Disclaimer

Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. These days I'm retired, and I can't by law give you advice. While I do make mistakes, I try hard to do my analysis thoroughly, and to make sure my data are correct (old habits die hard!) Also, don't ask me why I called it "Volewica". It's too late, now.

BTW, clicking on most charts will produce the original-sized, i.e., bigger version.

Tuesday, June 19, 2018

US advance indicators level off a tad

The US has a number of regional Fed surveys, plus the national ISM (formerly the NAPM) and the PMI surveys.  These come out early in the month and are well correlated with the economic cycle.  The thick green lines shows the average (for manufacturing) for the ISM and the PMI surveys, the blue dotted line shows the ISM alone and the red dashed line the PMI alone.  No signs of a precipitous plunge, but there does appear to be a levelling off.  Given the rise in the Fed's discount rate and the massive sell-off in Treasuries (10 year yield up from 1.38 in July 2016 to 2.94 now) that wouldn't be at all surprising.  Will there be a recession?  I'll keep you posted.



➥ "Extreme adjustment" refers to a statistical process whereby extreme points (up or down) are reduced to fit closer to the nearby data averages.  For example, the extreme adjustment algorithm would adjust the data point for a strike, say, or a hurricane, if it only lasted 1 month, but would not if its effects lasted 12 months.  The original algorithm was invented by the US Bureau of the Census.

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