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Confusing Stats

June 17, 2011 – 4:59 pm

This morning with some calming news coming out of Greece, the stock market started out strong. Later after the opening the LEI (Leading Economic Indicator) report was released and it was up .8% a much stronger reading than expected. This report is supposed to tell us what the economy is going to do in the months ahead. It is a good gauge but not perfect. The main reason for the larger than expected number was the very healthy interest rate spread. A separate measure of current economic activity indicated that in May it appears the economy is growing at an annual rate of 2.4%. That is stronger than the current GDP number.

Consumer sentiment numbers for early June came in less than expected at 71.8 when expectations were for 73.5 from 74.3 in May. I have never been much of a fan of this number as people when asked how they feel change their minds too frequently. It does not necessarily reflect how they spend. Peoples’ feelings are too easily influenced by current events. Also, when people feel bad they at times spend more not less to make them feel better. It is just too hard to figure.

It is always difficult to interpret all the data that constantly bombards us but it is obvious that although our weak recovery got weaker we are not falling into another recession this year and most likely not next year.

We just have to accept this current weakness and any hint that it is ending will pull us out of the stock market correction.

Good Trading
Steve Peasley

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