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
good either.
Sorry to be such a ray of sunshine, but I calls ’em as I sees ’em.
LEI should stand for Lagging Economic Indicators…the undercurrents for a strong 2nd half are there, thats what you see perculating….the riptide is the effect of high energy costs and the margin squeeze…thats why the reports are all conflicting…separate the wheat from the chaff and read between the lines.
http://naybob.blogspot.com/2005/04/perception-is-not-reality-money-is.html