Category Archives: Uncategorized

Money Supply Charts Through May 2018

For reference purposes, below are two sets of charts depicting growth in the money supply.

The first shows the MZM (Money Zero Maturity), defined in FRED as the following:

M2 less small-denomination time deposits plus institutional money funds.
Money Zero Maturity is calculated by the Federal Reserve Bank of St. Louis.

Here is the “MZM Money Stock” (seasonally adjusted) chart, updated on June 22, 2018 depicting data through May 2018, with a value of $15,427.5 Billion:

MZMSL

Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 3.7%:

MZMSL_6-22-18 15427.5 3.7 Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed June 25, 2018:

https://research.stlouisfed.org/fred2/series/MZMSL

The second set shows M2, defined in FRED as the following:

M2 includes a broader set of financial assets held principally by households. M2 consists of M1 plus: (1) savings deposits (which include money market deposit accounts, or MMDAs); (2) small-denomination time deposits (time deposits in amounts of less than $100,000); and (3) balances in retail money market mutual funds (MMMFs). Seasonally adjusted M2 is computed by summing savings deposits, small-denomination time deposits, and retail MMMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.

Here is the “M2 Money Stock” (seasonally adjusted) chart, updated on June 21, 2018, depicting data through May 2018, with a value of $14,024.2 Billion:

M2SL

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 3.8%:

M2SL_6-21-18 14024.2 3.8 Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed June 25, 2018:

https://research.stlouisfed.org/fred2/series/M2SL

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2754.88 as this post is written

Markets During Periods Of Federal Reserve Intervention – June 15, 2018 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 (through June 15, 2018) from the Doug Short site post of June 15 (“Treasury Snapshot:  10-Year Remains at 2.93%“):

The S&P500 during Federal Reserve intervention

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2779.66 as this post is written

Charts Indicating Economic Weakness – June 2018

U.S. Economic Indicators

Throughout this site there are many discussions of economic indicators.  At this time, the readings of various indicators are especially notable.  This post is the latest in a series of posts indicating U.S. economic weakness or a notably low growth rate.

While many U.S. economic indicators – including GDP – are indicating economic growth, others depict (or imply) various degrees of weak growth or economic contraction.  As seen in the June 2018 Wall Street Journal Economic Forecast Survey the consensus (average estimate) among various economists is for 2.9% GDP growth in 2018.  However,  there are other broad-based economic indicators that seem to imply a weaker growth rate.

As well, it should be remembered that GDP figures can be (substantially) revised.

Charts Indicating U.S. Economic Weakness

Below are a small sampling of charts that depict weak growth or contraction, and a brief comment for each:

Total Federal Receipts

“Total Federal Receipts” growth continues to be intermittent in nature since 2015.  As well, the level of growth does not seem congruent to the (recent) levels of economic growth as seen in aggregate measures such as Real GDP.

“Total Federal Receipts” through May had a last value of $217,075 Million.  Shown below is  displayed on a “Percent Change From Year Ago” basis with value -9.7%, last updated June 12, 2018:

Monthly Treasury Receipts Percent Change From Year Ago

source:  U.S. Department of the Treasury. Fiscal Service, Total Federal Receipts [MTSR133FMS], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed June 13, 2018:

https://fred.stlouisfed.org/series/MTSR133FMS

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Underperformance Of Consumer Staples Stocks

In the March 23, 2017 post (“‘Hidden’ Weakness In Consumer Spending?“) I wrote of various indications that consumer spending may be (substantially) less than what is depicted by various mainstream indicators, including overall retail sales.

One recent development that appears to be a problematical aspect of consumer spending is the performance of the consumer staples stocks.  As one can see in the chart below, there has been a marked relative weakness in these stocks (with the XLP serving as a proxy).  The chart shows a 10-year daily depiction of the XLP (top plot), the S&P500 (middle plot) and XLP:S&P500 ratio (bottom plot.)  While there can be various interpretations and reasons for this underperformance, it does appear to represent a “red flag” especially considering other problematical indications concerning consumer spending:

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

XLP v S&P500 chart

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Unemployment

I have written extensively concerning unemployment, as the current and future unemployment issue is of tremendous importance.

The consensus belief is that employment is robust, citing total nonfarm payroll growth and the current unemployment rate of 3.8%.  However, my analyses continue to indicate that the conclusion that employment is strong is incorrect.  While the unemployment rate indicates that unemployment is (very) low, closer examination indicates that this metric is, for a number of reasons, highly misleading.

My analyses indicate that the underlying dynamics of the unemployment situation remain exceedingly worrisome, especially with regard to the future.  These dynamics are numerous and complex, and greatly lack recognition and understanding, especially as how from an “all-things-considered” standpoint they will evolve in an economic and societal manner.  I have recently written of the current and future U.S. employment situation on the “U.S. Employment Trends” page.

While there are many charts that can be shown, one that depicts a worrisome trend is the  Civilian Labor Force Participation Rate for those with a Bachelor’s Degree and Higher, 25 years and over.  Among disconcerting aspects of this measure is the long-term (most notably the post-2009) trend, especially given this demographic segment.

The current value as of the June 1, 2018 update (reflecting data through the May employment report) is 74.1%:

Civilian Labor Force Participation Rate: Bachelor's Degree and Higher, 25 years and over

source:  U.S. Bureau of Labor Statistics, Civilian Labor Force Participation Rate: Bachelor’s Degree and Higher, 25 years and over [LNS11327662], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed June 11, 2018:

https://fred.stlouisfed.org/series/LNS11327662

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Loan Demand And Related Measures

As seen in previous updates, various aspects of lending growth and related measures have shown a marked slowing in the growth rate.  Here is a measure, Net Percentage of Domestic Banks Reporting Stronger Demand for Commercial and Industrial Loans from Large and Middle-Market Firms, that shows a decline:

Net Percentage of Domestic Banks Reporting Stronger Demand for Commercial and Industrial Loans from Large and Middle-Market Firms

source:  Board of Governors of the Federal Reserve System (US), Net Percentage of Domestic Banks Reporting Stronger Demand for Commercial and Industrial Loans from Large and Middle-Market Firms [DRSDCILM], retrieved from FRED, Federal Reserve Bank of St. Louis;  accessed June 11, 2018:

https://fred.stlouisfed.org/series/DRSDCILM

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Wages And Earnings

The level and growth rates of wages and household earnings continues to be (highly) problematical.  I have extensively discussed these worrisome trends in income and earnings.

As seen in many measures the problem is chronic (i.e long-term) in nature.

Shown below is a chart depicting the 12-month percent change in real average hourly and weekly earnings for private sector employees from January 2008 – April 2018.  As seen in the chart, growth in this measure over the time period depicted has been intermittent, volatile, and, especially since 2017, weak:

 12-month percent change in real average hourly and weekly earnings

source: Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, Real average hourly earnings up 0.2 percent for all private employees from April 2017 to April 2018 on the Internet at https://www.bls.gov/opub/ted/2018/real-average-hourly-earnings-up-0-point-2-percent-for-all-private-employees-april-2017-to-april-2018.htm(visited June 11, 2018).

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Other Indicators

As mentioned previously, many other indicators discussed on this site indicate economic weakness or economic contraction, if not outright (gravely) problematical economic conditions.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2786.85 as this post is written

Total Household Net Worth As Of 1Q 2018 – Two Long-Term Charts

For reference purposes, here is Total Household Net Worth from a long-term perspective (from 1945:Q4 through 2018:Q1).  The last value (as of the June 7, 2018 update) is $100.768344 Trillion:

(click on each chart to enlarge image)

TNWBSHNO

Also of interest is the same metric presented on a “Percent Change from a Year Ago” basis:

TNWBSHNO Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Board of Governors of the Federal Reserve System; accessed June 7, 2018:

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

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2770.37 as this post is written

Total Household Net Worth As A Percent Of GDP 1Q 2018

The following chart is from the CalculatedRisk post of June 7, 2018 titled “Fed’s Flow of Funds:  Household Net Worth increased in Q1.” It depicts Total Household Net Worth as a Percent of GDP.  The underlying data is from the Federal Reserve’s Z.1 report, “Financial Accounts of the United States“:

(click on chart to enlarge image)

Total Household Net Worth As A Percentage Of GDP

As seen in the above-referenced CalculatedRisk post:

The net worth of households and nonprofits rose to $100.8 trillion during the first quarter of 2018. The value of directly and indirectly held corporate equities decreased $0.4 trillion and the value of real estate increased $0.5 trillion.

also:

The Fed estimated that the value of household real estate increased to $25.1 trillion in Q1. The value of household real estate is now above the bubble peak in early 2006 – but not adjusted for inflation, and this also includes new construction.

As I have written in previous posts concerning this Household Net Worth (as a percent of GDP) topic:

As one can see, the first outsized peak was in 2000, and attained after the stock market bull market / stock market bubbles and economic strength.  The second outsized peak was in 2007, right near the peak of the housing bubble as well as near the stock market peak.

also:

I could extensively write about various interpretations that can be made from this chart.  One way this chart can be interpreted is a gauge of “what’s in it for me?” as far as the aggregated wealth citizens are gleaning from economic activity, as measured compared to GDP.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2767.09 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 = $26.92):

(click on chart to enlarge image)(chart last updated 6-1-18)

CES0500000003

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 June 1, 2018:

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 6-1-18)

CES0500000003 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 = $22.59):

(click on chart to enlarge image)(chart last updated 6-1-18)

AHETPI

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 June 1, 2018:

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

Pictured below is this AHETPI 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 6-1-18)

AHETPI Percent Change From Year Ago

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

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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 2734.15 this post is written

Consumer Confidence Surveys – As Of May 29, 2018

Doug Short’s site had a post of May 29, 2018 (“Consumer Confidence Improves in May“) that displays the latest Conference Board Consumer Confidence and Thomson/Reuters University of Michigan Consumer Sentiment Index charts.  They are presented below:

(click on charts to enlarge images)

Conference Board Consumer Confidence

University of Michigan Consumer Sentiment

There are a few aspects of the above charts that I find highly noteworthy.  Of course, until the sudden upswing in 2014, the continued subdued absolute levels of these two surveys was disconcerting.

Also, I find the “behavior” of these readings to be quite disparate as compared to the other post-recession periods, as shown in the charts between the gray shaded areas (the gray areas denote recessions as defined by the NBER.)

While I don’t believe that confidence surveys should be overemphasized, I find these readings to be very problematical, especially in light of a variety of other highly disconcerting measures highlighted throughout this site.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2695.89 as this post is written

Durable Goods New Orders – Long-Term Charts Through April 2018

Many people place emphasis on Durable Goods New Orders as a prominent economic indicator and/or leading economic indicator.

For reference, below are two charts depicting this measure.

First, from the St. Louis Fed site (FRED), a chart through April 2018, updated on May 25, 2018. This value is $248,496 ($ Millions):

(click on charts to enlarge images)

Durable Goods New Orders

Second, here is the chart depicting this measure on a “Percentage Change from a Year Ago” basis:

Durable Goods New Orders Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Manufacturers’ New Orders:  Durable Goods [DGORDER]; U.S. Department of Commerce: Census Bureau; accessed May 25, 2018;

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

_________

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 2719.22 as this post is written

Money Supply Charts Through April 2018

For reference purposes, below are two sets of charts depicting growth in the money supply.

The first shows the MZM (Money Zero Maturity), defined in FRED as the following:

M2 less small-denomination time deposits plus institutional money funds.
Money Zero Maturity is calculated by the Federal Reserve Bank of St. Louis.

Here is the “MZM Money Stock” (seasonally adjusted) chart, updated on May 18, 2018 depicting data through April 2018, with a value of $15,374.1 Billion:

MZMSL

Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 3.8%:

MZMSL Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed May 24, 2018:

https://research.stlouisfed.org/fred2/series/MZMSL

The second set shows M2, defined in FRED as the following:

M2 includes a broader set of financial assets held principally by households. M2 consists of M1 plus: (1) savings deposits (which include money market deposit accounts, or MMDAs); (2) small-denomination time deposits (time deposits in amounts of less than $100,000); and (3) balances in retail money market mutual funds (MMMFs). Seasonally adjusted M2 is computed by summing savings deposits, small-denomination time deposits, and retail MMMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.

Here is the “M2 Money Stock” (seasonally adjusted) chart, updated on May 17, 2018, depicting data through April 2018, with a value of $13,951.5 Billion:

M2SL_5-17-18 13951.5

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 3.7%:

M2SL Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed May 24, 2018:

https://research.stlouisfed.org/fred2/series/M2SL

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2733.29 as this post is written

Walmart’s Q1 2019 Results – Comments

I found various notable items in Walmart’s Q1 2019 management call transcript (pdf) dated May 17, 2018.  (as well, there is Walmart’s press release of the Q1 results (pdf) and related presentation materials)

I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly management call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Doug McMillon, President and CEO, page 2, wrt Walmart U.S.:

Walmart U.S. continues to perform well with comp sales growth,
excluding fuel, of 2.1 percent. Greg and the Walmart U.S. team continue to
strengthen our supercenters. We’ve improved our merchandising in areas
like fresh food with better lighting, an expanded deli offer, and an improved
bakery layout to make it easier for customers to navigate. We also recently
introduced new apparel brands with improved design, quality and value.
Customer experience scores continue to improve as we’ve lowered prices
and taken steps to make shopping with us easier and more enjoyable. We
aim to make shopping easy, fast, friendly and fun for customers, and our
team continues to make progress towards that goal. I continue to be
impressed by the progress the team is making on inventory management.
They’ve put together a string of 12 quarters of reduced comp store
inventory while maintaining strong in-stock levels. eCommerce sales
accelerated in the first quarter with 33 percent growth, and we expect to
grow sales about 40 percent for the full year. Sam’s Club comps improved
5.2 percent, excluding fuel and a 140 basis point decrease for tobacco.
Outside of the U.S., eight of eleven markets posted positive comp sales,
including our four largest markets of Mexico, U.K., China and Canada. So
overall, we feel pretty good about this quarter.

comments from Doug McMillon, President and CEO, page 3, wrt Walmart U.S.:

I’ll start with Walmart U.S.

In addition to comp sales growth of 2.1 percent, more people
shopped with us as comp traffic improved 0.8 percent. Comp sales were
trending higher through early April, but general merchandise sales and
traffic were somewhat negatively impacted by unseasonably cool weather
in April. 

comments from Brett Biggs, EVP & CFO, page 8, wrt Walmart U.S.:

Gross margin rate declined 23 basis points primarily due to price
investments and higher transportation expenses as a result of higher fuel
costs and third-party transportation rate pressures.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2722.46 as this post is written