Financial Iceberg

FINANCIAL ICEBERG

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ECONOMY

US Economy : Still into the Growth Phase ?
March 11 ( From FRED )

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US Economy : Still into the Growth Phase ? $MACRO, $STUDY, $SPY, $SPX, $ES_F

The Situation

Since the beginning of the financial crisis, the Federal Reserve has been obliged to inject tons of liquidity into the system. Financial assets like the SP500 had a very good performance indeed. But at some point less and less disconnect to the real economy.

But we could be surprise of the slowly turnaround of 7 crucial economic US indicators even if lately it have been tremendously impacted by the weather.

We will compare the SP500 to the 7 US Economic Indicators. And more specifically :

1) Value of US Manufacturers Unfilled Orders for Capital Goods ( Nondefense capital goods excluding aircraft ).
2) US Federal Government Current Expenditures
3) US Imports of Goods and Services
4) Value of Total Inventories for Durable Goods Industries
5) US Real Retail and Food Services Sales
6) US Manufacturing Index PMI
7) US average weekly hours worked

Let s go through each economic data showed in charts ( in a year-over-year basis in each case )

1) Value of US Manufacturers Unfilled Orders for Capital Goods ( Nondefense capital goods excluding aircraft ).

2) US Federal Government Current Expenditures

3) US Imports of Goods and Services

4) Value of Total Inventories for Durable Goods Industries

5) US Real Retail and Food Services Sales

6) US Manufacturing Index PMI

And most of the time, when we had a year-over-year upswing in % of the ISM manufacturing index, the economy rebounded...

7) US average weekly hours worked ( quarterly basis )

And now shown in one chart with the SP500 Index on the second chart below...

Conclusion

What it is very interesting to note, is that each time the value of the 7 indicators on a year-over-year basis rose and crossed 0%, the risk of a the economy surprise on the stronger side than anticipated has increased tremendously

The SP500 seems not to ignore that fact for now even in the past previous cycles, stocks were anticpating the strenghtening of the economy... But also this time... And adding the Liquidity driven bull market...Can the SP500 continue to make new highs?

A few economic data have been impacted by the very harsh weather conditions ( retail sales, hours worked and NAPM ). We must follow those data if we see a rebound next month or so...

New high on the SP500 recently, still growing economic indicators, the recipe for a Perfect Surprise for the SP500 going forward ?