About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Friday, September 05, 2008

Economic & Inflation Indicators

Economy
The weekly leading indicator sets remain in sharp downtrends and
continue to herald an ongoing downturn.

The monthly new orders indicators indicate only mild contraction in
the US and are being heavily supported by a strong export book,
especially in manufactured goods.

The economic power index ( 12 month changes in real wages + total
employment) remains moderately negative but did show some
improvement in August as there was a slight pick up in wage growth
and a deceleration of inflation. The pick up in the EPI is a hopeful sign.
The EPI understated economic purchasing power in recent months
because I did not include the tax rebates, which are now running down
in size.

My "quickie" coincident indicators portray a weak economy -- lower
real wages, retail sales, total employment and production. Averaged
out, the indicators are down 2% yr / yr.

Inflation
The inflation thrust gauge made a cyclical peak in July and is now headed
sharply lower reflecting the large downdraft in the commodites market.
First beneficiaries should be the real wage and consumer confidence. The
deceleration of inflation -- largely commodities driven -- comes in the wake
of a rapid global economic slowdown.

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