The US Conf Board of Leading Economic
Indicators slid -0.4% in March. The LEI have been soft for some time now,
posting a marginal gain in February (0.1 %) and a decline in January (-0.3%).
Note that despite this morning’s decent new claims number, the biggest
negative factor in the index was average weekly initial claims for the month.
Excuse me if I cannot muster much enthusiasm of the "Yeah! There are less
layoffs than before" variety.
Only 2 of the 10 indicators that comprise the leading index were positive
last month: interest rates and manufacturers’ new orders for consumer
goods and materials.
This is not an economy hitting a soft patch; rather, it is a choppy expansion
with fading momentum. Higher energy prices, commodity costs, interest rates and
taxes are not helping; Consumer confidence has faded and Business spending and
hiring is (mostly) MIA.
Lastly, earnings have been very good — but that’s very much expected.
Yesterday’s CNBC poll had 3/4s of viewers expecting earnings to help the market.
That suggests that good earnings are already factored into the market. Note that
the year-over-year earnings gains for the S&P500 — earnings momentum — has
been steadily fading since Q3 2003 (almost 30%) to Q1 2005 (12%). That ain’t
Sorry to be such a ray of sunshine, but I calls ’em as I sees ’em.