Monday, January 31, 2011
Sunday, January 30, 2011
Thursday, January 27, 2011
Wednesday, January 26, 2011
On the other hand, our Fundamental Stock Market Indicator (FSMI), which is a very good coincident indicator of the S&P 500, was at a cyclical high last week.
Monday, January 24, 2011
Oil demand in the New World now exceeds demand in the Old World by 29.1%. We track demand in the Old World countries of Japan, the US, and Europe versus the rest of the world, a.k.a. the New World. In the former, it just started to recover late last year, but remains near the lowest readings since the summer of 1994. The New World’s demand, which exceeded Old World oil usage for the first time on record in January 2005, now exceeds it by 11.1mbd, rising to a record high of 49.2mbd in December. (We update these charts monthly for our subscribers in our "Global Oil Demand & Supply.")
Sunday, January 23, 2011
Unlike the ECRI's Weekly Leading Index, the monthly Index of Leading Economic Indicators (LEI), compiled by the Conference Board, did not dip last year, though it did increase at a slower pace from June through October. Since then, it has been on a tear again with a gain of 1.0% during December, following November’s 1.1% increase. During both months, eight of the 10 components of the LEI rose. Such broad-based increases are good harbingers for economic growth during the first half of the year. By the way, the LEI is at a record high. It actually surpassed the previous record high during November 2009.
The Index of Leading Economic Indicators is a great 12-24 month leading indicator of federal tax receipts. It certainly would come as a big surprise to lots of New Normal prognosticators if federal, state, and local governments start to report improving tax revenues and record highs in these receipts by 2012. The 12 month sum of federal tax receipts through December rose 7.9% above the December 2009 total to the highest since May 2009. (We update these charts monthly for our subscribers in our "High Frequency Economic Indicators" and our "US Government Finance" briefing books.)
Wednesday, January 19, 2011
China’s global outreach program is clearly motivated by the nation’s desperate need for more food, energy, and industrial commodities. With such a large motivated buyer in the market, it’s no wonder that commodity prices are soaring, and should continue to do so this year. The Chinese are bound to counter Washington’s demands for a stronger currency by complaining that the Fed’s QE-2.0 program is boosting commodity prices. Nice try. The fact is that China’s inflation problem is homegrown. No one does quantitative easing better than the Chinese. As I’ve noted previously, over the past two years through November, China’s international reserves, bank reserves, and M1 are up 47.6%, 51.9%, and 57.1%. (We update these charts monthly for our subscribers in our China briefing book.)
Tuesday, January 18, 2011
Emerging nations’ exports surpassed the exports of the G7 nations in July 1996. Since then, their share of world exports expanded from 50.1% to 65.5%, while G7’s share dropped from 49.9% to 34.5%. The divergence between the New and
While it is widely believed that rising commodity prices are bad for profits, this chart shows that the y/y growth in 12-month forward earnings of the S&P 500 is highly and positively correlated with the y/y change in the CRB raw industrials spot price index. Rising commodity prices may squeeze some companies’ profit margins, but many others can pass them through to prices or offset them with productivity gains. In addition, commodity-related industries certainly benefit from higher commodity prices. (These charts are updated regularly for subscribers in our High Frequency Economic Indicators.)