LEI for the U.S. increased for the fifth consecutive month in August. Supplier deliveries, the interest rate spread and stock prices made large positive contributions to the index this month, more than offsetting the substantial negative contribution from real money supply. The six month change in the index has picked up to 4.4 percent (about an 8.9 percent annual rate) in the period through August, up sharply from -2.4 percent (a -4.7 percent annual rate) for the previous six months. In addition, the strengths among the leading indicators have been widespread in recent months.It is interesting to see that the money supply is no longer a "wind at the sail" (i.e. it is decreasing).
Source: Conference Board
The problem with the CB's LEI suite is that they presume in their methodologies that the underlying parameters are constant. In this case Velocity has dropped so far that Money Supply is not the indicator it was. Mauldin, Econbrowser and Economist's View all dissect the phenomena.
ReplyDeleteThink where'd we be without quantitative easing, FHA mortgage support (80%)and Fed support for mortgage backed securities.
"Think where'd we be without quantitative easing, FHA mortgage support (80%)and Fed support for mortgage backed securities."
ReplyDeleteRight where we'll be in another year.
Time to turn on the printing presses....pappa wants a new plasma !
ReplyDeleteI think in 1000 years we will look back at this and say what are we doing. Everything is manipulated and we are just all sheep copying one another to die wealthy.
ReplyDelete