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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 !!!

Tuesday, July 16, 2013

US Economic & Profits Indicators

The monthly coincident economic indicator is measured on a yr/yr % basis. It came in
at +1.3% for June for a slight improvement over May ( A CEI reading of +3.0% represents
solid, moderate growth). The sales and production side of the indicator was pretty fair,
but the income side -- real take home pay and 12 month % change in civilian jobs --
was negative reflecting higher taxes on wages plus the effect of somewhat faster inflation.
My weekly CEI, a conservative measure, was up by about 1% yr/yr. To maintain a moderate
level of consumer spending, householders are having to borrow more and dip into savings
because wage rates remain rather low. Retail sales have held up reasonably well despite
the income pressures on households.

Consumer discretionary spending stocks are now overbought relative to the broader
market, but continue in a leadership role. XLY Relative Strength

My primary top line or sales growth indicator for business improved in Jun., but averaged
only 3.3% for the second quarter. With sluggish growth overseas and a stronger US $, it
would be fortunate if corporate sales growth came in at 3.0% overall for the quarter. My
price / cost ratio has been improving in recent months, but there is still mild pressure on
profit margins. Business sector output growth and pricing power remain subpar in this
challenging economic environment.

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