Consumer Confidence Stumbles

The Lehmann Letter (SM) Consumer Confidence dropped in September after rising four consecutive months. This morning The Conference Board reported September Consumer Confidence fell to 86.0 from a revised 93.4 in August: Too bad. As you can see from the chart and table it appeared to be rising toward 100. Consumer Confidence Recessions shaded Here’s the record since the beginning of 2013 (1985 = 100.0): 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 Continue reading

S&P P/E Flirts With 20/1

The Lehmann Letter (SM) The stock market was down at the opening this morning, but remains near record highs. See E. S. Browning’s article in this morning’s Wall Street Journal for an excellent discussion of the outlook: “Expect More Volatility With Stocks Priced Near Perfection” Mr. Browning discusses valuations and begins as follows: “One reason stocks were so troubled last week is that they are getting closer to what Wall Street, in its inimitable slang, calls being “priced for perfection.” “Priced for perfection, unfortunately, doesn’t mean attractive. It means that stock prices are so high that gains depend on Continue reading

GDP Up by 4.6%

The Lehmann Letter (SM) The Bureau of Economic Analysis released its third monthly estimate for this quarter’s GDP: Up by 4.6%. Households’ durable goods purchases (think autos) remain the champ among GDP’s components: Up by 14.1%. (To be fully informed visit © 2014 Michael B. Lehmann      

Business Equipment’s Gradual Improvement

The Lehmann Letter (SM) New Orders for Nondefense Capital Goods Excluding Aircraft is a good leading indicator for business capital expenditures because it omits the volatile aviation industry. The chart reveals recent growth past previous peaks. New Orders for Nondefense Capital Goods Excluding Aircraft (Recessions shaded) Today’s Census Bureau announcement of $73.2 billion in new orders for August puts matters in context: New Orders for Nondefense Capital Goods Excluding Aircraft in $Billions 2013 January        70.1 February       66.3 March           65.8 April              67.5 May              68.0 June             69.1 July              67.1 August          68.1 September    66.8 October        65.8 November     69.7 December     69.1 2014 January        Continue reading

New Home Sales Bust Loose

The Lehmann Letter (SM) New home sales soared past half a million in August. This morning the Census Bureau reported 504,000 new homes sold: 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       432,000 March           403,000 April              413,000 May              454,000 June             422,000 July              412,000 August          504,000 The latest figures are impressive. Let’s hope they hold. (To be fully informed visit © 2014 Michael Continue reading

Are Household Balance Sheets Back?

The Lehmann Letter (SM) The Federal Reserve reports quarterly on household (and other) balance sheets, and household balance sheets have recovered strongly since the Great Recession. Two newspaper articles illustrate the many ways one can examine the data. On September 19 (posted the day before) Neil Shah reported in The Wall Street Journal: “U.S. Household Wealth Hits Fresh Record” Households’ stock-market portfolio is up and household debt has remained flat overall (although remixed). As a result: “Americans’ combined wealth posted a new high in the second quarter, allowing consumers to ramp up borrowing—a development that could put the economy Continue reading

Home in the Range?

The Lehmann Letter (SM) That title is a dreadful play on words, but look at the chart and data. It appears that existing-home sales are fluctuating in a range and showing no upward trend. Existing Home Sales Recessions shaded Existing home sales in millions: 2013 March           4.96 April              4.99 May              5.15 June             5.16 July              5.38 August          5.33 September    5.26 October        5.13 November     4.83 December     4.87 2014 January        4.62 February       4.60 March           4.59 April              4.66 May              4.89 June             5.03 July              5.14 August          5.05 This morning the National Association of Realtors’ headline said: “Existing-Home Sales Slightly Lose Momentum in August as Investor Continue reading

The Fed’s Transparent Policy

The Lehmann Letter (SM) Yesterday’s letter summarized the Federal Reserve’s decision to maintain an expansionary policy in the near term. You should also read Neil Irwin’s article in yesterday’s New York Times, posted on the 17th: “The Fed Is Boring Again. That’s a Relief.” Mr. Irwin pointed out that the crisis is over and the Fed is taking care of business in a matter-of-fact and transparent way. As he said: “…the big questions of Fed policy have mostly been answered, all the more so after this week’s meeting of the Federal Open Market Committee and the news conference on Continue reading

Fed Reaffirms Bias Toward Expansion

The Lehmann Letter (SM) Yesterday’s announcement by the Federal Reserve left no doubt that its expansionary policy remains in place. The Fed will not pursue a restrictive, i.e. raising interest rates, policy now or in the near future. The Fed will stimulate aggregate demand with low interest rates as long as inflation remains low and unemployment remains high. You can see for yourself: Two significant paragraphs: “…To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate…The Committee continues to anticipate… that it likely Continue reading

No Inflation

The Lehmann Letter (SM) This morning the Bureau of Labor Statistics reported a 0.2% decline in consumer prices for August: That’s a drop of roughly 2.4% at a seasonally adjusted annual rate. Where’s the inflation that some fear? Yesterday this letter stated that the economy has considerable slack: Low capacity utilization. There are few forces pushing prices upward. That’s because aggregate demand has grown slowly and not pulled the economy into the danger zone where prices rise swiftly. This afternoon the Federal Reserve announces its view of events. Chances are the Fed will not see inflation as an immediate Continue reading