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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 17, 2010

Economic Indicators

The weekly leading indicators I follow most closely have turned up
over the past few weeks, but further strength is needed ahead before
one could plausibly conclude the economy may be regaining some
momentum. However, up beats down in this case.

Disappointingly, The Fed has again shrunk the monetary base here
in Sep. There is much speculation that the Fed plans to wait until
after the mid-term election in early Nov. to provide another large
dollop of quantitative easing. This speculation has fueled the gold
price for sure. I do not know whether such speculation has any merit.
I do however think a strong round of seasonal liquidity injections
would serve well.

Weekly coincident data suggest the economy has flattened out through
mid - Sep from the latter part of Jul. The ECRI monthly coincident
also declined slightly for Aug., following 8 straight months of progress.
My own "stripped down" set of coincident indicators fared a bit better
in Aug. on gains in employment, production and real retail sales.
However, the clear takeaway is that the economy started to lose
growth momentum in Aug.,with this development coming about 4
months after the leading indicators experienced a cycle-to-date top.

Viewed yr /yr, my coincident indicators were up 2.7%. Momentum
has been decelerating primarily because of a flattening in retail
sales after a strong bounce from 12/08 through 4/10. Consumers
have not only operated on a cash and carry basis in the aggregate, but
have been building savings as well.

Total civilian employment has flattened out in recent months. The
economy did add 1.3 million jobs from 12/09 through 6/10. That is a
big number, but represents only about a recovery of 16.3% of jobs
lost. That large deficit plus a slowdown on the jobs front in recent
months has proven very costly to the Obama administration.

My primary profits indicator did rise in Aug. for the 14th straight
month. Yr / yr, momentum is decelerating, but this is a widely
expected development. Profits have continued to progress nicely
through Aug.

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