Search Results
Results 301–350
of 407 found.
The ECRI Weekly Leading Index Continues Its Climb
by Doug Short,
The question had been whether the WLI decline that began the the Q4 of 2009 was a leading indicator of a recession. The published index has never dropped to the -11.0 level in July 2010 without the onset of a recession. The deepest decline without a recession onset was in the Crash of 1987, when the index slipped to -6.8. The ECRI managing director correctly predicted that we would avoid a double dip. The latest GDP for Q4 of 2010, revised down slightly to 2.8, confirms the ECRI stance.
What Inflation Means to You: Inside the Consumer Price Index
by Doug Short,
The Fed justified the current round of quantitative easing "to promote a stronger pace of economic recovery" The Fed is trying to increase inflation, operating at the macro level. But what does an increase in inflation mean at the micro level, specifically to your household? Let's do some analysis of the Consumer Price Index, the best known measure of inflation. The Bureau of Labor Statistics 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 ECRI Weekly Leading Growth Index Up Slightly
by Doug Short,
The question had been whether the WLI decline that began the the Q4 of 2009 was a leading indicator of a recession. The published index has never dropped to the -11.0 level in July 2010 without the onset of a recession. The deepest decline without a recession onset was in the Crash of 1987, when the index slipped to -6.8. The ECRI managing director correctly predicted that we would avoid a double dip. The latest GDP for Q4 of 2010, revised down slightly to 2.8, confirms the ECRI stance.
The Q Ratio: Updated with Latest Federal Reserve Data
by Doug Short,
The Q Ratio is a popular method of estimating the fair value of the stock market. It's a fairly simple concept, but laborious to calculate. The Q Ratio is the total price of the market divided by the replacement cost of all its companies. The numbers are supplied in the Federal Reserve Z.1 Flow of Funds Accounts of the US, which is released quarterly. The first chart shows Q Ratio from 1900 to the present. I've extrapolated the ratio since the latest Fed data based on a combination of the price of VTI, the Vanguard Total Market ETF, and an extrapolation of the Z.1 data itself.
U.S. Household Incomes: A 42-Year Perspective
by Doug Short,
In preparation for a presentation at the Retirement Income Industry Association later this month, I've been researching household incomes in the United States. My data source is the Census Bureau, which has a quintile breakdown of data from 1967 through 2009. The pie chart here shows that the top fifth of households in 2009 took home 50% of the nation's income. The middle fifth received 15% and bottom fifth 3%. The charts below show income growth over the complete data series. In addition to the quintiles, the Census Bureau includes the mean income for the top five percent of households
The ECRI Weekly Leading Index Moves Higher Into Positive Territory
by Doug Short,
The question had been whether the WLI decline that began the the Q4 of 2009 was a leading indicator of a recession. The published index has never dropped to the -11.0 level in July 2010 without the onset of a recession. The deepest decline without a recession onset was in the Crash of 1987, when the index slipped to -6.8. The ECRI managing director correctly predicted that we would avoid a double dip. The latest GDP for Q4 of 2010, revised down slightly to 2.8, confirms the ECRI stance.
The Q Ratio Moves Yet Further Into Nosebleed Territory
by Doug Short,
The Q Ratio is a popular method of estimating the fair value of the stock market developed by Nobel Laureate James Tobin. It's a fairly simple concept, but laborious to calculate. The Q Ratio is the total price of the market divided by the replacement cost of all its companies. Fortunately, the government does the work of accumulating the data for the calculation. The numbers are supplied in the Federal Reserve Z.1 Flow of Funds Accounts of the United States, which is released quarterly.
Profit Margin Squeeze and Inflation Risk
by Doug Short,
At present, in light of the unemployment rate and the ongoing demographic shift, the surge in commodity prices probably poses more risk of margin squeeze than run-away inflation. Some degree of cost-push inflation may be a near-term risk, but the demand-pull inflation we saw in the 1970s is difficult to evision in the US economy of this decade.
Inflation: A Look Inside the Latest CPI Releases
by Doug Short,
Core CPI is still substantially below the Fed's inflation target of 2%, but both headline and Core CPI have begun to rise in recent months. If we extrapolate the latest rise over the next year, Core CPI would hit the Fed's target rate by the end of summer. Of course, monthly CPI numbers are too volatile to place any confidence is extrapolations of this sort.
The ECRI Weekly Leading Index: Steady As She Goes
by Doug Short,
Today the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) continues to hover in the mild growth range, now at 4.5. The current number is based on data through February 4. The adjusted sequence for the last five weeks has been a steady range: 3.6, 4.1, 3.5, 3.6, 4.5.
The ECRI Weekly Leading Index: Steady As She Goes
by Doug Short,
Today the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) continues to hover in the mild growth range, now at 3.7. The current number is based on data through January 28. The adjusted sequence for the last four weeks has been a steady range: 3.6, 4.1, 3.5, 3.7.
Three Market Valuation Indicators Continue to Signal Caution
by Doug Short,
As I've frequently pointed out, these indicators (relationship of the S&P Composite to a regression trendline, The cyclical P/E ratio, and the Q ration) aren't useful as short-term signals of market direction. Periods of over- and under-valuation can last for years. But they can play a role in framing longer-term expectations of investment returns. At present they suggest a cautious outlook and guarded expectations.
The Q Ratio Moves Yet Further Into Nosebleed Territory
by Doug Short,
The average (arithmetic mean) Q ratio is about 0.71. In the chart below I've adjusted the Q Ratio to an arithmetic mean of 1 (i.e., divided the ratio data points by the average). This gives a more intuitive sense to the numbers. For example, the all-time Q Ratio high at the peak of the Tech Bubble was 1.82 ? which suggests that the market price was 158% above the historic average of replacement cost. The all-time lows in 1921, 1932 and 1982 were around 0.30, which is about 57% below replacement cost. That's quite a range.
Is the Stock Market Cheap?
by Doug Short,
Here's the latest update of my preferred 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 January 2011, which is 1282.62. The ratios in parentheses use the January monthly close of 1286.12 (which this month gives a similar ratio to one decimal place as the monthly average).
The ECRI Weekly Leading Index: Steady As She Goes
by Doug Short,
Today the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) continues to signal improvement, although the latest 3.5 is slightly below the previous week's 4.1. The current number is based on data through January 21.
Economic Forecast Failures: The 10-Year Yield
by Doug Short,
Earlier today I analyzed the Wall Street Journal survey of economist forecasts for Q4 GDP. How accurate are economists' forecasts in general? It varies, of course, but sometimes they miss by a long shot. Consider, for example, the forecasts for 10-year Treasury yields in the October 2010 WSJ survey.
Three Market Valuation Indicators All Signal Caution
by Doug Short,
Let's check out the latest overlays of the three valuation indicators I routinely follow: The relationship of the S&P Composite to a regression trendline; The cyclical P/E ratio using the trailing 10-year earnings as the divisor; and The Q Ratio.
The Q Ratio Moves Further Into Nosebleed Territory
by Doug Short,
The mean-adjusted charts above indicate that the market remains significantly overvalued by historical standards ? by about 62% in the arithmetic-adjusted version and 75% in the geometric-adjusted version. Of course periods of over- and under-valuation can last for many years at a time.
Is the Stock Market Cheap?
by Doug Short,
Here's the latest update of my preferred 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 December 2010, which is 1241.53. The ratios in parentheses use the December monthly close of 1257.64 (which this month gives the same ratio to one decimal place as the monthly average).
Consumer Confidence Index: Down Slightly But Well Below the Historical Trend
by Doug Short,
Let's take a step back and put the Director of the Consumer Research Center's rather rosy interpretation of consumer confidence in a larger perspective. The chart below is intended to help evaluate the historical context for this index as a leading indicator of the economy. Toward this end I have included recessions and GDP. The linear regression through the index data shows the long-term trend of this very volatile indicator. Today's 52.5 reading is significantly below the 85.3 of the current regression level (38.5% below, to be precise).
Gasoline Prices: The Holiday Present We Didn't Want
by Doug Short,
On our brief Christmas afternoon drive home from a family gathering in Clayton NC, we spotted a Wal-Mart service station sign for $3.01.9 regular gas. The post-Thanksgiving holiday season is not one I normally associate with high gas prices. As the chart below shows, the general pattern is for gasoline prices to peak in the summer and decline after Labor Day. This year has run counter to the pattern by a significant degree.
Politics and GDP: Which Party Is Best for the Economy?
by Doug Short,
Here is a snapshot of the average GDP by political party in control of the White House and Congress. Of course, GDP lags any policy changes that impact its components, so the table must be viewed in the historical context of the chart below. Draw your own conclusions.
The ECRI Weekly Leading Index Turned Positive ? The First Time Since May
by Doug Short,
The question, had been whether the latest WLI decline that began the the Q4 of 2009 was a leading indicator of a recession or a false negative. The published index has never dropped to the current level without the onset of a recession. The deepest decline without a near-term recession was in the Crash of 1987, when the index slipped to -6.8. The ECRI managing director is now on record stating that we've avoided a double dip. The revised GDP for Q3, coming in at 2.6, confirms the ECRI stance.
The ECRI Weekly Leading Index: A Hair's Breadth from Turning Positive
by Doug Short,
Today the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) registered negative growth for the 28th consecutive week, coming in at -0.1. However, the rate of contraction has been lessening for the past 20 weeks. The latest weekly number, based on data through December 10, is a tiny fraction below the positive range. How tiny? The -0.1 is rounded from -0.052.
Inflation: A Look Inside the Latest CPI Release
by Doug Short,
Headline CPI has remained essentially flat for the past six months. Core CPI has generally trended downward over the past year, but the latest annualized rate saw a fractional rise from 0.61% to 0.77%, which is still substantially below the Fed's core inflation target of 2%. Was there a driver for this change? A quick glance at the chart suggests that Housing made the difference. Housing makes up 42% of the Headline CPI, and it moved from a negative annualized rate of -0.24% to 0.01%.
The Fed's QE2 Intervention: A Disaster in the Works?
by Doug Short,
QE2 is a gambit. At face value, we must assume that speeding the recovery and increasing core inflation to the target rate are the true motives. The Fed says as much, and the concern of the sole dissenter, Thomas Hoenig about long-term inflation risks, reinforces this view. On the other hand, blog commentators have speculated on a range of ulterior prime motives ? ranging from bank bailouts to funding Uncle Sam with interest-free loans, etc.
The ECRI Weekly Leading Index: Still Negative But Continuing to Improve
by Doug Short,
On Friday, December 10 the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) registered negative growth for the 27th consecutive week, coming in at -1.5. However, the rate of contraction has been lessening for the past 19 weeks. The latest weekly number is based on data through December 3.
The Q Ratio Is Moving Into Nosebleed Territory
by Doug Short,
The mean-adjusted charts above indicate that the market remains significantly overvalued by historical standards ? by about 59% in the arithmetic-adjusted version and 72% in the geometric-adjusted version. Of course periods of over- and under-valuation can last for many years at a time.
Inflation and Market Valuation
by Doug Short,
Here is a rather different look at the pattern of cyclical P/E10 ratios that form the basis of my monthly valuation update Is the Stock Market Cheap? Instead of the usual chronological sequence of ratios, the scatter diagram I made plots the monthly ratios according to the annualized inflation rate on the horizontal axis. I've set vertical gridlines at 4% intervals and marked the average (arithmetic mean) P/E10 for each 4% vertical band.
What Inflation Means to You: Inside the Consumer Price Index
by Doug Short,
The universal response is to moan over price increases and take delight when prices are cheaper. But in reality, households vary dramatically in the impact that inflation has upon them. The one thing we can be certain about is this: An increase in inflation will have a painful effect on lower income households, those on fixed incomes, and any household whose discretionary spending is more dream than reality.
The ECRI Weekly Leading Index: Still Negative But Improving
by Doug Short,
Today the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) registered negative growth for the 26th consecutive week, coming in at -2.4. However, the rate of contraction has been lessening for the past 18 weeks.
The Q Ratio Indicates a Significantly Overvalued Market
by Doug Short,
Our mean-adjusted charts indicate that the market remains significantly overvalued by historical standards ? by about 49% in the arithmetic-adjusted version and 62% in the geometric-adjusted version. Of course periods of over- and under-valuation can last for many years at a time.
Is the Stock Market Cheap?
by Doug Short,
In times of critical importance, the conventional P/E ratio often lags the index to the point of being useless as a value indicator. "Why the lag?" you may wonder. "How can the P/E be at a record high after the price has fallen so far?" The explanation is simple. Earnings fell faster than price.
The ECRI Weekly Leading Index: Negative Growth But Improving
by Doug Short,
Today the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) registered negative growth for the 24th consecutive week, coming in at -4.5. The rate of contraction has been lessening for the past 16 weeks. The latest weekly number is based on data through November 12.
On October 29, economist Lackshman Achuthan, the managing director of the Economic Cycle Research Institute, gave assurances on CNBC that ''we're not going to go into a new recession anytime soon.''
QE2 and Mortgage Rates: Measuring the Fed's Strategy
by Doug Short,
How will we know if the new round of quantitative easing is a success? An early sign will be that a variety of rates will fall ? at least until the economy reaches liftoff, which probably means sustained real GDP north of 3.3% (the long-term GDP average). I'm already tracking Treasury yields on a regular basis (Treasury Yield Snapshot). Spreads are widening, which should be pleasing to the Fed, but the rising yields at the short end are probably not the Fed's intention.
The ECRI Weekly Leading Index
by Doug Short,
Today the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) registered negative growth for the 23rd consecutive week, coming in at -5.7, an improvement from last week's -6.5. The rate of contraction has been lessening over the two months. The latest weekly number is based on data through November 5.
The ECRI Weekly Leading Index
by Doug Short,
Today the Weekly Leading Index of the Economic Cycle Research Institute registered negative growth for the 22nd consecutive week, coming in at -6.5, unchanged from last week. The rate of contraction has been lessening over the past eight weeks. While the published index has never dropped to the current level without the onset of a recession, the ECRI managing director is now on record stating that we've avoided a double dip. Doug Short presents charts of the index, gross domestic product and the federal funds rate since 1965.
The Q Ratio Indicates a Significantly Overvalued Market
by Doug Short,
The Q Ratio is a popular method of estimating the fair value of the stock market, calculated as the total price of the market divided by the replacement cost of all its companies. Doug Short presents charts of the Q Ratio since 1900. The mean-adjusted charts indicate that the market remains significantly overvalued by historical standards - by about 48 percent in the arithmetic-adjusted version and 60 percent in the geometric-adjusted version. Of course periods of over- and under-valuation can last for many years at a time.
Is the Stock Market Cheap?
by Doug Short,
After dropping to 13.4 in March 2009, the S&P 500 price-to-earnings ratio using trailing earnings averaged over 10 years has rebounded to 21.4. The historic average is 16.35, suggesting that the stock market is expensive. Secular declines have ranged in length from over 19 years to as few as three. The current decline is now in its 10th year. Doug Short provides charts of the P/E10 ratio since 1871.
The ECRI Weekly Leading Index
by Doug Short,
On Friday the Economic Cycle Research Institute's weekly leading index registered negative growth for the 21st consecutive week, coming in at -6.5, a fractional improvement over last week's -6.9. The rate of contraction has been lessening over the past eight weeks. The published index has never dropped to the current level without the onset of a recession. Doug Short presents charts of the index, GDP and the federal funds rate since 1965.
The ECRI Weekly Leading Index
by Doug Short,
On Friday the Economic Cycle Research Institute's Weekly Leading Index registered negative growth for the 20th consecutive week, coming in at -6.8, a fractional improvement over last week's -7.0. While the rate of contraction has been lessening over the past seven weeks, the magnitude of decline from the peak in October 2009 is unprecedented in the Institute's published data back to 1967. The published index has never dropped to the current level without the onset of a recession. Doug Short presents charts of the index, gross domestic product and the federal funds rate since 1967.
The ECRI Weekly Leading Index
by Doug Short,
On Friday the Economic Cycle Research Institute's weekly leading index registered negative growth for the 19th consecutive week, coming in at -6.9, a fractional improvement over last week's -7.0. While the rate of contraction has been lessening over the past six weeks, the magnitude of decline from the peak in October 2009 is unprecedented in the Institute's published data going back to 1967. The published index has never dropped to the current level without the onset of a recession. Doug Short presents charts of the index, GDP and the federal funds rate going back to 1967.
Small Business Sentiment, Cautious Consumers and the Stealth Recession
by Doug Short,
The National Federation of Independent Businesses small business optimism index rose fractionally this month, from 88.8 to 89.0. Doug Short presents a chart comparing the small business optimism index with the Consumer Metrics Institute's weighted composite index going back to 2005. The chart suggests that the government's stimulus measures had a temporary impact on consumer discretionary spending, but little or no impact on small business sentiment. The recession may officially be over, but the small business optimism index is still in recession territory.
Results 301–350
of 407 found.
