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 October 12, 2017 update (reflecting data through October 6, 2017) is -1.540.

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 October 18, 2017 incorporating data from January 8, 1971 through October 13, 2017, on a weekly basis.  The October 13, 2017 value is -.89:

NFCI_10-18-17 -.89

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 18, 2017:

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

The ANFCI chart below was last updated on October 18, 2017 incorporating data from January 8,1971 through October 13, 2017, on a weekly basis.  The October 13 value is -.67:

ANFCI_10-12-17 -.64

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 18, 2017:

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 site 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 2562.56 as this post is written

Trends Of S&P500 Earnings Forecasts

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of October 13, 2017:

from page 24:

(click on charts to enlarge images)

S&P500 EPS forecasts 2017 & 2018

from page 25:

S&P500 actual and expected EPS

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site 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 2561.70 as this post is written

S&P500 EPS Forecasts 2017, 2018, 2019

As many are aware, Thomson Reuters publishes earnings estimates for the S&P500.  (My other posts concerning S&P earnings estimates can be found under the S&P500 Earnings tag)

The following estimates are from Exhibit 23 of the “S&P500 Earnings Scorecard” (pdf) of October 17, 2017, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts.  For reference, the Year 2014 value is $118.78/share, the Year 2015 value is $117.46, and the Year 2016 value is $118.10/share:

Year 2017 estimate:

$130.53/share

Year 2018 estimate:

$145.67/share

Year 2019 estimate:

$159.20/share

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site 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 2560.42 as this post is written

Standard & Poor’s S&P500 Earnings Estimates For 2017 And 2018 – As Of October 5, 2017

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 October 5, 2017:

Year 2017 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $127.08/share

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

-From a “bottom up” perspective, “as reported” earnings of $116.50/share

Year 2018 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $144.71/share

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

-From a “bottom up” perspective, “as reported” earnings of $134.12/share

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site 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 2559.36 as this post is written

Disturbing Charts (Update 28)

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 – 100 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.

(click on charts to enlarge images)

Housing starts (last updated 9-19-17):

Housing Starts

US. Bureau of the Census, Housing Starts: Total: New Privately Owned Housing Units Started [HOUST], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/HOUST/, October 14, 2017.

The Federal Deficit (last updated 8-8-17):

Federal Deficit

US. Office of Management and Budget, Federal Surplus or Deficit [-] [FYFSD], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/FYFSD/, October 14, 2017.

Federal Net Outlays (last updated 8-8-17):

Federal Net Outlays

US. Office of Management and Budget, Federal Net Outlays [FYONET], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/FYONET/, October 14, 2017.

State & Local Personal Income Tax Receipts (% Change from Year Ago)(last updated 7-28-17):

State & Local Personal Income Tax Receipts Percent Change From Year Ago

US. Bureau of Economic Analysis, State and local government current tax receipts: Personal current taxes: Income taxes [ASLPITAX], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/ASLPITAX/, October 14, 2017.

Total Loans and Leases of Commercial Banks (% Change from Year Ago)(last updated 10-13-17):

Total Loans and Leases of Commercial Banks % Change from Year Ago

Board of Governors of the Federal Reserve System (US), Loans and Leases in Bank Credit, All Commercial Banks [TOTLL], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/TOTLL/, October 14, 2017.

Bank Credit – All Commercial Banks (% Change from Year Ago)(last updated 10-13-17):

Bank Credit – All Commercial Banks % Change from Year Ago

Board of Governors of the Federal Reserve System (US), Bank Credit of All Commercial Banks [TOTBKCR], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/TOTBKCR/, October 14, 2017.

M1 Money Multiplier (last updated 10-5-17):

M1 Money Multiplier

Federal Reserve Bank of St. Louis, M1 Money Multiplier [MULT], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/MULT/, October 14, 2017.

Median Duration of Unemployment (last updated 10-6-17):

Median Duration Of Unemployment

US. Bureau of Labor Statistics, Median Duration of Unemployment [UEMPMED], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/UEMPMED/, October 14, 2017.

Labor Force Participation Rate (last updated 10-6-17):

Labor Force Participation Rate

US. Bureau of Labor Statistics, Civilian Labor Force Participation Rate [CIVPART], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/CIVPART/, October 14, 2017.

The Chicago Fed National Activity Index (CFNAI) 3-month moving average (CFNAI-MA3)(last updated 9-25-17):

CFNAIMA3 -.04

Federal Reserve Bank of Chicago, Chicago Fed National Activity Index: Three Month Moving Average [CFNAIMA3], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/CFNAIMA3/, October 14, 2017.

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 2553.17 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – October 13, 2017 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.

Below are three long-term charts, from Doug Short’s ECRI update post of October 13, 2017 titled “ECRI Weekly Leading Index…”  These charts are on a weekly basis through the October 13, 2017 release, indicating data through October 6, 2017.

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

ECRI WLI,Gr.

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

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 site 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 2556.32 as this post is written

The October 2017 Wall Street Journal Economic Forecast Survey

The October 2017 Wall Street Journal Economic Forecast Survey was published on October 12, 2017.  The headline is “Economists See GOP Tax Plan Producing Growth Spurt, But Split Over Long-Term Effect.”

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.

An excerpt:

An overwhelming majority of forecasters in The Wall Street Journal’s monthly survey of economists said the GOP tax plan unveiled last month would, if implemented, raise the growth rate for U.S. gross domestic product over the next two years. Some 60% saw a modest lift to output compared with its current trend, while 27% said the annual growth rate would jump by more than half a percentage point.

The announced framework, which lacks some details and could change as lawmakers flesh it out in the coming weeks, features lower tax rates on corporate profits, incentives for business investment and fewer individual income tax brackets, among other changes.

But roughly half of the economists said any growth spurt would fade over time. Asked about the tax plan’s likely effect on the economy’s long-run growth rate, 48% predicted a modest increase while 38% said the U.S. would remain on its current trajectory. Just 4% said the tax plan would boost the GDP growth rate by more than 0.5 percentage point a year, while 10% said growth would be slower than if there had been no tax changes.

also:

As for the federal budget deficit, 85% of economists said the GOP tax plan would cause it to widen over the next decade.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 15.85%. The individual estimates, of those who responded, ranged from 0% to 33%.  For reference, the average response in September’s survey was 16.08%.

As stated in the article, the survey’s respondents were 59 academic, financial and business economists.  Not every economist answered every question.  The survey was conducted October 6-10.

The current average forecasts among economists polled include the following:

GDP:

full-year 2017:  2.3%

full-year 2018:  2.4%

full-year 2019:  2.0%

Unemployment Rate:

December 2017: 4.2%

December 2018: 4.0%

December 2019: 4.1%

10-Year Treasury Yield:

December 2017: 2.46%

December 2018: 3.00%

December 2019: 3.30%

CPI:

December 2017:  1.8%

December 2018:  2.2%

December 2019:  2.4%

Crude Oil  ($ per bbl):

for 12/31/2017: $50.26

for 12/31/2018: $52.51

for 12/31/2019: $53.64

(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 site 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 2553.80 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 October 5, 2017 update (reflecting data through September 29, 2017) is -1.552.

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 October 12, 2017 incorporating data from January 8, 1971 through October 6, 2017, on a weekly basis.  The October 6, 2017 value is -.89:

NFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 12, 2017:

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

The ANFCI chart below was last updated on October 12, 2017 incorporating data from January 8,1971 through October 6, 2017, on a weekly basis.  The October 6 value is -.64:

ANFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 12, 2017:

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 site 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 2554.82 as this post is written

October 2017 IMF Report – Probabilities Of Recession And Deflation

The International Monetary Fund (IMF) recently published the October 2017 “World Economic Outlook.”  The subtitle is ”Seeking Sustainable Growth:  Short-Term Recovery, Long-Term Challenges.”

One area of the report is Figure 1.19 on page 26.  While I do not agree with the current readings of the two measures presented – Probability of Recession and the Probability of Deflation – I do find them to be notable, especially as one can compare these estimates across various global economies.

As one can see, the report states that the U.S. is estimated to have a roughly 23% probability of recession and roughly a 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 site 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 2550.23 this post is written

CEO Confidence Surveys 3Q 2017 – Notable Excerpts

On October 5, 2017, The Conference Board released the 3rd Quarter Measure Of CEO Confidence.   The overall measure of CEO Confidence was at 59, down from 61 in the second quarter. [note:  a reading of more than 50 points reflects more positive than negative responses]

Notable excerpts from this October 5 Press Release include:

CEOs’ assessment of current economic conditions was mixed. Currently, 56 percent say conditions are better compared to six months ago, down from 60 percent in the second quarter. Business leaders, however, are more positive in their appraisal of current conditions in their own industries. Now, 53 percent say conditions in their own industries have improved, up from 47 percent last quarter.

Looking ahead, CEOs’ optimism regarding the short-term outlook for the economy is slightly more pessimistic. Currently, 39 percent expect economic conditions to improve over the next six months, compared to 41 percent last quarter. However, 14 percent expect economic conditions to worsen, compared to 3 percent last quarter. About 36 percent of CEOs anticipate an improvement in their own industries over the next six months, down from 48 percent in the second quarter of this year.

The Business Roundtable last month also released its CEO Economic Outlook Survey for the 3rd Quarter of 2017.   Notable excerpts from the September 19, 2017 release, titled “Business Roundtable CEO Economic Outlook Index Shows Signs of Continued Confidence in Economy“ (pdf):

The Business Roundtable CEO Economic Outlook Index — a composite of CEO projections for sales and plans for capital spending and hiring over the next six months — stood at 94.5 for the third quarter of 2017, edging up from 93.9 in the second quarter.

For the second quarter in a row, the Index reached its highest level since the second quarter of 2014 (95.4). The Index has also significantly exceeded its historical average of 80.3 for three quarters in a row and remains well above 50, suggesting CEOs’ continued confidence in the U.S. economy.

CEO plans for hiring jumped from the previous quarter, up 9.9 points to 80.2 in the third quarter – the highest reading in more than six years. Expectations for sales dipped by 7.4 to 116.9 for the third quarter, while plans for capital investment moderated slightly from 87.2 to 86.4.

CEOs project 2.1 percent GDP growth in 2017, up 0.1 percent from their projection for 2017 made in June.

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site 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 2546.60 as this post is written