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dshort – Advisor Perspectives

March 4th Webinar: The Myth of the Most Efficient Market

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February 26th, 2015

Presenter: Jim O'Shaughnessy
Wednesday, March 4, 2015 at 4:15 p.m. EST


Assets in index funds and ETFs are reaching all-time highs, driven in part by the belief that stock selection strategies have become a fool's errand for investors who are trying to outperform the market. In this webinar, Jim O'Shaughnessy will share empirical research conducted over 80 years to debunk this myth and identify time-tested principles that allow investors to consistently beat the market. He will:

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A Long-Term Look at Inflation

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February 26th, 2015

The Consumer Price Index for Urban Consumers (CPI-U) released this morning puts the January year-over-year inflation rate at -0.9%, the lowest since the eight-month deflationary period that ended in October 2009. It is substantially below the 3.85% average since the end of the Second World War and its 10-year moving average.

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Inflation: A Six-Month X-Ray View

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February 26th, 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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The "Real" Goods on the Latest Durable Goods Data

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February 26th, 2015

Earlier today I posted an update on the February Advance Report on January 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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What Inflation Means to You: Inside the Consumer Price Index

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February 26th, 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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January Durable Goods Came in Better Than Expected

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February 26th, 2015

The February Advance Report on January Durable Goods released today by the Census Bureau showed a bit of a bounce from the previous month. Here is the Bureau's summary on new orders:

New orders for manufactured durable goods in January increased $6.5 billion or 2.8 percent to $236.1 billion, the U.S. Census Bureau announced today. This increase, up following two consecutive monthly decreases, followed a 3.7 percent December decrease. Excluding transportation, new orders increased 0.3 percent. Excluding defense, new orders increased 3.0 percent.

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December Headline Consumer Price Index At Its Lowest Since October 2009

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February 26th, 2015

The Bureau of Labor Statistics released the January CPI data this morning. Year-over-year unadjusted Headline CPI came in at 0.09% (rounded to 0.1%), down from 0.76% (rounded to 0.8%) the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.65% (rounded to 1.6%), up from the previous month's 1.61% (but unchanged to one decimal). The non-seasonally adjusted month-over-month Headline number was down -0.47% (rounded to -0.5%), and the Core number was up 0.20%.

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New Jobless Claims at 313K, Worse Than Forecast

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February 26th, 2015

Today's seasonally adjusted 313K came in well above the Investing.com forecast of 290K. The four-week moving average at 294,500 is now 15,500 above its 14-year interim low set sixteen weeks ago.

Here is a close look at the data over the past few years (with a callout for the past year), which gives a clearer sense of the overall trend in relation to the last recession and the volatility in recent months.

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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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Gasoline Volume Sales, Demographics and our Changing Culture

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February 24th, 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-November, 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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Consumer Confidence Declined in February

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February 24th, 2015

The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through February 12. The headline number of 96.4 was a decline from the revised January final reading of 103.8, an upward revision from 102.9. Today's number was below the Investing.com forecast of 99.6.

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Richmond Fed Manufacturing Composite: Activity Slowed in February

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February 24th, 2015

The February update shows the manufacturing composite at 0, down from 6 last month. Numbers above zero indicate expanding activity. Today's composite number was well below the Investing.com forecast of 7.

Because of the highly volatile nature of this index, I like to include a 3-month moving average, now at 4.3, to facilitate the identification of trends.

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Weekly Gasoline Price Update: Up 29 Cents in Four Weeks

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February 23rd, 2015

It's time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny, Regular rose six cents and Premium five. Regular is now up 29 cents (14.1 percent) since its interim weekly low set four weeks ago.

WTIC closed today back below 50 and off its 2015 interim glass ceiling around the 54 level.

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Understanding the CFNAI Components

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February 23rd, 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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Chicago Fed: Economic Growth Picked Up Slightly in January

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February 23rd, 2015

"Index shows economic growth picked up slightly in January": 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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World Markets Update: The Rally Continues at a Moderate Pace

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February 21st, 2015

For the second consecutive week, all eight indexes on my world market watch list posted weekly gains, although at a slightly more moderate pace. The average gain for the eight was 1.04%, down from the previous week's 1.48%. Japan's Nikkei 225 was the top performer, up 2.34%, with France's CAC 40 in second place with a 1.50% advance. China's Shanghai Composite managed a 1.34% gain on just two sessions and is now in the midst of its Lunar New Year market holidays, which will keep it closed until the 25th. The S&P 500, FTSE 100 and Hang Seng all logged nearly identical gains around the 0.6% mark.

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ECRI Recession Watch: Weekly Update

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February 20th, 2015

Today's new release of the publicly available data from the Economic Cycle Research Institute (ECRI) puts its Weekly Leading Index (WLI) at 130.3, up slightly from 130.0 the previous week. The WLI annualized growth indicator (WLIg) is at -4.3, unchanged from the previous week but off the interim low of -5.0 in mid-January.

The title for the ECRI's latest public report, Conflicting Concerns, offers an interesting perspective on the January Fed Minutes released on Wednesday.

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Conference Board Leading Economic Index: Growth Moderates

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February 19th, 2015

The Latest Conference Board Leading Economic Index (LEI) for January is now available. The index rose 0.2 percent but December was revised downward from 0.5 percent to 0.4 percent and November from 0.4 percent to 0.2 percent. The latest number came in below the 0.3 percent forecast by Investing.com.

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Philly Fed Business Outlook: Continued Modest Growth

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February 19th, 2015

The latest gauge of General Activity came in at 5.2, a decline from last month's 6.3 and the lowest reading since the -2.0 contraction in February of last year. The 3-month moving average came in at 11.9, down from 23.6 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook was essentially unchanged at 29.7 versus the previous month's 50.9.

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The Big Four Economic Indicators: Industrial Production

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February 18th, 2015

Today's month-over-month increase of 0.19 percent (to two decimal places) follows a downwardly revised -0.28 percent in December (previously reported at -0.11 percent). Today's headline number came in below the consensus expectation of a 0.4 percent increase.

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Producer Price Index: Headline and Core Go Negative Month-over-Month

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February 18th, 2015

Today's release of the January Producer Price Index (PPI) for Final Demand came in at -0.8% month-over-month seasonally adjusted. That's down from the previous month's -0.2% decline (an upward adjustment from -0.3%). Core Final Demand (less food and energy) came in at -0.1% month-over-month.

The year-over-year change in Final Demand is flat at 0.0%, the lowest in the brief history of this data series.

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Empire State Manufacturing: Modest Expansion, But Down 2.2 Points from Last Month

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February 17th, 2015

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 7.8 shows a 2.2 point slippage from last month's 10.0, which signals expansion at a modest pace. The Investing.com forecast was for a reading of 8.5.

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The dshort Economic Calendar, Miami Style

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February 13th, 2015

Note from dshort: I'm in semi-vacation mode in southern Florida for the next few days. My routine updates on economic indicators will be posted on a somewhat delayed basis.

Today we spent Friday on a touring the Fairchild Topical Gardens a few miles south of Miami, 83 acres of amazing rare tropical plants including palms, cycads, flowering trees and vines. The gardens are all the more spectacular with the current exhibition of works by American artist Dale Chihuly.

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Michigan Consumer Sentiment Slips From Its January Peak

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February 13th, 2015

The Preliminary University of Michigan Consumer Sentiment for February came in at 93.6, down 4.5 points from the final reading of 98.1 in January. Investing.com had forecast no change from the February Preliminary.

The general trend in the Michigan Sentiment Index since the Financial Crisis lows had been one of slow improvement. But it is now a bit off its dramatic eleven-year high set last month.

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January Retail Sales Were Surprisingly Weak; No Help from Cheaper Gasoline

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February 12th, 2015

The Advance Retail Sales Report released this morning shows that sales in January came in at -0.8% month-over-month, which comes on top of a -0.9% decline in December. Core Retail Sales (ex Autos) came in at -0.09%, which follows a -0.09% December decline.

Given the sharp dcline in gasoline prices in recent months, we would expect Retail Sales ex Gasoline to look strong, with savings on gas prices increasing other purchases. But January sales ex-gas were flat at 0.0% MoM.

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Continuing Proof of Structural Changes in the U.S. Workforce

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February 11th, 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.

I've 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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February 10th, 2015

Note from dshort: I've updated this commentary with data from the February Employment Report for January.

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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February 10th, 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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Small Business Optimism: Index Relinquishes Some of Its December Advance

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February 10th, 2015

The latest issue of the NFIB Small Business Economic Trends is out today. The February update for January came in at 97.9, down 2.5 points from the previous month. The index is now at the 36.1 percentile in this series. The Investing.com forecast was for 101.3.

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Inside the World of Multiple Jobholders: Two Decades of Trends

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February 9th, 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 4.9 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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February 9th, 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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Revisions to the Nonfarm Payroll Jobs Report

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February 9th, 2015

In my latest Employment Update for January, I pointed out that the Bureau of Labor Statistics revised the December month-over-month change for Nonfarm Payroll Employment upward from 252K to 329K and November from 353K to 423K, a total of 147K to the upside. However, the BLS's initial estimate for this metric should be taken with the proverbial grain of salt. In this chart, I plot the change since the turn of the century from the first to third estimate for each month through November 2014, the most recent month for which we have three estimates.

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Earnings of Private Employees: A Big Recovery in January

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February 6th, 2015

First, here is a chart of the Average Hourly Earnings. I've included a linear regression through the data to highlight the trend. Hourly earnings increased at a faster pace through 2008, but the pace slowed from early 2009 onward. The December data point was a bit disturbing, a 5 cent month-over-month decline, the largest decline in the history of the series. However the January data point is a big bounce of 12 cents, the largest increase in the series.

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The Civilian Labor Force, Unemployment Claims and the Business Cycle

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February 6th, 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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Strong Jobs Growth in January with Big Upward Revisions to November and December

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February 6th, 2015

Today's report of 257K new nonfarm jobs in January was above the Investing.com forecast of 234K. Moreover, December was revised upward from 252K to 329K and November from 353K to 423K, a total 0f 147K to the upside. The unemployment rate ticked up from 5.6% to 5.7%.

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NYSE Margin Debt Little Changed in December

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February 5th, 2015

Unfortunately, the NYSE margin debt data is over a month old when it is published. Following its February 2014 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. The number has since hovered in a narrow range over the last six months. Real margin debt rose 0.4% in December and is now 2.0% off its February peak.

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Market Valuation Overview: Lofty, But a Bit Lower Than Last Month

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February 4th, 2015

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

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

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ISM Non-Manufacturing: Continued Growth in January

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February 4th, 2015

Today the Institute for Supply Management published its latest Non-Manufacturing Report. The headline NMI Composite Index is at 56.7 percent, up slightly from last month's 56.5 percent. Today's number came in above the Investing.com forecast of 56.3.

Here is the report summary:

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Anticipating the Employment Report for January

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February 4th, 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 January estimate of 213K new nonfarm private employment jobs from ADP. The 213K estimate came in below the Investing.com forecast of 225K for the ADP number. Moreover, ADP made a 12K upward revision to its December estimate, from 241K to 253K.

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

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February 3rd, 2015

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

But these are different times.

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The Q Ratio and Market Valuation: New Update

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February 3rd, 2015

Based on the latest Z.1 data, the Q Ratio at the end of the third quarter of 2014 was 1.09. As of the January close, the broad market was up 2.4% (based on VTI's monthly closes). My latest estimate would put the ratio about 63% above its arithmetic mean and 75% above its geometric mean. Of course periods of over- and under-valuation can last for many years at a time, so the Q Ratio is not a useful indicator for short-term investment timelines. This metric is more appropriate for formulating expectations for long-term market performance.

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Crestmont Market Valuation Update

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February 3rd, 2015

Quick take: Based on the January S&P 500 average of daily closes, the Crestmont P/E is now 94% above its arithmetic mean and at the 98th percentile of this fourteen-decade monthly metric.

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Is the Stock Market Cheap?

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February 2nd, 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, which is 2028.18. The ratios in parentheses use the monthly close of 1,994.99. For the earnings, see the table below created from Standard & Poor's latest earnings spreadsheet.

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The Latest on Real Disposable Income Per Capita

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February 2nd, 2015

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

The December nominal 0.22% month-over-month increase in disposable income rises to 0.45% when we adjust for inflation, thanks to a -0.23% month-over-month decline in the PCE price index. The year-over-year metrics are 3.76% nominal and 2.98% real.

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Two Measures of Inflation and Fed Policy

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February 2nd, 2015

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 December shows core inflation below the Federal Reserve's 2% long-term target at 1.33%. The latest Core Consumer Price Index release, also data through December, is higher at 1.61%.

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

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February 2nd, 2015

Quick take: At the end of January the inflation-adjusted S&P 500 index price was 91% above its long-term trend, down from 95% above trend the previous month.

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ISM Manufacturing Index: ISM Manufacturing Index: Slowest Growth in Eleven Months

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February 2nd, 2015

Today the Institute for Supply Management published its monthly Manufacturing Report for January. The latest headline PMI was 53.5, a decline from the previous month's 55.1 percent and below the Investing.com forecast of 54.5. This was the lowest PMI in eleven months

Here is the key analysis from the report:

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Secular Bull and Bear Markets

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February 2nd, 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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PCE Price Index: Inflation Slips Further Below the Fed Target

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February 2nd, 2015

The latest Headline PCE price index year-over-year (YoY) rate is 0.75%, down from 1.15% the previous month. The Core PCE index of 1.33% is down from the previous month's 1.40% YoY.

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

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Moving Averages: Month-End Update

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January 31st, 2015

Valid until the market close on February 27, 2015

The S&P 500 closed January with a monthly loss of 3.10%. All three S&P 500 MAs and three of the five the Ivy Portfolio ETF MAs are signaling "Invested".

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Visualizing GDP: A Look Inside the Q4 Advance Estimate

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January 30th, 2015

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

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Accentuate the Positive: The Psychological Inflation of Quarterly GDP

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January 30th, 2015

Note from dshort: I've updated the last chart in this commentary to include today's Q4 GDP Advance Estimate of real quarterly GDP. The BEA's annualized growth rate of 2.6% (2.64% to two decimals) is based on a 0.65% quarter-over quarter percentage change.

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Q4 GDP Per Capita Drops to 1.9%

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January 30th, 2015

Earlier today we learned that the Advance Estimate for Q4 2014 real GDP came in at 2.6 percent (rounded from 2.64 percent), down from 5.0 (rounded from 4.97) percent in Q3. Real GDP per capita was lower at 1.9 percent (rounded from 1.85 percent), a decline from 4.2 percent per capita in Q3.

Here is a chart of real GDP per capita growth since 1960. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis.

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Moving Averages: Month-End Preview

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January 30th, 2015

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

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Q4 GDP Advance Estimate at 2.6% Disappoints Expectations

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January 30th, 2015

The Advance Estimate for Q4 GDP, to one decimal, came in at 2.6 percent, a decline from 5.0 percent in Q3. Today's number disappointed mainstream economists' estimates, which were for a a smaller decline. For example, the Wall Street Journal survey of economists averaged 3.0 percent in their forecasts, and the frequently more accurate Investing.com also had an estimate of 3.0 percent.

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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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Forecasting Q4 GDP: A Look at the WSJ Economists' Collective Crystal Ball

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January 28th, 2015

What do economists see in their collective crystal ball for Q4? Let's take a look at the GDP forecasts from the latest Wall Street Journal survey of economists conducted earlier this month.

Here's a snapshot of the full array of WSJ opinions about Q4 GDP. I've highlighted the values for the median (middle), mean (average) and mode (most frequent).

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Real Median Household Income: A Significant December Increase

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January 26th, 2015

Summary: The Sentier Research monthly median household income data series is now available for December. The nominal median household income was up $537 month-over-month and $2,072 year-over-year. That's a 1.0% MoM gain and a 4.0% YoY gain. Adjusted for inflation, the numbers were up $738 MoM and $1725 YoY. The real numbers equate to a 1.4% MoM increase and a 3.3% YoY increase.

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

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January 26th, 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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Conference Board Leading Economic Index: About Those Benchmark Revisions

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January 23rd, 2015

Today's release of the December Conference Board's Leading Economic Index included benchmark revisions in addition to the routine monthly revisions. Also the base year for the index was changed from 2004=100 to 2010=100. Today's press release included the following comment:

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The Philly Fed ADS Business Conditions Index

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January 22nd, 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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WSJ Economists' Forecasts for 10-Year Yields and the Fed Funds Rate

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January 22nd, 2015

The big economic news today is the ECB's announcement of a quantitative-easing program of 60 billion euros per month starting in March and lasting until September 2016. That's a total commitment of over 1 Trillion euros. This announcement comes nearly three months after the US Fed ended its last round of QE.

With the focus now on the European Central Bank, let's take a quick look at a couple of items in the January Wall Street Journal survey of economists, starting with where the Federal Reserve is headed with the Fed Funds Rate, which is currently at 0.12 percent.

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Vehicle Miles Traveled: A Structural Change in Our Behavior

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January 21st, 2015

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

"Travel on all roads and streets changed by 1.1% (2.5 billion vehicle miles) for November 2014 as compared with November 2013." The less volatile 12-month moving average is up 0.08% month-over-month and 1.35% year-over-year. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) is essentially unchanged, up 0.01% month-over-month and up only 0.42% year-over-year.

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Treasury Snapshot: Where Are Yields Headed?

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January 19th, 2015

With Quantitative Easing behind us and the first FOMC meeting of 2015 still a week away, let's take a quick look at US Treasuries. The yields on the 10-, 20- and 30 year Treasuries have trended downward rather dramatically since the end of 2013. They hit their recent lows on Thursday of last week (January 15th). The 30-year yield hit an all-time closing low of 2.40% and the 20-year yield was 2.12%, one bp off its historic low. The yield on the 10-year Note closed at 1.77%, 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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Population-Adjusted Real Retail Sales: Another Perspective on the Economy

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January 16th, 2015

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

Earlier this week, the Advance Retail Sales Report showed that sales in December declined 0.9% month-over-month, as I reported in my real-time update.

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

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Census Bureau Revisions to Retail Sales

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January 14th, 2015

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 October 2014, the most recent month for which we have all three data points.

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

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January 14th, 2015

For the past few years I've been following a couple of transportation metrics: Vehicle Miles Traveled and Gasoline Volume Sales. For both series I focus on the population adjusted data. Let's now do something similar with the Light Vehicle Sales report from the Bureau of Economic Analysis. This data series stretches back to January 1976. Since that first data point, the Civilian Noninstitutional Population Age 16 and Over (i.e., driving age not in the military or an inmate) has risen 60.7%.

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Five Decades of Middle Class Wages: Update

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January 9th, 2015

Note from dshort: I've updated this series to include today's release of the December employment data. While my focus here is on long-term trends, I want to call attention to the six-cent decline from November to December in the average hourly earnings for this cohort. That's the largest month-over-month decline in the history of the series, which dates from 1964. The second largest was three cents in August 1983.

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Market Cap to GDP: The Buffett Valuation Indicator

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January 7th, 2015

Note from dshort: Following up on my routine valuation updates, here's a revised version of the "Buffett Indicator".

I've now updated the GDP denominator with the BEA's Q3 Third Estimate. The numerator is from the Fed's Q3 Z.1 Financial Accounts released on December 11th. The indicator remains over 2 standard deviations above its mean but off its interim high -- now at 123.1%, down from 127.3% at the end of Q2 and a bit lower than our last look, thanks to the upward revision of GDP denominator in the BEA's Third Estimate.

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

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January 2nd, 2015

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).

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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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