline Sales and 0.5% for Core Sales.

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The Numbers Needed for the Prime U.S. Workforce to Recover

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May 12th, 2015

At last 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.

Here is an updated a series of charts illustrating some structural changes in the workforce that are far more significant than the cyclical impact of the Great Recession.

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Job Openings & Labor Turnover: Clues to the Business Cycle

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May 12th, 2015

The latest JOLTS report (Job Openings and Labor Turnover Summary), data through March, is now available. The first chart below shows four of the headline components of the overall series, which the BLS began tracking in December 2000. The timeframe is quite limited compared to the main BLS data series in the monthly employment report, many of which go back to 1948, and the enormously popular Nonfarm Employment (PAYEMS) series goes back to 1939. Nevertheless, there are some clear JOLTS correlations with the most recent business cycle trends.

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Small Business Optimism Rises, But Sales Expectations Remain Weak

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May 12th, 2015

The latest issue of the NFIB Small Business Economic Trends is out today. The update for April came in at 96.9, a 1.7 point increase from the previous month. The index is now at the 33rd percentile in this series. The Investing.com forecast was for 95.8.

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Inside the World of Multiple Jobholders: Two Decades of Trends

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May 11th, 2015

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 about 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 Still Higher Than the Pre-Recession Level

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May 11th, 2015

Let's take a close look at Friday's employment report numbers on Full and Part-Time Employment. Buried near the bottom of Table A-9 of the government's Employment Situation Summary are the numbers for Full- and Part-Time Workers, with 35-or-more hours as the arbitrary divide between the two categories. The source is the monthly Current Population Survey (CPS) of households. The focus is on total hours worked regardless of whether the hours are from a single or multiple jobs.

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Demographic Trends in the 50-and-Older Work Force

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May 11th, 2015

Note: This commentary has been updated 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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Long-Term Trends in Employment by Age Group

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May 11th, 2015

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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The Civilian Labor Force, Unemployment Claims and the Business Cycle

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May 8th, 2015

What does the ratio of unemployment claims tell us about where we are in the business cycle and our current recession risk? At present, the ratio for Continued Claims has been trending down. Excluding the 1981 recession, the Initial Claims trough lead time for a recession has ranged from 7 to 22 months with an average of 12 months if we include the 1981 recession and 14 months if we exclude it. Admittedly, the last recession is an extreme example, but the Initial Claims trough preceded its December 2007 onset by a whopping 22 months.

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April Jobs Growth Rebounds and the Unemployment Rates Ticks Down to 5.4%

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May 8th, 2015

Today's report of 223K new nonfarm jobs in April was close to the Investing.com forecast of 224K. Moreover, March nonfarm payrolls were revised downward by 41K from 126K to 85K. The unemployment rate ticked down from 5.5% to 5.4%.

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Labor Productivity, Household Incomes and Corporate Profits: And the Winner Is?

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May 7th, 2015

Yesterday the Bureau of Labor Statistics released the preliminary data for Q1 Productivity and Costs. We learned that the headline metric, nonfarm business sector labor productivity, decreased at a 1.9 percent annual rate during the first quarter of 2015. Let's take a look at the BLS's complete data series for this index, which dates from 1947.

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ADP Employment Report for April Disappoints Expectations

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May 6th, 2015

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.

Today we have the April estimate of 169K new nonfarm private employment jobs from ADP. That is the lowest number since the 157K in January of last year, 15 months ago. In addition, the previous month's estimate was revised downward from 189K to 175K.

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The Market Remains in Overvaluation Territory

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May 5th, 2015

Here is a summary of the four market valuation indicators we update on a monthly basis.

  • 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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ISM Non-Manufacturing: Continued Growth in April

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May 5th, 2015

Today the Institute for Supply Management published its latest Non-Manufacturing Report. The headline NMI Composite Index is at 57.8 percent, up 1.3 percent from last month's 56.5 percent. Today's number came in above the Investing.com forecast of 56.2 percent.

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Market Valuation, Inflation and Treasury Yields: More Clues from the Past

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May 5th, 2015

Our 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 conventional 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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The Q Ratio and Market Valuation: Monthly Update

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May 4th, 2015

Note from dshort: This commentary has been updated to incorporate some extrapolations for estimating the latest Q Ratio.

The Q Ratio is a popular method of estimating the fair value of the stock market developed by Nobel Laureate James Tobin. It's a fairly simple concept, but laborious to calculate. The Q Ratio is the total price of the market divided by the replacement cost of all its companies.

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Crestmont Market Valuation Update

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May 4th, 2015

Quick take: Based on the April S&P 500 average of daily closes, the Crestmont P/E is 98% above its arithmetic mean and at the 98th percentile of this fourteen-plus-decade monthly metric.

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Is the Stock Market Cheap?

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May 4th, 2015

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. For the earnings, see the table below created from Standard & Poor's latest earnings spreadsheet.

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

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May 4th, 2015

Quick take: At the end of April the inflation-adjusted S&P 500 index price was 93% above its long-term trend, unchanged from 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

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May 3rd, 2015

This update is a response to a standing request from a couple of sources that we 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. Here 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).

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Secular Bull and Bear Markets

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May 3rd, 2015

Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? At this point, over five-and-a-half years later, the S&P 500 has set an inflation-adjusted record high.

Let's examine the past to broaden our understanding of the range of historical trends in market performance. An obvious feature of this inflation-adjusted series is the pattern of long-term alternations between up-and down-trends.

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Light Vehicle Sales Per Capita: A New Look at the Long-Term Trend

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May 1st, 2015

For the past few years we've been following a couple of transportation metrics: Vehicle Miles Traveled and Gasoline Volume Sales. For both series we 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 61.6%.

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NYSE Margin Debt: A New Perspective

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May 1st, 2015

Update to our April 24th commentary: At the suggestion of Mark Schofield, Managing Director at Strategic Value Capital Management, LLC, we've created a new overlay chart with margin debt inverted so that we see the relationship between the two as a divergence.

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Market Cap to GDP: The Buffett Valuation Indicator

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May 1st, 2015

This commentary has an updated denominator from the Advance Estimate of Q1 GDP. The numerator is a linear extrapolation of the Fed's "Corporate Equities; Liability" in the Q4 Z.1 Financial Accounts. The indicator remains over 2 standard deviations above its mean at an interim high of 132.4%.

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ISM Manufacturing Index: Unchanged ... Lowest Growth Since May 2013

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May 1st, 2015

Today the Institute for Supply Management published its monthly Manufacturing Report for April. The latest headline PMI was 51.5 percent, unchanged from the previous month and below the Investing.com forecast of 52.0. The indicator remains at the lowest PMI since May 2013.

Here is the key analysis from the report:

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Moving Averages: April Month-End Update

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April 30th, 2015

Valid until the market close on May 29, 2015

The S&P 500 closed April with a monthly gain of 0.85%. All three S&P 500 MAs and four of the five Ivy Portfolio ETF MAs are signaling "Invested". In the table below, monthly closes that are within 2% of a signal are highlighted in yellow.

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Two Measures of Inflation and Fed Policy

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April 30th, 2015

The BEA's Personal Consumption Expenditures Chain-type Price Index for March shows core inflation below the Federal Reserve's 2% long-term target at 1.35%. The latest Core Consumer Price Index release, also data through March, is higher at 1.75%. The Fed is on record as using Core PCE data for its primary inflation gauge.

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Real Disposable Income Per Capita Declined Fractionally in March

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April 30th, 2015

With the release of today's report on March Personal Incomes and Outlays we can now take a closer look at "Real" Disposable Personal Income Per Capita.

The March nominal -0.04% month-over-month decline in disposable income drops to -0.21% when we adjust for inflation. The year-over-year metrics are 2.89% nominal and 2.56% real.

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PCE Price Index: Virtually No Change in the Fed's Preferred Inflation Gauge

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April 30th, 2015

The latest Headline PCE price index year-over-year (YoY) rate is 0.33%, statistically unchanged from 0.31% the previous month. The Core PCE index (less Food and Energy) at 1.35% is only one basis point above the previous month's 1.34% YoY.

The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012.

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Moving Averages: Month-End Preview

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April 30th, 2015

Here is an advance preview of the monthly moving averages we track after the close of the last business day of the month. At this point, before the open on the last day of the month, three S&P 500 strategies are now signaling "invested" -- unchanged from last month. One of the five of the Ivy Portfolio ETFs, PowerShares DB Commodity Index Tracking (DBC), is signal "cash". Last month the Vanguard FTSE All-World ex-US ETF VEU was also signaling "cash".

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Visualizing GDP: A Look Inside the Q1 First Estimate

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April 29th, 2015

The chart below is a way to visualize real GDP change since 2007. It uses 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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Q1 GDP Per Capita Goes Negative at -0.6 percent

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April 29th, 2015

Advance Estimate for Q1 GDP, to one decimal, came in at 0.2 percent, a substantial drop from the 2.2 percent of the previous quarter. But with a per-capita adjustment, the data series is currently at -0.6 percent (-0.59 percent to two decimal places). The 10-year moving average illustrates that US economic growth has slowed dramatically since the last recession.

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Q1 GDP Advance Estimate Surprises to the Downside

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April 29th, 2015

The Advance Estimate for Q1 GDP, to one decimal, came in at 0.2 percent, a substantial drop from the 2.2 percent of the previous quarter. Today's number was a disappointment for most economic forecasts, which were looking for a higher Advance Estimate. For example, both Investing.com and Briefing.com had forecast of 1.0 percent.

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A Surprising Decline in Consumer Confidence

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April 28th, 2015

The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through April 17. The headline number of 95.2 was a substantial drop from the revised March final reading of 101.4, a slight revision from 101.3. Today's number was well below the Investing.com forecast of 102.5.

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Richmond Fed: Manufacturing Remained Soft in April

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April 28th, 2015

The April update shows the manufacturing composite at -3, up from -8 last month. Above zero indicates expanding activity; below zero indicates contraction. Today's composite number was a tick below the Investing.com forecast of -2.

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Forecasting Q1 GDP: Gazing Into the Crystal Ball

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April 27th, 2015

The big economic number this week will be the Q1 Advance Estimate for GDP on Wednesday at 8:30 AM ET. What do economists see in their collective crystal ball for Q1 of 2015? Let's take a look at the GDP forecasts from the latest Wall Street Journal survey of economists conducted earlier this month.

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NYSE Margin Debt Hits an All-Time High

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April 24th, 2015

The NYSE margin debt data is about a month old when it is published. The latest debt level is up 2.5% month-over-month and at a record high. Real (inflation-adjusted) debt rose 1.9% month-over-month and also at a record high.

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The "Real" Goods on the March Durable Goods Data

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April 24th, 2015

Earlier today the Census Bureau posted the Advance Report on March Durable Goods New Orders. This 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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March Durable Goods: A Mixed Bag

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April 24th, 2015

The April Advance Report on March Durable Goods released today by the Census Bureau was a mixed bag. Here is the Bureau's summary on new orders:

The latest new orders headline number at 4.0 percent was well above the Investing.com estimate of 0.6 percent. However, this series is up only 0.7% percent year-over-year (YoY), and if we exclude transportation, "core" durable goods came in at -0.2 percent month-over-month (MoM) and has contracted for six consecutive months.

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Median Household Income Declined in March

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April 23rd, 2015

The Sentier Research monthly median household income data series is now available for March. The nominal median household income was down $307 month-over-month but up $1,104 year-over-year. That's a -0.6% MoM decline and a 2.1% YoY increase. Adjusted for inflation, the latest income was down $436 MoM but up $1,116 YoY. The real numbers equate to a -0.8% monthly decline but a 2.1% yearly increase.

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New Homes Sales Disappoint Forecasts

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April 23rd, 2015

This morning's release of the March New Homes Sales from the Census Bureau at 481K disappointed expectations, although the sales for the previous month were revised upward. The Investing.com forecast was for 513K sales, which would have been a 5.4% decline from the previous month. The actual decline was 11.4%.

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Four Bad Bears: Some Comments from Bob Bronson

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April 22nd, 2015

Earlier today I received an email from my friend Bob Bronson of Bronson Capital Markets Research. Bob offered some comments on the latest update in my periodic overview of bear market recoveries:

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Gasoline Volume Sales and our Changing Culture

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April 22nd, 2015

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-February, 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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The Four Totally Bad Bear Recoveries: Where Are We Now?

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April 20th, 2015

This 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
  3. The 2000 Tech Bubble bust and,
  4. The Financial Bubble and Crisis.

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The Declining Demand for Driving Vehicles

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March 20th, 2015

Paul Hodges, who writes a blog for ICIS.com on Chemicals and the Economy, recently sent me link to his fascinating study on the correlation between gasoline prices and the Department of Transportation's monthly statistics on vehicle miles driven. Paul offers a new perspective with a scatter chart showing the correlation between gasoline prices (vertical axis) and per-capita vehicle miles traveled on the horizontal axis.

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Household Net Worth: The "Real" Story

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March 13th, 2015

Let's take a long-term view of household net worth from the latest Z.1 release. A quick glance at the complete data series shows a distinct bubble in net worth that peaked in Q4 2007 with a trough in Q1 2009, the same quarter the stock market bottomed. The latest Fed balance sheet shows a total net worth that is 50.9% above the 2009 trough and 22.2% above the 2007 peak and at an all-time high. The nominal Q4 net worth is up 1.9% from the previous quarter and up 5.2% year over year.

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The Fed Balance Sheet: What Is Uncle Sam's Largest Asset?

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March 13th, 2015

Pop Quiz! Without recourse to your text, your notes or a Google search, what line item is the largest asset on Uncle Sam's balance sheet?

  • A) U.S. Official Reserve Assets
  • B) Total Mortgages
  • C) Taxes Receivable
  • D) Student Loans

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Equity Valuations, Recessions and Stock Market Declines

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February 25th, 2015

Last week I had a fascinating conversation with Neile Wolfe, of Wells Fargo Advisors, LLC. Based on the underlying data in the adjacent chart, Neile made some cogent observations about the historical relationships between equity valuations, recessions and market prices:

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Household Income versus Family (Tax-Unit) Income

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January 29th, 2015

My virtual acquaintance New Deal Democrat has posted an interesting article on real (inflation-adjusted incomes) based on annual IRS tax data through 2013. His discussion includes some comparisons between the Census Bureau's median Household Income data and the Family Unit average income. A Family Unit is the term used for an IRS designated Tax Unit (e.g., a couple with dependents, or a head of household with dependents, or a single person).

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Household Incomes Across Time: The Divergence at the Top

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December 30th, 2014

Among the most interesting of the long-term economic indicators I track is the Census Bureau's annual data on the mean (average) household income received by each fifth (quintile) and top 5 percent. See my latest update here. A conspicuous pattern in the series is the widening of the spread in income growth that started during the 1980s.

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Happiness Revisited: A Household Income of $75K?

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September 25th, 2014

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

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September 19th, 2014

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

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September 17th, 2014

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

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September 17th, 2014

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

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September 16th, 2014

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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