'"We didn't actually overspend our budget. The allocation simply fell short of our expenditure."
~ Keith Davis
The Professional Opinion
S&P 500 Index: 1057.08
LEI - Leading Economic Index
The LEI has improved for five months in a row now, the longest streak since 2004.. Look for a range of GDP in the 2-3% range in 2010.
Five of the ten leading economic indicators have also increased. Capacity Utilization rose by .6% to 69.6%.
The difference between Capacity Utilization and full production is what is expected to keep inflation at bay in the near term.
As the economy improves deflation is expected to began to ease, with mild inflation taking its place.
The housing market continues to appear to be stabilizing. Existing homes were slightly lower in August. There was a slight increase in permits for new housing construction.
Other Key Factors
Consumer Price Index: Up .4% in August. Deflation Year over Year is tracking at its lowest levels since 1950.
Inflation: Core inlation came in at rate of 1.4%. There are no inflation risks in the short term.
Employment: The rate of job losses has slowed, but employment, or lack thereof remains a problem and is expected to persist well into 2010.
Overvaluation: Not anytime soon, The S&P is sitting in at a PE of somewhere around 14.5 times 2010 earnings and is considered a very reasonable value.
The cyclical bull market remains intact. Buy on the dips. Single digit pull backs are expected to be the norm for the remainder of the year.
In search of morning meal in the back yard.