Here is the latest 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.
This morning's seasonally adjusted 212K new claims, down 2K from the previous week's revised figure, was below the Investing.com forecast of 215K
Today the Institute for Supply Management published its monthly Manufacturing Report for July. The latest headline Purchasing Managers Index (PMI) was 58.1 percent, a decrease of 2.1 percent from 60.2 the previous month. Today's headline number was below the Investing.com forecast of 59.4 percent.
Today we have the ADP July estimate of 219K new nonfarm private employment jobs, an increase over the ADP June figure of 213K.
Valid until the market close on August 31, 2018.
The S&P 500 closed June with a monthly gain of 3.60% after a small gain of 0.48% in June. All three S&P 500 MAs are signaling "invested" and three of five Ivy Portfolio ETFs — Vanguard Total Stock Market ETF (VTI), Vanguard REIT Index (VNQ), and PowerShares DB Commodity Index (DBC) — are signaling "invested".
Personal Income (excluding Transfer Receipts) in June rose 0.44% and is up 5.0% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was at 0.34%. The real number is up 2.7% year-over-year. Extensive revisions and updates were made.
The price of bitcoin surged above $8,000 on Tuesday for the first time since May after the Group of 20 (G20) meeting in Argentina concluded last weekend with little urgency to take regulatory action on cryptocurrencies. In a communiqué, finance ministers and central bank governors expressed confidence that the technology underlying alt-coins “can deliver significant benefits to the financial system and the broader economy.”
Evidence shows that the yield-curve slope and equity returns provide signals of similar direction in the economy, allowing investors to nowcast with relative confidence. Today, those signals indicate that several developed markets—in particular, Japan, Germany, and the United States—are ominously close to entering a correction phase.
This morning's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 147.4, down 0.5 from the previous week. Year-over-year the four-week moving average of the indicator is now at 2.38%, down from 2.51% last week. The WLI Growth indicator is now at 0.3, also down from the previous week.
Since we are necessarily in the predictions business, this letter offers our expectations for equity market returns. We admit our crystal ball is typically cloudy when it comes to what markets will do in the near term. While nothing is ever for certain, we can better view the potential for longer-term stock market returns from a couple of perspectives.