S&P 500 Snapshot: October Opens with a Selloff Click to view

October 1st, 2014 Doug Short

When it comes to monthly market volatility in the S&P 500, October tops the list, ranging from its 16.3% surge in 1974 to its 21.8% plunge in 1987. How will October 2014 stack up on the volatility scale? Time will tell. But the month certainly opened on a weak note, dropping 1.32%, the sixth largest one-day decline so far this year. The index closed a bit off its -1.52% intraday low at the start of the final hour of trading. The intraday range was at the 96th percentile of the 189 market days of 2014.

The selloff in equities was matched by a rally in Treasuries.

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

October 1st, 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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Forget Active vs. Passive: It's All About Factors Click to view

October 1st, 2014 Adam Butler, Mike Philbrick and Rodrigo Gordillo

We just love a good debate, and there seems to be quite a heated debate at the moment about the relative utility of passive versus active investing. Perhaps this debate is as timeless as investment management itself, but a flurry of recent studies may have finally armed passive advocates with enough ammunition to settle the argument once and for all.

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ISM Manufacturing Index: Disappointing September Growth Click to view

October 1st, 2014 Doug Short

Today the Institute for Supply Management published its monthly Manufacturing Report. The latest headline PMI at 56.6 came in lower the August 59.0 percent and below the Investing.com forecast of 58.5. The September level was the lowest since June.

Here is the key analysis from the report:

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Three Reasons Why stocks Could Mint a Shiny Fourth Quarter for Investors Click to view

October 1st, 2014 Chris Kimble

Investors often enjoy a strong wind at their back in the fourth quarter, based on seasonal patterns and stock market history. Will 2014 be different?

When looking at the S&P 500, more than half of the index’s gains over the past 25 years took place during the final three months of the year.

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Anticipating the Employment Report for September Click to view

October 1st, 2014 Doug Short

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 September estimate of 213K new nonfarm private employment jobs from ADP, which we can consider along with the estimate of 206K total new jobs from TrimTabs.

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Secular Bull and Bear Markets Click to view

October 1st, 2014 Doug Short

Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? Without 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

September 30th, 2014 Doug Short

Valid until the market close on October 31, 2014

The S&P 500 closed September with a monthly loss of 1.55%. All three S&P 500 MAs and three of the five the Ivy Portfolio ETF MAs are signaling "Invested".

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"Deflationary" Ball Game? Click to view

September 30th, 2014 Chris Kimble

Well October is almost here and it's time for the baseball post season to start today. Speaking of baseball, is a "New Deflationary Ball Game" starting in a variety of assets?

This 5-pack reflects that a variety of long-term support and resistance line breaks are taking place.

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Consumer Confidence Drops Click to view

September 30th, 2014 Doug Short

The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through September 18. The headline number of 86.0 was a surprising decline over the revised August final reading of 93.4, an upward revision from 92.4. Today's number was well below the Investing.com forecast of 92.5. The current level is a four-month-low.

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Moving Averages: Month-End Preview Click to view

September 30th, 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 PowerShares DB Commodity Index Tracking (DBC and the Vanguard FTSE All-World ex-US ETF (VEU), are signal cash "cash", with VEU as this month's addition.

If a position is less than 2% from a signal, it is highlighted in yellow.

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Weekly Gasoline Price Update: Unchanged Click to view

September 29th, 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 and Premium were both unchanged. Regular and Premium are both up 16 cents from their interim lows during the second week of last November.

According to GasBuddy.com, only one state (Hawaii) has Regular above $4.00 per gallon, unchanged from last week, and no states are averaging above $3.90. South Carolina has the cheapest Regular at $3.08.

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Two Measures of Inflation and Fed Policy Click to view

September 29th, 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 August shows core inflation below the Federal Reserve's 2% long-term target at 1.47%, but for the past five months this indicator has hovered above its narrow range of the previous 12 months.

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The Big Four Economic Indicators: Real Personal Income Less Transfer Payments Click to view

September 29th, 2014 Doug Short

According to the Bureau of Economic Analysis, Personal Income (PI) in August rose 0.3%. Transfer Payments (TP), which includes Social Security, Medicare, Medicaid, government & private pensions and miscellaneous welfare programs) rose 0.7%. If we subtract the latter from the former (PI less TP) the monthly increase drops to 0.2%. If we adjust for inflation using the PCE Price Index, the increase rises to 0.3%, thanks mostly to lower gasoline prices, which contributed to a disinflationary month-over-month decline in the BEA's PCE Price Index.

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A Bearish Message from Small- and Mid-Caps? Click to view

September 29th, 2014 Chris Kimble

The Russell 2000 & Mid-Cap 400 indexes happened to bottom together in the fall of 2008, ahead of the S&P 500, sending a bullish signal to the broad markets.

Turning the page forward, they both started started reflecting weakness earlier this year after they both hit respective Fibonacci 161% extension levels. Both have been diverging against the S&P 500 for the past few months.

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The Latest on Real Disposable Income Per Capita Click to view

September 29th, 2014 Doug Short

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

The August nominal 0.20% month-over-month change increases to 0.25% when we adjust for inflation, thanks to a fractional drop in the PCE price index. The year-over-year metrics are 3.43% nominal and 1.94% real.

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

September 29th, 2014 Doug Short

The latest Headline PCE price index year-over-year (YoY) rate of 1.46%, down from the previous month's 1.58%. The Core PCE index of 1.47% is fractionally lower 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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Tracking the Market with Social Media Click to view

September 28th, 2014 Blair Jensen

The Trade Followers Momentum indicator for the S&P 500 Index (SPX) continues to suggest lower prices are ahead. Last week we noted that traders on Twitter were chasing price and that it should cause some instability. That turned out to be the case as market indexes had 1% moves in both directions. This is another indication of uncertainty by market participants that is generally resolved with a large momentum move once everyone piles on to the same side. 7 Day momentum is showing large negative divergences with SPX which often precedes declines.

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Weighing the Week Ahead: Awaiting The Economic Data Message Click to view

September 28th, 2014 Jeff Miller

Employment week always generates a strong economic focus. Because it falls on an early calendar day this month, we also have an avalanche of other economic reports.

This week will emphasize the message of the economic data.

What can we learn from this news?

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Weekly Market Summary Click to view

September 27th, 2014 Urban Carmel

After making bull market highs last week, equities lost 1% this week, led by small caps (RUT) which shed another 2.4%. With RUT now down 8% from its July high and under its 200-dma, investors are starting to wonder whether a larger correction is underway.

One reason to expect a larger sell off is that that has been a pattern during mid term election years. As an example, in the past four mid-term years, SPX has sold off by 8%, 16%, 20% and 34%; from its high to its eventual low has taken 2-6 months. In the past 6 months, the largest correction was 4.5% and took just 11 days.

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World Markets Weekend Update: The Rally Takes a Breather Click to view

September 27th, 2014 Doug Short

The broad rally of world indexes on my watch list took a time out last week, with seven of the eight posting losses. China's Shanghai Composite was the sole gainer with a 0.78% weekly advance. Japan's Nikkei 225 was second best for the week at -0.56%. The S&P 500 managed to take 3rd place with a -1.37%. Germany's DAX was the biggest loser, down over 3%.

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Why Stock Investors Should Care What Happens in the Junk Bond Market Click to view

September 27th, 2014 Chris Puplava

Perhaps the biggest news story of today is that Bill Gross (AKA: the “Bond King”), founder of PIMCO and the largest bond fund in the world, is leaving to join Janus Capital. Shares of Janus (JNS) surged more than 40% today on the news while PIMCO’s parent company, Allianz, fell more than 8%. While Gross’s departure may have garnered most of the headlines today, there were other significant moves in the bond market that caught lesser attention—the second biggest outflow in high yield bonds (“junk bonds”) since the bull market began five years ago.

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Getting Technical: Weekend Update Click to view

September 26th, 2014 Serge Perreault

Here’s the latest weekend update from Serge Perreault, a Chartered Professional Accountant and market technician located near Montreal, Canada. Serge has been following the U.S. market in a series of weekly charts. Here is his update on the S&P 500.

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Corporate Profits and Market Peaks: Are We There Yet? Click to view

September 26th, 2014 Cris Sheridan

Corporate profit data was released today for the second quarter, showing a broad-based rebound from the weather-induced weakness seen at the beginning of the year.

Here’s a chart showing eight different corporate profitability measures since 2009. I’ve added a dotted line to indicate the rebound from Q1 2014:

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5 Things To Ponder: Market Concerns Click to view

September 26th, 2014 Lance Roberts

Thankfully it is Friday which means a rather volatile, and rough, week for stocks is coming to a close. This past week I did a rather complete technical review of the major markets globally noting a rising level of deterioration in prices. As I noted in that missive:

“However, since the beginning of the year, as the Federal Reserve has begun to reduce their "liquidity-driven goodness", markets have begun to stagnate at the levels I identified earlier this year.

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The BEA's Q2 GDP Third Estimate: A Deeper Analysis Click to view

September 26th, 2014 Rick Davis

In their third estimate of the US GDP for the second quarter of 2014, the Bureau of Economic Analysis (BEA) reported that the economy was growing at a +4.59% annualized rate, up about a half a percent yet again from their previous estimate. When compared to the prior quarter, the new measurement is now up 6.7% from a -2.11% contraction rate for the 1st quarter of 2014. This level of quarter to quarter improvement in GDP growth is truly rare; this is the best since the 2nd quarter of 2000, and the second best since the 2nd quarter of 1982.

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ECRI Recession Watch: Weekly Update Click to view

September 26th, 2014 Doug Short

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 134.9, down slightly from the previous week's 135.6. The WLI annualized growth indicator (WLIg) is at 2.0, down slightly from the previous week's 2.1.

On Wednesday, September 10th, Lakshman Achuthan appeared on Wall Street Journal Live, where he stated that Japan is on track for another recession. He included comments about what that means for Europe and the United States.

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Pimco's Gross Goodbye Click to view

September 26th, 2014 Chris Kimble

Bill Gross announced that he was leaving Pimco this morning, is this fund suggesting that investors do the same and exit some broad market holdings due to this price action of late?

In my opinion, the fund's price action has NOT sent an all-out bearish signal to the broad market at this time as the S&P 500 is just 2% off all-time highs. If we see further weakness from this complex, the message would be one I will respect.

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Michigan Consumer Sentiment Remains at a 14-Month High Click to view

September 26th, 2014 Doug Short

The Final University of Michigan Consumer Sentiment for September came in at 84.6, unchanged from the September Preliminary reading but up from the 82.5 August final. This is the highest level since July of last year, 14 months ago. Today's number was a tick below the Investing.com forecast of 84.7.

See the chart below for a long-term perspective on this widely watched indicator. I've highlighted recessions and included real GDP to help evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.

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Q2 GDP Rises to 4.6% in the Third Estimate, Matching Expectations Click to view

September 26th, 2014 Doug Short

The Third Estimate for Q2 GDP, to one decimal, came in at 4.6 percent, an upward revision from the Second Estimate of 4.2 percent. The GDP deflator used to calculate real (inflation-adjusted) GDP slipped to 2.1 percent, an downward revision from the Second Estimate of 2.2 percent. Investing.com correctly forecast both numbers.

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A Rational Look at Gold Click to view

September 26th, 2014 Michael Lombardi

The fundamentals that drive gold prices higher are in full force and improving. Central banks are buying more of the precious metal (to add to their reserves), while countries that are known to be big consumers of gold bullion post increased demand.

According to the India Bullion & Jewellers’ Association, India’s monthly gold bullion imports are expected to rise by as much as 50% in the coming few months. This is mainly due to the festival/wedding season fast approaching in India.

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Dollar Stealing Gold’s Luster Click to view

September 25th, 2014 Dominic Cimino

An interesting development is occurring. The US Dollar is in the midst of its strongest rally of the last several years. At the same time, gold and commodities are trending lower. Have you noticed you don’t see as many gold commercials these days? What does it all mean?

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3 Things Worth Thinking About: "No Bubble Here" Click to view

September 25th, 2014 Lance Roberts

Yesterday, I reviewed some the longer term macro trends of the markets noting some deterioration that should give rise to some concern. However, the bullish trends currently remain intact which suggests that portfolios remain more heavily tilted towards equity exposure for the time being.

Shortly after posting my analysis, I received an email of the following chart with a title that simply stated: “I do not know why anyone is talking about bubbles...”

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

September 25th, 2014 Doug Short

Earlier today I posted an update on the September Advance Report on August 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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Forewarning Pronounced Economic Weakness Click to view

September 25th, 2014 Ted Kavadas

In the post of September 11, 2014 (“Additional Thoughts Concerning The Economic Situation“) I stated:

There are an array of indications and other “warning signs” – many readily apparent – that the current level of economic activity and financial market performance is accompanied by exceedingly perilous dynamics.

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How Long to the Next Recession? iM’s Weekly Update Click to view

September 25th, 2014 Anton Vrba and Georg Vrba

The BCI at 180.6 is up from last week’s upward revised 178.8. The BCIg, the six month smoothed annualized growth of BCI, is at 19.1 also up from last week's upward revised 18.5. This week’s rise in BCI is mainly attributed to yesterday’s released statistics for New Houses Sold and For Sale, which are continuing to improve and are at record levels for the current business cycle.

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Durable Goods Report: Up 0.7% Excluding Volatile Transportation Orders Click to view

September 25th, 2014 Doug Short

The September Advance Report on August 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 August decreased $54.5 billion or 18.2 percent to $245.4 billion, the U.S. Census Bureau announced today. This decrease, down following two consecutive monthly increases, followed a 22.5 percent July increase. Excluding transportation, new orders increased 0.7 percent. Excluding defense, new orders decreased 19.0 percent.

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New Jobless Claims at 293K, Better Than Expected Click to view

September 25th, 2014 Doug Short

In the week ending September 20, the advance figure for seasonally adjusted initial claims was 293,000, an increase of 12,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 280,000 to 281,000....

Today's seasonally adjusted number at 293K was below the Investing.com forecast of 300K. The 4-week moving average is now only 4,750 above its post-recession low set seven weeks ago.

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Housing Prices, "Real" Interest Rates, and the "Real" CPI Click to view

September 24th, 2014 Mike Shedlock

With housing prices still rising, albeit more slowly, inquiring minds might be wondering about "Real" interest rates and the "Real" CPI?

CPI Distortions

I believe the CPI is hugely distorted, but not for the same reasons as everyone else. Home prices used to be in the CPI but the BLS now uses OER (Owners' Equivalent Rent). OER is a measure of actual rental prices as well as fiction.

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NYSE Margin Debt Drifts Higher in August Click to view

September 24th, 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. June saw a 0.9% decline, but the August number has drifted higher, up 0.6%, and is now only is 1.9% below the February peak.

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China Update: Opportunity Or Risk? Click to view

September 24th, 2014 Adam Feik

I often write about investment opportunities – or (sometimes) the lack thereof – here in the U.S. But of course, my portfolios usually include some foreign investment opportunities as well (sometimes more than others).

So today, let’s look at the largest country in the world – which happens to be involved in a lot of stories in the financial press these days.

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Minimum Volatility Stocks: Out-Of-Sample Performance of iM’s Best12(USMV) Click to view

September 23rd, 2014 Georg Vrba

The backtest reported in a previous article showed that ranking the holdings of USMV, the iShares MSCI USA Minimum Volatility ETF, and selecting a portfolio of the 12 top ranked stocks, provided higher returns for the portfolio than for the underlying ETF. To test these findings out-of-sample we launched the Best12(USMV)-July-2014 model on Jun-30-2014 and published the holdings on our website then. So far this portfolio has gained 8.2%, while USMV is up a mere 2.2%.

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

September 23rd, 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-July, 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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It's That Time of Year... Click to view

September 23rd, 2014 Chris Kimble

Fall, celebrated by poet John Keats as the "season of mists and mellow fruitfulness", arrived yesterday at 10:29 PM EDT. Today, September 23rd, will be the first full day of Autumn in the US.

As market watchers are well aware, the seasonal turn window has NOT had any impact for a few years.

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Richmond Fed Manufacturing Composite: "Continued to Grow at a Moderate Pace in September" Click to view

September 23rd, 2014 Doug Short

The September update shows the manufacturing composite at 14, up from 12 last month. Numbers above zero indicate expanding activity. Today's composite number was above the Investing.com forecast of 10.

Because of the highly volatile nature of this index, I like to include a 3-month moving average, now at 11.0, to facilitate the identification of trends.

Here is a snapshot of the complete Richmond Fed Manufacturing Composite series.

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Forecasting the Market: A Thought Experiment Revisited Click to view

September 23rd, 2014 Chris Turner

With nearly all Q2-14 reported earnings in the books, here is the latest update of my ongoing "thought experiment" for forecasting the S&P 500 price based on earnings fundamentals. The chart below is based on the latest trailing twelve-month earnings (TTM) data published on the Standard & Poor's website as of September 18th, 2014. The numbers are from the spreadsheet maintained by senior analyst Howard Silverblatt. See dshort's monthly valuation update for instructions on downloading the spreadsheet.

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Analyzing Earnings as of Q2 2014 Click to view

September 22nd, 2014 Lance Roberts

Second quarter results were considerably better than the Q1 as activity rebounded following the exceptionally cold winter season. For the quarter, operating earnings rose from $27.32 per share to $29.45 which translates into a quarterly increase of 7.8%. While operating earnings are widely discussed by analysts and the general media; there are many problems with the way in which these earnings are derived due to one-time charges, inclusion/exclusion of material events, share buybacks and accounting gimmickry to "beat earnings."

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Understanding the CFNAI Components Click to view

September 22nd, 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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About That 500% Jump in Interest Rates... Click to view

September 22nd, 2014 Michael Lombardi

The verdict is in...

Last week, at the end of its regularly scheduled meeting, the Federal Reserve said:

1) It would continue to reduce the amount of money it creates each month. The Fed said it will be out of the money printing business by the end of this year. By that time, the Federal Reserve will have created more than $4.0 trillion new American dollars (out of thin air).

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Chicago Fed: Economic Growth Decelerated in August Click to view

September 22nd, 2014 Doug Short

"Index shows economic growth decelerated in August": 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) decreased to –0.21 in August from +0.26 in July. Two of the four broad categories of indicators that make up the index decreased from July, and two of the four categories made negative contributions to the index in August."

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Tracking the Market with Social Media Click to view

September 21st, 2014 Blair Jensen

The Trade Followers Momentum indicator for the S&P 500 Index (SPX) is showing uncertainty from market participants. The pattern currently being painted by 7 day momentum is usually indicative of traders chasing price. The consolidation and small dip in price over the past few weeks caused momentum to drop rapidly, then when the market recovered momentum shot upward. This behavior shows market participants are reacting rather than planning and executing. This puts some instability into the market as any change in news will cause swift changes in sentiment.

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Weighing the Week Ahead: Do Market Divergences Signal a Warning for Stock Investors? Click to view

September 21st, 2014 Jeff Miller

In the wake of the FOMC meeting and the IPO hype, we face a week with little new information – the lull before earnings season. This sort of vacuum makes it difficult to predict the week ahead, but I have an interesting idea:

This week will feature discussion about market divergences — gold, oil, small caps, and bitcoin are losers. Large cap stocks have been winners. Why?

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Weekly Market Summary Click to view

September 20th, 2014 Urban Carmel

SPX, DJIA and NDX all ended the week at new highs. For them, the trend remains higher.

What is most interesting is the small cap index, RUT. Not only did it lose 1.2% this week while the other indices gained, but it is now more than 5% off its peak. For the year, RUT is negative and SPX is up 9%.

Is this divergence between SPX and RUT bearish? It would seem it should be.

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

September 20th, 2014 Doug Short

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

Travel on all roads and streets changed by 1.5% (4.0 billion vehicle miles) for July 2014 as compared with July 2013. The less volatile 12-month moving average is up 0.13% 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 0.05% month-over-month and down 0.2% year-over-year.

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5 Things To Ponder: The Fed Click to view

September 19th, 2014 Lance Roberts

It has been quite an eventful week between Scotland's battle over independence, the Federal Reserve's FOMC announcement and the markets making new all-time highs.

For Scotland, the decision came down to the benefits of maintaining their unity with the United Kingdom. While William Wallace may not have agreed, the vote to remain part of the U.K., which cannot happen again for a generation, removed a potential stumbling block for the markets globally.

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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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Market Cap to GDP: The Buffett Valuation Indicator Click to view

September 19th, 2014 Doug Short

Note from dshort: I've updated this analysis to include yesterday's Federal Reserve release of the 2014 Z.1 Financial Accounts for Q2.

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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Market Valuation Overview Click to view

September 19th, 2014 Doug Short

Note from dshort: I delayed posting this monthly update until we had yesterday's release of quarterly Fed data for calculating the Q Ratio, which I've discussed in more detail in the Q Ratio commentary linked below.

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

September 19th, 2014 Doug Short

Note from dshort: I've updated this series to include the data in yesterday's Federal Reserve release of the 2014 Z.1 Financial Accounts for Q2. Based on data extrapolations through the latest close, the Q Ratio is 70% above its arithmetic mean and 83% above its geometric mean. The current valuation level is surpassed only by the Tech Bubble.

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3 Things Worth Thinking About (Volume 9) Click to view

September 18th, 2014 Lance Roberts

One of Fiedler's Forecasting Rules states:

"Always be precise in your forecasts: Economists state their GDP growth projections to the nearest tenth of a percentage point to prove they have a sense of humor."

The Federal Reserve has certainly proved both points

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Deflation at the Fed (and Check Out Commodities) Click to view

September 18th, 2014 Chris Kimble

Does the Fed prefer Inflation or Deflation? See the footnote below for proof that Deflation has been the Fed trend for decades.

On a more serious note regarding the Inflation/Deflation theme, many feel the Fed's policies will lead to strong inflation. From a stock market perspective, inflation is taking place, as the Dow and S&P 500 are at/near all-time highs.

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Philly Fed Business Outlook: Continued Growth Click to view

September 18th, 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 22.5, a decrease from last month's 28.0. The 3-month moving average came in at 24.8, up from 23.2 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. Today's stunner: The six-month outlook at 56.0, off the 22-year high of 64.4 set last month.

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How Long to the Next Recession? iM’s Weekly Update Click to view

September 18th, 2014 Anton Vrba and Georg Vrba

The BCI at 178.4 is up from last week’s 177.8. The BCIg, the smoothed annualized growth of BCI, at 18.2 is also up from last week's 18.1. However, BCI does not indicate a possible recession in the near future.

Figure 1 plots BCIp, BCI, BCIg and the S&P500 together with the thresholds (red lines) that need to be crossed to be able to call a recession.

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Should You Buy Into the U.S. Dollar Rally? Click to view

September 18th, 2014 Michael Lombardi

Since May, when it was near an all-time low, the U.S. dollar has rallied. Compared to other major currencies of the world, the greenback is up five percent since July, as the chart below illustrates.

The question: should investors get into this U.S. dollar rally?

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Economic Denial From Builders: The Sequel Click to view

September 17th, 2014 Logan Mohtashami

On this date last year I shared a chart with CNBC’s Diana Olick, which indicated how far removed home builders were from economic reality. Titled appropriately “Economic Denial From Home Builders”.

Now, one year later, the builders have raised confidence to yet a higher and ever more disconnected from reality level, by reporting confidence levels equal to the number recorded back in November of 2005

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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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A Long-Term Look at Inflation Click to view

September 17th, 2014 Doug Short

The August Consumer Price Index for Urban Consumers (CPI-U) released this morning puts the August year-over-year inflation rate at 1.70%, off the May 19-month high of 2.13%. It is well below the 3.87% average since the end of the Second World War and 28 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

September 17th, 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

September 17th, 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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Inflation? Not in August, Thanks to the Drop in Gasoline Prices Click to view

September 17th, 2014 Doug Short

The Bureau of Labor Statistics released the August CPI data this morning. Year-over-year unadjusted Headline CPI came in at 1.70%, down from the previous month' 1.99%. Year-over-year Core CPI (ex Food and Energy) came in at 1.72% (rounded to 1.7%), down from the previous month's 1.86%. The non-seasonally adjusted month-over-month Headline number was negative at -0.17%, and the Core number was up a fractional 0.07%. On a seasonally-adjusted basis, the all items index posted its first contraction in 16 months.

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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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Producer Price Index for August Was Unchanged Click to view

September 16th, 2014 Doug Short

Today's release of the August Producer Price Index (PPI) for Final Demand was unchanged month-over-month seasonally adjusted. Core Final Demand was up 0.1% from last month. Investing.com correctly forecast Core PPI but was looking for a comparable 0.1% increase in the headline number.

The unadjusted year-over-year change in Final Demand is up 1.8%, up slightly from last month's YoY of 1.7%.

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An Alibaba Push for Yahoo? Click to view

September 16th, 2014 Chris Kimble

For the past decade this 38% Fibonacci level has been very heavy resistance for Yahoo, stopping its upward progress two different times.

Could the third time be different with the assistance of Alibaba?

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The Perfect (Dollar) Storm – When Currencies Collide Part 2 Click to view

September 15th, 2014 Chris Puplava

Should the USD break out from its 2005 to present bearish trend, we should see some significant developments in inter-market relationships. For starters, the relative performance of U.S. stocks to the MSCI World Stock Index Excluding the U.S. shows a strong correlation to the USD Index. Should the USD continue to rally we are likely to see U.S. stocks continue to outperform world stock markets.

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Deflationary Spiral Nonsense; Keynesian Theory vs. Practice Click to view

September 15th, 2014 Mike Shedlock

Price Deflation Hits Italy First Time in 55 Years

The Italian National Institute of Statistics (ISTAT) reports that consumer price inflation declined by 0.1% from August 2013 to August 2014.

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The Illusion of Permanent Liquidity Click to view

September 15th, 2014 Lance Roberts

This "illusion" has not only been driving investors to make risky bets across the entire spectrum of asset classes; it has also led to the illusion of economic stability and growth. For example, financial analysts have started pushing the idea that the current earnings and economic backdrop will last for another decade. Such an expansion would rival the longest previous period on record (119 Months) from March of 1991 through March of 2001 during the "technological revolution." A repeat of such an expansion would be quite a feat if it were to occur.

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Empire State Manufacturing Shows a Robust Expansion Click to view

September 15th, 2014 Doug Short

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions continues is expanding at a faster pace. The headline number has increased to 27.5, up from 14.7 last month and its highest level since October 2009. The Investing.com forecast was for a reading of 16.0. The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions.

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House Prices to Decline in 2015? Click to view

September 15th, 2014 Michael Lombardi

As we progress to the end of 2014, my skepticism towards the U.S. housing market increases. In fact, the fate of home prices in 2015 is in question.

I don’t expect an outright collapse of the housing market like the one we saw in 2007, but I see the momentum in housing prices that began in 2012 and picked up in 2013 dissipating for several reasons.

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Weighing the Week Ahead: Will the Fed Change Course? Click to view

September 14th, 2014 Jeff Miller

After a number of meetings where the FOMC announcement merely confirmed widespread expectations, this week’s result may be different. I expect everyone to be wondering, Will the Fed change course?

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Junk Bonds: A Replay of the Past? Click to view

September 13th, 2014 Chris Kimble

For a period of time around from 1997 to 1999 & 2005 to 2007, the Pimco High Yield fund (PHDAX) found it difficult to move higher, creating a series of level highs. At the same time it created a series of higher lows. Once old support was tested as resistance and it failed to move higher, large declines in junk bonds and the stock market took place.

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5 Things To Ponder: "Bear-ly" Extant Click to view

September 12th, 2014 Lance Roberts

"It is a bad sign for the market when all the bears give up. If no-one is left to be converted, it usually means no-one is left to buy.” - Pater Tenebrarum

That quote got me thinking about the dearth of bearish views that are currently prevalent in the market. The chart below shows the monthly level of bearish outlooks according to the Investors Intelligence survey.

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Joe Friday: 10-year Yields Could Rise 150% or More Click to view

September 12th, 2014 Chris Kimble

The Power of the Pattern suggested that interest rates were about to blast off in May of 2013, because it looked like a bullish inverse head & shoulders pattern in yields was in play. What happened right after that posting? Interest rates experience the largest 18-month rally in yields in the past 30-years, beating the next biggest rally by 50%!

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Census Bureau Revisions to Retail Sales Click to view

September 12th, 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 June 2014, the most recent month for which we have all three data points.

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August Retail Sales Bounce Back Click to view

September 12th, 2014 Doug Short

The Advance Retail Sales Report released this morning shows that sales in August rose 0.6% month-over-month, up from 0.3% in July (an upward revision from 0.0%). Core Retail Sales (ex Autos) rose 0.3%, up from 0.1% in July.

Today's headline and core numbers matched the Investing.com forecasts.

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What the Worst Jobs Report of the Year Really Tells Us Click to view

September 12th, 2014 Michael Lombardi

A week ago today, the Bureau of Labor Statistics (BLS) released its jobs market report for the month of August. To say the very least, there was nothing in that report that says the labor market in the U.S. economy is back on its feet. In fact, the report painted a gruesome image of employment in this country.

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The Perfect (Dollar) Storm – When Currencies Collide Part 1 Click to view

September 11th, 2014 Chris Puplava

In October 1991 developments were in motion to create what Bob Case, then deputy meteorologist for the National Weather Service, called “the perfect storm,” which rocked the northeast and sank the Andrea Gail and its six crew members. A book was written about the storm in 1997 and a movie followed in 2000 chronicling the Andrea Gail’s final hours. Mr. Case highlighted the confluence of three factors that made the monster storm, which were:

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Vanguard Funds With Dynamic Asset Allocation: Which Allocation Is "Right for Your Situation"? Click to view

September 11th, 2014 Georg Vrba

High returns can be obtained from actively managed Vanguard funds when a dynamic asset allocation strategy is employed. However, models using index funds with dynamic asset allocation also produce better returns than models with static asset allocations. Performance and risk measures are given for six iM(MAC-Vang) models with various asset allocations, which use a combination of Vanguard bond- and stock-funds, and switch assets according to stock-market climate.

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3 Things Worth Thinking About (Volume 8) Click to view

September 11th, 2014 Lance Roberts

A Day To Remember – September 11, 2001

On the 13th anniversary of September 11, our thoughts are once again with all those who lost loved ones on that tragic morning. It is important that we remember those whose lives were lost, not only in the tragedy of September 11th, but all those that have died defending the freedoms that are the embodiment of America.

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The State of U.S. New Home Market Click to view

September 11th, 2014 Craig Eyermann

Is there a bull or bear market for new homes in the U.S.?

That question arises because other analysts are starting to raise red flags regarding the state of the U.S. new housing market, including Dave Kranzler, who argues that the stocks of U.S. home builders are ripe for shorting, and Charles Hugh Smith who believes that what he calls the "echo housing bubble" is in the process of "popping".

So what is the real economic state of business for the U.S. homebuilding industry?

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How Long to the Next Recession? iM’s Weekly Update Click to view

September 11th, 2014 Anton Vrba and Georg Vrba

The BCI at 177.8 is up from last week’s downward revised 177.6. The BCIg, the smoothed annualized growth of BCI, at 18.1 is also up from last week's downward revised 17.9. However, BCI does not indicate a possible recession in the near future.

Figure 1 plots BCIp, BCI, BCIg and the S&P500 together with the thresholds (red lines) that need to be crossed to be able to call a recession.

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Additional Thoughts Concerning the Economic Situation Click to view

September 11th, 2014 Ted Kavadas

Perhaps the main reason that I write of our economic situation is that I continue to believe, based upon various analyses, that our economic situation is in many ways misunderstood. While no one likes to contemplate a future rife with economic adversity, current and future economic problems must be properly recognized and rectified if high-quality, sustainable long-term economic vitality is to be realized.

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Want To “Buy Low and Sell High”? Here’s What to Do Today Click to view

September 11th, 2014 Adam Feik

What investment advice could be more basic than the old axiom to “buy low and sell high”? Yet, of all the often-ignored adages, this one is perhaps the most ignored of all.

Notice the adage does NOT say “buy and hold.” Huh! Ever notice that?! “Buy low and sell high” is very different from “buy and hold”! Observe:

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For 90% Of Americans: There Has Been No Recovery Click to view

September 10th, 2014 Lance Roberts

Every three years the Federal Reserve releases a survey of consumer finances that is a stockpile of data on everything from household net worth to incomes. The 2013 survey confirms statements I have made previously regarding the Fed's monetary interventions leaving the majority of Americans behind:

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Decelerating Growth for New Home Sale Prices Click to view

September 10th, 2014 Craig Eyermann

Evidence continues to mount that all is not well for the new home sales market in the United States. Now that we're armed with the most recent data available for median new home sale prices and median household income through the month of July 2014, let's update the picture of where things stand for the consumers of new homes being built throughout the United States:

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World Growth vs. Copper with 3-Month Lag; Iron Sinks to 5-Year Low; US Will Not Decouple Click to view

September 10th, 2014 Mike Shedlock

Copper is frequently cited as a leading indicator of economic activity because if its widespread use in many sectors of the economy, from homes and factories, to electronics and power generation and transmission.

For that reason, some call it "Dr. Copper".

Inquiring minds may be wondering what copper has to say about future economic growth. The following charts will explain.

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Interest Rates Are Up 200% in the Past Three Years ... Are You Kidding Me? Click to view

September 10th, 2014 Chris Kimble

When one looks at the yields on very short term U.S. Government debt, yields on the 2 & 5-year notes are up a big percentage over the past three years.

Since 2011, the yield on the 2-year note is up over 200% (0.17% to 0.56%) and the yield on the 5-year note is up over 100%. No doubt the actual rate remains very low on a historical basis.

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About That $38-Million Ferrari... Click to view

September 10th, 2014 Michael Lombardi

A 1962 Ferrari 250 GTO Berlinetta has set a new record selling for $38.1 million at an auction in Pebble Beach, California. News of the sale was all over the Internet and made it into major newspapers like The New York Times, The Wall Street Journal, and the Los Angeles Times.

But it’s not just old, rare cars that are selling. The high-end luxury car market is also booming. For example, Maserati sold 6,573 cars this past July, compared to only 1,536 cars a year ago.

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The 7 Deadly Sins Of Investing Click to view

September 9th, 2014 Lance Roberts

If you were raised in a religious household, or were sent to a Catholic school, you have heard of the seven deadly sins. These transgressions -- wrath, greed, sloth, pride, lust, envy and gluttony -- are human tendencies that, if not overcome, can lead to other sins and a path straight to the netherworld.

In the investing world, these same seven deadly sins apply. These "behaviors," just like in life, lead to poor investing outcomes.

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Connecting Apple's Dots: It Will Be Different This Time Click to view

September 9th, 2014 Chris Kimble

How time flies! Nine years ago Steve Jobs delivered one of the most memorable commencement addresses of all time at Stanford University (available on YouTube). In that speech, Steve discussed connecting life's dots by looking backwards.

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Small Business Sentiment: "Optimism Bumps Up Again" Click to view

September 9th, 2014 Doug Short

The latest issue of the NFIB Small Business Economic Trends is out today. The September update for August came in at 96.1, a 0.4 point uptick from the previous month's 95.7. In characteristic style, today's report subtitle downplays the improvement: "Expectations glum in 0.4-point increase to 96.1 in August". The index is now at the 29th percentile in this series, slightly 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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Obama Outperformed Reagan? Hardly. Click to view

September 8th, 2014 Lance Roberts

"There are three types of lies; Lies, Damn Lies and Statistics." - Mark Twain

Last week, Adam Hartung qualified for the "Mark Twain Award" if there was such a thing. In his article, "Obama Outperforms Reagan On Jobs, Growth & Investing," Adam goes to some length to try and show that the unemployment rate, the S&P 500 and economic growth are currently better under the current administration than they were during the Reagan administration.

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

September 8th, 2014 Doug Short

Last month Fed Chair Janet Yellen delivered an extended analysis of "Labor Market Dynamics and Monetary Policy" at the annual Jackson Hole Symposium. Her speech essentially reviewed the ongoing debate over the cyclical versus structural factors in employment since the Great Recession.

Over the weekend 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

September 8th, 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

September 8th, 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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Multiple Jobholders as a Percent of the Employed: Two Decades of Trends Click to view

September 8th, 2014 Doug Short

What are the long-term trends for the percentage of 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 monthly Current Population Survey.

As of the latest monthly data, multiple jobholders account for less than 5% of civilian employment. The survey captures data for four subcategories, the current relative sizes of which I've captured in a pie chart below. Note that the distinction between "primary" and "secondary" jobs is subjective one.

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The Core Workforce Part-Time Employment Ratio Continues to Improve Click to view

September 8th, 2014 Doug Short

Let's take a close look at last week'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 focus is on total hours worked: Full-time status may result from multiple part-time jobs.

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Tracking the Market with Social Media Click to view

September 7th, 2014 Blair Jensen

The Trade Followers Momentum indicator for the S&P 500 Index (SPX) is giving mixed signals this week. The core momentum indicators are still warning that some caution would be prudent. They reached extremely over bought levels two weeks ago which caused us to warn that the market would likely consolidate gains near the 2000 area before pushing higher. Two weeks later SPX has broken above 2000, but the momentum indicators from both Twitter and StockTwits have only fallen to a level that has historically marked short term tops.

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Weighing the Week Ahead: Which Stocks are Best for the 2014 Homestretch? Click to view

September 7th, 2014 Jeff Miller

In the absence of major economic news and events, the punditry usually tries to squeeze a little more juice out of old themes. The Fed reaction to the employment report will, no doubt, get some attention, but there are interesting corporate stories this week. Between the Apple iPhone announcement on Tuesday and the start of the Alibaba road show, there is news to fill the vacuum before late-week economic data.

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Weekly Market Summary Click to view

September 6th, 2014 Urban Carmel

Yesterday's widely anticipated employment report (NFP) reaffirmed that growth remains positive but tepid. 142,000 jobs were added in August, well off the expected print of 220,000 new jobs.

Was this "miss" really a surprise? No.

This month's print follows those of 84,000 in December and 288,000 in June. Moving between extremes like these is nothing new: it has been a pattern during every bull market.

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ISM Data for July and August Point to Very Strong Growth in Q3 GDP Click to view

September 6th, 2014 Robert Lamy

...The forecast for the third quarter of 2014 is reported in Figure 2. It shows an acceleration in the pace of economic growth in the third quarter, as real GDP is projected to rise by 5.3% (annual rate). In the second quarter, real GDP rebounded by 4.2% (preliminary estimate, annual rate) from the 2.1% drop in the first quarter. The projected stronger growth in real GDP in the third quarter reflects a significant strengthening in activity in both manufacturing and non-manufacturing industries.

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Why Calls for a Top Still Seem Premature Click to view

September 5th, 2014 Cris Sheridan

A handful of readers wrote yesterday: “Corporate profits are rolling over!”, “Cris, it’s time to get the word out.”

It appears the source of all the alarm was an article that recently appeared at Business Insider, “Wall Street Declares the Great Profit Margin Boom Is Finally Over,” which showed the following chart as partial evidence:

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5 Things To Ponder: Perspicacious Observations Click to view

September 5th, 2014 Lance Roberts

This past week has seen the market repeatedly attempt new "all-time" highs only to be found wanting. There has been plenty of headline data for the "bulls" to feast on from the ECB announcing a program to buy bonds, surging ISM data and improvement in productivity. However, the underlying data has kept the "bears" in the game with new orders and employment showing weakness, unit labor costs shrinking and the realization that the ECB's plans are likely be ineffectual.

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Joe Friday: Momentum Back at 2007 Levels For Small & Mid Caps Click to view

September 5th, 2014 Chris Kimble

Small and Mid Cap monthly momentum is reaching lofty levels last seen in 2007.

At the same time both are hitting Fibonacci 161% extension levels based upon their 2003 lows and 2011 highs as a resistance line off the 2003 lows is coming into play at (1) below.

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The Unemployment Rate Is Not Signaling a Recession: Update Click to view

September 5th, 2014 Georg Vrba

A reliable source for recession forecasting is the unemployment rate, which can provide signals for the beginnings and ends of recessions. The unemployment rate model, updated with the August figure of 6.1%, does not signal a recession now.

The model relies on four indicators to signal recessions:

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

September 5th, 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 view the numbers as a percent ratio of the Civilian Labor Force.

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Disappointment: Only 142K New Nonfarm Jobs in August Click to view

September 5th, 2014 Doug Short

Today's report of 142K new nonfarm jobs was substantially below the Investing.com forecast of 225K and the lowest monthly change since December. The unemployment rate ticked down from 6.2% to 6.1%, matching the Investing.com expectation.

The post-recession duration of unemployment remains high at 31.7 weeks, although that's well off the 40.7-week all-time high in late 2011.

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Another Warning Sign: Stocks Hit Highs on Collapsing Volume Click to view

September 5th, 2014 Michael Lombardi

Will the S&P 500 continue to march to new highs?

Well, my opinion towards the stock market hasn’t changed. I remain skeptical for a variety of reasons, many of which I have shared with my readers over the past few months.

But I have a new concern about the stock market, something that hasn’t been touched on by analysts: trading volume is collapsing.

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3 Things Worth Thinking About (Volume 7) Click to view

September 4th, 2014 Lance Roberts

Surge In Sentiment Surveys

There is an interesting divergence going on between sentiment based surveys, specifically the ISM Manufacturing and Non-Manufacturing surveys, and actual underlying economic data. This week saw both surveys rise sharply to cyclically high levels despite weakness in actual new orders and consumer consumption.

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ISM Non-Manufacturing: August Composite at Another Record High Click to view

September 4th, 2014 Doug Short

Today the Institute for Supply Management published its latest Non-Manufacturing Report. The headline NMI Composite Index is at 59.6 percent, up from last month's 58.7 percent and another record high for this relatively new indicator, which goes back to January 2008, the second month of the Great Recession. Today's number came in well above the Investing.com forecast of 57.5.

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How Long to the Next Recession? iM’s Weekly Update Click to view

September 4th, 2014 Anton Vrba and Georg Vrba

The BCI at 177.7 is up from last week’s 177.0. The BCIg, the smoothed annualized growth of BCI, at 18.0 is also up from last week's upward revised 17.9. However, BCI does not indicate a possible recession in the near future.

Figure 1 plots BCIp, BCI, BCIg and the S&P500 together with the thresholds (red lines) that need to be crossed to be able to call a recession.

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Recession Probability Models - September 2014 Click to view

September 4th, 2014 Ted Kavadas

There are a variety of economic models that are supposed to predict the probabilities of recession.

While I don’t agree with the methodologies employed or probabilities of impending economic weakness as depicted by the following two models, I think the results of these models should be monitored.

Please note that each of these models is updated regularly, and the results of these – as well as other recession models – can fluctuate significantly.

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Calling It Like It Is Click to view

September 3rd, 2014 Lance Roberts

Yesterday I was directed to read a piece by Brad Delong, Professor of Economics at Berkeley and a research associate at the National Bureau of Economic Research (NBER), entitled "The Greater Depression."

The entire piece is worth reading, however, here is the clincher:

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Vanguard's Actively Managed Funds With Dynamic Asset Allocation: The Best Bet for High Returns Click to view

September 3rd, 2014 Georg Vrba

“Studies have shown that your asset allocation has a bigger impact on your long-term returns than any specific fund you pick....” This is part of a statement on a Vanguard web-page. My study shows this to be true, and exceptionally high returns can be obtained from Vanguard funds, when a dynamic asset allocation strategy is employed, and actively managed funds instead of index funds are used. Using a combination of bond-, stock-, and sector-funds in the model, and switching asset allocation according to stock-market climate....

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Eye of the Storm, Part 2 Click to view

September 3rd, 2014 Adam Feik

Last week in “Part 1,” I began by asking, “What’s normal for financial markets and investing?” Together, we re-lived some of the 20th century’s incredible achievements, calamities, and triumphs. We then considered whether this new century’s version of “normal” would be similar to the 20th century – or whether things might be different now. We pondered the possibility that the slower economic growth (2.2%) of the past 5 years could represent – as Mohamed El-Erian predicted in 2009 – a “new normal” the U.S. will have to contend with for many years – or decades.

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Real Median Household Income Rose 0.20% in July Click to view

September 3rd, 2014 Doug Short

Summary: The Sentier Research monthly median household income data series is now available for July. The nominal median household income was up $154 month-over-month and $1,945 year-over-year. Adjusted for inflation, it was up $105 MoM and only $905 YoY. The real numbers equate to a 0.20% MoM increase and a 1.70% YoY increase. July marks the third month of real increases following two months of declines.

In real dollar terms, the median annual income is 6.4% lower (about $3,700) than its interim high in January 2008.

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What Recovery? Click to view

September 3rd, 2014 Michael Lombardi

According to Fed Chairwoman Janet Yellen, “More jobs have now been created in the recovery than were lost in the downturn… the unemployment rate, at 6.2% in July, has declined nearly 4 percentage points from its late 2009 peak.” (Source: “Labor Market Dynamics and Monetary Policy,” Federal Reserve, August 22, 2014.)

Great news, right? On the surface, yes. But when you look closer at the numbers, the jobs market paints a very different picture as to what is going on in this country.

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Are Gold Prices Taking Cues From The Swiss Franc? Click to view

September 2nd, 2014 Chris Kimble

Three years ago yesterday, I shared a chart highlighting why Gold may under-perform for years to come. The chart looked at the correlation between the Swiss Franc and Gold and how both were tagging ascending long-term resistance at the same time.

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Crestmont Market Valuation Update Click to view

September 2nd, 2014 Doug Short

Quick take: Based on the August S&P 500 average of daily closes, the Crestmont P/E is now 90% above its arithmetic mean and at the 98th percentile of this fourteen-decade monthly metric.

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Is the Stock Market Cheap? Click to view

September 2nd, 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 averages of daily closes for the past month, which is 1,961.53. The ratios in parentheses use the monthly close of 2003.37. For the earnings, see the table below created from Standard & Poor's latest earnings spreadsheet.

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Government Bonds: Triple Resistance Against the Trend Click to view

September 2nd, 2014 Chris Kimble

Would you have guessed eight months ago that the S&P 500 would hit the 2,000 level and the Government bond ETF TLT would be up twice as much as the broad market on the year? I can't help but believe this has surprised a few investors. It has me.

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

September 2nd, 2014 Doug Short

Quick take: At the end of August the inflation-adjusted S&P 500 index price was 85% above its long-term trend, down from 86% 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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