Chicago Fed National Financial Conditions Index (NFCI)

The St. Louis Fed’s Financial Stress Index (STLFSI) is one index that is supposed to measure stress in the financial system.  Its reading as of the July 17, 2014 update (reflecting data through July 11) is -1.350.

Of course, there are a variety of other measures and indices that are supposed to measure financial stress and other related issues, both from the Federal Reserve as well as from private sources.

Two other indices that I regularly monitor include the Chicago Fed National Financial Conditions Index (NFCI) as well as the Chicago Fed Adjusted National Financial Conditions Index (ANFCI).

Here are summary descriptions of each, as seen in FRED:

The National Financial Conditions Index (NFCI) measures risk, liquidity and leverage in money markets and debt and equity markets as well as in the traditional and “shadow” banking systems. Positive values of the NFCI indicate financial conditions that are tighter than average, while negative values indicate financial conditions that are looser than average.

The adjusted NFCI (ANFCI). This index isolates a component of financial conditions uncorrelated with economic conditions to provide an update on how financial conditions compare with current economic conditions.

For further information, please visit the Federal Reserve Bank of Chicago’s web site:

http://www.chicagofed.org/webpages/publications/nfci/index.cfm

Below are the most recently updated charts of the NFCI and ANFCI, respectively.

The NFCI chart below was last updated on July 23, incorporating data from January 5,1973 to July 18, 2014, on a weekly basis.  The July 18, 2014 value is -.99:

(click on chart to enlarge image)

NFCI 7-23-14 update

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 23, 2014:

http://research.stlouisfed.org/fred2/series/NFCI

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The ANFCI chart below was last updated on July 23, incorporating data from January 5,1973 to July 18, 2014, on a weekly basis.  The July 18, 2014 value is -.39:

(click on chart to enlarge image)

ANFCI 7-23-14 update

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 23, 2014:

http://research.stlouisfed.org/fred2/series/ANFCI

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1988.35 as this post is written

Current Economic Situation

With regard to our current economic situation, my thoughts can best be described/summarized by the posts found under the 38 “Building Financial Danger” posts.

My thoughts concerning our ongoing economic situation – with future implications – can be seen on the page titled “A Special Note On Our Economic Situation,” which has been found near the bottom of every blog post since August 15, 2010.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1988.41 as this post is written

Standard & Poor’s S&P500 Earnings Estimates For 2014 & 2015 – As Of July 17, 2014

As many are aware, Standard & Poor’s publishes earnings estimates for the S&P500.  (My posts concerning their estimates can be found under the S&P500 Earnings tag)

For reference purposes, the most current estimates are reflected below, and are as of July 17, 2014:

Year 2014 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $120.07/share

-From a “top down” perspective, operating earnings of N/A

-From a “top down” perspective, “as reported” earnings of $109.67/share

Year 2015 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $136.01/share

-From a “top down” perspective, operating earnings of $136.03/share

-From a “top down” perspective, “as reported” earnings of $131.80/share

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1983.53 as this post is written

Long-Term Historical Charts Of The DJIA, Dow Jones Transportation Average, S&P500, And Nasdaq Composite

StockCharts.com maintains long-term historical charts of various major stock market indices, interest rates, currencies, commodities, and economic indicators.

As a long-term reference, below are charts depicting various stock market indices for the dates shown.  All charts are depicted on a monthly basis using a LOG scale.

(click on charts to enlarge images)(charts courtesy of StockCharts.com)

The DJIA, from 1900-July 18, 2014:

Dow Jones Industrial Average since 1900

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The Dow Jones Transportation Average, from 1900-July 18, 2014:

Dow Jones Transportation Average since 1900

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The S&P500, from 1925-July 18, 2014:

S&P500 since 1925

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The Nasdaq Composite, from 1978-July 18, 2014:

Nasdaq Composite since 1978

 

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1984.34 as this post is written

Updates Of Economic Indicators July 2014

Here is an update of various indicators that are supposed to predict and/or depict economic activity. These indicators have been discussed in previous blog posts:

The July 2014 Chicago Fed National Activity Index (CFNAI)(pdf) updated as of July 21, 2014:

CFNAI MA-3 July 2014

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The ECRI WLI (Weekly Leading Index):

As of July 18, 2014 (incorporating data through July 11, 2014) the WLI was at 135.2 and the WLI, Gr. was at 4.2%.

Here is a chart of the ECRI WLI,Gr., from Doug Short’s July, 2014 post titled “ECRI Recession Watch:  Weekly Update” :

Dshort 7-18-14 - ECRI-WLI-growth-since-2000 4.2

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The Aruoba-Diebold-Scotti Business Conditions (ADS) Index:

Here is the latest chart, depicting the ADS Index from July 12, 2012 through June 12, 2014:

ADS Index

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The Conference Board Leading (LEI) and Coincident (CEI) Economic Indexes:

As per the July 18, 2014 press release, the LEI was at 102.2 and the CEI was at 109.2 in June.

An excerpt from the July 18 release:

“The CEI shows the pace of economic activity continued to expand moderately through June,” said Ken Goldstein, Economist at The Conference Board. “Stronger consumer demand driven by sustained job gains and improving confidence remains the main source of improvement for the U.S. economy. In addition to a stronger housing market, more business investment could also provide an upside to the overall economy.”

Here is a chart of the LEI from Doug Short’s blog post of July 18 titled “Conference Board Leading Economic Index:  Fifth Monthly Increase“ :

Conference Board LEI

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1974.20 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – July 18, 2014 Update

As I stated in my July 12, 2010 post (“ECRI WLI Growth History“):

For a variety of reasons, I am not as enamored with ECRI’s WLI and WLI Growth measures as many are.

However, I do think the measures are important and deserve close monitoring and scrutiny.

The movement of the ECRI WLI and WLI, Gr. is particularly notable at this time, as ECRI publicly announced on September 30, 2011 that the U.S. was “tipping into recession,” and ECRI has reiterated the view that the U.S. economy is currently in a recession, seen most recently in these twelve sources :

Other past notable year 2012 reaffirmations of the September 30, 2011 recession call by ECRI were seen (in chronological order) on March 15 (“Why Our Recession Call Stands”) as well as various interviews and statements the week of May 6, including:

Also, subsequent to May 2012:

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Below are three long-term charts, from Doug Short’s blog post of July 18, 2014 titled “ECRI Recession Watch:  Weekly Update.”  These charts are on a weekly basis through the July 18 release, indicating data through July 11, 2014.

Here is the ECRI WLI (defined at ECRI’s glossary):

ECRI WLI

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This next chart depicts, on a long-term basis, the Year-over-Year change in the 4-week moving average of the WLI:

Dshort 7-18-14 - ECRI-WLI-YoY 3.9 percent

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This last chart depicts, on a long-term basis, the WLI, Gr.:

ECRI WLI,Gr.

_________

I post various economic indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1977.00 as this post is written

The July 2014 Wall Street Journal Economic Forecast Survey

The July Wall Street Journal Economic Forecast Survey was published on July 17, 2014.  The headline is “WSJ Survey:  Economists Worry the Fed Will Keep Rates Low Too Long.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

One excerpt:

Some 79% of the 42 economists who answered the question said the greater risk is that the Fed will raise rates too late, versus 21% who said the greater risk is that the Fed will raise rates too soon.

As seen in the “Economic Indicators” section, the average response as to the odds of another recession starting within the next 12 months was 12.13%; June’s average response was 11.36%.

The current average forecasts among economists polled include the following:

GDP:

full-year 2014:  1.6%

full-year 2015:  2.9%

full-year 2016:  2.8%

Unemployment Rate:

December 2014: 5.9%

December 2015: 5.5%

December 2016: 5.3%

10-Year Treasury Yield:

December 2014: 3.07%

December 2015: 3.69%

December 2016: 4.13%

CPI:

December 2014:  2.3%

December 2015:  2.1%

December 2016:  2.4%

Crude Oil  ($ per bbl):

for 12/31/2014: $99.02

for 12/31/2015: $97.82

 

(note: I highlight this WSJ Economic Forecast survey each month; commentary on past surveys can be found under the “Economic Forecasts” category)

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1958.12 as this post is written

Chicago Fed National Financial Conditions Index (NFCI)

The St. Louis Fed’s Financial Stress Index (STLFSI) is one index that is supposed to measure stress in the financial system.  Its reading as of the July 10, 2014 update (reflecting data through July 4) is -1.351.

Of course, there are a variety of other measures and indices that are supposed to measure financial stress and other related issues, both from the Federal Reserve as well as from private sources.

Two other indices that I regularly monitor include the Chicago Fed National Financial Conditions Index (NFCI) as well as the Chicago Fed Adjusted National Financial Conditions Index (ANFCI).

Here are summary descriptions of each, as seen in FRED:

The National Financial Conditions Index (NFCI) measures risk, liquidity and leverage in money markets and debt and equity markets as well as in the traditional and “shadow” banking systems. Positive values of the NFCI indicate financial conditions that are tighter than average, while negative values indicate financial conditions that are looser than average.

The adjusted NFCI (ANFCI). This index isolates a component of financial conditions uncorrelated with economic conditions to provide an update on how financial conditions compare with current economic conditions.

For further information, please visit the Federal Reserve Bank of Chicago’s web site:

http://www.chicagofed.org/webpages/publications/nfci/index.cfm

Below are the most recently updated charts of the NFCI and ANFCI, respectively.

The NFCI chart below was last updated on July 16, incorporating data from January 5,1973 to July 11, 2014, on a weekly basis.  The July 11, 2014 value is -.98:

(click on chart to enlarge image)

NFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 16, 2014:

http://research.stlouisfed.org/fred2/series/NFCI

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The ANFCI chart below was last updated on July 16, incorporating data from January 5,1973 to July 11, 2014, on a weekly basis.  The July 11, 2014 value is -.43:

(click on chart to enlarge image)

ANFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 16, 2014:

http://research.stlouisfed.org/fred2/series/ANFCI

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1981.57 as this post is written

Disturbing Charts (Update 15)

I find the following charts to be disturbing.   These charts would be disturbing at any point in the economic cycle; that they (on average) depict such a tenuous situation now – 61 months after the official (as per the September 20, 2010 NBER BCDC announcement) June 2009 end of the recession – is especially notable.

These charts raise a lot of questions.  As well, they highlight the “atypical” nature of our economic situation from a long-term historical perspective.

All of these charts are from the Federal Reserve, and represent the most recently updated data.

The following nine charts are from the St. Louis Federal Reserve:

(click on charts to enlarge images)

Housing starts (last updated 6-17-14):

Housing Starts

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The Federal Deficit (last updated 3-14-14):

Federal Deficit

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Federal Net Outlays (last updated 3-14-14):

Federal Net Outlays

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State & Local Personal Income Tax Receipts  (% Change from Year Ago)(last updated 3-27-14):

State And Local Income Tax Receipts

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Total Loans and Leases of Commercial Banks (% Change from Year Ago)(last updated 7-11-14):

Total Loans and Leases

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Bank Credit – All Commercial Banks (% Change from Year Ago)(last updated 7-11-14):

Total Bank Credit

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M1 Money Multiplier (last updated 7-3-14):

money multiplier

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Median Duration of Unemployment (last updated 7-3-14):

median duration of unemployment

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Labor Force Participation Rate (last updated 7-3-14):

Labor Force Participation Rate

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This last chart is of the Chicago Fed National Activity Index (CFNAI, and its 3-month moving average CFNAI-MA3) and it depicts broad-based economic activity (last updated 6-23-14):

Chicago Fed National Activity Index

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I will continue to update these charts on an intermittent basis as they deserve close monitoring…

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1973.28 as this post is written

CEO Confidence Surveys 2Q 2014 – Notable Excerpts

On July 9, 2014, The Conference Board and PwC released the 2nd Quarter Measure Of CEO Confidence.   The overall measure of CEO Confidence was at 62, down from 63 in the first quarter. [note:  a reading of more than 50 points reflects more positive than negative responses]

Notable excerpts from this July 9 Press Release include:

CEOs’ assessment of current economic conditions was considerably less favorable. Now, 46 percent claim conditions are better compared to six months ago, down from 54 percent in the first quarter. However, business leaders’ sentiment regarding conditions in their own industries edged up slightly, with 48 percent saying conditions in their own industries have improved, compared with 47 percent last quarter.

CEOs’ expectations regarding the short-term outlook pulled back slightly in the second quarter. Currently, approximately 53 percent of business leaders anticipate economic conditions will improve over the next six months, down from 60 percent last quarter. Expectations for their own industries are less upbeat, with 46 percent of CEOs anticipating an improvement, down from 52 percent in the first quarter.

The Business Roundtable also released its CEO Economic Outlook Survey for the 2nd Quarter of 2014 last month.   Notable excerpts from the June 17 release, titled “CEOs Predict 2.3 Percent GDP Growth in 2014, Well Below Economy’s Potential” :

Results from the Business Roundtable’s second quarter 2014 CEO Economic Outlook Survey show CEOs expect 2014 gross domestic product (GDP) growth of 2.3 percent, representing below-normal growth compared to past economic recoveries, and well below the economy’s potential. Last quarter’s estimate for 2014 GDP growth was 2.4 percent. CEOs also expect a decline in expectations for capital expenditures, and a moderate improvement in the outlook for sales and hiring over the next six months. The Business Roundtable CEO Economic Outlook Index, which is a composite of expectations for investment, sales and hiring, increased to 95.4 in the second quarter from 92.1 last quarter.

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1977.79 as this post is written