Monthly Archives: October 2013

Standard & Poor’s S&P500 Earnings Estimates For 2013 & 2014 – As Of October 17, 2013

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 17, 2013:

Year 2013 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $107.52/share

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

-From a “top down” perspective, “as reported” earnings of $98.28/share

Year 2014 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $121.46/share

-From a “top down” perspective, operating earnings of $113.76/share

-From a “top down” perspective, “as reported” earnings of $108.29/share

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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.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1745.15 as this post is written

Average Hourly Earnings Trends

I have written many blog posts concerning the worrisome trends in income and earnings.

Along these lines, one of the measures showing disconcerting trends is that of hourly earnings.

While the concept of hourly earnings can be defined and measured in a variety of ways, below are a few charts that I believe broadly illustrate problematic trends.

The first chart depicts Average Hourly Earnings Of All Employees: Total Private  (FRED series CES0500000003)(current value = $24.09) :

(click on chart to enlarge image)(chart last updated 10-22-13)

CES0500000003_10-22-13 24.09

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average Hourly Earnings of All Employees:  Total Private [CES0500000003] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed October 22, 2013:

http://research.stlouisfed.org/fred2/series/CES0500000003

This next chart depicts this same measure on a “Percentage Change From A Year Ago” basis.  While not totally surprising, I find the decline from 2009 and subsequent trend to be disconcerting:

(click on chart to enlarge image)(chart last updated 10-22-13)

CES0500000003_10-22-13 24.09 Percent Change From Year Ago

There are slightly different measures available from a longer-term perspective.  Pictured below is another measure, the Average Hourly Earnings of Production and Nonsupervisory Employees – Total Private  (FRED series AHETPI)(current value = $20.24)  :

(click on chart to enlarge image)(chart last updated 10-22-13)

AHETPI_10-22-13 20.24

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average Hourly Earnings of Production and Nonsupervisory Employees:  Total Private [AHETPI] ; U.S. Department of Labor: Bureau of Labor Statistics;  accessed October 22, 2013:

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

Pictured below is this AHETPI measure on a “Percentage Change From A Year Ago” basis:

(click on chart to enlarge image)(chart last updated 10-22-13)

AHETPI_10-22-13 20.24 Percent Change From Year Ago

I will continue to actively monitor these trends, especially given the post-2009 dynamics.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1753.08 as this post is written

U-3 And U-6 Unemployment Rate Long-Term Reference Charts As Of October 22, 2013

Shortly after each monthly employment report I have been posting a continual series titled “3 Critical Unemployment Charts.”

Of course, there are many other employment charts that can be displayed as well.

For reference purposes, below are the U-3 and U-6 Unemployment Rate charts from a long-term historical perspective.  Both charts are from the St. Louis Fed site.  The U-3 measure is what is commonly referred to as the official unemployment rate; whereas the U-6 rate is officially (per Bureau of Labor Statistics) defined as:

Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force

Of note, many economic observers use the U-6 rate as a (closer) proxy of the actual unemployment rate rather than that depicted by the U-3 measure.

Here is the U-3 chart, currently showing a 7.2% unemployment rate:

(click on charts to enlarge images)(charts updated as of 10-22-13)

UNRATE_10-22-13 7.2 percent

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Civilian Unemployment Rate [UNRATE] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed October 22, 2013;

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

Here is the U-6 chart, currently showing a 13.6% unemployment rate:

U6RATE_10-22-13 13.6 percent

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons  [U6RATE] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed October 22, 2013;

http://research.stlouisfed.org/fred2/series/U6RATE

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1751.55 as this post is written

3 Critical Unemployment Charts – October 2013

As I have commented previously, as in the October 6, 2009 post (“A Note About Unemployment Statistics”), in my opinion the official methodologies used to measure the various job loss and unemployment statistics do not provide an accurate depiction; they serve to understate the severity of unemployment.

However, even if one chooses to look at the official statistics, the following charts provide an interesting (and disconcerting) long-term perspective of certain aspects of the officially-stated unemployment situation.

The first two charts are from the St. Louis Fed site.  Here is the Median Duration of Unemployment (current value = 16.3 weeks) :

(click on charts to enlarge images)(charts updated as of 10-22-13)

UEMPMED_10-22-13 16.3 weeks

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Median Duration of Unemployment [UEMPMED] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed October 22, 2013;

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

Here is the chart for Unemployed 27 Weeks and Over (current value =  4.146 million) :

UEMP27OV_10-22-13 4146

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Civilians Unemployed for 27 Weeks and Over [UEMP27OV] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed October 22, 2013;

http://research.stlouisfed.org/fred2/series/UEMP27OV

Lastly, a chart from the CalculatedRisk.com site, from the October 22 post titled “September Employment Report:  148,000 Jobs, 7.2% Unemployment Rate.”  This shows the employment situation vs. that of previous recessions, as shown:

CR 10-22-13 EmployRecSept2013

As depicted by these charts, our unemployment problem is severe.  Unfortunately, there do not appear to be any “easy” solutions.

On April 24, 2012 I wrote a five-part blog post titled “The Unemployment Situation Facing The United States”, which discusses various problematical issues concerning the present and future employment situation.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1756.24 as this post is written

VIX Monthly And Weekly Charts Since Year 2000

For reference purposes, below are two charts of the VIX from year 2000 through Friday’s (October 18, 2013) close.

Here is the VIX Monthly chart, depicted on a LOG scale, with price labels as well as the 13- and 34-month moving averages, seen in the cyan and red lines, respectively:

(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)

EconomicGreenfield 10-21-13 VIX Monthly LOG 13-34 since 2000

Here is the VIX Weekly chart, depicted on a LOG scale, with price labels as well as the 13- and 34-week moving average, seen in the cyan and red lines, respectively:

(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)

EconomicGreenfield 10-21-13 VIX Weekly LOG 13-34 since 2000

 

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1744.66 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – October 18, 2013 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 seven sources :

Other past notable 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:

Below are three long-term charts, from Doug Short’s blog post of October 18 titled “ECRI Recession Watch:  Weekly Update.”  These charts are on a weekly basis through the October 18 release, indicating data through October 11, 2013.

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

(click on charts to enlarge images)

Dshort 10-18-13 ECRI-WLI 130.4

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

Dshort 10-18-13 ECRI-WLI-YoY 3.4 percent

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

Dshort 10-18-13 ECRI-WLI-growth-since-1965 2.8

_________

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 1744.55 as this post is written

St. Louis Financial Stress Index – October 17, 2013 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 October 17, incorporating data from December 31,1993 to October 11, 2013, on a weekly basis.  The October 11, 2013 value is -.541:

(click on chart to enlarge image)

STLFSI_10-17-13 -.561

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

STLFSI_10-17-13 -.561 1-year

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 17, 2013:

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 1721.14 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 October 17, incorporating data from January 5,1973 to October 11, 2013, on a weekly basis.  The October 11, 2013 value is -.83:

(click on chart to enlarge image)

NFCI_10-17-13 -.83

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 17, 2013:

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

The ANFCI chart below was last updated on October 17, incorporating data from January 5,1973 to October 11, 2013, on a weekly basis.  The October 17, 2013 value is -.34:

(click on chart to enlarge image)

ANFCI_10-17-13 -.34

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 17, 2013:

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 1716.08 as this post is written

Disturbing Charts (Update 12)

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 – 52 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 9-18-13):

EconomicGreenfield 10-16-13 HOUST_9-18-13

The Federal Deficit (last updated 4-19-13):

EconomicGreenfield 10-16-13 FYFSD_4-19-13

Federal Net Outlays (last updated 4-19-13):

EconomicGreenfield 10-16-13 FYONET_4-19-13

State & Local Personal Income Tax Receipts  (% Change from Year Ago)(last updated 7-31-13):

EconomicGreenfield 10-16-13 ASLPITAX_7-31-13 Percent Change From Year Ago

Total Loans and Leases of Commercial Banks (% Change from Year Ago)(last updated 10-11-13):

EconomicGreenfield 10-16-13 TOTLL_10-11-13 Percent Change From Year Ago

Bank Credit – All Commercial Banks (% Change from Year Ago)(last updated 10-11-13):

EconomicGreenfield 10-16-13 TOTBKCR_10-11-13 Percent Change From Year Ago

M1 Money Multiplier (last updated 10-10-13):

EconomicGreenfield 10-16-13 MULT_10-10-13

Median Duration of Unemployment (last updated 9-6-13):

EconomicGreenfield 10-16-13 UEMPMED_9-6-13

This next chart is from the CalculatedRisk.com blog post of September 6, 2013, titled “August Employment Report:  169,000 Jobs, 7.3% Unemployment Rate”and it shows (in red) the relative length and depth of this downturn and subsequent recovery from an employment perspective:

EconomicGreenfield 10-16-13 CR 9-6-13 EmployRecAug2013

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 9-23-13):

EconomicGreenfield 10-16-13 cfnai_monthly_MA3 9-23-13

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 1698.06 as this post is written

The October 2013 Wall Street Journal Economic Forecast Survey

The October Wall Street Journal Economic Forecast Survey was published on October 13, 2013.  The headline is “Shutdown Likely to Prolong Fed’s Stimulus.”

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

Here is one excerpt I found notable:

Whenever the government finally reopens, it isn’t clear whether it will be able to produce economic data covering the month of October. Even if it does, the economic volatility from the shutdown will cause reports covering October, November and possibly December to be head-scratchers given the one-time hits over that period.

As to the question (seen in the spreadsheet detail) “Please estimate on a scale of 0 to 100 the probability of a recession in the U.S. in the next 12 months,” the average was 16%.

The current average forecasts among economists polled include the following:

GDP:

full-year 2013:  2.0%

full-year 2014:  2.8%

full-year 2015:  2.9%

Unemployment Rate:

December 2013: 7.2%

December 2014: 6.6%

December 2015: 6.1%

10-Year Treasury Yield:

December 2013: 2.88%

December 2014: 3.47%

December 2015: 3.94%

CPI:

December 2013:  1.7%

December 2014:  2.1%

December 2015:  2.3%

Crude Oil  ($ per bbl):

for 12/31/2013: $101.38

for 12/31/2014: $98.22

(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 1710.14 as this post is written