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Friday, October 26, 2012

Recent. economic data

There are a few new pieces of economic data to review.  Lets start with durable goods.


Clearly durable goods have not done well for a few months.  This continues to have a recession like look to me.  It is very different then in last year's recession scare or any other time since 2009.  Unless it rebounds very soon, manufacturers might have to start laying people off.

Here is a chart of the CFNAI, kind on an interesting index.


This index has clearly gotten down to levels that have been associated with recessions.  However, there have been a few occurrences that did coincide with recessions.  Much lower then where we are at and it will get pretty tough to argue we are not in or very near a recession.

I thought this was an interesting chart on the housing market.


All the housing starts have not translated into more employment yet.  That may be explained by this next chart.

Starting in Nov. of last year there was a big jump in the seasonal adjustments applied to the data.  The adjustments all year have been higher then they were from 2009-2011.  Is there really a recovery in the building of new homes or not?  Were construction workers getting paid to sit on their hands so they would be around and ready to build more houses when the market recovered?  I guess you can decide for yourself how real the housing recovery is.

Morgan Stanley has a proprietary indicator that has a bit of a scary chart.


This is the lowest this index has been since the last recession.  This is another indicator that is much worse now then during the recession scare last year.  Is the job market about to start turning down again?

It is interesting to watch the pundits on TV grab on to any positive data they can find and ignore the many pieces of negative data out.  I cannot find any real sign of a turn up in economic activity.  There are several signs that indicate things may be about to get worse faster.

Recently I am starting to hear people get excited again about China.  Yes I am sure there is a pickup in activity and I am pretty sure I know why.  It is simply AAPL.  They have to make millions of their new products ahead of the release date to satisfy their customers.  They are all made in China.  The old products are still being made so there is an overlap of production.  This certainly causes a surge in the data, LOL.  In a short time AAPL had multiple new products released.  Going forward the old products will taper off and production of the new products will settle down to the levels needed to meet demand.  I suspect the surge in China will be short lived.


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