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Topic Title: Leading Economic Indicators
Created On Thu May 21, 09 07:12 PM

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Thu May 21, 09 07:12 PM

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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"You can discover more about a person in an hour of play than in a year of conversation."
- Plato

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chocolatemoney
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Fri May 22, 09 05:56 PM

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/

-------------------------
Disclaimer: I am just a newbie

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BullBear
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Fri May 22, 09 07:10 PM

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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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"Nos liberi sumus, Rex noster liber est, manus nostrae nos liberverunt", Grito de Almacave, Foundation of Portugal, 1146

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

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Gmike2000
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Tue Jun 02, 09 07:51 AM

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.

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macrotrade
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Tue Jun 02, 09 10:30 AM

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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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"All it takes to turn a parrot into a learned financial economist is just one word - arbitrage." Stephen Ross

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

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Gmike2000
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Tue Jun 02, 09 10:24 PM

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.

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chocolatemoney
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Joined: Oct 2008

Wed Jun 03, 09 01:47 PM

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...

-------------------------
Disclaimer: I am just a newbie

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BullBear
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Posts: 699
Joined: Aug 2007

Thu Jun 04, 09 10:08 PM

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"

-------------------------
"Nos liberi sumus, Rex noster liber est, manus nostrae nos liberverunt", Grito de Almacave, Foundation of Portugal, 1146

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Anthis
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Posts: 3035
Joined: Oct 2001

Thu Jun 04, 09 11:01 PM

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...

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PaperCut
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Posts: 1610
Joined: May 2004

Fri Jun 05, 09 04:08 PM

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?

-------------------------
"A man should be learned in several sciences, and should have a reasonable, philosophical and in some measure a mathematical head, to be a complete and excellent poet."

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daveangel
Senior Member

Posts: 4978
Joined: Oct 2003

Fri Jun 05, 09 04:40 PM

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.

-------------------------
Knowledge comes, but wisdom lingers.

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Traden4Alpha
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Posts: 6013
Joined: Sep 2002

Fri Jun 05, 09 05:23 PM

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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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"It often happens that a player carries out a deep and complicated calculation, but fails to spot something elementary right at the first move." -- grandmaster Alexander Kotov --inscribed on gift chess sets given by Amaranth hedge fund.

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

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chocolatemoney
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Posts: 92
Joined: Oct 2008

Fri Jun 05, 09 05:28 PM

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

-------------------------
Disclaimer: I am just a newbie

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Anthis
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Posts: 3035
Joined: Oct 2001

Fri Jun 05, 09 06:36 PM

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.