10 Updates

Do Economic Reports Mean Nothing This Time Around?

Feb 28 2014, 2:34pm CST | by

Some of the Federal Reserve’s districts compile and release monthly economic reports for their regions. In the last week or two, those reports were that the Fed’s Empire State (NY) Mfg Index plunged...

Filed under: news

 
 
 

20 weeks ago

Do Economic Reports Mean Nothing This Time Around?

Feb 28 2014, 2:34pm CST | by

Some of the Federal Reserve’s districts compile and release monthly economic reports for their regions.

In the last week or two, those reports were that the Fed’s Empire State (NY) Mfg Index plunged from 12.5 in January to 4.5 in February. The Fed’s Philadelphia Region Index plunged from a positive reading of + 9.4 in January to – 6.3 in February. The Dallas Fed’s Mfg Index dropped from 3.8 in January to 0.3 in February. The Richmond Fed’s Index plummeted from +12 in January to -6 in February.

The ISM national Mfg Index plunged from 56.5 in December to 51.3 in January, just barely above the contractionary 50 level. Within the index, the monthly decline in new orders was the largest in 33 years. The Fed’s regional indexes indicate the slowdown accelerated in February.

However, the Fed does not seem to think its indexes are of any importance. It says the economy continues on its recovery track.

Unlike in 2010, 2011, and 2012, the stock market also seems to believe this time around that negative reports are of no importance.

But when Friday morning’s release of the Chicago PMI Mfg Index showed it ticked up imperceptibly from 59.6 in January to 59.8 in February, and although remaining at a two-year low Pending Home Sales ticked up 0.1% in January, the stock market took off.

The Fed also utilizes a major measurement of national business activity, the Chicago Fed’s National Activity Index (CFNAI). It is a composite of 85 selected economic indicators that the Chicago Fed’s website says, “are drawn from four broad categories of national data: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories. Each of these data series measures some aspect of overall macroeconomic activity. . . . The CFNAI provides a gauge of current and future economic activity and inflation in the U.S.”

A composite of 85 individual measurements designed to pull together the individual monthly economic reports. If ever there was an indicator of importance to the Fed that would be it, right?

Apparently not. The index is designed to hover closely around 0, a positive number indicating growth, a negative number indicating economic contraction. The Fed even says if the three-month moving average of the index declines to – 0.70 the economy has slowed so much “it indicates a recession has begun.”

The Fed’s CFNAI collapsed from +0.73 in November to -0.03 in December. The Fed reported this week that it plunged further into negative territory at -0.39 in January.

However, that did not seem to even register in the Fed’s continuing assessment that the economic recovery continues “at a moderate pace.”

Why bother compiling all this data to produce these regional and national indexes if they mean nothing, are even meaningless to the Fed?

The Commerce Department reported on Friday that GDP growth in the fourth quarter was not 3.2% as it originally reported, but only 2.4%. That is a substantial decline from the 4.1% growth of the third quarter.

Meanwhile, if they can be believed, the economic reports for January and February, including the Fed’s own indicators noted above, as well as reports on retail sales, factory output, employment reports, housing reports, and so on, indicate the first two months of the current quarter tracked well below the downwardly revised fourth quarter.

Wall Street firms and major banks continue to slash their forecasts for the economy. They got it right that 4th quarter GDP would be revised down from 3.2% to around 2.5%. Their forecasts for the current quarter, prior to this week’s reports, seemed to range between 1.5% and 1.8%.

In 2010, 2011, and 2012, the Fed rushed in with additional new QE stimulus when economic reports indicated the economic recovery was stumbling. This time around, it seems unperturbed even though its own indexes confirm the negative reports from virtually every corner of the economy.

In 2010, 2011, and 2012 the S&P 500 fell 17%, 19.5%, and 11% respectively when economic reports indicated the economy was stumbling. This time around, investors are not at all nervous. Unperturbed by the reports, the S&P 500, and particularly the Nasdaq, managed only minor pullbacks in January before roaring back to new highs, even as the economic reports worsened./>/>

Is it really different this time? Do economic reports mean nothing this time? The stock market thinks so.

Does the Fed also think so, or is it waiting for the market? In those prior years, it waited until the stock market had declined by double digits before rushing in almost in panic with more massive QE to rescue the economy.

Sy is president of StreetSmartReport.com and editor of the free market blog Street Smart Post . Follow him on twitter @streetsmartpost. He was the Timer Digest #1 Gold Timer for 2012 (Gold Timer of the Year), as well as the #2 Long-Term Stock Market Timer.

Source: Forbes Business

 
Update
10

6 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

Cambodia's Famous Battambang Circus
KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was told today ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

6 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

"GOLDEN ASIA" Tokyo Premiere Press Conference
KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by robber ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

6 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

The Prince Of Wales Visits The Royal International Air Tattoo
KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakyat t ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

6 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammuddin Husse ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

6 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

INDIA-CHINA-DIPLOMACY-TRADE
PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states last month. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

6 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

Government Weekly Cabinet Meeting
KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in compensatio ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

6 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Mo ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

6 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

Iskandar Johor Open - Previews
JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 million ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

6 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

EurAsia Cup presented by DRB-HICOM - Day One
PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Schem ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

6 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) t ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

China's rotten meat scandal spreads to Japan (Roundup)
Beijing/Tokyo, July 22 (IANS) A rotten meat scandal which led several fast food chains to withdraw some of their most popular dishes in China this week spread to Japan Tuesday, as McDonald's announced it had stopped selling fried chicken.
 
 
Study reports worldwide drop in HIV cases
Sydney, July 22 (IANS/EFE) The number of people with HIV has dropped by 18.7 percent since 2012, according to a report made public at the 20th International AIDS Conference being held in Melbourne.
 
 
China seals McDonald's, KFC supplies after scandal
Beijing, July 22 (IANS) Authorities in China have rushed to seal up suspicious meat products in fast food chains, including McDonald's and KFC, after one of their suppliers was accused of selling stale meat.
 
 
Rotten meat scandal in China hits Starbucks
Beijing, July 22 (IANS/EFE) The US coffee chain Starbucks has withdrawn some of its sandwiches from its stores in China following a scandal affecting one of its meat suppliers, Shanghai Husi Food Co., which was shut down by authorities for selling expired meat.
 
 
 

Latest from the Network

'Mary Kom' to have world premiere at TIFF
Toronto, July 22 (IANS) Priyanka Chopra-starrer "Mary Kom", based on boxer M.C Mary Kom, will have its world premiere here at Toronto International Film Festival (TIFF), the organizers announced Tuesday. The 39th...
Read more on Celebrity Balla
 
EU sanctions more entities against Syria
Brussels, July 22 (IANS) The European Union (EU) Tuesday expanded sanctions against Syria over the government's "violent repression" of its civilian population. According to the Council of European Union statement,...
Read more on Politics Balla
 
UN Security Council slams IS for persecuting minorities in Iraq
United Nations, July 22 (IANS) The UN Security Council Tuesday condemned the persecution of minorities in Iraq by the extremist group Islamic State (IS) and warned that such acts may constitute a crime against humanity...
Read more on Politics Balla
 
Adam Levine and wife performed at wedding
Adam Levine and Behati Prinsloo both performed at their wedding reception. The Maroon 5 singer was joined by his bandmates and Fleetwood Mac star Stevie Nicks to serenade guests at Flora Farms in Los Cabos, Mexico, on...
Read more on Celebrity Balla
 
Jada Pinkett Smith wants to help women
Jada Pinkett Smith wants to help rape victims after her niece was recently drugged. The 'Gotham' actress feels grateful that nothing serious happened to her young relative because she was with a ''responsible'' group of...
Read more on Celebrity Balla
 
Emma Stone worries people will leave her money
Emma Stone is worried people will ''f**k with her'' by leaving money around. The 'Magic in the Moonlight' actress recently spoke of her belief her late grandfather leaves her quarters, and is now concerned other people...
Read more on Celebrity Balla
 
Beyonce and Jay Z treat 'On The Run' crew to skating session
Beyonce and Jay Z treated their 'On The Run' crew to a skating session. The singer and her rapper husband are currently touring Canada and the United States as part of their 'On The Run' stadium tour and were feeling...
Read more on Celebrity Balla
 
This $30 spray will make you iPhone or Android phone waterproof
Sony isn’t exactly enjoying smooth sailing in the global smartphone market right now, but it did start an awesome trend. Following the Japanese electronics giant’s lead, a number of smartphone vendors are now focused...
Read more on Apple Balla
 
Gaza toll 609 as US blames Hamas for crisis (Roundup)
Gaza/Jerusalem/Cairo, July 22 (IANS) The relentless Israeli military campaign dubbed Operation Protective Edge targeting the Gaza Strip, which has lasted for more than two weeks, has killed over 600 Palestinians even...
Read more on Politics Balla
 
MH17 victims' bodies reach Ukraine government-controlled city (Roundup)
Donetsk/Kiev/Moscow, July 22 (IANS) A refrigerated train carrying the bodies of Malaysian Airlines flight MH17 crash victims arrived Tuesday in the government-controlled city of Kharkiv in eastern Ukraine as Russia and...
Read more on Politics Balla