International Economic Week In Review: The Non-Threat of Inflation Continues

Last week, the biggest news was the continued lack of global inflationary pressures.  The US’ core PPI was 1.4% Y/Y while the core CPI printed at 1.7% for the same period.  Germany’s WPI was .4% M/M, Italy’s was .2% M/M and .7% Y/Y while Spain’s was .3% Y/Y.  UK inflation dropped a bit, with core CPI coming in at 1.7% Y/Y and core PPI coming in at 1% Y/Y.  The sum total of all this news is central banks in the US, EU and UK have nothing to worry about from inflationary pressures.  Should each bank want to continue their policy of low interest rates, they certainly can.

More over at XE.com

Weekly Indicators for January 13 - 17 at XE.com

 - by New Deal democrat

Weekly Indicators are up over at XE.com.

Remember the polar vortex from last week?  It seems to have kept consumers indoors and freight from moving.

December housing permits and starts: least improvement in almost 3 years

 - by New Deal democrat


I discuss this morning's report on housing permits and starts over at XE.com.

Both of these series continue their deceleration and are on the verge of turning negative YoY.

Housing: the last time low interest rates got 'less low,' it wasn't 'different this time'

 - by New Deal democrat

Two  signifiant arguments contra my contention that housing demand will actually decrease at least for awhile YoY this year are that (1) there is a lot of pent-up demand, and (2) interest rates at 3% are still low so there shouldn't be that much of a reaction.

Fair points.  But this isn't the first time that there has been pent-up demand for housing in an era of low interest rates.  While the statistical series aren't identical, they clearly show that there was a huge housing bust during the Great Depresssion, that lasted through World War 2.  Then all the GI's came home in 1945 and got busy making babies. Boom!

And interest rates were low throughout the 1940's and 1950's, rising to no more than 3% until about 1957.  While the 10 year or 30 year treasury bond series doesn't go back that far, the archival series "long term US government securities" does:



Note the series LTGOVTBD overlaps with the 10 year treasury series during the 1960's.  Here's the comparison of YoY% changes in each, to show how closely they correspond:



Similarly, the series "nonfarm housing starts" began in 1946 and ended in 1969.  Here is the YoY% change in each during their period of overlap in the 1960's:



Now that we've established that the late 1940's and 1950's, like the present, were an era of pent-up demand with low interest rates, and we have two data series that will show us the correlation between changes in interest rates and housing starts, let's plot their YoY% change on a quarterly basis from 1946 through 1962 (I've already covered 1963 to the present):



The argument against my bearishness is that minor changes in interest rates won't result in major changes in housing demand.  But in the post-WW2 suburban Baby Boom era, far from being muted, the changes were magnified.  A change of as little as 0.2% in interest rates was associated with changes of 200,000 or more in housing starts. On 5 of the  6 occasions from 1946 through 1962 that interest rates increased YoY, housing starts fell YoY, in each case by at least 100,000 units annualized (even in 1962, several months were negative YoY, although no quarter was).

Previously I've shown that on 12 of 15 occasions since 1962 when interest rates have gone up by 1% YoY, housing permits have fallen by -100,000 or more.  This data makes the total 17 of 21 times over almost 70 years, and even with interest rates rising by less than 1%.

So, could it be different this time?  Certainly.

But what we can say is that the last time, like this time, that it was "different this time" because of pent-up demand and low interest rates,  it turned out that it actually wasn't "different this time."

Population adjusted initial jobless claims and the unemployment rate: an update

 - by New Deal democrat

Occasionally over the last few years I have remarked upon the usually tight relationship between population-adjusted initial jobless claims and the unemployment rate. Overall the unemployment rate tends to follow the trend in the population-adjusted initial jobless claims with about a 6 to 12 month lag:



Thus, while we can quarrel about the reasons, the fact that the unemployment rate has continued to drop sharply over the last year, following the trend in initial claims, was not unexpected.

With initial claims near historical lows as a share of population, the issue becomes whetherr the unemployment rate can fall much below 6%, or whether the gap that opened up in 2009 will ultimately be closed.

I anticipate that the unemployment rate will continue to fall, perhaps at a somewhat slower rate, to about 6%, but have a very difficult time declining meaningfully below that level.

There is no "falling rate of personal consumption growth"

 - by New Deal democrat

Yesterday the blog "Capital Spectator" featured a post entitled Is the falling rate of personal consumption growth a new risk factor? featuring this graph of the YoY% change in real personal income:




The blog is a good and respectable source of information, but in this case, I think they made a mistake.  The entire "decline" for 2013 is contained in last month's data, and there's a very good reason why that happened.

Here's a bar graph of the monthly percentage change for the very same data:



Notice the huge spike upward in November and December 2012, and similar spike downward in January 2013.  That's because of moving taxable income forward from 2012 to 2013 due to the higher tax rates that were anticipated due to the "fiscal cliff" expiration of the Bush tax cuts  at the end of 2012.

So the November 2013 - January 2014 YoY comparisons now will be between "regular" monthly changes now vs. the very volatile changes of one year ago.

When we back out the months of tax law timing, here is the YoY% comparisons we get:



Flat.  There is no "falling rate of personal consumption growth."  Not that Zero Hedge won't have an article trumpeting the alleged downturn when the December comparisons come out at the end of this month.  Or that they won't be completely silent about YoY January comparisons too.

The relationship between interest rates and stock prices has changed

  - by New Deal democrat 

The correlation between stock prices and interest rates has completely changed for the last 15 years, compared with the previous 40 years.  I have a new post up at XE.com explaining how and why.

USD/JPY Tops Out For Now

This is up over at XE.com

The state of the consumer: "I'm not dead yet!"

  - by  New Deal democrat

Like the character in the "Bring out your dead!" Monty Python skit, the American consumer keeps protesting that s/he isn't dead yet.

So why, given wages that are several percent below their 2010 peak, do consumers keep spending?

Let's go back to the paradigm for the American consumer that I first set forth 6 years ago.  In order to increase spending, the American consumer must either:

• have a wage increase
• be able to refinance debt at lower rates, thus freeing up cash
• be able to cash in an appreciating asset

Let's look at each in turn.  First of all, while inflation adjusted wages have been overall flat for the last 5 years, there has been a tick up of several percent since the late 2012 bottom:



On the other hand, as shown in this graph from Mortgage News Daily, the increase in interest rates has well and truly killed refinancing:



Finally, here is a graph of Americans' total net household worth, via Doug Short:



Why has household net worth almost completely rebounded?  Mainly because of increasing house values, as shown in this graph of the Case Shiller index:



Secondly, more affluent households who rode out the downturn in the markets during the Great Recession are seeing their 401k balances completely recover along with stock prices, as shown in this graph of the S&P 500:



We know that there is a wealth effect, and for now the wealth effect is picking up where debt refinancing left off.

As an aside, here is the graph of those "Not in the Labor Force, Want a Job Now" I ran on Friday:



Notice the spike downward in the last 6 months.  I do not think it is coincidental that it mirrors the graph of household worth above.  The Altnata Fed has reported that in the last couple of years the percentage of those leaving the workforce due to retirements has increased, and I suspect that the recent spike in net worth has caused a stampede of Boomers for the exits.

International Week in Review: US Payroll Shocker Edition

This is over at XE.com

A thought for Sunday: when it comes to inequality of opportunity, yes there IS something wrong with the Pareto principle

 - by New Deal democrat

 Prof. Brad DeLong reposts an essay on inequality of opportunity from Angus Deaton:

Even if we believe that equality of opportunity is what we want, and don't care about inequality of outcomes, the two tend to go together, which suggests that inequality itself is a barrier to equal opportunity.

What about envy of the rich? Economists have a strong attachment to something called the Pareto principle ...: If some people are made better off and no one is made worse off, the world is a better place. Envy should not be counted....

.... 

To worry about these consequences of extreme inequality has nothing to do with being envious of the rich and everything to do with the fear that rapidly growing top incomes are a threat to the wellbeing of everyone else.

There is nothing wrong with the Pareto principle, and we should not be concerned over other' good fortune if it brings no harm to us....

I beg to differ.  The Pareto principle is an extremely conservative restriction that entrenches existing inequalities of power and wealth in place, virtually in perpetuity.

Let me explain.  Below is a graph taken from a recent Harvard and Duke study, in which they asked Americans what they thought the existing distribution of wealth is, and what they think it should be, comparing those with the actual distribution of wealth:



Americans think the top 20% owns about 55% of the wealth. They think a fair distribution would be for the top 20% to own 33% of the wealth.  In fact, the top 20% owns about 82% of all the wealth in the US, and the bottom 60% own only 4% of the wealth (and the breakdown only gets more lopsided when we consider the top 5%, top 0.5%, and top 0.05%).

So, let us say that we democratically as a society decide that equality of opportunity should result in our fair wealth distribution as described above, and so we enact frictionless and fair policies, consistent with the Pareto principle, to move to the wealth distribution that Americans say would be fair now. How long would it take to get there? When would we arrive?

The answer is:  never.

Under the Pareto principle, we cannot redistribute existing wealth, since doing so would make those from whom it is redistributed worse off.

We can try to get around this two ways:  the first is, we only pass policies to ensure that future economic growth winds up being allocated, after taxes, in the distribution we have chosen as fair, or some facsimile thereof.

So we arrange our tax and other public policies to assure that not a cent of existing wealth is redistributed, but future growth winds up adding 33% of the total to the top 20%.  Yes, I know we are talking unicorns and rainbows, but here's the point:  even if we could do that, even if we did it for 10, or 20, or 50, or 100 years, or forever, we would never arrive at the wealth distribution we believe is fair.  The top 20% would always have 33% of the wealth accumulated since now, and more than 33% of the pre-existing wealth.  Thus, out into infinity, they would always have more than 33% of the total wealth. (Yes, I know what I've just written is a vast oversimplification blah blah blah. Note to economists: just consider it a "model," and then it's all good.)

The only way to get to 33% via future policies is to ensure that, for some period of time, the top 20% accumulate less than 33% of the new wealth, which we already have agreed is unfair, since we have agreed that they should have 33% of the wealth.

Needless to say, if our policies are far more incremental, which is of course far more likely, then we never even get close.

But wait, you say, people die. We simply change our estate tax laws to approximate what they were back in the 1930s, and prevent the transfer of $Billions to succeeding generations of heirs.  There are several problems with this.  The first is that, depending on how the tax laws are written, it will take decades to lifetimes to come to fruition.  The second is the objection that existing plutocrats derive pleasure from the fact that they can dispose of their wealth, upon their death, as they see fit,  and if that means ensuring that their heirs out unto the generations remain among the plutocrats, that is their right.  If we interfere with that, we are making them very sad.  The Pareto principle is violated.

The bottom line is, any choice by society to enact policies to move away from an existing distribution of wealth - even, let me emphasize, unearned, inherited wealth - violates the Pareto principle.

If Prof. Garcia's and DeLong's critique of inequality is correct, then surely it should not take a lifetime of resolute effort to approach a fairer result, and in fact the Pareto principle does not even permit that. The Pareto principle entrenches plutocracy.

So, I am sorry, Professors, but when it comes to entrenched inequality, there IS a problem
with the Pareto principle.

UPDATE; Just to be clear that this is not just about envying wealth, let's consider in our land of unicorns and rainbows that we have had a Rawlsian conference in which we have agreed to relentlessly enforce equality of opportunity.  We then have a 10,000 year test run in which we reord the resulting distribution of wealth, which I'll call summation X.

We now go back into real history where we already have not had equality of opportunity, and we have any existing, different distribution of wealth.  The Pareto priniple forbids us from ever arriving at summation X.  A certain amount of wealth and assets can never be owned by those who should otherwise own them by dint of their efforts under conditions of equality of opporltunity. Why should we give our allegiance to such a principle?

======

P.S.: My primary solution to the above is to ignore the claimed utility as to heirs not yet in existence.  I have no problem with Bill Gates or Henry Ford passing on their wealth, minus a reasonable tax rate, to their children or grandchildren.  But by the time we get to great great grandchildren, inherited wealth should be taxed at confiscatory rates, e.g.,90%.  I would only apply this to that portion of wealth that is inherited.  If granddad leaves me $100 million, and by dint of acumen and industry I turn that into $1 Billion (after inflation) by the time of my death, only the inherited portion, i.e., the first $100 million, should be subject to the confiscatory rates.

Weekly Indicators for January 6 - 10 at XE.com

  - by New Deal democrat

This week's edition of Weekly Indicators is up at XE.com.

Real M2 continues to decelerate, and could turn into a negative indicator within the next several months. Consumer spending has also softened, although the Oil choke collar remains disengaged.

Unemployed and underemployed but want a job now

  - by New Deal democrat

Here is the measure of people who aren't in the labor force because they aren't looking for a job, but say they "want a job now" (red) added to the unemployment rate (blue) and also (orange) added to the underemployment rate (green), current through this morning's employment report for December 2013:



I believe this a far more accurate way to look at the issue, as compared with EPI's "missing workers" estimate.

The numbers aren't pretty now, but note that they also weren't very pretty even before the recession.

BIG Employment Miss

From the BLS:

The unemployment rate declined from 7.0 percent to 6.7 percent in  December, while total nonfarm payroll employment edged up (+74,000),  the U.S. Bureau of Labor Statistics reported today. Employment rose  in retail trade and wholesale trade but was down in information.

This is in comparison to the AP job report that printed at 238,000.

Looking at the details, we see some very large holes in the jobs data.

Retail +55,000 (Remember, the data is seasonally adjusted, so this takes the holiday hiring season into account).

Professional employment increased 19,000 in comparison to a 2013 monthly average of 53,000

Other categories growth was equally paltry.

Also consider the following hours worked data:

The average workweek for all employees on private nonfarm payrolls edged  down by 0.1 hour to 34.4 hours in December. The manufacturing workweek  was unchanged, at 41.0 hours, and factory overtime edged up by 0.1 hour  to 3.5 hours. The average workweek for production and nonsupervisory  employees on private nonfarm payrolls edged down by 0.1 hour to 33.6 hours.

Finally, there is the issue of the drop in the unemployment rate, which went from 7%-6.7%.  The reason is the drop in the civilian labor force from 155,284,000 to 154,937,000.  Put another way, expect to hear more about "people running from the US labor market."

A final caveat from Bonddad: I've grown to give this monthly data point release less and less importance, instead focusing on the broader employment picture -- which is still miserable.  However, from a practical side, this data point will move the markets because of the size of the miss and the fact it contradicts the "US economy is getting stronger" narrative we've been seeing over the last few months.

Why I think EPI's "missing workers" claim is wrong, and maybe close to impossible

 - by New Deal democrat

[Update: graphs and links now added.]

Today we will get the final employment report for 2013, and the alternative claims are already starting.  For example, yesterday Naked Capitalsim is claiming that people over 65 are working more because they can't retire.  Even though almost every aging Boomer will tell you that they'd like to work part time after 65 to keep mentally active and socially involved.  And those who stayed the course with their 401k's since 2008 have more worth in them now than before the recession.  And elderly life expectancy has improved dramatically in the last 30 years.

But the real issues are wages and the unemployment rate among working age adults.

Let me start by saying that the current rate remains unacceptably high, and Washington should have done far more (like a new WPA for infrastructure repairs, like Bonddad and I suggested four years ago!).  But that doesn't excuse faulty methodology in service to a good cause.

And that's what brings me to the Economic Policy Institute's "missing workers" report", which claims to measure the "real" unemployment rate.This was introduced a few months ago, and has gotten a lot of attention on progressive blogs since.  It purports to show that the number of "missing workers" who want a job but have dropped out of the labor force, has continued to increase, to as high as 6 million a few months ago.  Unlike virtually every other measure of the unemployment rate, it has shown virtually no improvement in the last 3 years, as shown in their accompanying graph:



There are at least 2 major problems with their methodology.  First of all, as I already described several weeks ago, the Census Bureau asks a question in the Household Survey each month designed to elicit exactly what the EPI says it is measuring; namely, those who are "Not in [the] Labor Force, [but] Want [a] Job Now," or series "NILFWJN."  Even in the best of times, about 4.6 million people tell the Census Bureau that they fall into that category, as shown in the graph below where I have subtracted that number to norm it to approximately zero in 2006 and 2007, the same average number as the EPI graph [updated with this morning's information]:



Both series follow a similar trajectory through 2011, but the official Census Bureaur data never shows an increase of more than 2.4 million, and declined to 1.2 million in November, whereas EPI shows a total of 6 million in October of this year.

The second problem with the EPI's methodology is that it makes use of the less accurate, more erratic employment number from the Household Survey, rather than the Nonfarm Payrolls employment number from the BLS, which has a much larger sample size.  The issue here is that, since January 2012, the payrolls report shows that almost 4 million jobs have been added to the economy.  The Household survey, however, shows only 2.8 million jobs added, a deficit of 1.2 million jobs.

Almost everyone concedes that the nonfarm payrolls employment number is more accurate.  Further, most economists expect the more erratic Household Survey number of employed to resolve closer to the trend in the Payrolls report.  Ordinarily, that's not a problem.

But because the EPI's "missing workers" methodology compares job growth against a target (projected civilian labor force from 2006), EPI essentially makes that entire 1.2 million difference part of the enhanced unemployment figure.  To cut to the chase, if the EPI's report made use of the nonfarm payrolls number for employment, their alternate unemployment measure would have fallen by about an additional 1% in the last couple of years, and would be following a similar downward trajectory as virtually every other measure of unemployment.

In fact, if the nonfarm payrolls reports are accurate, then EPI's measure becomes virtually impossible.  That's because, as shown in blue in the graph below, the population increase for those age 16 and over since the beginning of 2010, the bottom for employment in the Great Recession, is about 8 million.  The Payrolls report shows 7 million jobs added, or about 87.5% of the entire working age population increase.

For so long as the statistics have been kept, the biggest percentage of the population age 16 and over that has been employed is about 64.5%, which applied to 8 million is 5.2 million:



In other words,  even under the most pessimistic scenario that can be concocted using the nonfarm payrolls number, the entire working age population plus about 2.0 million people have found jobs in the last 4 years, and 92% of the 4.3 million growth sonce January 2012, or about 1.2 million more thn the most pessimistic employment to populatioin reading. that is a -0.8% decline in the unemployment rate even before we take into account retiring Boomers, just in the last 22 months.  But the EPI measure only reigsters a decline of -0.3%, including retiring Boomers.

Put another way, if the nonfarm payrolls numbers have been correct, the number of total unemployed including those so discouraged they stopped looking for owrk should have decreased by several million since the beginning of 2012..  And yet the EPI measure has the total number of missing unemployed workers rises almost relentlessly throughout that period, almost completely offsetting the number of officially unemployed workers.  That's not just wrong, if the nonfarm payrolls report is correct, it's impossible.

Maybe EPI has good explanations for these issues.  But without more, it is difficult to see why we shouldn't just accept the official Census Bureau report of those who say they aren't looking (and so aren't in the labor force), but want a job now.  The number will be updated later this morning, and I'll have an updated graph that includes that measure for both the U-3 and U-6 (part time and marginally attached workers) metrics.

A rare stock market forecast for 2014

  - by New Deal democrat

I have a new post up at XE.com, commenting on recent speculation about a stock market crash vs. a pullback due to valuations in 2014, based on YoY corporate profits in 2013.

2014 forecast: a year of deceleration

  - by  New Deal democrat

My method of foecasting is pretty simple. In fact, so simple, I call it the K.I.S.S. method. Even though the LEI is the statistic most denigrated by Wall Street forecasters, it has the inconvenient habit of being right more often than the highly-paid punditocracy, especially at turning points.

Since I'm not a highly paid Wall Street pundit, I simply rely upon the LEI for the short term, and the yield curve for the longer term with the caveat of watching out for deflation. The simple fact is, with one exception, if real M1, and real M2 (less 2.5%), are positive, and the yield curve 12 months ago was positive, the economy has always been in expansion. When real money supply is negative, and the yield curve was inverted 12 months ago, the economy has always been in contraction. The exception is that the yield curve does not help to project the economy 12-16 months later if the economy at that later date is in deflation - as it was in 1930-32 and late 2008 and early 2009.

In the few years I have also learned a lot about the methods of the late Prof. Geoffrey Moore, the founder of ECRI, so I also intergrate his findings about short and long leading indicators into my forecast. 

This year the forecast methods are consistent for the first 6 months:  growth will continue.  It is in the last half of the year, and particularly in the 4^th quarter, that there is more difficulty.

First of all, let’s look at two overlapping but different forecast algorithms with a time frame of approximately 6 months ahead:  the Conference Board’s Index of Leading Indicators, and ECRI’s Weekly Leading Index.

Here is a graph of the LEI via Briefing.com

And here is ECRI’s WLI via Doug Short:

Both of these are forecasting continued growth over the next 6 months.  In fact, the LEI has actually picked up strength in the last several months.

One big difference between the two measures is that the LEI uses housing permits and starts (actually a long indicator) as a component, while the WLI uses the Mortgage Bankers’ Association’s purchase mortgage application index as a component.  After sideways movement for most of the year, housing permits unexpectedly rose strongly in October, and maintained that level in November.  On the other hand, purchase mortgage activity has made new post-recession lows due to the increases in interest rates.

One other item worth noting is that there does not appear to be any big surge in gas prices (outside of the seasonal norm) forecast, so inflation should be kept in check, so there should be no “oil price shock” to the economy.  Also, it appears that Washington plans on leaving the economy alone this year, so there will not be any new drag from austerity or, one hopes, from a refusal to pay the bills already incurred.

But the LEI and the WLI do not forecast more than about 8 months out.  For that we need to look at the long leading indicators.  There are two separate ways I look at this.  First, when the yield curve and real money supply as measured by M1 and M2 are positive (+2.5% in the case of M2), the economy has always expanded one year later (provided there is no deflation), including during the pre-WW2 era that may be more applicable to today’s economy.  By contrast, when both measures are negative, a recession has always ensued.

First of all, here is the yield curve, as measured by 10 year treasury rates minus 6 month treasury rates:

Note that these reliably inverted (i.e., the result was negative) a year or more before the onset of each of the last three recessions (and the same is true of prior post-WW2 recessions).  As you can easily see, the yield curve has steepened considerably in the last 8 months, entirely due to the increase in yields for the 10 year Treasury note.  Provided we do not expect deflation in the final part of this year, this should mean clear sailing.

Now let’s take a look at the 4 long leading indicators identified by Professor Geoffrey Moore and at least until recently, the components of ECRI’s “long leading index.”  These are:  corporate bond yields, inverted (blue), housing permits (red), corporate profits (green), and Real M2 (orange):

Three of the 4 of thee indicators are absolutely positive, but at the same time all 4 have decelerated, as highlighted in this next graph, which measures the YoY% change in the same items:

Interest rates for corporate bonds have increased, meaning that indicator has turned negative.  If present trends continue, and based on the last 50 years of history, the odds are extremely good that they will, housing permits will turn negative at some point in the first half of this year.  Similarly, if their current trend continues, real M2 will also fall below +2.5% (although I emphasize that I have no data helpful as to whether M2 will or won’t).  Corporate profits are a total question mark, although we will begin to get an answer as Q4 earnings are reported over the next month or so.

Finally, here is a look at Real M1:

This too has been decelerating, although it remains very positive.

In conclusion, unless we expect deflation (and right now I don’t), there is every reason to view the long leading indicators, under either method, as being in agreement that the economic expansion will continue through the end of 2014.

On the other hand, the deceleration of most of the indicators, and also the deceleration of the WLI, cause me to believe that the second half will be considerably weaker than the first half.  If the long leading indicators turn negative quickly enough and significantly enough, it is possible that we could enter into a recession in Q4.  Before ruling that out, I want to see how 2013 Q4 corporate profits play out, as well as the next couple of months of housing and money supply data.  But subject to that caveat – that there are mounting reasons to be concerned about 2015 – I look for continued positive readings in employment, wages, industrial production, and GDP through the year.

I can’t help noting that my contrast for decelerating growth is at odds with that of many luminaries, including Paul Krugman, Bill McBride a/k/a Calculated Risk, Muhammed el-Arian of PIMCO, and Menzie Chinn of Econbrowser.  Morgan Stanley went so far as to call the economy “ready for launch.”

My critique of these optimistic calls is what I laid out at the outset of this article:  all of these forecasts, to a greater or lesser extent, engage in coincident-trend-following.  Morgan Stanley’s note, for example, cites the coincident indicator of freight transportation, as well as the short leading indicators of the ISM survey and capex spending.  Several others take similar tacks. 

And although I have great respect for both Bill McBride and, of course, Krgthulu, both of them rely on an acceleration of the housing recovery.  For example, Krugman says, “housing is still moving forward.” 

I always caution against using the present progressive tense without extreme care when it comes to economic data.  What we know is that housing permits and starts made new highs in October, although permits pulled back slightly in November.  We also know that the trend in 2013 was of decelerating growth, as I’ve set forth above.  And nearly every other measure of housing, except for prices, has taken it on the chin.  In addition to purchase mortgage applications, pending sales just went negative YoY.

So, just as I was an outlier to the chorus of Doom beginning at the end of April 2009, I am afraid I am going to have to withhold my cheers now.  My forecast is that 2014 will be a year of decelerating growth.

Upper 90s-100 Area Still Tough on Oil Prices

With the exception of the summer driving season (roughly late May - late September), oil prices have met with still resistance in the upper 1990s/100 price area.

International Week in Review

Last week, the big news was from the manufacturing sector, which was the primary driver of most market activity.  Here's a link.

Weekly Indicators for Dec.30 - Jan. 2 at XE.com

  - by New Deal democrat

My Weekly Indicators column is up at XE.com.  The coincident data looks good, but deceleration in the long leading indicators shows signs of spreading to short leading indicators.