Monday, July 11, 2016

NDD's weekly indicators

New Deal Demoncrat - weekly indicators. His summary:

Among long leading indicators, interest rates for corporate bonds, treasuries, the yield curve, real money supply, real estate loans, purchase mortgage applications, and mortgage rates are positive. Refinance applications are neutral. Since corporate and treasury interest rates made new lows, this resets the long leading indicator clock so far as they are concerned. *However,* mortgage rates, despite a big decline, still have not made new lows for over 3 years, so this remains a big negative in the longer term forecast.

The significant change among short leading indicators continued. For the 2nd straight week, commodities across the board have improved so much that I am now scoring them a positive. The spread between corporates and treasuries, and stock prices, remain neutral. The US$ against major currencies changed back from positive to neutral, and against all currencies remains negative. Jobless claims, oil and gas prices, and usage, all remain very positive.

The coincident indicators have become mixed. On the positive side, for the second week in a row, rail transport improved just barely enough to score as neutral, although this may be an artifact of the July 4 holiday week. Temp staffing was positive again for the 4th time in the last 5 weeks. Consumer spending was mixed again for the 3rd week in a row. Steel was negative again for the 3rd week in a row. Tax withholding turned back to positive. Shipping and bank rates remain negative.

There has developed a sharp bifurcation in the indicators. In general, the long and short leading indicators either remain positive or are turning positive, with the significant exception of the broad US$. Meanwhile the coincident indicators with the exception of some measures of consumer spending, are negative.

I continue to believe that the coincident tail is not going to wag the leading dog, which just got several big tailwinds this week. I will be particularly watching industrial production and the Empire State Manufacturing Index this coming week for their reading on the ending of the shallow industrial recession.

And so hopefully Whitey finally stops piddling his panties and just buys the second half of the expansion.

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