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Category Archives: Economy
Update: I updated the charts and some of the performance results on March 28, 2017. I found and corrected an error in the performance calculations. Conclusions remain the same. It’s finally time to start turning all the economic indicator stuff I’ve been posting on into something useful for investors. In this post I’ll introduce the SPY-COMP indicator and how it works as tool for entering and exiting investments. The mechanics of the SPY-COMP system are similar to the SPY-UI system I’ve posted on previously. The only difference is that the new system uses a composite of the top 6 economic … Continue reading
In today’s post we’ll update the top 6 economic indicators as of mid March 2017. Each of the 6 indicators is updated with February data. Last month’s update is here. For background on the top 6 see here. The table below shows the current heatmap for the top 6 indicators. Just like last month all of the indicators are green. Here’s a brief update on each. Unemployment rate – Feb was another strong month for employment. UER is back down to 4.7%. Below it’s 12 month SMA. No signs of weakness in this indicator. Real retail sales – Feb’s year … Continue reading
On Friday, March 10, the unemployment rate (UER) for Feb 2017 was released by the BLS. The UER improved to 4.7%. In this post I’ll update the SPY-UI indicator for March. I’ll also provide some new charts with historical data that will be useful in the future. The first thing we’ll look at is the latest UER with respect to its 12 month SMA. The chart below plots both of those along with the US recession boundaries and the SP500 monthly drawdowns. The chart goes back to 1948. For this month the UER at 4.7% is still below its 12 … Continue reading
In my last post I introduced a heat map of the top individual economic indicators and how the heat maps are a very simple yet useful way at looking at the overall state of the economy. In this post I’ll do the same thing but this time with composite economic indicators. What is a composite economic indicator and how is it different than an individual indicator? Individual economic indicators typically provide information about one particular aspect of the economy, say housing, and consists of one data series or a composite of related sub-series. A composite economic indicator, as we’re using the term here, tries to … Continue reading
Now that we have a good set of top economic reads on the state of the economy and a list of the top 6 individual economic indicators, we can tackle using these indicators to get a gauge on where we are in the economic cycle. In this post we’ll present a simple heat map of the top 6 economic indicators, look at what the heat map looked like in previous recessionary periods, and finally compare it to what the heat map is saying today. This will become a regular monthly post, published on or just after the third Friday of … Continue reading
A quick post on a new page I have added to the blog. In the top menu you will see a page called ‘Top 6 Economic Indicators“. On this page you will find FRED graphs of 6 economic indicators, updated automatically when new data is available. I’ll tell you a bit more about these indicators below and why they were chosen. First, there are a lot of economic indicators these days. There are individual indicators (we track 66 of them), like the unemployment rate, for very measuring very specific aspects of the economy, and composite indicators (made up of many individual … Continue reading
The fiscal cliff is coming and the politicians are going to let us drive right over it. At least that’s the drumbeat you hear in the financial news media. And with 5 months to go until the end of 2012 the drumbeat is picking up its tempo. With that in mind I thought it would be useful to take a look at what impact the fiscal cliff would have on asset classes, the likely outcomes, and the implications for investors. That’s the bad, scary news. The likely outcome of what I described above is very very small in my opinion. … Continue reading
I don’t know why I feel the need to do an outlook post. I don’t pay any attention to market forecasts. I don’t invest in indexes. So, why the need for an outlook post? Well, over the years I have to come to the opinion that it is quite helpful to your investment results to know at a very broad level if you’re investing with a head wind or with a tail wind. For me this affects my broad allocation to cash versus risk investments and also helps me determine how much risk to take in my trading account. The … Continue reading
Today I wanted to update my top 3 contrarian indicators. The market selloff continues and looking at contrarian indicators can give an investor an edge in determining the right time to buy. I introduced these indicators in this post; money flows; investors sentiment, and margin debt. Lets see what they’re telling us. First up, money flows. Money continues to pour out of equity mutual funds. The latest data from ICI is below. The $30B outflow out of equity funds in the week ending Aug 10th was the worst since Q1 2009. On a monthly basis you can see the comparison … Continue reading
With all the discussion of the current economic situation in the US, jobs, deficits, etc.. it constantly amazes me how short term oriented and myopic investors can sometimes be. In this regard I think we could gain some insight by looking at what’s happened in Japan since 1990. Barry Ritholz at the Big Picture has a great post comparing the Japanese and US stock markets from their great boom peaks. Take a look. As the famous saying goes, history doesn’t necessarily repeat but it often rhymes. In the most optimistic light I can put this, there are enough gloom and … Continue reading