January Producer Price Index: Core Final Demand Up 0.5% MoM
Today's release of the January Producer Price Index (PPI) for Final Demand was up 0.5% month-over-month seasonally adjusted, up from a 0.2% increase last month. It is at 2.1% year-over-year, up from 1.3% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.5% MoM, up from 0.1% the previous month and is up 1.7% YoY NSA. Investing.com MoM consensus forecasts were for 0.1% headline and 0.1% core.
New Residential Housing Starts Inch Down in January
The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for January new residential housing starts. The latest reading of 1.567M was above the Investing.com forecast of 1.425M and a decrease from the previous month's revised 1.626M.
New Residential Building Permits: 1.551M in January
The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for January new residential building permits. The latest reading of 1.551M was an increase from a revised 1.420M in December and above the Investing.com forecast of 1.450M.
World Markets Update
Three of eight indexes on our world watch list posted gains through February 18, 2020. The top performer is our own S&P 500 with a gain of 4.32%. Germany's DAXK is in second with a gain of 2.99% and in third is France's CAC40 with a gain of 1.32%. Coming in last is Hong Kong's Hang Seng with a loss of -2.34%.
Weekly Gasoline Price Update: Regular and Premium Mostly Unchanged
The price of Regular and Premium are a penny and unchanged, respectively, from last week. According to GasBuddy.com, Hawaii has the highest average price for Regular at $3.54 and Mississippi has the cheapest at $2.07. The WTIC end of day spot price closed at 52.29, up 5.5% from last week.
NAHB Housing Market Index: "Builder Confidence Remains Solid in February"
The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of builder opinion on the relative level of current and future single-family home sales. It is a diffusion index, which means that a reading above 50 indicates a favorable outlook on home sales; below 50 indicates a negative outlook. The latest reading of 74 is down 1 from last month.
Empire State Manufacturing Survey: Activity Picks Up in February
This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 12.9 was an increase of 8.1 from the previous month's 4.8. The Investing.com forecast was for a reading of 5.0.
The Big Four Economic Indicators: Industrial Production Down in January
Today's report on Industrial Production for January shows a -0.31% decrease month-over-month, which was worse than the Investing.com consensus of -0.2%. The year-over-year change is -0.83%, up from last month's YoY decrease.
ECRI Weekly Leading Index Update
This morning's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 148.2, down 0.8 from the previous week. Year-over-year the four-week moving average of the indicator is now at 3.76%, down from last week. The WLI Growth indicator is now at 4.82, down from the previous week.
Retail Sales: Up 0.26% in January
The Census Bureau's Advance Retail Sales Report for January was released this morning. Headline sales came in at 0.26% month-over-month to one decimal and was at the Investing.com forecast. Core sales (ex Autos) came in at 0.29% MoM (to two decimals).
Inflation: An X-Ray View of the Components
Here is a table showing the annualized change in Headline and Core CPI, not seasonally adjusted, for each of the past six months. Also included are the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation. We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components.
What Inflation Means to You: Inside the Consumer Price Index
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
Five Decades of Middle-Class Wages: January 2020 Update
We've updated this series to include the January release of the Consumer Price Index as the deflator and the January monthly employment update. The latest hypothetical real (inflation-adjusted) annual earnings are at $40,102, down 11.0% from 45-plus years ago.
Consumer Price Index: January Headline at 2.49%
The Bureau of Labor Statistics released the January Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.49%, up from 2.29% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.26%, unchanged from the previous month and above the Fed's 2% PCE target.
Long-Term Trends in Employment by Age Group
The Labor Force Participation Rate (LFPR) is a simple computation: You take the Civilian Labor Force (people age 16 and over employed or seeking employment) and divide it by the Civilian Noninstitutional Population (those 16 and over not in the military and or committed to an institution).
Multiple Jobholders: Over Two Decades of Trends as of January
At present, multiple jobholders account for just 5.1 percent of civilian employment. The survey captures data for four subcategories of the multi-job workforce, the current relative sizes of which we've illustrated in a pie chart.
The Latest Look at the Total Return Roller Coaster
Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $16,591 for an annualized real return of 10.17%.
The Big Four Economic Indicators: January Nonfarm Employment
This commentary has been updated to include this morning's release of Nonfarm Employment. January's 225K increase in total nonfarm payrolls had revisions that resulted in 7K more jobs than previously reported. Annual revisions and changes to household survey data were made. The Investing.com consensus was for 160K new jobs and the unemployment rate to remain at 3.5%.
Market Remains Overvalued
Here is a summary of the four market valuation indicators we update on a monthly basis.
- The Crestmont Research P/E Ratio
- The cyclical P/E ratio using the trailing 10-year earnings as the divisor
- The Q Ratio, which is the total price of the market divided by its replacement cost
- The relationship of the S&P Composite price to a regression trendline
Market Valuation, Inflation and Treasury Yields: Clues from the Past
Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a "normal" market environment -- one with conventional business cycles, Federal Reserve policy, interest rates and inflation -- current valuation levels would be a serious concern.
But these are different times.
Market Cap to GDP: An Updated Look at the Buffett Valuation Indicator
With the Q4 GDP Advance Estimate and the January close data, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 145.4%, up from 140.4% the previous quarter.
A Closer Look at Today's ADP Employment Report
In this morning's ADP employment report we got the January estimate of 291K new nonfarm private employment jobs from ADP, an increase over December's revised 199K. The popular spin on this indicator is as a preview to the monthly jobs report from the Bureau of Labor Statistics.
ISM Non-Manufacturing: Increase in January
The Institute of Supply Management (ISM) has now released the January Non-Manufacturing Purchasing Managers' Index (PMI), also known as the ISM Services PMI. The headline Composite Index is at 55.5 percent, up 0.6 from a revised 54.9 last month. Today's number came in above the Investing.com forecast of 55.0 percent.
December Trade Deficit at $48.9B
The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 199 and details U.S. exports and imports of goods and services. Today's headline number of -48.9B was lower than the Investing.com forecast of -43.2B.
Regression to Trend: Another Look at Long-Term Market Performance
Quick take: At the end of January the inflation-adjusted S&P 500 index price was 133% above its long-term trend, up from 130% the previous month. This is a record high.
About the only certainty in the stock market is that, over the long haul, over performance turns into underperformance and vice versa. Is there a pattern to this movement? Let's apply some simple regression analysis to the question.