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Replying to Topic: Leading Economic Indicators
Created On Thu May 21, 09 07:12 PM by trackstar

trackstar
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U.S. Economy: Leading Indicators Index Gains as Recession Eases - Bloomberg May 21

"May 21 (Bloomberg) -- The index of U.S. leading economic indicators rose more than forecast and a manufacturing gauge improved in signs the deepest recession in five decades could end later this year.

The Conference Board�s leading gauge increased 1 percent in April, the biggest gain since November 2005, the New York-based group said today. The index points to the direction of the economy over the next three to six months. A separate report showed manufacturing in the Philadelphia area shrank in May at the slowest pace in eight months.

A recent rebound in stock prices and improving consumer confidence are among components of the leading index that are stoking speculation the economy will begin to grow again in the next six months. Still, with unemployment at a 25-year high and projected to keep climbing into 2010, and lenders restricting credit, the recovery may be muted.
...
For the first time since the recession started in December 2007, the change in the leading index over the last six months, on an annualized basis, surpassed the year-over-year measure as both improved. That also happened before the end of the previous two recessions."

For numbers, technical notes, and graphs:

The Conference Board - Global Business Cycle Indicators

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chocolatemoney
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Fri May 22, 09 05:56 PM

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Roubini is still negative: http://www.forbes.com/2009/05/20/depression-recession-green-shoots-housing-jobs-opinions-columnists-nouriel-roubini.html
Magnus (UBS) is negative as well: http://v2.ftalphaville.ft.com/blog/2009/05/21/56108/the-bull-case-shredded/

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BullBear
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Quote
Originally posted by: chocolatemoney
Roubini is still negative: http://www.forbes.com/2009/05/20/depression-recession-green-shoots-housing-jobs-opinions-columnists-nouriel-roubini.html
Magnus (UBS) is negative as well: http://v2.ftalphaville.ft.com/blog/2009/05/21/56108/the-bull-case-shredded/

I believe that some EU IBs (like UBS, Commerzbank, ...) are shorting the market so they would be happy with a deepening recession in the US and a sell-off to cover their shorts. They are also piled on treasuries (locked in at low yields) and if the US keeps recovering they'll face huge losses on sovereign bonds.

We'll see! I think the US will be out of the mess later this year and going forward - 2010+

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Edited: Fri May 22, 09 at 07:10 PM by BullBear

Gmike2000
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Quote
Originally posted by: chocolatemoney
Roubini is still negative: http://www.forbes.com/2009/05/20/depression-recession-green-shoots-housing-jobs-opinions-columnists-nouriel-roubini.html
Magnus (UBS) is negative as well: http://v2.ftalphaville.ft.com/blog/2009/05/21/56108/the-bull-case-shredded/

Roubini's behaviour is that of an inexperienced junior trading apprentice. He got it right once, which makes him stick to the same view (bearish) over and over again.

He already got it wrong in March (when the stock rallye started) by saying stocks will fall another 20%. He also got it wrong when he said we are at a near depression, l-shaped recovery. Doom and gloom is his trademark, that is what the journalists want him for. He also said China would fall into a black hole, turns out, China is doing really well.

The guy clearly has some psychological issues. Maybe his parents did not give him much attention as a kid. Maybe he did not have many friends because his family moved around so much. Maybe he got beaten up in high school. In any case, I always sense his joy when he gets the media attention and when he feels that is gloom is stoking fear in his listeners. Don't take him too seriously...the guy needs to see a shrink.

macrotrade
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Quote
Originally posted by: Gmike2000
Roubini's behaviour is that of an inexperienced junior trading apprentice. He got it right once, which makes him stick to the same view (bearish) over and over again.

Yeah, he gets a lot of things wrong. But that's just very normal. However, if you weight the predictions with importance he is far superior than 99.9% of other analysts / economists, or at least his track record is. I think his baseline scenario is very realistic.

I think if one adjusts economic indicators for seasonality + stimulus + potential of negative surprises + estimation erros we are still on a negative trendline.

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Edited: Tue Jun 02, 09 at 10:30 AM by macrotrade

Gmike2000
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There is no doubt we are still in trouble. And I am not a very good economist anyways.

The point to note is that Roubini now abstains from making market predictions. This is good, he should stick to economics, because he clearly does not understand the stock market. There is no such thing as "fair value" in the stock market. Never has been. Never will be. That is the nature of the market.

The thing about all these economic indicators is that, first of all, you have to question how this stuff is measured to begin with. And then, secondly, there is tremendous noise...with all kinds of revisions and corrections etc taking place. Even if we take the revisions as the true and precise measurement, the volatility of these numbers is way high. What is signal, what is noise? The problem with economists is that they can always explain everything AFTER the fact. By contrast, in physics you can see a comet approaching our planet from like the edge of the solar system and predict within a tight range the likelihood that it is going to hit earth. In economics, nobody can predict when a crisis is going to happen. It is a backward looking science. In a sense, it is a subdiscipline of history....storytelling.

On any given day, you will find somebody who says the market is going to crash or going to ralle. Flip a coin, one of them is bound to be correct. Then the media makes him look like he can walk on water. Where are all those guys that saw Black Monday 1987 coming? 20yrs later, they have had ample time to prove their forecasting ability. They never pulled it off again.

chocolatemoney
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Quote
Originally posted by: Gmike2000
There is no doubt we are still in trouble. And I am not a very good economist anyways.

The point to note is that Roubini now abstains from making market predictions. This is good, he should stick to economics, because he clearly does not understand the stock market. There is no such thing as "fair value" in the stock market. Never has been. Never will be. That is the nature of the market.

The thing about all these economic indicators is that, first of all, you have to question how this stuff is measured to begin with. And then, secondly, there is tremendous noise...with all kinds of revisions and corrections etc taking place. Even if we take the revisions as the true and precise measurement, the volatility of these numbers is way high. What is signal, what is noise? The problem with economists is that they can always explain everything AFTER the fact. By contrast, in physics you can see a comet approaching our planet from like the edge of the solar system and predict within a tight range the likelihood that it is going to hit earth. In economics, nobody can predict when a crisis is going to happen. It is a backward looking science. In a sense, it is a subdiscipline of history....storytelling.

On any given day, you will find somebody who says the market is going to crash or going to ralle. Flip a coin, one of them is bound to be correct. Then the media makes him look like he can walk on water. Where are all those guys that saw Black Monday 1987 coming? 20yrs later, they have had ample time to prove their forecasting ability. They never pulled it off again.

I am not smart enough to make predictions. After such a rally I have unloaded the boat pretty much. The risk is that many will rush back in the market, pushed by investors that fear they're missing the train, in my view...

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BullBear
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Thu Jun 04, 09 10:08 PM

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Quote
Originally posted by: Gmike2000
There is no doubt we are still in trouble. And I am not a very good economist anyways.

The point to note is that Roubini now abstains from making market predictions. This is good, he should stick to economics, because he clearly does not understand the stock market. There is no such thing as "fair value" in the stock market. Never has been. Never will be. That is the nature of the market.

The thing about all these economic indicators is that, first of all, you have to question how this stuff is measured to begin with. And then, secondly, there is tremendous noise...with all kinds of revisions and corrections etc taking place. Even if we take the revisions as the true and precise measurement, the volatility of these numbers is way high. What is signal, what is noise? The problem with economists is that they can always explain everything AFTER the fact. By contrast, in physics you can see a comet approaching our planet from like the edge of the solar system and predict within a tight range the likelihood that it is going to hit earth. In economics, nobody can predict when a crisis is going to happen. It is a backward looking science. In a sense, it is a subdiscipline of history....storytelling.

On any given day, you will find somebody who says the market is going to crash or going to ralle. Flip a coin, one of them is bound to be correct. Then the media makes him look like he can walk on water. Where are all those guys that saw Black Monday 1987 coming? 20yrs later, they have had ample time to prove their forecasting ability. They never pulled it off again.

The infinite monkeys theorem or "monkeys in typewritters"

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Anthis
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Quote
Originally posted by: macrotrade
Quote
Originally posted by: Gmike2000
Roubini's behaviour is that of an inexperienced junior trading apprentice. He got it right once, which makes him stick to the same view (bearish) over and over again.

Yeah, he gets a lot of things wrong. But that's just very normal. However, if you weight the predictions with importance he is far superior than 99.9% of other analysts / economists, or at least his track record is. I think his baseline scenario is very realistic.

I think if one adjusts economic indicators for seasonality + stimulus + potential of negative surprises + estimation erros we are still on a negative trendline.

Thats right. Roubini Insurance or something...

PaperCut
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Fri Jun 05, 09 04:08 PM

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This question is in earnest; it's not a statement marquerading as a question.

Is there any way that this mess doesn't end up in a state of USD hyperinflation?

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daveangel
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Fri Jun 05, 09 04:40 PM

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Quote
Originally posted by: Gmike2000
There is no doubt we are still in trouble. And I am not a very good economist anyways.

The point to note is that Roubini now abstains from making market predictions. This is good, he should stick to economics, because he clearly does not understand the stock market. There is no such thing as "fair value" in the stock market. Never has been. Never will be. That is the nature of the market.

The thing about all these economic indicators is that, first of all, you have to question how this stuff is measured to begin with. And then, secondly, there is tremendous noise...with all kinds of revisions and corrections etc taking place. Even if we take the revisions as the true and precise measurement, the volatility of these numbers is way high. What is signal, what is noise? The problem with economists is that they can always explain everything AFTER the fact. By contrast, in physics you can see a comet approaching our planet from like the edge of the solar system and predict within a tight range the likelihood that it is going to hit earth. In economics, nobody can predict when a crisis is going to happen. It is a backward looking science. In a sense, it is a subdiscipline of history....storytelling.

On any given day, you will find somebody who says the market is going to crash or going to ralle. Flip a coin, one of them is bound to be correct. Then the media makes him look like he can walk on water. Where are all those guys that saw Black Monday 1987 coming? 20yrs later, they have had ample time to prove their forecasting ability. They never pulled it off again.

The things Gmike is that whilst ROubini I think has been overly pessimistic, I think you have in the past being overly optimistic.

There are certainly plenty of risks - there is the possibility of very high inflation (although in my view I think this is a small risk) or of a flattish recovery or even a double dip. I think we have had a strong rally in riskly assets over the past 8 weeks and given where things are priced now the risk is more to the downside than the upside.

On the inflation front, I am less concerned that this is a problem. The reason is that i think there 1.5bn chinese people who willing to ensure that wage inflation is not a problem for a long time.

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Traden4Alpha
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Fri Jun 05, 09 05:23 PM

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Quote
Originally posted by: PaperCut
Is there any way that this mess doesn't end up in a state of USD hyperinflation?

A few scenarios:
1. The Fed maintains a Goldilocks balance between deflation and inflation by alternatively scaring and soothing the markets.
2. The Fed lets some inflation occur to erode the burden of consumer, corporate, banks, and government debt, but caps the total run of inflation to 30-50% total (e.g., permits 3 years of 10-15% inflation)
3. All the other countries of the world look worse than the U.S., so flight-to-quality factors keep people holding/buying US debt.

That said, some significant amount of inflation looks extremely likely. Whether it goes "hyper" is another issue.

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Edited: Fri Jun 05, 09 at 05:34 PM by Traden4Alpha

chocolatemoney
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Prof. Hamilton says: "Anyone who suggests that last week's ballooning reserve deposits represent inflationary pressure or the Fed monetizing the deficit simply doesn't know what they're talking about. Banks are sitting on the reserves, not withdrawing them as cash. When markets settle down, the Fed can and will absorb those reserves back in with sterilizing sales of Treasury securities, just as it did in 2001 or after the more modest spike in August 2007. "
Source: (http://www.econbrowser.com/archives/2008/10/balance_sheet_o.html)

It also seems like that liquidity is not leaving reserve deposits, not as much as maybe desired: http://www.econbrowser.com/archives/2009/06/more_on_bank_le.html

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Anthis
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Fri Jun 05, 09 06:36 PM

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Quote
Originally posted by: PaperCut
This question is in earnest; it's not a statement marquerading as a question.

Is there any way that this mess doesn't end up in a state of USD hyperinflation?

Hyper_ or_not inflation might or might not be a problem depending on your position in the socio-economic pyramid.

BullBear
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We've always lived with some inflation... Don't worry! Some (low) inflation is great - It keeps you away from deflation.

A low inflation figure is a safety margin that we need to keep a sustainable economy (human nature).

- the TARP given to Banks will be paid back. Probably, AIG will be a loosing position but after unwinding the rest of the positions they'll exit with profits. I hope they can cover the AIG loss.

- commercial paper is short-term by nature... (reducing the FED's balance sheet)

- with risk-taking coming back they can start shifting some of their positions from the public to the private sector

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Now, the problem with public debt has to be solved one day -> They have to reduce public spending. Start with cutting superfluous expenses. [This is not a Bernanke's decision it has to be taken by the US Gov]
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hamster
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Edited: Wed Aug 19, 09 at 02:18 PM by hamster

trackstar
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Kohn Plays Down Tightening Challenge - Market Watch WSJ Sept 30

WASHINGTON (MarketWatch) - A leading voice at the Federal Reserve played down the complexity of the challenge facing the central bank on the question of when to pull the trigger to hike interest rates, saying that the situation was not so different from past episodes.

The short article has a link to his remarks.

See also

Fed to Watch Forecasts to Decide on Exit, Kohn Says - WSJ Sept 30

The U.S. Federal Reserve will carefully evaluate economic forecasts to judge exactly when and how to exit out of its extraordinary rescue programs, and the withdrawal will happen "well before" inflation has a chance to rise out of control, the Fed's vice chairman said Wednesday.

"We must begin to withdraw accommodation well before aggregate spending threatens to press against potential supply, and well before inflation as well as inflation expectations rise above levels consistent with price stability," said Fed Vice Chairman Donald Kohn in a speech to the Cato Institute.

In a separate speech, the president of the Federal Reserve Bank of Atlanta said the Federal Reserve probably has a while longer to wait before it needs to start withdrawing its market support programs in earnest.

"I think it may well be some time before comprehensive exit need be under way," Dennis Lockhart said...
...

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Edited: Wed Sep 30, 09 at 09:13 PM by trackstar

trackstar
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Useful reference.

The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities

Review excerpt from Library Journal:

"Baumohl, a former economics reporter for Time magazine, has written a tremendously useful source on economic indicators. Baumohl considers a variety of factors when describing each indicator, such as what exactly it measures, how it is computed, where to find the relevant report on the web, the day and time this report is released, the source of the information, and how often the information is revised. He also discusses the market impact of these indicators on bonds, stocks, and currency."

�Stacey Marien, American Univ. Lib., Washington, DC

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"You can discover more about a person in an hour of play than in a year of conversation."
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Edited: Wed Sep 30, 09 at 09:28 PM by trackstar

trackstar
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New Economic Reports Show We're Still Hurting - Washington Post Oct 2

"The fragile economic recovery has relied heavily on government stimulus spending, but new data show that as the money runs out, a sustained rebound may be elusive.

The dramatic decline in sales reported Thursday by the Big Three automakers suggested the extent to which the stimulus act has propped up the economy. The government's wildly popular "Cash for Clunkers" program drove consumer spending to its highest level in eight years in August. But after it ended, so did the growth in auto sales.

General Motors' sales plunged 36 percent in September compared with August. Ford plummeted 37 percent. Chrysler dove 33 percent. Cash for Clunkers "was a one-time boost of sales followed by a crater," said Ben Herzon, an economist at Macroeconomic Advisers. The firm forecast that the program was likely to have no effect as a stimulant for national economic output.

Other economic data released Thursday showed that the deep wounds of the recession have yet to heal. Weekly jobless claims rose more than expected, a sign that businesses are still concerned about the future. The monthly unemployment rate, scheduled for release Friday, is expected to rise, albeit at a slower rate. Consumer loan delinquencies remain at record highs, and manufacturing growth has slowed."
...

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trackstar
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U.S. September Job Cuts Exceeded Forecasts; Unemployment Rose - Bloomberg Oct 3

"Oct. 3 (Bloomberg) -- U.S. job losses unexpectedly accelerated last month and the unemployment rate reached the highest level since 1983, signaling any recovery in consumer spending and economic growth will be slow to develop.

The Labor Department figures prompted President Barack Obama to say he�s working to �explore any and all additional measures� to spur growth, and underscored forecasts for the Federal Reserve to keep its benchmark interest rate near zero through next year.

�This has the potential to put a big stop sign on the road to economic recovery,� said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. �The harder jobs are to get, the harder and longer this road to recovery is going to be.�

Payrolls dropped by 263,000 in September, exceeding the median forecast in Bloomberg�s survey, with losses extending from cash-strapped state and local governments to retailers to builders, yesterday�s report showed. The jobless rate rose to 9.8 percent from 9.7 percent in August, while working hours matched a record low.

The Standard & Poor�s 500 Index closed down 0.5 percent at 1,025.21 in New York trading, losing 1.8 percent for the week. Ten-year Treasury yields rose to 3.22 percent late yesterday from 3.18 percent the prior day. The dollar sank 0.2 percent to 1.4576 per euro at 5:30 p.m. New York time."
...

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