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The Disturbing Economic Tea Leaves Financial Advisors of Delaware - - PowerPoint PPT Presentation

Oct 05, 2022 169 likes •586 views

Economic Indicators to Watch The Disturbing Economic Tea Leaves Financial Advisors of Delaware Valley Philadelphia, PA Monday, April 1, 2013 Richard Yamarone Bloomberg Economic BRIEF Author of The Traders Guide to Key Economic

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Economic Indicators to Watch

The Disturbing Economic Tea Leaves

Financial Advisors of Delaware Valley

Philadelphia, PA

Monday, April 1, 2013

Richard Yamarone Bloomberg Economic BRIEF Author of “The Trader’s Guide to Key Economic Indicators”

Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737 Twitter: @Yamarone

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SLIDE 2

Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

The Stock Market and the Economy...Two Different Things

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Economy Isn’t Advancing Fast Enough to Engender Job Creation

  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1

1 2 3 4 5 6

  • 2400
  • 2000
  • 1600
  • 1200
  • 800
  • 400

400 800 1200 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11

Nonfarm Payrolls vs. Real GDP

NFP (lhs) GDP (rhs) Payrolls ('000) GDP YOY% Source: BEA, BLS NFP T <Index>, GDP CYOY <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Economy Operating Well Below its Potential

$5,500 $6,500 $7,500 $8,500 $9,500 $10,500 $11,500 $12,500 $13,500 $14,500 1980 1985 1990 1995 2000 2005 2010 2015

Potential GDP Real GDP

Real GDP (Blns) vs. Real Potential GDP (Blns)

Source: BEA, CBO, Bloomberg CBOPGDPR <Index>, GDP CHWG <Index>

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SLIDE 5

Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Employment To Be a Slow Train Coming

90 92 94 96 98 100 102 1 5 9 13 17 21 25 29 33 37 41 45 49 53 '73 - '75 1980 '81 - '82 '90 - '91 2001 '07 - current

Nonfarm Payroll Creation From Onset of Recession

Source: BLS, NBER, Bloomberg Months

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Employment To Be a Slow Train Coming -- II

peak-to-trough % jobs lost Recession Date (months) total jobs lost (millions) months to job restoration peak-to-trough Period 1 1948-49 11 2.34 22 5.17 1953-54 10 1.71 23 3.33 1957-58 8 2.22 20 4.17 1960-61 10 1.19 20 2.16 1969-70 11 1.04 18 1.46 1973-75 16 2.17 19 2.70 1980 6 1.16 10 1.20 1981-82 16 2.84 28 3.09 AVG: 11 1.83 20 2.91 Period 2 1990-91 8 1.62 32 1.40 2001 8 2.71 48 2.04 AVG: 8 2.16 40 1.72 Period 3 2007-09 (current) 18 8.31 ? 6.03

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Recession Decimated Many Industries

  • 1,906
  • 73
  • 2,233
  • 582
  • 1,135
  • 408
  • 1
  • 286
  • 548
  • 1,469

120 630

  • 633
  • 215

43

  • 2,500
  • 2,000
  • 1,500
  • 1,000
  • 500

500 1,000 Construction Mining & Logging Manufacturing Wholesale Trade Retail Trade Transportation Utilities Information Financial Professional Education Healthcare Leisure/Hospitality Others Services Government

Jobs Created 2 Years Prior to Great Recession Trough*, in thousands

Source: BLS *February 2010

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Hiring not Exactly Brisk

209 188 490 284 645 344 2

  • 43

113 1,595 584 240 901 982 163

  • 606
  • 800
  • 600
  • 400
  • 200

200 400 600 800 1,000 1,200 1,400 1,600 Construction Mining & Logging Manufacturing Wholesale Trade Retail Trade Transportation Utilities Information Financial Professional Temporary Education Healthcare Leisure/Hospitality Others Services Government

Jobs Created Since Great Recession Trough*, in thousands

Source: BLS *February 2010

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

If GDP Dips to 2.0% -- It’s Recession Time

  • 6
  • 4
  • 2

2 4 6 8 10 12 14 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008

Real GDP (Y/Y %)

Source: NBER, BEA, Bloomberg GDP CYOY <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Railcar Loads Are Plunging

  • 6.00
  • 4.00
  • 2.00

0.00 2.00 4.00 6.00 8.00

  • 50
  • 40
  • 30
  • 20
  • 10

10 20 30 40 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Railcar Loads (lhs) GDP (rhs)

Real GDP (Y/Y%) vs. Railcar Loads of Waste/Scrap (Y/Y%)

Source: Association of American Railroads, BEA, Bloomberg RAILWAST <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Manufacturing Gains Still Not Generating Jobs

70 75 80 85 90 95 100 105 8,000 10,000 12,000 14,000 16,000 18,000 20,000 1995 2000 2005 2010 MFG Jobs (lhs) IP (rhs)

Industrial Production Index, Manufacturing Jobs ('000)

Source: Federal Reserve, BLS USMMMANU <Index>, IP <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

It’s 1941 For Manufacturing

10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 1940 1950 1960 1970 1980 1990 2000 2010

U.S. Manufacturing Employment (in thousands)

Source: Bureau of Labor Statistics USMMMANU <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Housing Starts, the Most Interest Rate Sensitive Sector of the Economy

450 550 650 750 850 950 1050

Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13

Housing Starts ('000)

Source: Dept. of Commerce NHSPSTOT <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Still a Way to go for Housing Recovery

200 700 1,200 1,700 2,200 2,700

Jan-59 Jan-67 Jan-75 Jan-83 Jan-91 Jan-99 Jan-07

Housing Starts ('000)

Source: Dept. of Commerce NHSPSTOT <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Won’t Get Any Jobs from Housing

4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500 8,000

100,000 200,000 300,000 400,000 500,000 600,000 700,000

1993 1997 2001 2005 2009 2013

Spending (lhs) Employment (rhs)

Residential Construction Spending ($ mls) Construction Employment (thousands)

Source: U.S. Department of Commerce, Bureau of Labor Statistics, Bloomberg

USECTOT <Index>, CNSTRESI <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

This is what the Fed is Trying to Revive?

2 3 4 5 6 7 8 1947 1954 1961 1968 1975 1982 1989 1996 2003 2010

Residential Investment as a Percent of GDP (%)

PFIVRESI <Index>, GDP CUR$ <Index> Source: BEA

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Sideways Movements in Housing

100 150 200 250 300 350 400 450 500 550 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Mortgage Bankers Association

Mortgage Bankers Association's Purchase Applications Index

MBAVPRCH <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Home Prices Have Little Improvement in Post Crisis

50 100 150 200 250 300

2000 2002 2004 2006 2008 2010 2012

PHXR-SA LXXR-SA SDXR-SA SFXR-SA DNXR-SA WDXR-SA MIXR-SA TPXR-SA ATXR-SA CHXR-SA BOXR-SA DEXR-SA MNXR-SA CRXR-SA LVXR-SA NYXR-SA CEXR-SA POXR-SA DAXR-SA SEXR-SA

S&P-Case-Shiller Home Price Index

Source: S&P/Case-Shiller

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Commercial Construction Slump

$20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 1993 1996 1999 2002 2005 2008 2011

Total U.S. Commercial Construction Spending ($ mlns)

Source: U.S. Census Bureau CNSTCOMM <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Retailers Headed Out of the Malls

4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 2000 2003 2006 2009 2012

Regional & Strip Mall Vacancies

Strip Mall Regional & Superregional Malls Source: Reis Inc.

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

State & Local Governments May be a Ticking Time Bomb

4,750 4,800 4,850 4,900 4,950 5,000 5,050 5,100 5,150 5,200 5,250 13,000 13,200 13,400 13,600 13,800 14,000 14,200 14,400 14,600 14,800 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Local (lhs) State (rhs)

State & Local Government Employment (in thousands)

Source: BLS USEGSTSA <Index>, USEGLCSA <Index>

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Earnings/Analyst Conference Calls

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Bloomberg Orange Book

Summary of Commentary on ____________________

Current Economic Conditions By Corporation

from earning statements commencing July 1, 2010

NI ORANGEBOOK <GO>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

What is Being Said…

“And so we're still seeing that midnight shopping in our stores when that EBT card, it's like a debit card, when it is ready and it is funded, there are people who are in the store at midnight because they know it turns on. And they have shopped from like 10:45 to midnight and they're waiting for that card and then our lines open up. And we've had some of our busiest ours at midnight.” Rosalind Brewer, EVP, Wal-Mart April 12, 2011 “I think the most telling indicator for us that economic weakness and employment is the key issue driving soft volumes, is the fact that we continue to see, as – in contrast to the historical norms, we continue to see volume pick up heavily at the beginning of each month, and then steadily erode through the month, being particularly soft in the last week to 10 days of the

  • month. That just tells us that people are running out of money.”

Gregg Engles, CEO Dean Foods May 10, 2011 “Now clearly when it gets to the end of the month and they've run out of dollars and the first of month gets there, you'll see some pick-up in sales. I would say it's not as dramatic as it was two years ago due mostly to the fact that not 100% of those benefits are getting loaded on to people's cards..”

  • J. Michael Schlotman, CFO, SVP Kroger May 17, 2011
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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Small Businesses Drive the Economy

75 80 85 90 95 100 105 110 1987 1991 1995 1999 2003 2007 2011

  • 6
  • 4
  • 2

2 4 6

Real GDP (Y/Y%) vs. NFIB Small Business Optimism

GDP NFIB NFIB GDP

Source: NFIB, BEA

SBOITOTL <Index>, GDP CYOY <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Real Disposable Incomes Spike Not Sustainable

  • 6.00
  • 4.00
  • 2.00

0.00 2.00 4.00 6.00 8.00 1990 1995 2000 2005 2010

Real Disposable Personal Incomes (Y/Y%)

PIDSDCWT <Index> Source: BEA, Bloomberg

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

What Happens When the Stimulus Ends?

$8,000 $8,500 $9,000 $9,500 $10,000 $10,500 $11,000 2000 2002 2004 2006 2008 2010 2012

Real Dis Pers Incomes Real Pers Inc ex-Transfers

Government Stimulus Driving Incomes

Source: BEA, Federal Reserve Bank of St. Louis, Bloomberg Incomes in $ billions PIDSDCWT <Index>, PIDSPINX <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Lowest Hourly Earnings on Record

1 2 3 4 5 6 7 8 9 10 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Average Hourly Earnings: Total Private Industries, Production and Nonsupervisory Employees (Y/Y%)

Source: BLS USHEYOY <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

No Typo, Over 47 Million People at or Below Poverty!

25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 50,000,000 2007 2008 2009 2010 2011 2012

Supplemental Nutrition Assistance Program Number of Participants

Source: U.S.D.A, Bloomberg FDSPNUM <Index>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

More People Added to Food Stamp Program than Payrolls

  • 1,000,000
  • 800,000
  • 600,000
  • 400,000
  • 200,000

200,000 400,000 600,000 800,000 1,000,000

Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12

Food Stamps Payrolls

Monthly Change Food Stamp Participants & Non Farm Payrolls

Sources: BLS, USDA

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Poverty Growing Faster than Payrolls

90 95 100 105 110 115 120 125 130 135 6/1/2009 6/1/2010 6/1/2011 6/1/2012 Food Stamps Payrolls

Growth in Food Stamps vs. Nonfarm Payroll Jobs

Source: USDA, BLS

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

Peddle too Slow, and the Bike Tips Over

  • 4.00
  • 2.00

0.00 2.00 4.00 6.00 8.00 1995 2000 2005 2010

Real Consumer Spending, Y/Y %

PCE CONC <Index> Source: Bloomberg, BEA

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

There is No Holy Grail of Economic Indicators

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

‘Fab Five’ – Dining Out

  • 6
  • 4
  • 2

2 4 6 8

'98 '01 '04 '07 '10 '13

Spending: Meals at Other Eating Places (Y/Y%)

Source: BEA, NBER RPCEDPMB <Index> <GO>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

‘Fab Five’ – Dining Out II

95 96 97 98 99 100 101 102 103 104 2005 2006 2007 2008 2009 2010 2011 2012

Restaurant Performance Index: Current

Source: National Restaurant Association, Bloomberg

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

‘Fab Five” – Jewelry & Watches

  • 20
  • 16
  • 12
  • 8
  • 4

4 8 12 16 '98 '01 '04 '07 '10 '13

Spending: Jewelry & Watches Y/Y%

Source: Bureau Economic Analysis, NBER

RPCEDJRY <Index> <GO>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

‘Fab Five’ – Cosmetics & Perfumes

  • 9
  • 6
  • 3

3 6 9 '98 '01 '04 '07 '10 Jan-13

Spending: Cosmetics & Perfumes (Y/Y%)

Source: Bureau Economic Analysis, NBER RPCEDCOS <Index> <GO>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

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SLIDE 39

Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

‘Fab Five’ – Women’s Dresses

  • 10
  • 8
  • 6
  • 4
  • 2

2 4 6 8 10 12 '98 '01 '04 '07 '10 '13

Spending: Women's & Girls' Clothing (Y/Y%)

Source: Bureau Economic Analysis, NBER RPCEDWGC <Index> <GO>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

‘Fab Five’ – Casino Gambling

  • 16
  • 12
  • 8
  • 4

4 8 12 16 20 24 '98 '01 '04 '07 '10 '13

Spending: Casino Gambling Y/Y%

Source: Bureau Economic Analysis, NBER RPCEDCAS <Index> <GO>

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Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737

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