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Entries for 2020

Leading Economic Index Joins The "V-Shaped" Data Recovery

 June 21 2020     David Templeton
Last week the Conference Board released their report on the Leading Economic Index (LEI) along with data on the Coincident Economic Index (COI). The LEI rose 2.8% in May after falling 7.5% in March and down 6.1% in April. The report notes the improvement in unemployment insurance claims accounts for about two-thirds of the LEI improvement. With consumers representing a large part of the economy, a...

Individual Investors Expressing Equity Market Skepticism

 June 18 2020     David Templeton
Individual investors continue to express a low level of enthusiasm for stocks if the AAII sentiment survey is any indication. Today's AAII Sentiment Survey report noted individual investor bullish sentiment declined 9.9 percentage points to 24.4% with most of the decline showing up in the bearishness reading which increased 9.7 points to 47.8%. The bull/bear spread now stands at a wide -23.4 perce...

Market Telegraphing A 'V-Shaped' Economic Recovery?

 June 10 2020     David Templeton
If one is only looking at the stock market, that is the S&P 500 Index, a 'V-shaped' recovery has unfolded off the March 23 low. Not too many expected this type of recovery as the virus/lockdown induced contraction was underway. However, on a price only basis, the S&P 500 Index is up 43.34% since the low on March 23.Yes, the economic damage resulting from the virus induced stay-at-home mandates was...

Individuals Save In April With Many Businesses Shutdown

 June 1 2020     David Templeton
Last Friday's April Personal Income and Outlays report from U.S. Bureau of Economic Analysis reported a significant month over month increase in personal income, up 12.9% and a dramatic increase in savings as a percentage of disposable income, up 33.0%. At the same time the income and outlays report showed a significant decline in personal consumption expenditures (PCE), down 13.2%.Not surprisingl...

Negative Interest Rates And The Impact On Investor Investment Choices

 May 30 2020     David Templeton
One phenomenon investors face today is the fact central banks around the world have moved to a negative interest rate posture. Earlier this month Federal Reserve Chairman, Jerome Powell, stated the U.S. Federal Reserve is not considering moving the Fed Funds Rate to a negative level though. Yet, rates in the U.S. are near zero with the Fed Funds target rate at .25% or 25 basis points. A one month ...

JOLTS: How Quickly Things Can Change

 May 15 2020     David Templeton
Just a few short months ago I was writing about the tight job market and the fact the number of job openings continued to exceed the number of those unemployed. This had been the case since February 2018 and was a sign of a strong economy. How quickly the tide can go out.Today's Job Openings and Labor Turnover Survey (JOLTS) reported total separations increased by 8.9 million to 14.5 million in Ma...

Weak Small Business Optimism, But Expectations Of A Short-Lived Recession

 May 12 2020     David Templeton
Not surprisingly, small business owners are anything but optimistic about the current environment. The NFIB Small Business Optimism Index fell 5.5 points to 90.9 in April. The NFIB report notes the index has declined 13.6 points in two months. The index is now at a level below the recession in 2001 that occurred after the bursting of the technology bubble.Also notable in the report is the continue...

A Dreadful Employment Report

 May 9 2020     David Templeton
Much was written about the employment report on Friday, yet the the S&P 500 Index rose 1.69% and the Dow Jones Industrial Average rose 1.91% on the day. As much of the commentary notes, me included, the equity markets are forward looking. Not enough can be written about how bad this report is though. The equity market will eventually not look past this data if a V-shaped improvement is not seen in...

Approaching Maximum Investor Bearish Sentiment Level

 May 8 2020     David Templeton
Not to surprising that the individual investor sentiment as reported by the American Association of Individual Investors (AAII) this week continues to deteriorate. As seen in the below chart, this week's bullish sentiment is reported at 23.7% down 6.9 percentage points from the prior week. The economic reports over the last few weeks have been absolutely terrible and it does not seem the reported ...

S&P 500 Dividend Aristocrats Lag In This Down Market

 May 6 2020     David Templeton
A favorable characteristic of the S&P 500 Dividend Aristocrats is this basket of stocks generally holds up better in broader market pullbacks as seen in the below table. Where the entire row is highlighted, it represents a significant market pullback and the Aristocrats outperformed the S&P 500 Index by double digits. The S&P 500 Aristocrats are companies in the S&P 500 Index that have increased t...
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