September Publication Schedule

The Lehmann Letter (SM) The stock market has reached record highs and GDP grew strongly in the latest quarter. Let’s watch these indicators to observe events in the month ahead. ECONOMIC INDICATOR PUBLICATION SCHEDULE  September 2014  Source (* below)……Series Description……Day & Date  Quarterly Data BLS…Productivity & Costs ….Thu, 4th BEA…International transacs…Wed, 17th BEA……..….GDP ..……..…Fri, 26th BEA……..….Profits ..……..…Fri, 26th Monthly Data ISM..Purchasing managers’ index…Tue, 2nd BEA.New-vehicle sales.(Approximate).Thu, 4th BLS………….Employment…….…   Fri, 5th Fed……. Consumer credit…………Tue, 9th Census………….Inventories…….. Fri, 12th Fed……….Capacity utilization……Mon, 15th BLS…………Producer prices……. Tue, 16th BLS……….Consumer prices.……. Wed, 17th Census………Housing starts…….Thu, 18th NAR………Existing-home sales….Mon, 22nd Census……..New-home sales…… Wed, 24th Census……….Capital goods…….. Continue reading

GDP and Autos

The Lehmann Letter (SM) Autos have traditionally led the economy into and out of recession. That hasn’t been as true over the past 15 years. But this morning’s GDP report from the Bureau of Economic Analysis points out autos’ important role today: http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&903=6 GDP grew by approximately $150 billion in the second quarter, and durable goods were almost one-third of that increase. Not bad for a component that represents less than one-tenth of GDP! (To be fully informed visit http://www.beyourowneconomist.com/) © 2014 Michael B. Lehmann    

S&P Reaches 2000

The Lehmann Letter (SM) Yesterday the S&P 500 closed above 2000 for the first time. Examine the chart and a question becomes evident: Has the stock market broken out of the range it’s been in since the bursting of the dot-com bubble in 2000? That depends on earnings. Stock Market Recessions shaded Trailing (actual, not projected) earnings per share are currently about $100, generating a P/E of approximately 20/1. (P/E = S&P/Earnings: 20 = 2000/100) That also generates another key question: Can earnings continue to climb? (Because it’s not reasonable to expect a P/E significantly higher than 20.) Answer: Earnings Continue reading

Consumer Confidence Edges Toward 100.0

The Lehmann Letter (SM) Consumer Confidence continues to move up toward 100.0: A level that signals households believe normal conditions have returned. This morning The Conference Board reported August Consumer Confidence of 92.4: https://www.conference-board.org/press/pressdetail.cfm?pressid=5264 Consumer Confidence Recessions shaded Here’s the record since the beginning of 2013: 2013 January        58.4 February       68.0 March           61.9 April              69.0 May              74.3 June             82.1 July              81.0 August          81.8 September    80.2 October        72.4 November     72.0 December     77.5 2014 January        79.4 February       78.3 March           83.9 April              81.7 May              82.2 June             86.4 July              90.3 August          92.4 2014 looks good. (To be fully informed visit http://www.beyourowneconomist.com/) © 2014 Michael Continue reading

New Home Sales Continue To Disappoint

The Lehmann Letter (SM) Housing remains the economy’s most disappointing sector: Stuck near the bottom of the trough. The economy can’t fully recover while dragging this anchor. This morning’s report from the Census Bureau provides no relief: http://www.census.gov/construction/nrs/pdf/newressales.pdf Only 412,000 new homes sold in July. Look at the chart. Look at the numbers. See for yourself. New Home Sales Recessions Shaded Here are the seasonally adjusted data at an annual rate: 2013 January        453,000 February       448,000 March           440,000 April              452,000 May              431,000 June             459,000 July              367,000 August          379,000 September    399,000 October        450,000 November     445,000 December     442,000 2014 January        457,000 February       Continue reading

Janet Yellen Speaks

The Lehmann Letter (SM) The Federal Reserve has recently made clear – in no uncertain terms – that there is no simple thermostat that guides – or can guide – the conduct of monetary policy. Federal Reserve Chairwoman Janet Yellen reinforced that view in a speech delivered today: “Labor Market Dynamics and Monetary Policy” http://www.federalreserve.gov/newsevents/speech/yellen20140822a.htm Ms. Yellen carefully sets out the complexity and intricacy of the task confronting the Fed as it attempts to forecast economic conditions in its struggle to stimulate expansion without rekindling inflation. Here are some excerpts: “…monetary policy ultimately must be conducted in a pragmatic manner Continue reading

Are Existing Home Sales Trending Upward?

The Lehmann Letter (SM) On June 24 we carried the identical headline and said the following about a reported uptick in existing home sales: “The cheers become muted when we realize that existing-home sales have fluctuated around 5.0 million for over a year. There was a slight upward trend from last spring to last fall, and then a slight downward trend from last fall into this spring. So we hope this is the beginning of a renewed upward trend.” This morning the National Association of Realtors reported: “Existing-Home Sales Continue to Climb in July” http://www.realtor.org/news-releases/2014/08/existing-home-sales-continue-to-climb-in-july The first paragraph said: “Total Continue reading

Conflicting Views on Homebuilding?

The Lehmann Letter (SM) Yesterday’s letter noted an improvement in residential construction data. Yesterday’s San Francisco Chronicle, in an article credited to the Associated Press, was in sync: “Sales outlook lifts home builders’ confidence” http://digital.olivesoftware.com/Olive/ODE/SanFranciscoChronicle/ But the reader soon discovered that the text of the article was not nearly as positive as the headline. Builders’ confidence is lower than it was at the beginning of the year. “U.S. home builders are feeling more confident in their sales prospects headed into next year, a sign that home construction and sales of newly built homes may pick up after stalling this summer. Continue reading

Housing Starts: Small Improvement

The Lehmann Letter (SM) Ever so slowly this important indicator has been creeping upward. This morning the Census Bureau reported 1.1 million July housing starts at a seasonally adjusted annual rate: http://www.census.gov/construction/nrc/pdf/newresconst.pdf Compare that with the chart and the monthly figures below the chart. Housing Starts Recessions shaded These figures are presented in thousands of homes started, so that 0.9 is shown in its raw form of 896 for 896,000: 2013 January        896 February       951 March           994 April              848 May              915 June             831 July              898 August          885 September    863 October        936 November     1,105 December     1,034 2014 January        897 February       928 Continue reading

Don’t Bet Against the Fed

The Lehmann Letter (SM) The inflation hawks have been forecasting inflation ever since the Federal Reserve began fighting the Great Recession eight years ago. They continue to do so. The Fed’s response? “Not so fast…… Let’s see solid signs that the economy faces strain: Full employment, high capacity utilization and other evidence of the consequences of robust aggregate demand.” So far the Fed has been correct, and it would rather err on the side of robust conditions such as full employment. Today’s Wall Street Journal carries an article by Jon Hilsenrath discussing whether or not the Fed will be able Continue reading