This update is in response to a standing request for real (inflation-adjusted) charts of the S&P 500, Dow 30, and Nasdaq Composite. Here are 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 referred to as the CPI).
Quick take: At the end of January the inflation-adjusted S&P 500 index price was 93% above its long-term trend, down from 94% 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.
Here is a new update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly average of daily closes for the past month. For the earnings, see the table created from Standard & Poor's latest earnings spreadsheet.
The January US Manufacturing Purchasing Managers' Index conducted by Markit came in at 55.0, down fractionally from the 55.1 December figure. Today's headline number was slightly below the Investing.com consensus of 55.1. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
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.
Today the Institute for Supply Management published its monthly Manufacturing Report for January. The latest headline Purchasing Managers Index (PMI) was 56.0 percent, an increase of 1.5 percent from 54.5 the previous month. Today's headline number was above the Investing.com forecast of 55.0 percent.
Valid until the market close on February 28, 2017
The S&P 500 closed January with a monthly gain of 1.79% after a gain of 1.82% in December. All three S&P 500 MAs are signaling "invested" and three of the five Ivy Portfolio ETF MAs — Vanguard Total Stock Market ETF (VTI), Vanguard FTSE All-World ex-US ETF (VEU), and PowerShares DB (DBC) — are signaling "invested". In the table, monthly closes that are within 2% of a signal are highlighted in yellow.
Over the last decade the general trend has been consistent: The rate of home ownership continues to decline. The Census Bureau has now released its latest quarterly report with data through Q4 2016. The seasonally adjusted rate for Q4 is 63.5 percent, up from 63.4 in Q3. The nonseasonally adjusted Q3 number is 63.7 percent, above the Q3 number and its highest in a year.
The BEA's Personal Consumption Expenditures Chain-type Price Index for December, released yesterday, shows that core inflation remains below the Federal Reserve's 2% long-term target at 1.70%. The most recent Core Consumer Price Index release, also data through December, is higher at 2.20%. The Fed is on record as using Core PCE data for its primary inflation gauge. Headline inflation for both series is conspicuously lower, largely a result of low energy costs.
The BEA's Personal Income and Outlays report for December was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index rose 0.16% month-over-month (MoM) and is up 1.62% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.11% MoM and 1.70% YoY. Core PCE remains below the Fed's 2% target rate.