Insights & Advice

January 3, 2007 data as reported by Ned Davis Research The ISM Manufacturing Index rebounded 1.9 points to 51.4 in December, indicating a resumption of growth.  Economists expected a reading of 50.0.  A 3.4 point gain in new orders and a similar rise in production led the way.  It was the biggest rise in production in over a year.  Among the composite’s components, only inventories contracted at a faster rate.  Customer inventories, however, were too high, remaining above 50 for the third straight month.  ISM characterized manufacturing conditions as "resilient," perhaps a bit strong considering that only half of the…

Existing Home Sales Slip Existing home sales slipped 0.8% in December to a 6.22 million annual rate, below the consensus for a 0.5% drop to 6.25 million, even though mortgage rates continued to fall. A 2.1% rise in condo sales was more than offset by a 1.3% decline in singles.  Sales were mixed by region, falling sharply in the West (all singles), modestly in the Northeast, but rising in the Midwest and South.  On a y/y basis, the sales decline continued to moderate, rising to -7.9%.  Singles were off 7.2%, while condos were down 12.2%.  For the full year, sales…

March 1, 2007 Data as Provided by Ned Davis Research New Home Sales Plunge New home sales plunged 16.6% to a 937,000 annual rate in January, the biggest drop in 13 years to its lowest level since February 2003 .  Economists expected a drop of 3.6% to a 1.080 million unit annual rate.  The seasonally adjusted monthly sales totals for Q4 were revised down by a net of 65,000, although the unadjusted totals for both the quarter and the year were little changed.  Led by a 37% swoon in the West, all four regions suffered sharp setbacks.  But we wouldn’t…

Data as provided by Ned Davis Research According to the Chicago Fed National Activity Index, the economy is growing a little below trend…There were downward revisions to each of the four months this year; all are now below zero, indicating below trend growth.  The index rose 0.01 points in April to -0.10, while the three-month average rose to 0.16 from a revised -0.43.  In April, negative contributions from employment, consumption and housing, and sales more than offset a positive contribution from production and income.  Only 32 of the 85 indicators made a positive contribution, while 34 improved over the prior…

September 7, 2007 data as reported by Ned Davis Research Job growth stopped in August for the first time in four years…Nonfarm payrolls actually shed 4,000 jobs in August. Economists expected a rise of 112,000, resulting in the biggest overestimation by economists in over three years. Additionally, the prior two months were revised down by a large 81,000, showing a more pronounced slowdown in job creation before the August financial turmoil. The unemployment rate remained at 4.6%, matching expectations. Average hourly earnings also matched the consensus, rising 0.3%. In order to reduce the risks to the economy and help stabilize…

October 5, 2007 data as reported by Ned Davis Research. Nonfarm payrolls expanded by 110,000 in September, close to the consensus of 100,000…But the decline that was is no more.  August was revised up to a whopping gain of 89,000 (nearly all from the government sector / public education) from a decrease of 4,000, the biggest upward revision in a year…Additionally, July’s payrolls were revised up by 25,000 to 93,000.  Nevertheless, employment growth has smoothly downshifted from a monthly average of 142,000 in Q1 to 126,000 in Q2 to 97,000 in Q3.  Private payrolls rose by 73,000, a little above…

January 26, 2007 Data as provided by Ned Davis Research Existing Home Sales Slip Existing home sales slipped 0.8% in December to a 6.22 million annual rate, below the consensus for a 0.5% drop to 6.25 million, even though mortgage rates continued to fall. A 2.1% rise in condo sales was more than offset by a 1.3% decline in singles.  Sales were mixed by region, falling sharply in the West (all singles), modestly in the Northeast, but rising in the Midwest and South.  On a y/y basis, the sales decline continued to moderate, rising to -7.9%.  Singles were off 7.2%,…

June 4, 2008 The Fed has dropped interest rates far and fast and that is a very important and effective stimulus for the economy.  However, fortunately or unfortunately, the Fed has a dual mandate.  They must not only contend with economic growth, they must also – at times – battle inflation. Fed Chairman Ben Bernanke recently gave his first speech in two months on the economic outlook and offered some clear signals that the Fed is growing more concerned about inflation expectations.  Considering the Fed’s expectation of a return to U.S. economic growth in the second half of 2008 there…

July 3, 2008 Even though US quarterly GDP has yet to contract and is not set to do so in this (the third) quarter, there is little doubt that the economy is weak. The federal tax rebate checks are doing a good job boosting consumer spending, but the stimulus will fade. A weak employment market will sap consumer spending power. A weak housing market coupled with rising mortgage rates will also suppress consumer spending. The Federal Reserve’s current and significant monetary stimulus should start gaining significant traction this summer (given historical delays).  However, the Fed will soon act to fight…

Sunday, October 19, 2008 Today’s economic reports all point to an economy in recession. Industrial Production Screeches to Halt Industrial production dropped 2.8% in September, the most since December 1974 and well below the consensus for a 0.8% decline, resulting in the biggest overestimation by economists since at least 2002.  Hurricanes Gustav and Ike (which had a 2.25 point impact on production), in addition to a labor strike at Boeing (which curtailed production by 0.5 points), were cited for the dramatic decline.  Revisions were not a factor.  Industrial production is 4.5% below a year ago, the biggest y/y decline since…

Sunday, November 30, 2008 Reports out this morning showed economic activity continues to slow across the country and sectors, from housing to manufacturing to the consumer. New Home Sales Slide To 17-Year Low New home sales fell 5.3% in October to a 433,000 annual rate, the fewest since January 1991.  Economists expected a drop of 3.0% to 450,000.  Additionally, the prior three months were revised slightly lower.  Sales plunged in the West and the South, but rose in the smaller Northeast and Midwest regions.  Sales are down over 40% from a year ago.  In Q3, 17% of all new home…

May 8, 2009   Consumers, businesses, and financial markets are showing signs of improving health. The US recession will end in the second half of 2009. The difference between most recessions and this one has been a dramatic and overwhelming loss of faith in the economy. We are becoming more optimistic on the economy, but we remain cognizant of the strong recessionary forces that remain in place. A full recovery remains long off. The odds have improved that the bear market has hits its bottom and that it will not re-test its March 2009 lows (retesting the November 2008 lows…