St. Louis Financial Stress Index – April 17, 2014 Update

On March 28, 2011 I wrote a post (“The STLFSI“) about the St. Louis Fed’s Financial Stress Index (STLFSI) which is supposed to measure stress in the financial system.  For reference purposes, the most recent chart is seen below.  This chart was last updated on April 17, incorporating data from December 31,1993 to April 11, 2014, on a weekly basis.  The April 11, 2014 value is -1.084:

(click on chart to enlarge image)

STLFSI

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Here is the STLFSI chart from a 1-year perspective:

St. Louis Financial Stress Index

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 17, 2014:

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

_________

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 1864.85 as this post is written

Chicago Fed National Financial Conditions Index (NFCI)

Each week I have been posting two charts of the St. Louis Fed’s Financial Stress Index (STLFSI), which is supposed to measure stress in the financial system.

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

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

The NFCI chart below was last updated on April 16, incorporating data from January 5,1973 to April 11, 2014, on a weekly basis.  The April 11, 2014 value is -.93:

(click on chart to enlarge image)

NFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 17, 2014:

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

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The ANFCI chart below was last updated on April 16, incorporating data from January 5,1973 to April 11, 2014, on a weekly basis.  The April 11, 2014 value is -.53:

(click on chart to enlarge image)

ANFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 17, 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 1862.31 as this post is written

Disturbing Charts (Update 14)

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 – 58 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 (except one, as noted) are from the Federal Reserve, and represent the most recently updated data.

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

(click on charts to enlarge images)

Housing starts (last updated 3-18-14):

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):

ASLPITAX

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Total Loans and Leases of Commercial Banks (% Change from Year Ago)(last updated 4-11-14):

Total Loans and Leases Percent Change From Year Ago

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Bank Credit – All Commercial Banks (% Change from Year Ago)(last updated 4-11-14):

Total Bank Credit Percent Change From Year Ago

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M1 Money Multiplier (last updated 4-10-14):

Money Multiplier

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Median Duration of Unemployment (last updated 4-4-14):

Median Duration of Unemployment

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This next chart is from the CalculatedRisk.com blog post of April 4, 2014, titled “March Employment Report:  192,000 Jobs, 6.7% Unemployment Rate” and it shows (in red) the relative length and depth of this downturn and subsequent recovery from an employment perspective:

CR 4-4-14 -  EmployRecMar2014

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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 3-24-14):

CFNAI MA-3

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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 1842.98 as this post is written

Deflation Probabilities

While I do not agree with the current readings of the measure – I think the measure dramatically understates the probability of deflation, as measured by the CPI – the Federal Reserve Bank of Atlanta maintains an interesting data series titled “Deflation Probabilities.”

As stated on the site:

Using estimates derived from Treasury Inflation-Protected Securities (TIPS) markets, described in a technical appendix, this weekly report provides two measures of the probability of consumer price index (CPI) deflation through 2018.

A chart shows the trends of the probabilities.  As one can see in the chart, the readings are volatile.

As for the current weekly reading, the April 10, 2014 update states the following:

The 2013–18 deflation probability—based on the 5-year TIPS issued in April and the 10-year TIPS issued in July 2008—was 0 percent on April 9, where it has been since early September. The 2012–17 deflation probability is also 0 percent as of April 9.

Prices of Treasury Inflation-Protected Securities (TIPS) with similar maturity dates can be used to measure probabilities of a net decline in the consumer price index over the five-year period starting in early 2013 or the five-year period starting in early 2012.

I plan on providing updates to this measure on a regular interval.

_________

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 1815.69 this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – April 11, 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 April 11, 2014 titled “ECRI Recession Watch:  Weekly Update.”  These charts are on a weekly basis through the April 11 release, indicating data through April 4, 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 4-11-14 - ECRI-WLI-YoY 2.8 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 1818.57 as this post is written

The April 2014 Wall Street Journal Economic Forecast Survey

The April Wall Street Journal Economic Forecast Survey was published on April 11, 2014.  The headline is “Economists See Growth Spurt Delayed, Not Derailed.”

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.

Three excerpts I found notable:

Harsh winter weather delayed—but likely didn’t derail—the breakout growth many economists expected for the U.S. going into the year.

also:

Because of the weather drag, the consensus view of the 48 economists surveyed—not all of whom answered every question—is that real GDP growth slowed to only a 1.5% annual rate in the first quarter and is now revving up to a 3.0% pace this quarter. That’s a bit less robust than the pattern projected in the March survey, when first-quarter growth of 1.9% was expected to be followed by a 2.9% pace.

also:

Economists continue to think that if they are misreading the tea leaves, it is because they are too cautious about the outlook. Three-quarters of the respondents say the risk to their respective forecasts for 2014 is to the upside rather than to the downside.

As seen in the “Economist Q&A” section, the average response as to the odds of another recession starting within the next 12 months was seen to be roughly equal to that of March’s average response of 12%.

The current average forecasts among economists polled include the following:

GDP:

full-year 2014:  2.7%

full-year 2015:  3.0%

full-year 2016:  2.9%

Unemployment Rate:

December 2014: 6.2%

December 2015: 5.7%

December 2016: 5.4%

10-Year Treasury Yield:

December 2014: 3.35%

December 2015: 3.91%

December 2016: 4.33%

CPI:

December 2014:  1.9%

December 2015:  2.1%

December 2016:  2.3%

Crude Oil  ($ per bbl):

for 12/31/2014: $97.31

for 12/31/2015: $95.51

 

(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 1821.87 as this post is written

Markets During Periods Of Federal Reserve Intervention – April 11, 2014 Update

In the August 9, 2011 post (“QE3 – Various Thoughts“) I posted a chart that depicted the movements of the S&P500, 10-Year Treasury Yield and the Fed Funds rate spanning the periods of various Federal Reserve interventions since 2007.

For reference purposes, here is an updated chart from Doug Short’s blog post of April 10 (“Treasury Snapshot:  10-Year Yield Closes Near Its 2014 Low“) :

(click on chart to enlarge image)

Dshort 4-10-14 - SPX-10-yr-yield-and-fed-intervention

 

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1833.08 as this post is written

IMF Report – Probabilities Of Recession And Deflation

The International Monetary Fund (IMF) recently published the April 2014 “World Economic Outlook.” (pdf)  The subtitle is “Recovery Strengthens, Remains Uneven.”

One area of the report is figure 1.14 on page 14.  While I do not agree with the current readings of the three measures presented – Probability of Recession, Probability of Deflation, and the “Deflation Vulnerability Index” – I do find them to be notable, especially as one can compare these estimates across various economies.

As one can see, the U.S. is estimated to have a roughly 12.5% probability of recession and a roughly 2% probability of deflation for the periods indicated.

_________

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 1837.11 this post is written

St. Louis Financial Stress Index – April 10, 2014 Update

On March 28, 2011 I wrote a post (“The STLFSI“) about the St. Louis Fed’s Financial Stress Index (STLFSI) which is supposed to measure stress in the financial system.  For reference purposes, the most recent chart is seen below.  This chart was last updated on April 10, incorporating data from December 31,1993 to April 4, 2014, on a weekly basis.  The April 4, 2014 value is -1.058:

(click on chart to enlarge image)

STLFSI

-

Here is the STLFSI chart from a 1-year perspective:

STLFSI 1-year

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 10, 2014:

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

_________

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 1849.61 as this post is written

CEO Confidence Surveys 1Q 2014 – Notable Excerpts

On April 9, 2014, The Conference Board and PwC released the 1st Quarter Measure Of CEO Confidence.   The overall measure of CEO Confidence was at 63, up from 60 in the fourth quarter. [note:  a reading of more than 50 points reflects more positive than negative responses]

Notable excerpts from this April 9 Press Release include:

CEOs’ assessment of current economic conditions continued to improve. Now, 54 percent claim conditions are better compared to six months ago, up from 44 percent last quarter. Business leaders are also more optimistic about conditions in their own industries. Approximately 47 percent say conditions in their own industries have improved, compared with 41 percent last quarter.

CEOs’ short-term outlook also improved considerably. Currently, 60 percent of business leaders anticipate economic conditions will improve over the next six months, up from 50 percent in the fourth quarter of last year. Expectations for their own industries are more upbeat, with 52 percent of CEOs anticipating an improvement in conditions in the months ahead, up from 47 percent last quarter.

The Business Roundtable also released its CEO Economic Outlook Survey for the 1st Quarter of 2014 last month.   Notable excerpts from the March 18 release, titled “CEOs Expect Continued Slow GDP Growth with Moderate Increases in Sales, Hiring and Investment” include the following:

Results from the Business Roundtable’s first quarter 2014 CEO Economic Outlook Survey show a moderate uptick in CEO expectations for hiring, sales and capital expenditures and some improvement in the Business Roundtable CEO Economic Outlook Index. But the survey’s expectation for 2014 GDP growth was 2.4 percent, representing below-normal growth compared to past economic recoveries. This latest reading follows an expectation for 2.2 percent growth in the CEO survey taken in the fourth quarter last year.

also:

The survey results showed that 72 percent of CEOs anticipate sales will increase in the next six months, but only 37 percent expect to add U.S. employees and less than half expect to increase their companies’ U.S. capital investment.

also:

The Business Roundtable CEO Economic Outlook Index – a composite index of CEO expectations for the next six months of sales, capital spending and employment – increased in the first quarter of 2014 to 92.1 from 84.5 in the fourth quarter of 2013. The Index now stands above its long-term average level of 79.7.

_____

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 1872.18 as this post is written