Out Fox The $treet

The Leading Economic Indicators declined slightly for August. The 0.1% decline was slightly worse than the flat line expected. More concerning is that the LEI has declined in three of the last six months leading to only slight growth over that period. This indicator has been very bullish during the recovery from the 2008 economic lows. Now it is starting to show some cracks that investors should pay attention to. Strong stock prices and interest rate spreads will hopefully push into the labor force pushing up the weekly labor numbers. The below chart from the Conference Board shows the historical numbers for the report. Very notable is the depth of the collapse and the relatively weak rebound so far. The LEI has only rebounded about half way from the peak in 2005.

The June Leading Economic Indicators dropped 0.3% versus expectations of a 0.1% drop. This marks the 2nd month in 3 that the indicators have dropped. This is a concerning trend as the leading indicators can be one of the best indicators of future economic growth. Consumer expectations and manufacturing new orders remain the biggest problems with gains in the financial and labor components leading the way. From the chart in the link, the leading indicators remain significantly below the peak at the end of 2005. The current is just over 95 after bottoming out around 80 at the end of 2008. The progress has been substantial, but the index has a long way to go in order to reach the pre-recession levels around 108. The July report will be key to see if the indicators have truly stalled out. Consumer expectations remain the one component that doesn't appear to be accurately valuing the future. Expectations just aren't as accurate as in the past with consumers in a constant bad ...

The Conference Board reported this morning that Leading Economic Indicators for October came in at 0.9% easily surpassing expectation (how is that considering the numbers are known?).  The leading indicators are usually an accurate predictor of economic conditions in the next months. This number continues to increase at a solid clip. If only the US market could focus on leading indicators like these and jobless claims and less on Europe. Not going to spend much time highlighting the individual components because it just doesn't matter. The numbers have been strong and will likely continue as like as monetary policy is accomondative. It likely won't change until investors become overly bullish on the stock market. The economy will continue rolling along producing jobless claims below expectations, but the stock market will get roiled by Europe. Some day though that will end and this bullish data will matter. 10:02 AM   Oct. Leading Indicators:  Leading Index...

After a few months of basically stagnant numbers in June and July, the August Leading Economic Indicators (LEIs) jumped 0.3%. Still not a robust number, but one that signals the economy should continue growing at a moderate level. The LEIs are likely the most under followed economic series around. It measures such mundane but very important economic stats such as interest rate spreads, M2 supply, weekly jobless claims, and average hourly work week. The markets sill seem more enamored with housing starts, monthly jobless report, or even the FED minutes. For August the interest rate spread and the M2 money supply made the biggest positive impact. Two numbers not regularly followed by the media and especially small investors. Both signal future growth in the economy especially since the LEIs have mostly been positive this year other then the June minor drop. Definitely nothing that supports a double dip. The Conference Board LEI for the U.S. continued to increase in August. The int...

Though most of the economic data this week has been disappointing (was it really considering the stock market drop and European debt crisis), the Leading Economic Indicators came in at a solid 0.4%. So while the economy and markets might be going through a lull right now, the indicators suggest the expansion should continue. The April number was also raised to 0.0 from -0.1. Need to do some further studying on the implications of the number being above the 2006 peak. In theory, that would mean that the economy at the end of 2010 should be much bigger and stronger then is was prior to the Great Recession. That clearly isn't the case as the market would have to rally nearly 40% to match those totals. "The index points to continued, though slower, U.S. growth for the rest of this year," says Bart van Ark, chief economist of The Conference Board. "Public debt and deficits weigh heavily on growth prospects on both sides of the Atlantic. We project a serious slowdown in Eu...

Ciovacco Capital Management has been working on an index to predict the sustainability of bull markets or the BMSI . Basically the goal of all investors is to determine when to let your winners run and when to dump stocks. Any of these indexes are generally based on the concepts of the Leading Economic Indicators that we harp on so much. For example, the spread in the short and long term interest rates is a huge indicator of future economic growth. That indicator flat lines and people should flee stocks. Not sure they've posted all of the 30 leading market indicators included in the study, but its interesting to note that it still flashes an extremely bullish case. Basically the same numbers as back in late 2004 before the market made its run over the next few years from 1,150 to 1,550. As usual such indicators are always designed with the numbers that would've predicted the past corrections and booms. Sometimes though they aren't that great at predicting the future. Change...

With all of the noise about Goldman Sachs (GS) this morning, the markets were able to regain focus due to strong earnings from Citigourp (C) and another strong Leading Indicators report from the Conference Board. It became a past versus future battle. Should you invest based on an event from 3 years ago or one that predicts the next 3 to 6 months? We've obviously harped on the importance of the Leading Indicators Index for a long time. The index was up a strong 1.4% in March easily surpassing estimates of 1.0% and February was also raised to 0.4% from 0.1%. All in all 1.7% was added to the index. The index is now at its highest level. What strikes me as odd is that the Conference Board quotes remain somewhat tepid. The index has grown solidly for a year now and the 6 month change is at 5.2% (or 10.6% on an annual pace) yet they use the term 'slow recovery '. Their numbers suggest anything but that. Says Ataman Ozyildirim, economist at The Conference Board: “The U.S. LEI ha...

If we've had one theme since starting this blog, its that the leading economic indicators and its primary leader over the last 12 months, the yield curve, is completely thrown aside by most economists and market experts. It shouldn't be though as it continues to forecast a strong recovery. You can fret about a double dip recession all you want, but it isn't going to happen while the LEI and the yield curve is this positive. So why invest for the correction if the signal isn't pointing that way? Anybody following these indicators should know that the yield curve expanded to record levels recently and hence it should be no surprise that the LEI for December expanded at a fast clip yet again. Initial jobless claims also will juice the number. Economists expect a 0.7% rise after 0.9% in November. Two very solid gains. Market Consensus Before Announcement ( Bloomberg ) The Conference Board's index of leading indicators rose a strong 0.9 percent in November, following a...

Ok these numbers have already been reported earlier today. If time permitted, we would have talked earlier this week about how the expectations were for a 0.7% increase in the leading indicators and nearly a 10% annual growth rate. With all the noise in the market, its important to step back and reflect on how positive these numbers are for the economy. All the worries about the dollar and this and that are just non sense noise. On to the report since we have it already. The Conference Board reported today that the leading indicators actually increased by 0.9%. This was above the expectations of 0.7% as mentioned earlier. The 6 month growth rate is now 4.7% or a 9.4% annual rate. Just slightly below the 5% numbers reported the last 2 months. The interest rate spread ( what we've harked on for a while ), Average weekly jobless claims, Average workweek, building permits, and stock prices continue to remain very positive. Easily off setting the declines in supplier deliveries and con...

The trend is your friend and that's acutely important when dealing with economic stats. One very important stat is the Leading Economic Indicators from the Conference Board that comes out on Thursday at 9am. These numbers have been soaring the last 6 months growing at an annual rate of over 10%. The expectations for Oct is that the indicators increased by 0.4% and First Trust estimates 0.5%. Lower then the 1% in Sept but still very solid growth. Until this number turns negative, it's difficult to turn negative on the stock market or the economy. Especially with the indicators growing substantially and the yield curve remaining very high. That combination is a recipe for huge growth and market gains.

Still amazes me how little attention the Leading Economic Index from the Conference Board gets from the market. The Conference Board reported a September number with a 1% increase and a 5.7% 6 month growth rate. This forecasts huge growth in Q4 and Q1 but oddly the head of the Conference Board stills tells a cautious tale. With a 6 month rate at the highest since 1983, its difficult to see any negative scenarios for the economy. The Conference Board Leading Economic Index™ (LEI) for the U.S. increased 1.0 percent in September, following a 0.4 percent gain in August, and a 1.0 percent rise in July. "With the sixth consecutive increase, the LEI's six-month growth rate has improved to its highest pace since 1983," says Ataman Ozyildirim, Economist at The Conference Board. "Except for average workweek and building permits, all the leading indicators contributed positively to the index this month. At the same time, the contraction in the coincident economic index h...

For the 5th month in a row, the Leading Economic Indicators soared higher. All this time, the leading economists have dismissed the rally in the markets. Now the LEIs have reached a point of 8.9% annual growth over the last 6 months and still most of the 'experts' commenting about the numbers only suggest that the recession is over, but the recovery is questionable. The data suggests otherwise and its foolish to base your decision on the Lagging Indicators which seems to be the typical error. The Conference Board Leading Economic Index™ (LEI)for theU.S. increased 0.6 percent in August, following a 0.9 percent gain in July, and a 0.8 percent rise in June. "Since reaching a peak in July 2007, the LEI fell for twenty months – the longest downtrend since the mid 1970s – but it has been rising since April and its gains have become very widespread," says Ataman Ozyildirim, Economist at The Conference Board. "The six-month growth rate of the LEI continues to accelerat...

One of the most important indicators and one that has been grossly overlooked by the media continues Leading Economic Indicators of the Conference Board. The last 6 months show a annual growth rate of 6%. Sure sounds like a V to me. Even the coincident indicator was flat in July showing that the economy has clearly leveled out and is ready for substantial growth. Whats even more impressive is that if Consumer Confidence were to turn positive, this number would be off the charts bullish. It amazes me that such a predictor of the future could be this positive yet consumers are so negative. All consumers need to do is turn bullish and life is good. Incredible! Highlights of the LEI section of the report: The Conference Board LEI for the U.S. rose again in July, its fourth consecutive increase. The six-month change in the index has risen to 3.0 percent (a 6.2 percent annual rate) in the period through July, up substantially from -2.8 percent (a -5.4 percent annual rate) for the previous si...

One of the most overlooked yet very important stats is the Leading Economic Indicators (LEI) produced by The Conference Board on a monthly basis. According to the January report , leading indicators were up 0.4% in January after a 0.2% rise in Decemeber. The Lagging Indicator (LAG) decereased by 0.1%. Ironically most of the media and even alot finanical reporters and anlayts focus on the lagging indicators. as they indicate what has happened in the past. They are actual hard facts about what took place in the economy while leading indicators only suggest what could happen. Unfortunately or fortunately depending on how you view it, these indicators are pretty good at predicing the future economic cycle. Money Supply and Interest Rates are 2 indicators that are typically overlooked by the gernal market. They have a huge impact on how businesses and consumers act in the future but they take a while for the indicators to have an impact on the economy and its not very tangible. As an exampl...