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A View from the Summit - April 25, 2018

The Chicago Fed National Activity Index is far from a household name.

  • Its importance—it is an index that encompasses 85 separate monthly economic indicators. It’s a very broad view of U.S. economic activity.

  • Drawback – it’s not forward-looking; it tells us where we’ve been, not where we’re going. The latest report is March.

The numbers—

  • The economy had been growing below its historical average for 22-consecutive months through November 2016 (Chicago Federal Reserve).

  • Twelve of the last 16 months have posted above average growth, including the last six months through March.

Summary—

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Supply and Demand - April 23, 2018

Have you filled up your car at the gas station lately? If you have, you’ve noticed the price of gasoline is ticking higher. As of April 16, the average price across the USA for regular gasoline was $2.75 per gallon, up 23 cents since the beginning of the year (Energy Information Administration). Of course, that is an average, and prices will vary.

Figure 1 highlights that prices are trending higher, and the uptrend goes beyond just the seasonal factors that typically boost prices in the spring.

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Retail sales – not hot, not cold - April 18, 2018

The unemployment rate is at 4.1% (U.S. BLS), consumer confidence is at a level last seen since late 2000 (Conf. Board), and paychecks have been fattened by tax cuts.

We’d expect retail sales to reflect the positive fundamentals. But that has been the case.

December and January were soft; February and March were modest at best, according to retail sales data from the U.S. Census.

  • A rebound in auto sales helped lift retail sales by 0.6% in March, the first positive reading since November.

Weather-related distortions—

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Tug ‘o War - April 16, 2018

We’ve witnessed plenty of stock market volatility lately. The Dow has been up or down more than 200 points (0.83% based on a 24,000 Dow) in 18 of 31 trading days since March 1 (St. Louis Federal Reserve DJIA data thru 4.13.18). However, 9 of the 18 swings have been positive. It’s an illustration of the relatively narrow range the major indexes have traded in.

4 16 18 index

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The Page Turns to Q1 Earnings - April 11, 2018

Q1 earnings season unofficially begins on Friday, with reports from several large banks.

What to expect—

  • The current forecast calls for S&P 500 profit growth of 18.5% (Thomson Reuters 4.10.18).

  • A record number of companies issued positive forecasts for Q1 (FactSet, since it began tracking the data in 2006).

  • Analysts have sharply revised profit forecasts higher (FactSet).

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