2 replies to this topic

[Islander]

The Conference Board report 9/20 of Leading Economic Indicators (LEI) designed to forecast economic activity over the next three to six months.The report tracks 10 economic indicators. Only one of those indicators, real money supply, advanced in August. No reason to think Sept data will vary much. Overall the LEI was -.7, +.6 was expected. This will hurt equities.

Bonds should go down in yield, but they are up due to inflation fears.

Correction on falling business activity and too much money in circulation.

I am defensively invested. (Puts) Islander.

[89S10]

I thought that, by the time the leading indicators are published, everyone has a good idea of the number, since most of the components are known. The spread between actual and expected seems wide. Maybe this is a surprise, as you say. Bloomberg says +0.7 was the July figure. The estimate for August was down 0.4 versus an actual of down 0.6. I must have mis-read your note. Still a negative surprise, economic strength wise.

Edited by 89S10, 20 September 2007 - 12:56 PM.

[Islander]

I did not give the July figures, but you are correct. The ..-7 is a major shift. and 1.4 % fall from July. I don't know what strength you see in the manufacturing sector, but it is spoty at best. The LEI is not infalable either as a forecasting tool or as measure of current conditions. Centers for Cycles Research, which we read, is saying we will "skirt a recession, 1% GDP in Q4)" That is hopeful, but even they gives themselves only a 50% probability of being correct. Be wary things are loose, use stops and puts. Islander.