Sunday, June 21, 2020

Leading Economic Index Joins The "V-Shaped" Data Recovery

Last week the Conference Board released their report on the Leading Economic Index (LEI) along with data on the Coincident Economic Index (COI). The LEI rose 2.8% in May after falling 7.5% in March and down 6.1% in April. The report notes the improvement in unemployment insurance claims accounts for about two-thirds of the LEI improvement. With consumers representing a large part of the economy, an improvement in the job market is important. Three of the ten components that go into the LEI calculation are suggesting weaker economic conditions, one being the new orders component. The Coincident Indicator rose 1.1% after falling 2.2% in March and down 10.4% in April. In evaluating the ratio of the LEI to the COI, one can clearly see the "V-shaped" rebound occurring with this data metric. A trend reversal with this ratio tends to occur as the economy looks to be recovering.

Thursday, June 18, 2020

Individual Investors Expressing Equity Market Skepticism

Individual investors continue to express a low level of enthusiasm for stocks if the AAII sentiment survey is any indication. Today's AAII Sentiment Survey report noted individual investor bullish sentiment declined 9.9 percentage points to 24.4% with most of the decline showing up in the bearishness reading which increased 9.7 points to 47.8%. The bull/bear spread now stands at a wide -23.4 percentage points.

Wednesday, June 10, 2020

Market Telegraphing A 'V-Shaped' Economic Recovery?

If one is only looking at the stock market, that is the S&P 500 Index, a 'V-shaped' recovery has unfolded off the March 23 low. Not too many expected this type of recovery as the virus/lockdown induced contraction was underway. However, on a price only basis, the S&P 500 Index is up 43.34% since the low on March 23.

Monday, June 01, 2020

Individuals Save In April With Many Businesses Shutdown

Last Friday's April Personal Income and Outlays report from U.S. Bureau of Economic Analysis reported a significant month over month increase in personal income, up 12.9% and a dramatic increase in savings as a percentage of disposable income, up 33.0%. At the same time the income and outlays report showed a significant decline in personal consumption expenditures (PCE), down 13.2%.