Jobless claims: a good coincident indicator of the US economy. If you look at changes in jobless claims it can also help you call turning points in the economy. I have done claims graphs a few times over the past six years but I haven’t posted an update in a while. So I wanted to update you on what the data are saying.
Tag: finance charts
News links for 10 Mar 2014
According to Wikipedia, the Taylor rule is a “monetary-policy rule that stipulates how much the central bank should change the nominal interest rate in response to changes in inflation, output, or other economic conditions.” It is named after Stanford economist John B. Taylor. Emerging markets’ monetary policy has been loose if one uses this rule.
According to S&P’s Case-Shiler House Price Index, house prices are up on average 12% since 2003. The chart of the path of house prices during that time is below via the New York Times.
It is worth noting that currently both markets are pushing deviation extremes only seen four times previously. The difference has much to do with the “secular market” within which these deviations occurred. The current deviation from the long term average, fuelled by Federal Reserve interventions, is approaching extremes in both deviation and duration. As I stated above – as investors we should always remain mindful of the risk.
Based on the data from the Federal Reserve Bank of St. Louis here is a single chart that shows credit growth in the US is continuing to decline while the Fed’s balance sheet is expanding.
The X-axis is the change in the spot currencies against the dollar since late May. The Y-axis is the change in the local 5-year debt. It is a useful way to conceptualize what has happened from a total return perspective. Korea, Czech, Romania, and China appear to have weathered the storm, thus far.
The histogram below shows the total return of long-dated treasuries over a rolling 4-month period since 2007. The leftmost bucket contains five periods that constitute the worst treasury losses since 2007. All five of these periods ended within the past 10 days, indicating that the recent losses are the worst in at least 6 years.
Given the ongoing volatility in fixed income markets, it’s time to once again to take a look at performance. The chart below shows where we stand on a year-to-date basis for major asset classes from a USD investor’s point of view.
I thought this chart was a good one. It shows how quickly house prices have recovered in a number of markets. WHile DC and LA are the areas where the Case-Shiller index is at its highest, over the last year, Atlanta, Las Vegas, Phoenix and San Francisco are the markets that have seen the highest appreciation in house prices.
The long-term trend in capacity utilization in the US shows a secular decline. After each major recession over the past 50 years, capacity utilization peaked at a lower level than after the previous recession. So far in the post-Great Recession recovery, this trend has not been violated, as the nation struggles from chronic excess capacity.
In spite of the divergence in the chart, the “loans create deposits” axiom still stands – deposits are still created through bank credit. Two key developments explain much of this divergence without violating these principles.