Here's a little lesson in basic (and I mean basic) economics. According to the Conference Board (and generally accepted analytical methods), there are 10 leading indicators:
- Average weekly hours, manufacturing
- Average weekly initial claims for unemployment insurance
- Manufacturers’ new orders, consumer goods and materials
- ISM® Index of New Orders
- Manufacturers' new orders, nondefense capital goods excluding aircraft orders
- Building permits, new private housing units
- Stock prices, 500 common stocks
- Leading Credit Index™
- Interest rate spread, 10-year Treasury bonds less federal funds
- Average consumer expectations for business conditions
Anybody see auto sales or commodity prices? Me neither.
So, why are these indicators moving south? If you looked around the web today, you might head over to Bespoke Investment Group, which had this nifty chart of oil inventories:
High inventories lead to lower oil prices, which in turn have dropped over the last few weeks. However, industrial metal prices, which would foreshadow Mr. Hayward's manufacturing weakness, are actually rising:
As for auto sales, let's take a look at the ever useful blog, Calculated Risk, which noted yesterday:
Based on a preliminary estimate from WardsAuto (ex-Jaguar and Porsche), light vehicle sales were at a 17.78 million SAAR in July.
That is up about 2% from July 2015, and up 6.5% from the 16.69 million annual sales rate last month.
CR's post included this chart:
If you look really closely at the chart, you'll see a red line at the far right end. It went up pretty smartly last month, putting a stake in the car sales are turning south meme.
It's gotten to the point where if I see it on Powerline, I know it's 100% wrong.