We've got good news and some potentially bad news regarding the current state of the stock market. First, the good news: stock prices are rising thanks to what seems to be an improving outlook in the market's underlying fundamentals.
We can see this improvement in the expected future level of dividends anticipated by the market, where we can see changes in the fundamental outlook for the stock market by observing how the spread between the amount of cash dividends expected to be paid out in future quarters is changing over time.
Here, we see that since mid-January, the spreads between the amount of dividends expected to have be paid out in future quarters is widening, which suggests that the business situation of the publicly-traded companies that make up the S&P 500 index is improving.
That improving outlook then would lead us to anticipate that the average of stock prices for the S&P 500 in the month of February 2011 will likely fall in a range between 1294 and 1332, at least, if you go by the math behind how stock prices work. This marks an improvement from the 1289-1321 range that we had previously forecast for the S&P 500 at the beginning of the month.
Though 17 February 2011, just a bit past the mid-point for the month, the average of daily closing stock prices for the S&P 500 is 1321.71, with a closing price of 1340.43 on 17 February 2011.
Which brings us to the potentially bad news. With average stock prices now moving significantly above the midpoint of our updated forecast range (1313), not to mention trading above the top end of our updated forecast range for the month (1332), we would describe the current state of the market as being a bit overheated.
That, in turn, suggests a correction is in the offing.
Now, that's no surprise given that we've had another indicator pointing to February 2011 as being a very likely month by which a correction would begin, but we can't predict which day that will happen.
There's another angle to consider as well. If the U.S. Federal Reserve is indeed using stock prices to assess how well their Quantitative Easing 2.0 program is going in setting future inflation expectations, stock prices running hot as they are today would be a signal to them that they need to take their foot of the QE pedal.
That may also have a negative effect on stock prices in the current economic situation, especially if future inflation expectations fall as they did in the interval between the Fed's QE 1.0 program and the current QE 2.0 program to near deflationary levels.
Unless, that is, they've finally been successful in convincing everyone that inflation is here to stay.
Labels: forecasting, inflation, SP 500
- posted by Ironman at 4:31 AM | Permalink | Share | | << Home Unexpectedly Intriguing!
About Political Calculations
blog advertising is good for you Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at: ironman at politicalcalculations.com Thanks in advance!
Most Popular PostsThe S&P 500 at Your Fingertips Reckoning the Odds of Recession Should You Trade in Your Gas Guzzler? What Are the Chances Your Marriage Will Last? Tipping Around the World What's Your Body Fat Percentage? The Odds of Dying, Again! The Biggest Issue of 2010, In One Chart Hauser's Law Average Lifetime Earnings Trajectories by Education
Quick IndexFirst Time Visitor to Political Calculations? On the Moneyed Midways A Lot, But Not All, of Our Tools
Recent Posts Mapping Crime in San Francisco How GE Became a Basket Case The New Obama Spending Future Correlating the Price of Gas and the Unemployment ... The Strangest Foods Served On Sticks How Many Kids Should You Have? From Economic Crisis to Statistical Adjustment How Much Is That in Gold? The Transformation of Student Loans Into Taxes 1.2 Million Americans Quit Seeking Work Since Nove... U.S. GDP Temperature GaugePolitical Calculations' U.S. GDP Temperature Gauge provides a means to quickly evaluate the growth rate of the U.S. economy against the backdrop of how the economy has performed since 1980, with the "temperature" color spectrum ranging from a recessionary "cold" (purple) through an expansionary "hot" (red).
The GDP Temperature Gauge presents both the annualized GDP growth rate as reported by the U.S. Bureau of Economic Analysis reports for a one-quarter period and also as averaged over a two quarter period, which smooths out the volatility seen in the one-quarter data and provides a better indication of the relative strength of the U.S. economy over time.
Recession Probability TrackPolitical Calculations' Recession Probability Track shows the probability that the U.S. economy will be in recession 12 months from the indicated date (shown in red) while revealing the probability trend over the past four years.
Previously, the probability of recession peaked at 50% on 4 April 2007, which means that March-April 2008 was the most likely period in which the NBER would have found the U.S. to be in recession.
As it happens, they almost did. The NBER instead chose December 2007 as the beginning month of the most recent recession (we had found a 46% probability for a recession beginning in that month!)
On the Moneyed MidwaysPolitical Calculations is also the online home of On the Moneyed Midways (aka OMM), a review of the best posts contributed to the week's best business and money-related blog carnivals, which we ran as a regular weekly feature for the five years from 2006 through 2010.
The link below will take you to the running index containing our most recent back issues (you can easily navigate the index to find older editions.)
OMM's Most Recent Editions - with links to our older editions!
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Market LinksBig Picture, The CXO Advisory Group Disciplined Approach to Investing Dividend Guy, The Doug Short Evidence Investing Fat Pitch Financials FX Investment Strategies
Recommended ReadingAngel in the Whirlwind Bailout Nation Cartoon Guide to Statistics A Comprehensive Guide to the Peloponnesian War The Complete Personal Memoirs of Ulysses S. Grant The Count of Monte Cristo Ender's Game Gardner's Art Through the Ages Empire of Wealth How to Make Presentations to Councils and Boards Juran's Quality Handbook Marks' Standard Handbook The Second World War Stocks for the Long Run Why Smart Executives Fail
Recommended ViewingThe Tudors: The Complete Series
Recently ShoppedBoss Black LeatherPlus Executive Chair Microsoft Office 2010 Home & Student LEGO Harry Potter: Years 1-4 The Buddha
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Investment Disclosure Statement: Ironman owns stock. Specifically, Ironman owns five shares of Boeing stock. Other than that, Ironman primarily invests through retirement accounts, in an index fund that closely tracks the performance of the S&P 500 and, from time to time, an ETF that is inversely-correlated with the S&P 500 (an anti-S&P 500 fund!). Details of any positions taken may be found through the chronological links in the Archives beginning with April 2009.
About Political Calculations
blog advertising is good for you Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at: ironman at politicalcalculations.com Thanks in advance!
Most Popular PostsThe S&P 500 at Your Fingertips Reckoning the Odds of Recession Should You Trade in Your Gas Guzzler? What Are the Chances Your Marriage Will Last? Tipping Around the World What's Your Body Fat Percentage? The Odds of Dying, Again! The Biggest Issue of 2010, In One Chart Hauser's Law Average Lifetime Earnings Trajectories by Education
Quick IndexFirst Time Visitor to Political Calculations? On the Moneyed Midways A Lot, But Not All, of Our Tools
Recent Posts Mapping Crime in San Francisco How GE Became a Basket Case The New Obama Spending Future Correlating the Price of Gas and the Unemployment ... The Strangest Foods Served On Sticks How Many Kids Should You Have? From Economic Crisis to Statistical Adjustment How Much Is That in Gold? The Transformation of Student Loans Into Taxes 1.2 Million Americans Quit Seeking Work Since Nove... U.S. GDP Temperature GaugePolitical Calculations' U.S. GDP Temperature Gauge provides a means to quickly evaluate the growth rate of the U.S. economy against the backdrop of how the economy has performed since 1980, with the "temperature" color spectrum ranging from a recessionary "cold" (purple) through an expansionary "hot" (red).
The GDP Temperature Gauge presents both the annualized GDP growth rate as reported by the U.S. Bureau of Economic Analysis reports for a one-quarter period and also as averaged over a two quarter period, which smooths out the volatility seen in the one-quarter data and provides a better indication of the relative strength of the U.S. economy over time.
Recession Probability TrackPolitical Calculations' Recession Probability Track shows the probability that the U.S. economy will be in recession 12 months from the indicated date (shown in red) while revealing the probability trend over the past four years.
Previously, the probability of recession peaked at 50% on 4 April 2007, which means that March-April 2008 was the most likely period in which the NBER would have found the U.S. to be in recession.
As it happens, they almost did. The NBER instead chose December 2007 as the beginning month of the most recent recession (we had found a 46% probability for a recession beginning in that month!)
On the Moneyed MidwaysPolitical Calculations is also the online home of On the Moneyed Midways (aka OMM), a review of the best posts contributed to the week's best business and money-related blog carnivals, which we ran as a regular weekly feature for the five years from 2006 through 2010.
The link below will take you to the running index containing our most recent back issues (you can easily navigate the index to find older editions.)
OMM's Most Recent Editions - with links to our older editions!
Site DataThis site is primarily powered by:
Visitors since December 6, 2004:
var site="sm7politicalcalculations"
CSS ValidationRSS Site Feed
JavaScript
The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.
Other Cool ResourcesZunZun - Exceptional regression analysis tool. Wolfram Integrator - Solve integrals. Do calculus! Create a Graph - Easy-to-use basic graph-making tool. Many Eyes - Data visualization extraordinaire! Wolfram Alpha - Computational knowledge engine. Khan Academy - Math & science video mini-lectures!
Archives December 2004 January 2005 February 2005 March 2005 April 2005 May 2005 June 2005 July 2005 August 2005 September 2005 October 2005 November 2005 December 2005 January 2006 February 2006 March 2006 April 2006 May 2006 June 2006 July 2006 August 2006 September 2006 October 2006 November 2006 December 2006 January 2007 February 2007 March 2007 April 2007 May 2007 June 2007 July 2007 August 2007 September 2007 October 2007 November 2007 December 2007 January 2008 February 2008 March 2008 April 2008 May 2008 June 2008 July 2008 August 2008 September 2008 October 2008 November 2008 December 2008 January 2009 February 2009 March 2009 April 2009 May 2009 June 2009 July 2009 August 2009 September 2009 October 2009 November 2009 December 2009 January 2010 February 2010 March 2010 April 2010 May 2010 June 2010 July 2010 August 2010 September 2010 October 2010 November 2010 December 2010 January 2011 February 2011 if (location.href.indexOf("archive")!=-1) document.write("Current Posts");Bloodhoundblog Budgets Are Sexy Cafe Hayek Carpe Diem Cheap, Healthy, Good Copywriting Tips Core77 Coyote Blog Craig Harper Darwin's Finance Digerati Life, The Division of Labour Dough Roller, The Eclectecon Econlog Economics Roundtable EconomicsUK Entrepreneurial Mind Environmental Economics Escape from Cubicle Nation Execupundit FiscalGeek Fortify Your Oasis Get Rich Slowly Gongol Good Financial Cents HR Bartender Hot Air i4cp Productivity Innocent Bystanders Innovation and Growth Instapundit Intangible Economy I've Paid Twice for This Already Joanne Jacobs Kaus Files Len Penzo dot Com Mahalanobis Making Ripples Market Power Mechonomics Mighty Bargain Hunter Monevator Money Blue Book My Dollar Plan New Economist Newmark's Door Nina Simosko Physorg Private Sector Development Radio Equalizer Real Clear Politics Richard Fernandez Roger L. Simon SCSU Scholars Science and Money Skeptical Optimist Sound Politics SOX First Speculist, The Sports Economist, The squawkfox Three Star Leadership Tim Worstall Tough Money Love Townhall Trusted Advisor Uncommon Misperceptions voluntaryXchange WILLisms Winterspeak
Market LinksBig Picture, The CXO Advisory Group Disciplined Approach to Investing Dividend Guy, The Doug Short Evidence Investing Fat Pitch Financials FX Investment Strategies
Recommended ReadingAngel in the Whirlwind Bailout Nation Cartoon Guide to Statistics A Comprehensive Guide to the Peloponnesian War The Complete Personal Memoirs of Ulysses S. Grant The Count of Monte Cristo Ender's Game Gardner's Art Through the Ages Empire of Wealth How to Make Presentations to Councils and Boards Juran's Quality Handbook Marks' Standard Handbook The Second World War Stocks for the Long Run Why Smart Executives Fail
Recommended ViewingThe Tudors: The Complete Series
Recently ShoppedBoss Black LeatherPlus Executive Chair Microsoft Office 2010 Home & Student LEGO Harry Potter: Years 1-4 The Buddha
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The S&P 500 at Your Fingertips Reckoning the Odds of Recession Should You Trade in Your Gas Guzzler? What Are the Chances Your Marriage Will Last? Tipping Around the World What's Your Body Fat Percentage? The Odds of Dying, Again! The Biggest Issue of 2010, In One Chart Hauser's Law Average Lifetime Earnings Trajectories by Education
First Time Visitor to Political Calculations? On the Moneyed Midways A Lot, But Not All, of Our Tools
Political Calculations' U.S. GDP Temperature Gauge provides a means to quickly evaluate the growth rate of the U.S. economy against the backdrop of how the economy has performed since 1980, with the "temperature" color spectrum ranging from a recessionary "cold" (purple) through an expansionary "hot" (red).
The GDP Temperature Gauge presents both the annualized GDP growth rate as reported by the U.S. Bureau of Economic Analysis reports for a one-quarter period and also as averaged over a two quarter period, which smooths out the volatility seen in the one-quarter data and provides a better indication of the relative strength of the U.S. economy over time.
Political Calculations' Recession Probability Track shows the probability that the U.S. economy will be in recession 12 months from the indicated date (shown in red) while revealing the probability trend over the past four years.
Previously, the probability of recession peaked at 50% on 4 April 2007, which means that March-April 2008 was the most likely period in which the NBER would have found the U.S. to be in recession.
As it happens, they almost did. The NBER instead chose December 2007 as the beginning month of the most recent recession (we had found a 46% probability for a recession beginning in that month!)
Political Calculations is also the online home of On the Moneyed Midways (aka OMM), a review of the best posts contributed to the week's best business and money-related blog carnivals, which we ran as a regular weekly feature for the five years from 2006 through 2010.
The link below will take you to the running index containing our most recent back issues (you can easily navigate the index to find older editions.)
OMM's Most Recent Editions - with links to our older editions!
This site is primarily powered by:
Visitors since December 6, 2004:
CSS Validation
RSS Site Feed
JavaScript
The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.
Other Cool ResourcesZunZun - Exceptional regression analysis tool. Wolfram Integrator - Solve integrals. Do calculus! Create a Graph - Easy-to-use basic graph-making tool. Many Eyes - Data visualization extraordinaire! Wolfram Alpha - Computational knowledge engine. Khan Academy - Math & science video mini-lectures!
Archives December 2004 January 2005 February 2005 March 2005 April 2005 May 2005 June 2005 July 2005 August 2005 September 2005 October 2005 November 2005 December 2005 January 2006 February 2006 March 2006 April 2006 May 2006 June 2006 July 2006 August 2006 September 2006 October 2006 November 2006 December 2006 January 2007 February 2007 March 2007 April 2007 May 2007 June 2007 July 2007 August 2007 September 2007 October 2007 November 2007 December 2007 January 2008 February 2008 March 2008 April 2008 May 2008 June 2008 July 2008 August 2008 September 2008 October 2008 November 2008 December 2008 January 2009 February 2009 March 2009 April 2009 May 2009 June 2009 July 2009 August 2009 September 2009 October 2009 November 2009 December 2009 January 2010 February 2010 March 2010 April 2010 May 2010 June 2010 July 2010 August 2010 September 2010 October 2010 November 2010 December 2010 January 2011 February 2011 if (location.href.indexOf("archive")!=-1) document.write("Current Posts");Bloodhoundblog Budgets Are Sexy Cafe Hayek Carpe Diem Cheap, Healthy, Good Copywriting Tips Core77 Coyote Blog Craig Harper Darwin's Finance Digerati Life, The Division of Labour Dough Roller, The Eclectecon Econlog Economics Roundtable EconomicsUK Entrepreneurial Mind Environmental Economics Escape from Cubicle Nation Execupundit FiscalGeek Fortify Your Oasis Get Rich Slowly Gongol Good Financial Cents HR Bartender Hot Air i4cp Productivity Innocent Bystanders Innovation and Growth Instapundit Intangible Economy I've Paid Twice for This Already Joanne Jacobs Kaus Files Len Penzo dot Com Mahalanobis Making Ripples Market Power Mechonomics Mighty Bargain Hunter Monevator Money Blue Book My Dollar Plan New Economist Newmark's Door Nina Simosko Physorg Private Sector Development Radio Equalizer Real Clear Politics Richard Fernandez Roger L. Simon SCSU Scholars Science and Money Skeptical Optimist Sound Politics SOX First Speculist, The Sports Economist, The squawkfox Three Star Leadership Tim Worstall Tough Money Love Townhall Trusted Advisor Uncommon Misperceptions voluntaryXchange WILLisms Winterspeak
Market LinksBig Picture, The CXO Advisory Group Disciplined Approach to Investing Dividend Guy, The Doug Short Evidence Investing Fat Pitch Financials FX Investment Strategies
Recommended ReadingAngel in the Whirlwind Bailout Nation Cartoon Guide to Statistics A Comprehensive Guide to the Peloponnesian War The Complete Personal Memoirs of Ulysses S. Grant The Count of Monte Cristo Ender's Game Gardner's Art Through the Ages Empire of Wealth How to Make Presentations to Councils and Boards Juran's Quality Handbook Marks' Standard Handbook The Second World War Stocks for the Long Run Why Smart Executives Fail
Recommended ViewingThe Tudors: The Complete Series
Recently ShoppedBoss Black LeatherPlus Executive Chair Microsoft Office 2010 Home & Student LEGO Harry Potter: Years 1-4 The Buddha
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The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.
ZunZun - Exceptional regression analysis tool. Wolfram Integrator - Solve integrals. Do calculus! Create a Graph - Easy-to-use basic graph-making tool. Many Eyes - Data visualization extraordinaire! Wolfram Alpha - Computational knowledge engine. Khan Academy - Math & science video mini-lectures!
Bloodhoundblog Budgets Are Sexy Cafe Hayek Carpe Diem Cheap, Healthy, Good Copywriting Tips Core77 Coyote Blog Craig Harper Darwin's Finance Digerati Life, The Division of Labour Dough Roller, The Eclectecon Econlog Economics Roundtable EconomicsUK Entrepreneurial Mind Environmental Economics Escape from Cubicle Nation Execupundit FiscalGeek Fortify Your Oasis Get Rich Slowly Gongol Good Financial Cents HR Bartender Hot Air i4cp Productivity Innocent Bystanders Innovation and Growth Instapundit Intangible Economy I've Paid Twice for This Already Joanne Jacobs Kaus Files Len Penzo dot Com Mahalanobis Making Ripples Market Power Mechonomics Mighty Bargain Hunter Monevator Money Blue Book My Dollar Plan New Economist Newmark's Door Nina Simosko Physorg Private Sector Development Radio Equalizer Real Clear Politics Richard Fernandez Roger L. Simon SCSU Scholars Science and Money Skeptical Optimist Sound Politics SOX First Speculist, The Sports Economist, The squawkfox Three Star Leadership Tim Worstall Tough Money Love Townhall Trusted Advisor Uncommon Misperceptions voluntaryXchange WILLisms Winterspeak
Big Picture, The CXO Advisory Group Disciplined Approach to Investing Dividend Guy, The Doug Short Evidence Investing Fat Pitch Financials FX Investment Strategies
Angel in the Whirlwind Bailout Nation Cartoon Guide to Statistics A Comprehensive Guide to the Peloponnesian War The Complete Personal Memoirs of Ulysses S. Grant The Count of Monte Cristo Ender's Game Gardner's Art Through the Ages Empire of Wealth How to Make Presentations to Councils and Boards Juran's Quality Handbook Marks' Standard Handbook The Second World War Stocks for the Long Run Why Smart Executives Fail
The Tudors: The Complete Series
Boss Black LeatherPlus Executive Chair Microsoft Office 2010 Home & Student LEGO Harry Potter: Years 1-4 The Buddha
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