Down goes the Dow

Crunchy wrote:

I'm talking about real inflation, not someone's prediction. And it's not difficult to find a bank offering around 1%, or higher.

Inflation was 2.1% in 2015. That is not a prediction but a statistic...even if it does not support your opinion.

Jumbo Kid wrote:

Crunchy wrote:

I'm talking about real inflation, not someone's prediction. And it's not difficult to find a bank offering around 1%, or higher.

Inflation was 2.1% in 2015. That is not a prediction but a statistic...even if it does not support your opinion.

your 2.1% inflation figure is *core* inflation.

you shouldn't use core inflation in this context. Core inflation is to get a smoothed out version of inflation, for policy making purposes. Not for measuring inflation for people on the ground.

In this context you have to use the actual full on inflation rate. which seems to have been 0.70% in 2015.

So interest on savings rate were above that.

agip wrote:

Jumbo Kid wrote:

[quote]Crunchy wrote:

I'm talking about real inflation, not someone's prediction. And it's not difficult to find a bank offering around 1%, or higher.

Inflation was 2.1% in 2015. That is not a prediction but a statistic...even if it does not support your opinion.

your 2.1% inflation figure is *core* inflation.

you shouldn't use core inflation in this context. Core inflation is to get a smoothed out version of inflation, for policy making purposes. Not for measuring inflation for people on the ground.

You are 180% off:

Core inflation is a measure of inflation that excludes certain items that face volatile price movements. Core inflation eliminates products that can have temporary price shocks because these shocks can diverge from the overall trend of inflation and give a false measure of inflation.

Jumbo Kid wrote:

agip wrote:

Inflation was 2.1% in 2015. That is not a prediction but a statistic...even if it does not support your opinion.

your 2.1% inflation figure is *core* inflation.

you shouldn't use core inflation in this context. Core inflation is to get a smoothed out version of inflation, for policy making purposes. Not for measuring inflation for people on the ground.

You are 180% off:

Core inflation is a measure of inflation that excludes certain items that face volatile price movements. Core inflation eliminates products that can have temporary price shocks because these shocks can diverge from the overall trend of inflation and give a false measure of inflation.

no no no

you have the use of core inflation backwards.

People on the street saw prices inflate 0.70%. That was the inflation rate. They buy energy and food, so you have to include them. Done. That 0.70% rate is what we should compare the interest rate on savings accounts to.

But

Policy makers need to make decisions based on what WILL be the inflation rate, not what IS the inflation rate. They don't want to made decisions base d on temporary blips.

So POLICY MAKERS will exclude volatile items like energy and food.

But for people who buy energy and food every day...it makes zero sense to exclude energy and food from calculating their inflation rate...so their inflation rate is the regular rate. 0.70%

This might clarify it for you: Social Security cost of living adjustments are based on full on inflation rates. Not the core rate. Why is that?

There is nothing "above".

This is the economic forecast from the Mortgage Bankers Association, which is the only economic forecast that I pay any attention to:https://www.mba.org/Documents/Research/Econ%20Forecast%20Mar%202016(0).pdfWhat I see in actual CPI data is that the February yoy number is 0.104, so thus far this quarter lower that predicted above. But, the oil price surge did not begin until commodities broke out on 3/1, so we will see how much pass-through we get.There is a well-known phrase, "If you lay all the world's economists end to end, they will all point in different directions," thus I use forecasts like the National Association for Business Economics as contrary indicators:

"Most panelists in the NABE March Outlook Survey expect the next U.S. business cycle peak will not occur until 2018 or later," according to NABE President Lisa Emsbo-Mattingly, CBE, director of research, Global Asset Allocation at Fidelity Investments. "In the three months since the last survey, 66% of the panelists have lowered their forecasts for 2016 growth of inflation-adjusted gross domestic product, or real GDP [the broadest measure of economic activity]. In light of volatility of markets and data, the panel forecasts the US will grow 2.2% in 2016, a deceleration from the 2.4% real GDP growth realized in 2015."

"An even larger 79% share of panelists lowered their 2017 growth outlook," noted Gregory Daco, head of U.S. macroeconomics, Oxford Economics USA. "For both 2016 and 2017, half of the participants reduced their estimates by 0.3 percentage point or more."

Thus, I assume that growth will pick up in 2017 and that the business cycle will top next year.

Stock futures pointed to a slightly firmer open for Wall Street on Monday, as the prospect of go-slow interest rate hikes offset worries about where oil prices are headed.

The S&P 500 posted the biggest weekly gain in a month last week, after nonfarm payrolls and other economic data convinced investors the Federal Reserve won't be rushing to increase interest rates and that an April hike isn't on the cards.

Oil was casting a shadow over markets on Monday, as U.S. and Brent crude prices extended losses seen late last week. Those declines came after comments by a Saudi official dampened hopes for an output-cut deal from major oil producers, who are holding a meeting later this month.

Analysts said oil may prove to be less of a hindrance for stock gains this time around.

"While oil continues to contribute to moves in the indexes, we have seen a decoupling between oil prices and indexes over the last couple of weeks which suggests it's no longer the main driver," said Craig Erlam, chief market analyst at Oanda, in emailed comments.

"Once again, loose monetary policy globally and a more dovish Fed appears to be lifting stock markets and could keep them elevated for now," he said, adding, though, that earnings season will be key over the next month, starting next week with Alcoa Inc. (AA).

agip wrote:

Inflation was 2.1% in 2015. That is not a prediction but a statistic...even if it does not support your opinion.

your 2.1% inflation figure is *core* inflation.

you shouldn't use core inflation in this context. Core inflation is to get a smoothed out version of inflation, for policy making purposes. Not for measuring inflation for people on the ground.

You are 180% off:

Core inflation is a measure of inflation that excludes certain items that face volatile price movements. Core inflation eliminates products that can have temporary price shocks because these shocks can diverge from the overall trend of inflation and give a false measure of inflation.[/quote]

no no no

you have the use of core inflation backwards.

Actually, I copied and pasted the definition of core inflation.

As previously noted, historically savings accounts returned inflation plus 1% to 2%; now the return is inflation minus one point.

Anyone who pays for college, buys food, health insurance, etc. knows real inflation is a damn bit higher than the gov stats tell us.

whatever dude.

Not much fun talking to you since you are so all over the place and unresponsive.

As stated earlier, the inflation rate and savings rates are currently pretty much a wash.

A year ago S&P 500 operating (non-GAAP) earnings estimate for Q1 2016 was $30.91, and full year 2016 was $135.03. Today the estimates for the same periods have fallen to Q1 2016 $25.94 and 2016 $118.21. Stock buybacks continue to add a 4% tailwind to earnings.

Earnings need to firm up to maintain an optimistic view of the market. We will know if the view is warranted soon enough when Q1 2016 earnings season starts one week from today.

Igy

Ghost of Igloi wrote:

Earnings need to firm up to maintain an optimistic view of the market. We will know if the view is warranted soon enough when Q1 2016 earnings season starts one week from today.

Igy

eh not really, methinks.

Oil didn't really collapse until July 2015 - so I'd say the 3Q will be a much more inportant tell than the 1Q or 2Q.

Econ news:

Factory orders: -1.7%. This down number after a couple of better mfgring numbers.

Consumer spending good - up to 89 from 84 last month.

Ghost of Igloi wrote:

A year ago S&P 500 operating (non-GAAP) earnings estimate for Q1 2016 was $30.91, and full year 2016 was $135.03. Today the estimates for the same periods have fallen to Q1 2016 $25.94 and 2016 $118.21. Stock buybacks continue to add a 4% tailwind to earnings.

Wall Street estimates are a crap shoot.

agip and Big,

Hope springs eternal. acts, however are different.

A year ago estimates for Q3 S&P 500 operating earnings (non-GAAP) was $34.61, however today that estimate has been market down to $31.07.

There has NEVER been a quarter above $29.60 (Q3 2014).

Also, note I am using the Street's favorite operating earnings (non-GAAP) which gives a considerable "rose colored glasses view" in comparison to the GAAP numbers.

Wall Street earnings estimates do typically adjust downward over the course of the year but the downgrades of late are a much higher percentage. It seems convenient to cheer rising earnings to support an optimistic view but discount them when it runs counter to that same optimistic view.

Seems ignorant at best to me.

Igy

well the point is that until oil stabilizes, just comparing Sp500 earnings from one year to the next without that context isn't all that useful a metric.

In other news,

According the website, my kid's 529 is up 7.02% per year for the last ten years. That's including the financial crisis. Pretty good for dumb index funds. It was in a 60-80% stock fund for most of the time - now it's in a 30% stock fund.

Every day that the stock market is down I throw another $100 or $200 at it. Roughly. I've been doing that for 20 years.

Sort of silly now that it is almost all bonds, but I still do it. I really enjoy saving.

agip,

Good on the savings. I am maxing out my 401k, Roth and wife's IRA. I have scaled back the risk in light of the distribution phase that begins in less than five years.

I went from being a coach to a financial advisor, so I had little savings for the kids college. Fortunately both were good students. Son is an engineer and daughter is an attorney. All student loans have been paid.

How's the running? I ran an eight miler in the foothills followed by strides for a total of nine miles. The pace is getting fasters and the pounds are falling off. So making some progress.

Igy

Ghost of Igloi wrote:

A year ago estimates for Q3 S&P 500 operating earnings (non-GAAP) was $34.61, however today that estimate has been market down to $31.07.

There has NEVER been a quarter above $29.60 (Q3 2014).

So they are forecasting the earnings will be the highest ever? Seems nuts to me.

Big,

Interesting isn't it.

Here is the data if you would like to see it:

http://us.spindices.com/indices/equity/sp-500

Look under "Additional Data" and you can actually pull up a spreadsheet with earnings estimates and actually data for non-GAAP and GAAP earnings. Quarterly data goes back at least 20 years.

Igy

Greece is still the word:

http://www.bloombergview.com/articles/2016-04-04/time-is-running-out-again-for-greece