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dshort – Advisor Perspectives

S&P 500 Snapshot: The Tenth -1%-Plus Selloff of 2015

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May 5th, 2015

Today the S&P 500 logged its 10th one-percent-or-greater decline of 2015. This one followed a mixed bag of economic reports. The March Trade Balance (Exports minus Imports) was the largest deficit since 2008. This will no doubt send the Second Estimate of Q1 GDP lower. On the other hand, the ISM Non-Manufacturing report surprised to the upside. With the April Employment report waiting in the wings, the equity markets sold off sharply.

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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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Weekly Gasoline Price Update: Up Another Nine Cents

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May 4th, 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 primium both rose nine cents. This is the third week of price increases after six weeks of little change. According to GasBuddy.com, California has the highest average price for Regular at $3.71. South Carolina has the cheapest at $2.33.

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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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World Markets Weekend Update: The Worst Week of 2015

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May 2nd, 2015

Six of the eight indexes on our world watch list traded lower this week, with China's Shanghai Composite as the top performer for the third consecutive week, gaining 1.89% in holiday shortened week. Hong Kong's Hang Seng was the other index to post a gain, albeit a modest 0.26%. The S&P 500 was the best performing loser, down only 0.44%. The losses for the other five index ranged from -1.20% for the FTSE 100 to -4.18% for France's CAC 40. The -1.34% weekly average of the eight is the worst collective performance of 2015.

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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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ECRI Recession Watch: "Whiff of Panic, but Sky Not Falling"

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May 1st, 2015

The featured article on the ECRI website is a Wall Street Journal Live interview of Lakshman Achuthan, who focuses on the weak Advance Estimate of Q1 GDP and also discusses the disconnect between manufacturing and services. The article also includes a link to an April 29 commentary, "A Two-Speed Economy", which elaborates on the manufacturing/services disconnect.

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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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Michigan Consumer Sentiment at 95.9, Unchanged from the Preliminary Report

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May 1st, 2015

The University of Michigan final Consumer Sentiment for April came in at 95.9, up from the 93.0 March final reading but below the initerim high of 98.1 in January. Investing.com had forecast 96.0 for the April final.

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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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The Big Four Economic Indicators: Real Personal Income

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April 30th, 2015

Personal Income (excluding Transfer Receipts) in March declined a fractional -0.10% but is up 3.4% year-over-year. However, when we adjust for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) declined a more negative -0.27%, its first decline in 15 months. The real number is up 3.09% year-over-year.

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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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New Jobless Claims at 262K, Lowest in 15 Years

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April 30th, 2015

Today's seasonally adjusted 262K new claims was a 15-year low and well below the Investing.com forecast of 290K. The four-week moving average at 283,750 is off its interim low of 282,250 set the week ending on April 4th.

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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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Vehicle Miles Traveled: Our Evolving Behavior

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April 27th, 2015

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

"Travel on all roads and streets changed by 2.8% (6.1 billion vehicle miles) for February 2015 as compared with February 2014." The less volatile 12-month moving average is up 0.20% month-over-month and 2.36% 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 0.13% month-over-month and up only 1.23% year-over-year.

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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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Existing Homes Sales: The Population-Adjusted Reality

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April 22nd, 2015

This morning's release of the March Existing Homes Sales beat expectations, rising to an annual rate of 5.19 million units. The latest number represents a 6.1% increase from the previous month, the highest reading since September 2013 and the largest percent increase since December 2010.

Now let's take a longer look at the data adjusted for population growth.

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Understanding the CFNAI Components

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April 20th, 2015

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

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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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Chicago Fed: Economic Growth Slowed In March

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April 20th, 2015

"Index shows economic growth slowed in March": 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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A Long-Term Look at Inflation

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April 17th, 2015

The Consumer Price Index for Urban Consumers (CPI-U) released this morning puts the year-over-year inflation rate at -0.07%. It is substantially below the 3.84% average since the end of the Second World War and its 10-year moving average, now at 2.22%.

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Inflation: A Six-Month X-Ray View

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April 17th, 2015

Here is a table showing the annualized change in Headline and Core CPI, not seasonally adjusted, 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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Conference Board Leading Economic Index Remains in Growth Territory

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April 17th, 2015

The Latest Conference Board Leading Economic Index (LEI) for March is now available. The index rose 0.2 percent, which follows a 0.1 percent February increase (a downward revision from 0.2 percent). The latest number came in below the 0.3 percent forecast by Investing.com.

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What Inflation Means to You: Inside the Consumer Price Index

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April 17th, 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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March Consumer Price Index: Energy and Shelter Costs Rise

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April 17th, 2015

The Bureau of Labor Statistics released the March CPI data this morning. The year-over-year unadjusted Headline CPI came in at -0.07% (rounded to -0.1%), down from -0.03% (rounded to 0.0%) the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.75% (rounded to 1.8%), up from the previous month's 1.70%. The non-seasonally adjusted month-over-month Headline number was up 0.60%, and the Core number was up 0.41% (rounded to 0.4%).

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The Philly Fed ADS Business Conditions Index

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April 16th, 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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Philly Fed Business Outlook: Another Month of Modest Growth

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April 16th, 2015

The latest gauge of General Activity came in at 7.5, up from last month's 5.0. The 3-month moving average came in at 5.9, little changed from 5.5 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook was little unchanged at 35.5 versus the previous month's 32.0.

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Empire State Manufacturing Conditions Go Negative

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April 15th, 2015

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at -1.2 shows a drop from last month's 6.9, which signals a slight contraction in activity. The Investing.com forecast was for a reading of 7.0.

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Producer Price Index: In Line with Expectations

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April 14th, 2015

Today's release of the March Producer Price Index (PPI) for Final Demand came in at 0.2% month-over-month seasonally adjusted. That follows the previous month's -0.5% decline. Core Final Demand (less food and energy) also came in at 0.2% month-over-month following a -0.5% change the month before. The Investing.com forecasts were for 0.2% headline and 0.2% core. The year-over-year change in Final Demand is -0.8%, the lowest in the brief history of this data series.

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Small Business Optimism: A Nine-Month Low

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April 14th, 2015

The latest issue of the NFIB Small Business Economic Trends is out today. The April update for March came in at 95.2, a 2.8 drop from the previous month and the lowest reading in nine months. The index is now at the 26th percentile in this series. The Investing.com forecast was for 98.4.

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March Retail Sales Bounce Back, But Q1 Ended Down 1.3% Quarter-over-Quarter

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April 14th, 2015

The Advance Retail Sales Report released this morning shows that sales in March came in at 0.9% month-over-month, snapping three months of contraction. February sales were revised upward from -0.6% to -0.5%. Core Retail Sales (ex Autos) came in at 0.4%, also snapping a three-month decline. Even with the bounce, however, total Q1 retail sales show a 1.3% contraction from sales in Q4 2014.

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

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April 13th, 2015

The Fed minutes of its March 17-18 policy meeting released last week was were generally viewed by the popular financial press as showing a split in the FOMC on the timing of a rate hike. The Wall Street Journal has now made available its April survey of economists on key economic indicators. At this point only 19 percent of the 60+ economists see a June rate hike, with a 65-percent majority identifying September as the liftoff date.

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Treasury Snapshot: Where Are Yields Headed?

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April 9th, 2015

With Quantitative Easing behind us as well as the Fed's first semi-annual congressional testimony and a couple of 2015 FOMC press releases, let's take another look at US Treasuries. The yields on the 10-, 20- and 30 year Treasuries had trended downward rather dramatically since the end of 2013. They hit their recent lows at the end of January. In fact, the 20- and 30-year yield hit record closing lows of 2.04% and 2.25%, respectively. The yield on the 10-year Note closed at 1.68%, substantially off its 3.04% close at the end of 2013 but above its 1.43% historic low in July of 2012.

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Job Openings & Labor Turnover and the Business Cycle

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April 8th, 2015

Note from dshort: Yesterday I was asked an interesting question from Jill Mislinski, my colleague at Advisor Perspectives who is now collaborating with me on our economic analyses. "Why don't we track the Bureau of Labor Statistics' JOLTS report?" she asked. Good question! we're now adding it to the Advisor Perspectives monthly updates.

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The Recovery of the Prime U.S. Workforce: Where Are We Now?

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April 8th, 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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Demographic Trends in the 50-and-Older Work Force

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April 7th, 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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Structural Trends in Employment by Age Group

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April 7th, 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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Inside the World of Multiple Jobholders: Two Decades of Trends

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April 6th, 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 Remains Higher Than the Pre-Recession Level

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April 6th, 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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The Civilian Labor Force, Unemployment Claims and the Business Cycle

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April 3rd, 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.

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March Had a Significant Decline in Jobs Growth

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April 3rd, 2015

Today's report of 126K new nonfarm jobs in March was well below the Investing.com forecast of 245K. Moreover, February nonfarm payrolls were revised downward by 31K from 295K to 264K. The unemployment rate remained unchanged at 5.5%.

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Anticipating the Employment Report for March

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April 1st, 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 (the PAYEMS series in the FRED repository).

Today we have a February estimate of 189K new nonfarm private employment jobs from ADP. The 189K estimate came in below the Investing.com forecast of 225K for the ADP number.

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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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