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Crafty_Dog
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« Reply #1250 on: August 08, 2017, 11:41:03 AM »

In the words of Scott Grannis, upon my forwarding that to him:

"Yes. And it’s shocking: in 10 years credit card debt outstanding has managed to increase by a whopping $1 billion! In inflation adjusted terms it has fallen by 10%. Relative to nominal GDP it has fallen by almost 25%. The sky is falling!"
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Crafty_Dog
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« Reply #1251 on: August 11, 2017, 02:57:36 AM »

Are Stock Prices Dangerously High? It Depends How You Look at It
These three P/E measurements are alarming. So why hasn’t it mattered?
Each of the major P/E measures is currently higher than its long-term average. Still, the market hit its latest high on Friday.
Each of the major P/E measures is currently higher than its long-term average. Still, the market hit its latest high on Friday. Illustration: Davide Bonazzi for The Wall Street Journal
By Jeff Brown
Aug. 6, 2017 10:13 p.m. ET
47 COMMENTS

U.S. stocks have set record after record this year, pleasing investors who might have expected a postelection slump. But have prices soared to levels that are too risky?

Just as a 50-degree day is cool in August and warm in January, share prices can look high or low depending on the frame of reference. Still, by almost any standard, share prices are indeed high today—sobering for anyone with a serious stake in the market. Consider the three most popular measures: trailing price-to-earnings ratio, forward P/E ratio and cyclically adjusted P/E ratio.
 

“Each of the measures is currently higher than its long-term average, prompting many market analysts to predict an impending market decline,” says Brandon Thomas, co-founder and chief investment officer at Envestnet , ENV -3.70% a Chicago-based research and advice provider for financial advisers.

Yet some experts make a case that stocks are not overpriced by important measures and will continue to rise. What’s an investor to do?

Here’s a look at what the top barometers are showing—and why stocks continue to defy them—along with the pros’ arguments about what comes next.

• Trailing P/E Ratio: The classic price-to-earnings ratio, or P/E, looks at the current price divided by the company’s total earnings for the past 12 months.

Today, the P/E for the stocks in the S&P 500 index is about 24, meaning investors pay $24 for every $1 in corporate earnings. That’s quite high compared with the historical average of about 15 or 16, but not so high compared with some periods of crisis in the past—more than 40 around the dot-com bubble and above 100 after the financial crisis broke. To return to average, prices would have to tumble or earnings skyrocket.

Some experts note, however, that it isn’t unusual, or particularly risky, for the P/E to be somewhat higher than average when interest rates and inflation are unusually low. If you’ll earn only a tad over 2% on a 10-year Treasury note, paying $50 for every $1 in interest income, why not pay 24 times earnings on a stock? That would be a 4% earnings yield (earnings divided by price). Also, a low earnings yield is easier to stomach if little will be lost to inflation.

Andrew Kleis, co-founder of Insight Wealth Group, a wealth-management firm in West Des Moines, Iowa, says that “in times of incredibly low interest rates, like today and the last several years, investors put their money into the equities markets because they believe that is their best opportunity for risk-adjusted returns. That drives up P/E ratios. It’s happened before, and it’s happening again.”

This view assumes investors own stocks to share in current or future earnings, even though not all earnings are paid out as dividends. Undistributed earnings used for plant expansion, research and development or stock buybacks should boost the share price.

• Forward P/E: For another look, many experts use a P/E based on projected or forecast earnings, usually from company estimates and a consensus among analysts. Because many analysts are predicting earnings will grow in the near and medium term, this view produces a P/E a little less frightening—currently about 19 for the S&P 500, close to its long-term average.

Jim Tierney, chief investment officer for concentrated U.S. growth equities at AllianceBernstein asset management in New York, says “forward earnings are what we care about the most,” and notes that Wall Street analysts expect healthy earnings gains, producing a forward P/E just shy of 19 this year and close to 17 in 2018. “A bit elevated, but not excessive in a world where the 10-year Treasury as at 2.37%,” Mr. Tierney says.

Of course, a forward-looking P/E can be off if earnings later come in higher or lower than expected. Earnings estimates sometimes have a bit of wishful thinking, and experts say many analysts currently assume earnings will be boosted by a big Republican corporate-tax cut.

Craig Birk, executive vice president of portfolio management at Personal Capital, an investment-management firm in San Carlos, Calif., says he prefers trailing P/E because it relies on established facts. “Forward-looking P/E is also useful, but it must be taken in the context that earnings projections tend to change meaningfully,” Mr. Birk says.

• CAPE: Robert Shiller, the Yale economist known for his book “Irrational Exuberance,” which warned of price bubbles in stocks and housing, devised a different approach to reduce distortions from short-term factors. His “cyclically adjusted price-to-earnings ratio,” or CAPE, divides the S&P 500’s current level by the average of 10 years of earnings adjusted for inflation.

That produces a frightening figure—a P/E today around 30, matching the level on Black Tuesday in 1929, and nearly double the long-term average of about 17 (but still below the peak of nearly 45 in 2000).

While CAPE is less volatile than the other two P/E gauges, some experts caution that it can be misleading at times. Right now, the 10-year earnings average is dragged down by the poor results during the financial crisis, pushing the CAPE ratio up.

Steve Violin, senior vice president and portfolio manager, F.L. Putnam Investment Management in Wellesley, Mass., prefers a CAPE using a five-year earnings average instead of 10, feeling it captures the current business climate and avoids distortions from events too far back to matter.

“A five-year CAPE ratio tends to be reasonably stable by avoiding estimates and smoothing out annual fluctuation,” he says. It’s currently at 23.6, compared with about 18 over the long term.
How long will this last?

A look at the S&P’s components shows that P/Es vary, with some stocks riskier than others—and demonstrates that no gauge can provide a simple view by itself of what’s going on.

Mr. Kleis notes, for example, that the average price of the S&P 500 is driven up by the 100 largest stocks in the index, with the remaining 400 trading closer to their historical P/E levels. “We know that investors have invested [their money] largely in the big, popular names they know and love,” he says. Because the index is based on market weight (stock price times number of shares), the top 100 make up 65% of the index’s value and have a disproportionate effect, he says.

Debating what various gauges really mean at any given moment is an endless process that always has some experts screaming that the sky is about to fall and others saying, “What, me worry?”

The important point today is that all the most popular barometers say share prices are high.
   
Mr. Violin notes, though, that valuation measures like P/E ratios are only part of the picture and need to be seen alongside measures of profit growth and financial strength. For that, he recommends zeroing in on individual companies. “It’s hard to use valuation ratios as a timing mechanism on their own,” he says. “Elevated stock-market valuations can persist for extended periods as they are sometimes justified.”

P/E ratios have been above average for years, and investors who dumped stocks as soon as they started to look high would have missed huge gains. “Stock valuations are elevated in aggregate, but economic and profit growth has justified these valuations so far,” Mr. Violin says. “This trend looks like it could persist, especially if interest rates remain low.”

Mr. Thomas says that despite high P/Es, the market is currently a “Goldilocks environment”—just right—due to low inflation and forecasts for higher corporate earnings. Though rising interest rates are traditionally damaging to stocks, Mr. Thomas believes rates are going up slowly enough for the markets to digest without much harm.

“Stock prices are at record highs for a reason,” he says, “and that is an expectation of improving earnings growth going forward. Many analysts are forecasting an acceleration in earnings growth as a result of an expected tax cut.”

Of course, things can go wrong. With the turmoil in Washington, for example, tax cuts are far from guaranteed.

Mr. Brown is a writer in Livingston, Mont. He can be reached at reports@wsj.com.
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Crafty_Dog
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« Reply #1252 on: September 14, 2017, 11:54:41 AM »

The Consumer Price Index Rose 0.4% in August To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 9/14/2017

The Consumer Price Index (CPI) rose 0.4% in August, coming in above the consensus expected increase of 0.3%. The CPI is up 1.9% from a year ago.

"Cash" inflation (which excludes the government's estimate of what homeowners would charge themselves for rent) rose 0.4% in August and is up 1.5% in the past year.

Energy prices rose 2.8% in August, while food prices rose 0.1%. The "core" CPI, which excludes food and energy, increased 0.2% in August, matching consensus expectations. Core prices are up 1.7% versus a year ago.

Real average hourly earnings – the cash earnings of all workers, adjusted for inflation – declined 0.3% in August but are up 0.6% in the past year. Real average weekly earnings are up 0.9% in the past year.

Implications: Consumer price inflation in August was the hottest for any month since January, with prices rising 0.4%. But, between Hurricanes Harvey and Irma, we're going to have to wait a couple of months to figure out whether there has been a shift in the underlying trend. The increase in prices in August was led by gasoline and housing costs. We're certain to see more upward pressure from gas prices in September as Harvey hit late in August, and so only affected prices for a small part of the month. In the past year, consumer prices are up 1.9%. This is below the Federal Reserve's 2% target, and so some are saying the Fed should hold off on raising rates in December. But consumer prices were up only 0.2% in the year ending in August 2015 and up 1.1% in the year ending August 2016, so seeing through temporary fluctuations, we think inflation has remained in a rising trend. "Core" consumer prices, which exclude food and energy, rose 0.2% in August and are up 1.7% from a year ago. A closer look at core prices shows a handful of goods that are keeping that measure below the 2% inflation target. Cellphone service prices have declined an unusually large 13.2% in the past year, while major household appliances are down 3.9% and vehicle costs are falling. For the consumer, these falling prices - which are the result of technological improvements and competition – plus rising wages mean increased spending power on all other goods. We still expect inflation to trend towards 2%+ in the medium term, and don't think the gains to consumers from falling prices in select areas are reason for concern or a justification for the Fed to hold off on a steady path of rising rates. A week ago, the futures market put the odds of a December rate hike at only 22%; now those odds are up to 47%. We think they should be more like 65%. The most disappointing news in today's report is that real average hourly earnings declined 0.3% in August. However, these earnings are up 0.6% over the past year. On the jobs front, initial claims for unemployment benefits declined 14,000 last week to 284,000. The recovery from Harvey should keep exerting downward pressure on claims over the next couple of weeks. Unfortunately, Irma will likely exert even more powerful upward pressure in the near term, so next week's report in claims should rise to about 300,000. After that, claims should drop over the following few weeks back to about 240,000, where it was before the hurricanes. In the meantime, continuing claims for unemployment benefits fell 7,000 to 1.94 million. Plugging all this data into our models suggests payroll gains will be muted for September, but then bounce back in the fourth quarter of the year.
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Crafty_Dog
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« Reply #1253 on: October 16, 2017, 02:52:23 PM »

GDP Growth Looking Good To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 10/16/2017

Next week, government statisticians will release the first estimate for third quarter real GDP growth. In spite of hurricanes, and continued negativity by conventional wisdom, we expect 2.8% growth.

If we're right about the third quarter, real GDP will be up 2.2% from a year ago, which is exactly equal to the growth rate since the beginning of this recovery back in 2009. Looking at these four-quarter or eight-year growth rates, many people argue that the economy is still stuck in the mud.

But, we think looking in the rear view mirror misses positive developments. The economy hasn't turned into a thoroughbred, but the plowing is easier. Regulations are being reduced, federal employment growth has slowed (even declined) and monetary policy remains extremely loose with some evidence that a more friendly business environment is lifting monetary velocity.

Early signs suggest solid near 3% growth in the fourth quarter as well. Put it all together and we may be seeing an acceleration toward the 2.5 – 3.0% range for underlying trend economic growth. Less government interference frees up entrepreneurship and productivity growth powered by new technology. Yes, the Fed is starting to normalize policy and, yes, Congress can't seem to legislate itself out of a paper bag, but fiscal and monetary policy together are still pointing toward a good environment for growth.

Here's how we get to 2.8% for Q3.

Consumption: Automakers reported car and light truck sales rose at a 7.6% annual rate in Q3. "Real" (inflation-adjusted) retail sales outside the auto sector grew at a 2% rate, and growth in services was moderate. Our models suggest real personal consumption of goods and services, combined, grew at a 2.3% annual rate in Q3, contributing 1.6 points to the real GDP growth rate (2.3 times the consumption share of GDP, which is 69%, equals 1.6).

Business Investment: Looks like another quarter of growth in overall business investment in Q3, with investment in equipment growing at about a 9% annual rate, investment in intellectual property growing at a trend rate of 5%, but with commercial constriction declining for the first time this year. Combined, it looks like they grew at a 4.9% rate, which should add 0.6 points to the real GDP growth. (4.9 times the 13% business investment share of GDP equals 0.6).

Home Building: Home building was likely hurt by the major storms in Q3 and should bounce back in the fourth quarter and remain on an upward trend for at least the next couple of years. In the meantime, we anticipate a drop at a 2.6% annual rate in Q3, which would subtract from the real GDP growth rate. (-2.6 times the home building share of GDP, which is 4%, equals -0.1).

Government: Military spending was up in Q3 but public construction projects were soft for the quarter. On net, we're estimating that real government purchases were down at a 1.2% annual rate in Q3, which would subtract 0.2 points from the real GDP growth rate. (1.2 times the government purchase share of GDP, which is 17%, equals -0.2).

Trade: At this point, we only have trade data through August. Based on what we've seen so far, it looks like net exports should subtract 0.2 points from the real GDP growth rate in Q3.

Inventories: We have even less information on inventories than we do on trade, but what we have so far suggests companies are stocking shelves and showrooms at a much faster pace in Q3 than they were in Q2, which should add 1.1 points to the real GDP growth rate.

More data this week – on industrial production, durable goods, trade deficits, and inventories – could change our forecast. But, for now, we get an estimate of 2.8%. Not bad at all.
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Crafty_Dog
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« Reply #1254 on: November 15, 2017, 11:25:23 AM »

Retail Sales Increased 0.2% in October To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 11/15/2017

Retail sales increased 0.2% in October (+0.5% including revisions to prior months). The consensus expected no change. Retail sales are up 4.6% versus a year ago.

Sales excluding autos rose 0.1% in October (+0.2% including revisions to prior months). The consensus expected a 0.2% gain. These sales are up 4.3% in the past year. Excluding gas, sales were up 0.4% in October and are up 4.3% from a year ago.

The rise in sales in October was led by autos, restaurants & bars and food & beverage stores.

Sales excluding autos, building materials, and gas rose 0.4% in October. If unchanged in November/December, these sales will be up at a 2.8% annual rate in Q4 versus the Q3 average.

Implications: Retail sales beat expectations for October and were revised up for prior months, a sign that - if you cut through the volatility due to the hurricanes - the economy is picking up. Retail sales rose 0.2% in October, after being held down by Harvey in August and then surging in September as consumers recovered following the storms. The growth in October was led by autos, which should remain unusually strong through year end as people replace vehicles destroyed in the hurricanes. But sales were also strong at restaurants & bars as well as food and beverage stores. The weakest categories in October were building materials, which should rebound in future months as Texas and Florida rebuild, and gas station sales, due to gas prices falling after the surge in September. Total retail sales are now up 4.6% in the past year. The best news today was the considerable strength for "core" sales, which excludes autos, building materials, and gas. Core sales grew 0.4% in October, and are up 3.4% from a year ago. Although some retail outlets are getting beat up by on-line retailing, the sector looks good from the consumer's point of view. Jobs and wages are moving up, consumers' financial obligations are an unusually small part of their incomes, and serious (90+ day) debt delinquencies are down substantially from post-recession highs. In other news this morning, business inventories were unchanged in September but revised up for earlier in the third quarter. As a result of these figures and the retail revisions, we now expect the government's estimate of Q3 real GDP growth to be revised up to a 3.3% annual rate from an originally reported 3.0%. Meanwhile, early tracking for Q4 real GDP growth in the 3.5 – 4.0% range. If we're right about Q4, this would be the first time we've had three straight quarters above 3% since before the financial crisis. In other news this morning, the Empire State index, a measure of manufacturing sentiment in New York, fell to 19.4 in November from 30.2 in October, suggesting continued strength in the factory sector.
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Crafty_Dog
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« Reply #1255 on: November 16, 2017, 02:05:32 PM »


________________________________________
Industrial Production Increased 0.9% in October To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 11/16/2017

Industrial production increased 0.9% in October (1.4% including revisions to prior months), easily beating the consensus expected 0.5%. Utility output rose 2.0%, while mining fell 1.3%.

Manufacturing, which excludes mining/utilities, increased 1.3% in October (1.7% including revisions to prior months). Auto production rose 1% while non-auto manufacturing rose 1.3%. Auto production is down 1.6% versus a year ago while non-auto manufacturing is up 2.9%.

The production of high-tech equipment rose 1.2% in October and is up 4.2% versus a year ago.

Overall capacity utilization increased to 77.0% in October from 76.4% in September. Manufacturing capacity utilization rose to 76.4% in October from 75.5% in September.

Implications: Industrial production continued its post-hurricane rally in October, easily beating consensus expectations as the manufacturing sector led the way. But even without the storms, production would have been a solid 0.3%, according to the Federal Reserve. Industrial production rose 0.9% in October and is now up 2.8% versus a year ago. The biggest positive contribution to today's headline number came from manufacturing which rose 1.3%, matching the largest monthly gain since 2010. Auto manufacturing rose 1% in October and is now up at a 27.5% annual rate in the past three months, getting back to pre-hurricane levels of output. Meanwhile, non-auto manufacturing posted its largest monthly gain since 2006, rising 1.3%. This strength was also reflected in manufacturing capacity utilization, which rose to its highest level since 2008. Looking forward, expect further gains in overall production as the economy recovers from the effects of the two hurricanes. The one disappointment in today's report came from mining which fell 1.3%, primarily due to both oil and gas well drilling and extraction. Oil and gas-well drilling has struggled since the storms, but its monthly declines have begun to level off and it is still up a massive 61% from a year ago. Look for a surge in drilling activity in the months ahead once the effects of the storms pass. In other news this morning, the Philly Fed Index, a measure of sentiment among East Coast manufacturers, fell to a still high 22.7 in November from 27.9 in October. On the employment front, new claims for jobless benefits rose 10,000 last week to 249,000. Meanwhile, continuing claims fell 44,000 to 1.86 million. Look for another solid month of job growth in November. Finally, on inflation, import prices rose 0.2% in October while export prices remained unchanged. In the past year however, import prices are up 2.5% while export prices are up 2.7%, both in stark contrast to the price declines in the twelve months ending in October 2016. Yet another reason why the Federal Reserve should and will raise rates in December.
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Crafty_Dog
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« Reply #1256 on: November 20, 2017, 11:27:22 AM »

The Economy is Accelerating To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 11/20/2017

We've called it a "Plow Horse" economy, which was our metaphor invented to counter forecasters who said slow growth meant a recession was on its way. A Plow Horse is always slow, but that slowness hides underlying strength – it was never going to slip and fall. Now, the economy is accelerating.

Halfway through the fourth quarter, monthly data releases show real GDP growing at a 3%+ annual rate. If that holds, it would make for three consecutive quarters of growth at 3% or higher. Believe it or not, the last time that happened was 2004.

Last week saw retail sales, industrial production, and housing starts all come in better than expected for October, the latter two substantially better.

And while retail sales grew "just" 0.2% in October, that came on the back of a 1.9% surge in September. Overall sales, and those excluding volatile components like autos, gas and building materials, all signal a robust consumer.

Meanwhile factory output surged 1.3% in October, tying the second highest monthly gain since 2010. Production at factories is now up 2.5% from a year ago, and accelerating. By contrast, factory production was down 0.1% in the year ending October 2016 and unchanged in the year ending October 2015. The current revival is not due to the volatile auto sector, where output of motor vehicles is down 5.9% from a year ago while the production of auto parts is down 0.3%.

The last piece of last week's good economic news was on home building: housing starts surged after a storm-related lull in September. Single-family starts, which are more stable than multi-family starts - and add more per unit to GDP - tied the highest level since 2007. Housing completions hit the highest level since 2008.

As a result of all this data, the Atlanta Fed's "GDP Now" model says real GDP is growing at a 3.4% annual rate in Q4. The New York Fed's "Nowcast" says 3.8%.

Of course, if we get anything close to those numbers, some analysts will claim the fourth quarter is just a hurricane-related rebound. But the conventional wisdom has been way too bearish for years, and Q3 is likely to be revised up to a 3.4% growth rate from the original estimate of 3.0%. Put it all together, and things are looking up. It's no longer a Plow Horse economy. In fact, after years of smothering the growth potential of amazing new technologies, the government is finally getting out of the way.

The Obama and Bush regulatory State is being dismantled piece by piece, and spending growth has slowed relative to GDP. Tax cuts are moving through Congress. These positive developments have monetary velocity – the speed at which money moves through the economy – picking up. "Animal spirits" are stirring. We don't have a cute name for it, but growth is accelerating.

This reduction in the burden of government would be easier, and much more focused on growth, if Republicans had fixed the budget scorekeeping process when they first had the chance back in 2015, or even in the mid-1990s, after having gained control of both the House and Senate.

Instead, they took a cowardly pass. As a result, when assessing the "cost" of tax cuts, Congress still ignores the positive economic effects of tax cuts on growth. Oddly, while refusing to "score" better GDP growth, we understand the budget scorekeepers assume tax cuts lead to higher interest rates, which add to the cost of the tax cuts. In effect, the scorekeepers will use dynamic models to count the negative effects of tax cuts on the overall economy, but not the positive ones!

This kind of rigged scoring system is why the current tax proposals don't cut tax rates on dividends or capital gains, and why some of the tax cuts are temporary. It's also why the top tax rate on regular income for the highest earners is likely to end up near the current tax rate of 39.6%.

We were never satisfied with Plow Horse growth, but we always thought it showed the power of innovation. The power of new technology caused the economy to grow since 2009, despite the burden of big government.

Now with better policies, growth is on the rise. We haven't fixed enough problems to get 3% real growth in every quarter, and maybe not even as the average growth rate over time. That would probably take some major changes to entitlement spending programs. But the recent improvement is hard to miss and signals that entrepreneurship is alive and well in the United States.
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DougMacG
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« Reply #1257 on: November 20, 2017, 12:08:27 PM »

"the Atlanta Fed's "GDP Now" model says real GDP is growing at a 3.4% annual rate in Q4. The New York Fed's "Nowcast" says 3.8%."

Yet we cannot pass meaningful tax reform because budget rules require a 2.6% projection AFTER the incentives to hire, build, expand are restored.  Stuck on stupid.
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ccp
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« Reply #1258 on: November 26, 2017, 01:09:47 PM »

https://nypost.com/2017/11/26/will-the-bank-stop-stiffing-me-on-my-savings-account-rate/

I remember when they paid 5% no matter how little you had in the bank

I watched my hundred dollars go up to 105 in the mid 60s.
checks were free.
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DougMacG
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« Reply #1259 on: November 27, 2017, 10:06:23 AM »

https://nypost.com/2017/11/26/will-the-bank-stop-stiffing-me-on-my-savings-account-rate/

I remember when they paid 5% no matter how little you had in the bank
I watched my hundred dollars go up to 105 in the mid 60s.
checks were free.

I think it is the Federal Reserve and our flawed public policies like monetary policy and deficit spending that is holding interest rates so low, not the banks IMHO.

Note that banking is a cartel, and a public private partnership (cronyism by definition).  They borrow from the Fed more so than reinvest savings.  If you wanted them to be competitive, you would need to allow more banks to compete or allow existing banks to compete in more markets.

The Fed gives them (almost) unlimited money (printed money, pretend money, caveat currency) at zero percent (with rounding) interest.  Given that, how much can they pay savers for their savings?  (near zero)

A whole generation and now maybe two or three will live without knowing the formerly greatest force on earth, the power of compounding interest.
https://www.cbsnews.com/news/compound-interest-the-most-powerful-force-in-the-universe/

That same force in now applied in the opposite direction, the declining value of the dollar over time even when inflation is averaging only 2-3%.
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Crafty_Dog
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« Reply #1260 on: November 30, 2017, 11:25:23 PM »

Personal Income Rose 0.4% in October To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 11/30/2017

Personal income rose 0.4% in October (0.3% including revisions to prior months), beating the consensus expected 0.3%. Personal consumption increased 0.3% (+0.2% including prior months' revisions), matching consensus expectations. Personal income is up 3.4% in the past year, while spending is up 4.2%.

Disposable personal income (income after taxes) rose 0.5% in October and is up 3.2% from a year ago. The gain in October was led by private sector wages and salaries.

The overall PCE deflator (consumer inflation) rose 0.1% in October and is up 1.6% versus a year ago. The "core" PCE deflator, which excludes food and energy, rose 0.2% in October and is up 1.4% in the past year.

After adjusting for inflation, "real" consumption rose 0.1% in October and is up 2.6% from a year ago.

Implications: Consumers enjoyed rising wages and healthy spending in October, following a storm-boosted September report. Consumer spending rose 0.3% in October, a slower pace of spending growth than we saw in September, but remember that September spending was boosted by the replacement of vehicles destroyed by hurricanes Harvey and Irma. Spending in October - led by housing, groceries, and prescription drugs – came despite a headwind from slower auto and gasoline sales. Meanwhile incomes rose 0.4% in October, led by private sector wages & salaries as well as interest income. Both incomes and spending have been heating up in recent months, with income rising at a 4.2% annual rate in the past three months, and spending up at a 5.5% annual rate over the same period. We expect to see healthy growth in the coming months, especially if meaningful tax cuts and reform come out of Washington. While some will bemoan that spending has outpaced income growth in the past few months, and has risen at a faster pace in the past year, stories about problems with the consumer are way overblown. Yes, consumer debts are at a record high in raw dollar terms, but so are consumer assets. Comparing the two, debts are the lowest relative to assets since 2000 (and that's back during the internet bubble when asset values were artificially high). Meanwhile, the financial obligations ratio - which compares debt and other recurring payments to income – is still hovering near the lowest levels of the past 35 years. In other words, consumers still have room to increase spending, and steadily rising incomes will continue to boost spending power in the months ahead. On the inflation front, the overall PCE deflator rose 0.1% in October and is up 1.6% in the past year. While that is modestly below the Fed's 2% inflation target, the pace of inflation has been rising in recent months and provides clear backing for the Fed to continue with rate hikes. In other news this morning, the Chicago PMI, which measures manufacturing sentiment in that region, fell in November to a still strong 63.9. Plugging this into our model along with other recent data, we expect tomorrow's national ISM Manufacturing index to show continued robust growth for November. In employment news this morning, new claims for jobless benefits fell 2,000 last week to 238,000. Meanwhile, continuing claims rose 42,000 to 1.96 million. Look for another solid month of job growth in November.
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Crafty_Dog
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« Reply #1261 on: December 08, 2017, 11:54:16 PM »

Don't Fear Higher Interest Rates To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 12/4/2017

The Federal Reserve has a problem. At 4.1%, the jobless rate is already well below the 4.6% it thinks unemployment would/could/should average over the long run. We think the unemployment rate should get to 3.5% by the end of 2019 and wouldn't be shocked if it got that low in 2018, either.

Add in extra economic growth from tax cuts and the Fed will be worried that it is "behind the curve." As a result, we think the Fed will raise rates three times next year, on top of this year's three rate hikes, counting the almost certain hike this month. And a fourth rate hike in 2018 is still certainly on the table. By contrast, the futures market is only pricing in one or two rate hikes next year – exactly as it did for 2017. In other words, the futures markets are likely to be wrong for the second year in a row.

And as short-term interest rates head higher, we expect long-term interest rates to head up as well. So, get ready, because the bears will seize on this rising rate environment as one more reason for the bull market in stocks to end.

They'll be wrong again. The bull market, and the US economy, have further to run. Rising rates won't kill the recovery or bull market anytime in the near future.

Higher interest rates reflect a higher after-tax return to capital, a natural result of cutting taxes on corporate investment via a lower tax rate on corporate profits as well as shifting to full expensing of equipment and away from depreciation for tax purposes.

Lower taxes on capital means business will more aggressively pursue investment opportunities, helping boost economic growth and the demand for labor – leading to more jobs and higher wages. Stronger growth means higher rates.

For a recent example of why higher rates don't mean the end of the bull market in stocks look no further than 2013. Economic growth accelerated that year, with real GDP growing 2.7% versus 1.3% the year before. Meanwhile, the yield on the 10-year Treasury Note jumped to 3.04% from 1.78%. And during that year the S&P 500 jumped 29.6%, the best calendar year performance since 1997.

This was not a fluke. The 10-year yield rose in 2003 and 2006, by 44 and 32 basis points, respectively. How did the S&P 500 do those years: up 26.4% in 2003, up 13.8% in 2006.

Sure, in theory, if interest rates climb to reflect the risk of rising inflation, without any corresponding increase in real GDP growth, then higher interest rates would not be a good sign for equities. That'd be like the late 1960s through the early 1980s. But with Congress and the president likely to soon agree to major pro-growth changes in the tax code on top of an ongoing shift toward deregulation, we think the growth trend is positive, not negative.

It's also true that interest on the national debt will rise as well. But federal interest costs relative to both GDP and tax revenue are still hovering near the lowest levels of the past fifty years. As we've argued, sensible debt financing that locks in today's low rates would be prudent. However, it will take many years for higher interest rates to lift the cost of borrowing needed to finance the government back to the levels we saw for much of the 1980s and 1990s. And as we all remember the 80s and 90s were not bad for stocks.

Bottom line: interest rates across the yield curve are headed higher. But, for stocks, it's just another wall of worry not a signal that the bull market is anywhere near an end.
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DougMacG
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« Reply #1262 on: December 19, 2017, 12:22:19 PM »

Previously thought impossible!  [Like yesterday, by growth haters, 'non-partisan' agencies and jouno-lists]

https://www.reuters.com/article/us-usa-economy-nyfed/n-y-fed-raises-u-s-fourth-quarter-gdp-growth-view-to-near-4-percent-idUSKBN1E9292?il=0
https://www.newyorkfed.org/research/policy/nowcast

N.Y. Fed raises U.S. fourth-quarter GDP growth rate to near 4 percent

This changes everything.
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Crafty_Dog
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« Reply #1263 on: December 28, 2017, 03:32:48 PM »

Monday Morning Outlook
________________________________________
2018: Dow 28,500, S&P 3100 To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 12/18/2017

Last December we wrote "we finally have more than just hope to believe that this year, 2017, is the year the Plow Horse Economy finally gets a spring in its step." We expected real GDP growth to accelerate from 2.0% in 2016 to "about 2.6%" in 2017. Our optimism was, in large part, based on our belief that the incoming Trump Administration would wield a lighter regulatory touch and move toward lower tax rates.

So far, so good. Right now, we're tracking fourth quarter real GDP growth at a 3.0% annual rate, which would mean 2.7% growth for 2017 and we expect some more acceleration in 2018.

The only question is: how much? Yes, a major corporate tax cut (which should have happened 20 years ago) is finally taking place. And, yes, the Trump Administration is cutting regulation. But, it has not reigned in government spending. As a result, we're forecasting real GDP growth at a 3.0% rate in 2018, the fastest annual growth since 2005.

The only caveat to this forecast is that it seems as if the velocity of money is picking up. With $2 trillion of excess reserves in the banking system, the risk is highly tilted toward an upside surprise for growth, with little risk to the downside. Meanwhile, this easy monetary policy suggests inflation should pick up, as well. The consumer price index should be up about 2.5% in 2018, which would be the largest increase since 2011.

Unemployment already surprised to the downside in 2017. We forecast 4.4%; instead, it's already dropped to 4.1% and looks poised to move even lower in the year ahead. Our best guess is that the jobless rate falls to 3.7%, which would be the lowest unemployment rate since the late 1960s.

A year ago, we expected the Fed to finally deliver multiple rate hikes in 2017. It did, and we expect that pattern will continue in 2018, with the Fed signaling three rate hikes and delivering at least that number, maybe four. Longer-term interest rates are heading up as well. Look for the 10-year Treasury yield to finish 2018 at 3.00%.

For the stock market, get ready for a continued bull market in 2018. Stocks will probably not climb as much as this year, and a correction is always possible, but we think investors would be wise to stay invested in equities throughout the year.

We use a Capitalized Profits Model (the government's measure of profits from the GDP reports divided by interest rates) to measure fair value for stocks. Our traditional measure, using a current 10-year Treasury yield of 2.35% suggests the S&P 500 is still massively undervalued.

If we use our 2018 forecast of 3.0% for the 10-year yield, the model says fair value for the S&P 500 is 3351, which is 25% higher than Friday's close. The model needs a 10-year yield of about 3.75% to conclude that the S&P 500 is already at fair value, with current profits.

As a result, we're calling for the S&P 500 to finish at 3,100 next year, up almost 16% from Friday's close. The Dow Jones Industrial Average should finish at 28,500.

Yes, this is optimistic, but a year ago we were forecasting the Dow would finish this year at 23,750 with the S&P 500 at 2,700. This was a much more bullish call than anyone else we've seen, but we stuck with the fundamentals over the relatively pessimistic calls of "conventional wisdom," and we believe the same course is warranted for 2018. Those who have faith in free markets should continue to be richly rewarded in the year ahead.
________________________________________
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Crafty_Dog
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« Reply #1264 on: January 01, 2018, 03:10:09 PM »

Predictions for 2018
Posted: 31 Dec 2017 05:40 PM PST

One year ago I expected to see an improving economy and further gains in equity prices, and I sure got that right. Stocks are up big-time and GDP growth has accelerated somewhat. But I worried, as I have every year for the past 8 years, that the Fed might be slow to react to rising confidence and declining money demand, and that this could set off a bout of rising inflation. Fortunately, I got that wrong yet again, since inflation has remained in a comfortable 1.5 - 2% range. For the past two years I've liked emerging markets, and they have done quite well. Last year I didn't much care for gold or commodities, but they have done well thanks to a weaker dollar—which I didn't see coming. So it's a mixed bag for calls, but last year's 19.4% rise in equity prices goes a long way to making up for a few smaller losses. In any event, take the following with suitable grains of salt. I've been bullish and right (on stocks) for so long now that it makes even me nervous.

All throughout 2017 the world worried that Trump and the Republicans were going to prove incompetent. Was Trump crazy? Could he actually govern? Could the Republicans abolish Obamacare as promised? Could they pass tax reform? Turns out they did a pretty good, if far from perfect, job. Obamacare is being dismantled, beginning with the elimination of the mandate. Tax reform could have been better, but it achieved its main objective: to stimulate investment. Meanwhile, hidden behind the distractions of tweet storms and faux pas, Trump has accomplished a major reduction in federal regulatory burdens. This can really make a difference over the long haul, and it may already be contributing to faster growth.

Thinking back, Obama in his first year got a $1 trillion dollar stimulus package designed to boot-strap the economy by redistributing income (see my analysis here). The result was the slowest recovery on record; Obama ended up borrowing some $8 trillion to no avail, since nothing he did was aimed at increasing the market's desire to invest, work harder, or take risk. Trump in his first year got a $1.5 trillion (CBO-scored "cost") stimulus package designed to boost the economy by increasing the after-tax returns to business investment. I'm betting the results of Trump's tax reform will be much better than expected, but the market is not yet willing to make that same bet, and that is the point of departure for all predictions of what is to come.

If 2017 was about just one thing, it was the ability of the Republicans to pass meaningful tax reform. The market spent most of the year handicapping the odds of tax reform, and it would appear that it is now mostly, if not fully, priced in. The tax reform package boils down to a one-time 20% boost to after-tax corporate profits (by cutting the corporate income tax rate from 35% to 21%), and that's pretty much what we have seen happen to equity prices this past year.

If 2018 is going to be about just one thing, it will be whether boosting the after-tax rewards to business investment results in a stronger economy. Beginning in 2009, Obama and the Democrats gambled that a massive redistribution of income would boost demand and thus boost the economy, but they lost. They ended up flushing $8 trillion down the Keynesian toilet. Trump and the Republicans are now gambling that a significant increase in the after-tax rewards to business investment will boost the economy. Only time will tell, but there are already hints of a stronger economy in the data: e.g., capex is up, industrial production is up, business confidence and the ISM indices are up, and industrial metals prices are up. It's likely that the current quarter could mark the first time we've enjoyed three consecutive quarters of 3% or more growth in over 12 years.

I think the meme for 2018 will be this: waiting for GDP. If the economy shows convincing and durable signs of stronger growth, more investment, more jobs, and rising productivity, then the Republicans' gamble will have paid off. If not, the Democrats will have carte blanche to take control of Congress and oust a sitting president.

From my supply-sider's perspective, we now have the essential ingredients for a stronger economy in place. Tax incentives are correctly aligned to encourage more business investment; regulatory burdens are being slashed, business confidence is high, and the Fed is not a threat for the foreseeable future. Swap and credit spreads are low, as is implied volatility, and that tells us that liquidity is plentiful and systemic risk is low. The fact that the rest of the world is also doing better as well is just icing on the cake.

But, argue the skeptics, won't businesses just use their extra profits to buy back shares and increase their dividends, making the wealthy even wealthier without creating any new jobs? This oft-repeated allegation is an empty argument, because it ignores one key thing: what do those who receive the money from buybacks and dividends do with it? John Cochrane explains it in this brief excerpt (do read the whole thing):

Suppose company 1 gets a tax cut, doesn't really know what to do with the money -- on top of all the extra cash the company may already have -- as it doesn't have very good investment projects. It sends the money to shareholders. Well, what do shareholders do with it? (Hint: track the money.) They most likely roll the money in to other investments. They find company 2 that does need the money for investment, and send it to that company. In the end, they only consume it if nobody has any good investment ideas.

The larger economic point: In the end, investment in the whole economy has nothing to do with the financial decisions of individual companies. Investment will increase if the marginal, after-tax, return to investment increases. Lowering the corporate tax rate operates on that marginal incentive to new investments. It does not operate by "giving companies cash" which they may use, individually, to buy new forklifts, or to send to investors. Thinking about the cash, and not the marginal incentive, is a central mistake.

In other words, what some companies do with their extra cash is immaterial. What matters is that tax reform has increased the marginal incentive to invest—for the entire economy—by reducing tax rates and by allowing the immediate expensing of capex. On the margin, investment now has become more attractive and more profitable in the US, and this will almost certainly result in more investment (some of which is likely to come from overseas firms deciding to relocate here), which in turn means more jobs, more productivity, and higher real incomes. As I explained a few years ago, productivity has been the missing ingredient in the current lackluster recovery, and very weak business investment is one reason that productivity has gone missing. A pickup in investment is bound to raise productivity, which is the ultimate driver of growth and prosperity.

So it's clear to me that tax reform is a big deal, because it's very likely to boost the long-term growth trajectory of the US economy by a meaningful amount. Surprisingly, however, the market does not appear to share that view. Why else would real yields still be miserably low (e.g., 0.3% for 5-yr TIPS)? Why else would the market expect only a modest increase (0.75% or so) in the Fed's target funds rate for the foreseeable future? The current Fed target is 1.5%, while 2-yr Treasury yields, which are the market's expectation for what that rate will average over the next two years, are only 1.9%. As for real yields, the current Fed target translates into a real yield—using the PCE Core deflator—of roughly zero, while the yield on 5-yr TIPS says the market expects that rate to average only 0.3% over the next 5 years. If the economy really gets up a head of steam (e.g., real growth of 3% or more per year), I can't imagine the Fed wouldn't raise rates by more than the market currently expects, and I can't imagine nominal and real yields in general won't be significantly higher than they are today. The last time the economy was growing at 4% a year (early 2000s), 5-yr TIPS real yields were 3-4%.

Yet the Fed is the one thing I worry about, which is nothing new. The Fed has been responsible for every recession in recent memory, because each time they have tightened monetary policy in order to reduce inflation or to ward off an expected increase in inflation, they have ended up choking off growth. They are well aware of this, however, so they are going to be very careful about raising rates as the economy picks up steam. But as I've explained many times before, the Fed's worst nightmare is a return of confidence. More confidence in a time of surprisingly strong growth would almost certainly reduce the demand for money; if the Fed doesn't take offsetting moves to increase the demand for all those excess reserves in the banking system (e.g., by raising the funds rate target and draining bank reserves) the result would be an unwelcome rise in inflation. Inflation is a monetary phenomenon: when the supply of money exceeds the demand for it, inflation is the inevitable result. And higher inflation would set us up for the next recession.

On balance, I think it's quite likely the economy is going to improve, and surprisingly so. Ordinarily that would be great news for the equity market, since a stronger than expected economy should result in stronger than expected profits. But the market is still cautious, so good news is going to be met with increased skepticism: if the Fed raises rates as the economy improves, the market will worry that higher rates will increase the risk of recession. And even if the Fed is slow to raise rates, the market will see that as a sign that inflation is likely to move higher, and that would in turn increase the odds of more aggressive Fed tightening and eventually another recession. In short, we're probably going to see the market climb periodic walls of worry, just as it has for the past several years.

Risk assets should do well in this environment, given time, but there will be headwinds. Rising Treasury yields will act to keep PE ratios from rising further, so equity market gains are likely to be driven mainly by stronger-than-expected earnings. At the same  time, higher bond yields will make it easier to people to exit stocks (very low yields today make being short stocks very painful).

Emerging market economies are so far behind their developed counterparts that they have tremendous upside potential in a world that is increasingly prosperous, but a stronger than expected US economy is likely to boost the dollar, which in turn would put pressure on commodity markets and the emerging economies that depend on them.

I continue to believe that gold is trading at a significant premium to its long-term, inflation-adjusted price (which I estimate to be around $600/oz.) because the world is still risk-averse. So a stronger US economy and a stronger dollar would spell bad news for gold. Who needs gold if real yields and real growth are rising?

In order to judge whether things are playing out in a healthy fashion, it will be critical to periodically assess the status of the world's demand for money—particularly bank reserves, of which there are over $2 trillion in excess of what is needed for banks to collateralize their deposits. If banks' demand to hold excess reserves declines faster than the Fed's willingness to drain reserves and/or raise the interest rate it pays on reserves, then higher inflation is almost sure to rear its ugly head. Signs of that happening would likely be seen in rising inflation expectations, a falling dollar, a steeper yield curve, and/or rising gold and commodity prices.

The world is on the cusp of a new chapter of stronger growth, led by US tax reform. The US economy has plenty of upside potential, given the past 8 years of sub-par growth and a significant decline in the labor force participation rate and lingering risk aversion. Tax reform can and should unleash that underutilized potential and boost confidence. The future looks bright, but there are, of course, lots of things that could go wrong (e.g., North Korea, the Middle East, Trump's ego, the Fed) so if and as the world becomes less risk averse, an investor would be wise to remain cautious, since very few things these days are obviously cheap. On the other hand, Treasuries, and bond yields in general, look very low and should thus be approached with great caution
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« Reply #1265 on: January 01, 2018, 06:06:14 PM »

Great analysis by Scott.
http://scottgrannis.blogspot.com/2017/12/predictions-for-2018.html

SG: "I've been bullish and right (on stocks) for so long now that it makes even me nervous."

   -  My interest is in GDP growth; I have no prediction about the stock market.  The market should tend to go up in a good economy but there are other factors which Scott goes on to explain.


"Obama ended up borrowing some $8 trillion to no avail"... "They ended up flushing $8 trillion down the Keynesian toilet."

   -  People intuitively know this and have been electing Obama's opponents for the last 4 cycles, but it seems that no one on the political stage effectively points this out.  R's are risking of about a trillion with tax rate cuts that will cost nothing if they succeed.  They are designed to grow the economy.  Democrats just wasted $8 trillion (above and beyond all taxes collected) on what only could harm incentives and growth.


" If the economy shows convincing and durable signs of stronger growth, more investment, more jobs, and rising productivity, then the Republicans' gamble will have paid off."

"Lowering the corporate tax rate operates on that marginal incentive to new investments. It does not operate by "giving companies cash"... "  (Univ of Chicago economist John Cochrane)

More investment "means more jobs, more productivity, and higher real incomes."  

   -  Now we find out if that is right.
« Last Edit: January 01, 2018, 06:49:04 PM by DougMacG » Logged
Crafty_Dog
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« Reply #1266 on: January 07, 2018, 02:47:17 PM »



https://www.ftportfolios.com/Commentary/EconomicResearch/2018/1/5/boom
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« Reply #1267 on: January 07, 2018, 05:08:47 PM »


Nice to know I have lived long enough to see Wesbury's predictions be accurate again.
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« Reply #1268 on: January 17, 2018, 12:45:47 PM »

Industrial Production Increased 0.9% in December To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 1/17/2018

Industrial production increased 0.9% in December (1.0% including revisions to prior months), beating the consensus expected 0.5%. Utility output rose 5.7%, while mining rose 1.6%.

Manufacturing, which excludes mining/utilities, increased 0.1% in December (0.2% including revisions to prior months). Auto production rose 2.0% while non-auto manufacturing was unchanged. Auto production is up 0.4% versus a year ago while non-auto manufacturing is up 2.6%.

The production of high-tech equipment rose 0.4% in December and is up 3.7% versus a year ago.

Overall capacity utilization increased to 77.9% in December from 77.2% in November. Manufacturing capacity utilization was unchanged in December.

Implications: Industrial production finished 2017 with a bang, beating consensus expectations and posting the largest calendar-year gain since 2010. The headline series rose 0.9% in December and is now up 3.6% in the past year. Further, overall production rebounded 10.7% at an annual rate in Q4 – its fastest quarterly pace since 2009 – after being held back in Q3 by Hurricanes Harvey and Irma. Even though the overall number was strong in December, it is important to note that the details of the report show the strength was primarily due to the volatile utilities and mining components. Manufacturing, which rose 0.1% in December has undergone a major shift. Back in December 2016, automobile manufacturing was up 6% from the prior year while non-auto manufacturing was up 0.2%. Now the leadership has reversed, with auto manufacturing up only 0.4% in the past year while non-auto manufacturing is up 2.6%. This demonstrates that the revival of manufacturing outside the auto sector in the US hasn't been all talk. The biggest source of strength in today's report came from utilities, a volatile category that is very dependent on weather, which rebounded 5.7% in December, after coming in weak in November. Given low January temperatures in much of the country, utilities may have another month of growth in them before reverting to normal. Another bright spot in December came from mining, which rose 1.6% amid broad-based gains in the sector. Notably, after five consecutive months of declines, oil and gas-well drilling rose 0.9% in December. Despite the weakness following the storms, today's gain signals it may have turned the corner. Look for a surge in drilling activity in the months ahead. In other recent news, the Empire State index, a measure of manufacturing sentiment in New York, dropped to 17.7 in January from 19.6 in December. On the housing front, the NAHB index, which measures homebuilder sentiment, fell to a still high 72 in January from 74 in December, signaling continued optimism from developers.
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« Reply #1269 on: January 18, 2018, 02:15:47 PM »



The ISM Manufacturing Index Rose to 59.7 in December To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 1/3/2018

The ISM Manufacturing Index rose to 59.7 in December, easily beating the consensus expected 58.2. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)

The major measures of activity were mostly higher in December, and all remain comfortably above 50, signaling growth. The new orders index rose to 69.4 from 64.0 in November, while the production index increased to 65.8 from 63.9. The supplier deliveries index rose to 57.9 from 56.5. The employment index declined to 57.0 from 59.7 in November.

The prices paid index rose to 69.0 in December.

Implications: Optimism in the manufacturing sector soared in December as tax reform moved toward passage. Manufacturing activity closed out 2017 on a high note, with the ISM index hitting 59.7 in December, behind just September for the highest reading of the year and the fastest pace of expansion going back to 2011. And it was not just a short term boom to end the year, in 2017 the ISM manufacturing index averaged the highest readings for a calendar year going all the way back to 2004. In December, sixteen of eighteen industries reported growth (two reported declines), while respondents noted that the pickup is coming from increased customer activity in both the US and abroad. The two most forward-looking indices – new orders and production - led the way in December, rising to very healthy levels. In fact, new orders hit the highest reading going back all the way to 2004. This suggests that the strength shown by the manufacturing sector throughout 2017 should carry over into 2018. And now that Washington has made good on tax reform (and regulatory reform looks likely), the pace of growth could pick up even further. In other news this morning, construction spending rose 0.8% in November (+1.2% including revisions to prior months). A jump in home building and the construction of offices more than offset a decline in work on manufacturing facilities. In housing news from last week, the national Case-Shiller home price index increased 0.7% in October and is up 6.2% from a year ago. By contrast, home prices rose 5.2% in the year ending in October 2016, so we've had some acceleration in home price increases in the past year. In the last twelve months, price gains have been led by Seattle and Las Vegas. The recent tax bill, which trims state and local tax deductions as well as mortgage interest deductibility for new loans, should be a headwind for price gains in the next few years. However, given short housing supplies and an economy gaining strength, we're still likely to see solid national average price gains, just not as fast as the past year and with the gains tilted toward lower tax states.
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