chart of the week - NY Fed + Philly Fed + ISM
(snip)"By request - now that the Empire State and Philly Fed manufacturing surveys for September have been released - here is an update to the graph I posted last month:
http://2.bp.blogspot.com/_pMscxxELHE...IsmmidSept.jpg
For this graph I averaged the New York and Philly Fed surveys (dashed green, through September), and averaged five surveys including New York, Philly, Richmond, Dallas and Kansas City (blue, through August).
The Institute for Supply Management (ISM) PMI (red) is through August (right axis).
Last month, when the ISM survey came in slightly better than expected, I wrote: "Based on this graph, I'd expect either the Fed surveys to bounce back in September - or the ISM to decline."
So far there has been little "bounce back" in the Fed surveys."(snip)
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Re: chart of the week - NY Fed + Philly Fed + ISM
also the UMich Consumer Sentiment Index ...
http://3.bp.blogspot.com/_pMscxxELHE...entSep2010.jpg
(snip)"The UMich index declined to 66.6 in September - the lowest level since August 2009 -- from 68.9 in August.
Consumer sentiment is a coincident indicator - and this is further evidence of a sluggish economy.
This was a big story in July when consumer sentiment collapsed to the lowest level since late 2009. Now it is even lower ..."(snip)
from
Re: chart of the week - NY Fed + Philly Fed + ISM
and while we're on a roll, the CFO survey was just released ...
(snip)"DURHAM, N.C. -- Optimism about the U.S. economy has fallen back to recession levels among chief financial officers (CFOs), who foresee minimal increases in expected hiring, weak consumer demand and heightened economic uncertainty.
Credit is still tight for small firms and many firms continue to hoard cash. Without improvement in the economy, CFOs say earnings growth and capital spending will falter within six to 12 months.
These are some of the findings of the most recent Duke University/CFO Magazine Global Business Outlook Survey. The survey, which concluded Sept. 10, asked 937 CFOs from a broad range of global public and private companies about their expectations for the economy. (See end of release for survey methodology.) The research has been conducted for 58 consecutive quarters. Presented results are for U.S. firms unless otherwise noted.
SUMMARY OF FINDINGS
-- CFO optimism about the U.S. economy has fallen to 49 on a zero-to-100 scale, well below the rating of 58 from the last quarter. Pessimists outnumber optimists four-to-one. European CFOs' optimism rate is 58; Asian CFOs' rate is 70.
-- Half of CFOs say they will cling tightly to cash due to economic uncertainty and as a liquidity buffer. The other half will spend some cash reserves in the next year, primarily for investment, to pay down debt and to make acquisitions.
-- Earnings are expected to rise 12 percent and capital spending almost 7 percent in the next 12 months. However, nearly half of CFOs say unless the overall economy improves, there is only a six-month window during which they can maintain this level of growth.
-- U.S. CFOs expect to increase domestic full-time employment by 0.7 percent in the next year. Nearly one-fourth of all recent hires have been contract and temporary employees.
-- Credit markets remain tight, especially for small companies. Most CFOs believe financial reform will add costs and restrictions that will dampen lending.
-- CFOs' economy-wide concerns include federal government policies, weak consumer demand, price pressure and the weak national employment outlook. By a wide margin, the top concern among CFOs about their own businesses is the struggle to maintain profit margins, followed by rising health care costs and low employee morale."(snip)
with 'professional commentary' by Mike Shedlock
(snip)"From the CFO report: More than half of responders say they will continue to sit on cash for liquidity to protect against another round of credit tightening and general economic uncertainty. Of the 50 percent that will deploy cash, only 56 percent will allocate to capital spending and investment.
Liquidity, not expansion plans, is the reason for 50% of that cash. Only 28% is for capital spending and investment. Some of the rest is for share buybacks at stupid levels (undoubtedly while insiders dump their shares).
By the way, borrowing money to hold cash for liquidity purposes, with no intention of using it is a drain on earnings, although arguably not much since borrowing rates are low. Think of it as an insurance policy.
Of the 28% allocated for capital spending and investment, note that 75% of CFOs think the window to deploy that cash is 6-12 months max, a period "during which they can maintain current levels of business activity without improvement in the overall economy."
Good luck with that. Yet, the sideline cash myth permeates the airwaves."(snip)
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