August 5th, 2017
The RITE REPORT
The following RITE Report generates indices from the monthly compilation of business, economic, & political news snippets from the Wall Street Journal, IBD, U.S. Government, et al.
Chris Angle, Editor
222 Boston Post Road, #244
Waterford, CT 06385
Please note that custom economic and/or macro investment research and wealth advisory services are available on request.
PART 1 - STOCKS
1) Macro-Economic Snippets w/Index
2) Indicators for Technical Analysis
3) Overall Investment Strategy Index
PART 2 - HEDGING
1) Hedging and Inflation Snippets
2) Hedging Summary
PART 1 - STOCKS
1) Macro-Economic Snippets
A) Negative Economic and General Business Data Snippets
IBD: IBD/TIPP Economic Optimism Index Hits 10-Month Low On TrumpCare
WSJ: Forecasters Lower Economic Outlook Amid Congressional Gridlock - Doubts grow over the ability of legislators to enact proposed policies that had sparked optimism
IBD: Meanwhile, the Commerce Department reported that retail sales slipped 0.2% in June, while sales excluding autos also declined 0.2% from May.
WSJ: Existing-Home Sales Slide as Prices Surge on Tight Inventory
Sales of previously owned U.S. homes fell 1.8% in June
WSJ: Eurozone Economy Slows in July, Survey Shows
FRED: Velocity of M2 Money Stock - decreased from Q1 1.431 to Q2 2017: 1.425
BEA: Personal income decreased $3.5 billion (less than -0.1 percent) in June according to estimates released today by the Bureau of Economic Analysis.
BEA: Disposable personal income (DPI) decreased $4.2 billion (less than -0.1 percent)
WSJ: China’s Manufacturing Gauges Offer Mixed Messages - The Caixin China manufacturing purchasing managers index hit its highest level in four months, but the government’s official PMI dropped
IBD: The exports orders index fell 2 points to 57.5. The Production index cooled to 60.6 from 62.4. The order backlogs measure fell to 55 from 57. The prices paid index popped 7 points to 62.
Total of Negative General Business and Economic News Snippets: 10
B) Positive Economic and General Business News Snippets
IBD: The Institute for Supply Management's manufacturing survey index out Monday unexpectedly surged to 57.8 from 54.9 in May from 54.8 in April, as the factory sector shifted into faster growth.
IBD: The IBD/TIPP Economic Optimism Index slipped in July, but still marks the 10th straight month of overall optimism.
IBD: The U.S. economy added 222,000 jobs in June, as the jobless rate ticked up to 4.4%, the Labor Department reported on Friday, the latest sign of renewed economic momentum.
WSJ: Eurozone Industrial Output Rises at Fastest Rate in Nearly Six Years - Upbeat data gives latest indication of recovery in the 19-country bloc
BLS: Real average hourly earnings increased 0.2 percent in June, seasonally adjusted. Average hourly earnings increased 0.2 percent, and CPI-U was unchanged. Real average weekly earnings increased 0.5 percent over the month.
IBD: But industrial production rose 0.4%, just above expectations, with May revised up to a slim gain, the Federal Reserve reported. Manufacturing output rose 0.2%.
ESA: The U.S. Census Bureau released new data today on building permits in June 2017 showing a seasonally adjusted annual rate (SAAR) of 1,254,000, up 7.4 percent from the revised May rate, and up 5.1 percent from June 2016.
ESA: Housing starts in June 2017 were at a SAAR of 1,215,000, up 8.3 percent from May 2016, and up 2.1 percent from June 2016.
CPB: The CPB World Trade Monitor shows that the volume of world trade increased 2.0% month‐on‐month
BEA: Real gross domestic product increased at an annual rate of 2.6 percent in the second quarter of 2017 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.2 percent (revised)
WSJ: U.S. Economy Glides Back to Steady, Modest Growth Path
Economy enters ninth year of expansion, growing at a 2.6% annual rate in the second quarter
BEA: Personal consumption expenditures (PCE) increased $8.1 billion (0.1 percent).
WSJ: Eurozone Economy Speeds Up, Raising Chance of Stimulus Taper
Currency area’s GDP grew faster than the U.S. in the three months to June on an annualized basis
IBD: U.S. Manufacturing Growth Remains Strong: ISM Index - The ISM manufacturing index fell 1.4 points to 56.3, in line with estimates and well above the break-even 50 level. The employment gauge cooled to 55.2 from 57.2. ISM's gauge of new orders eased to 60.4 from 63.5. While the ISM index settled back from a June level that was the second-highest since 2011.
IBD: A pickup in the ISM's prices-paid index indicates more factories also reported paying higher prices for inputs and raw materials last month, also a reflection of improving world demand.
Total of Positive General Business and Economic News Snippets: 15
Table of Positive v. Negative General Economic & Business News
Month % Neg % Pos
Jan 40% 60%
Feb 41% 59%
March 47% 53%
April 49% 51%
May 42% 58%
June 38% 62%
July 54% 46%
Aug 31% 69%
Sept 38% 62%
Oct 32% 68%
Nov 14% 86%
Dec. 32% 68%
Jan 34% 66%
Feb 04% 96%
Mar 19% 81%
April 30% 70%
May 22% 78%
June 44% 56%
July 40% 60%
3) Economic Analysis/Indicator Summary
(DAILY) - HIGH YIELD BONDS (HYG)
Upticked (06/30 - 88.39; 8/4 - 88.50) Positive
(DAILY) - iSHARES SELECT DIVIDEND (DVY)
(06/30 - 92.21; 8/4 - 92.80) Positive
08/01 - PURCHASING MANAGERS INDEX
Mfg still Expanding: 57.8 to 56.3 Positive
08/01 - CONSTRUCTION SPENDING (Census Bureau) Dn - 1.3% month to month - Negative; Year over year + 1.6% Positive; Combined - Neutral
08/03 - MANUFACTURERS’ SHIPMENTS, INVENTORIES, & ORDERS (Census Bureau): + 3%: Positive
08/02 - (BLS) UNEMPLOYMENT Overall: Positive
07/10 - Unemployment Rate (BLS): Same at 4.3%: (Neutral)
Civilian Labor Force Participation Rate (BLS): Uptick 62.7 - 62.9% (Positive)
Employment-Population Ratio (BLS): Uptick 60.0% - 60.9% (Positive)
06/05 - Employment Trends Index (The Conference Board TM) Decreased (Negative)
06/06 - QUARTERLY FINANCIAL REPORT - MFG, MINING, WHOLESALE, SERVICE (Census Bureau) - Manufacturing corporations' seasonally adjusted after-tax profits were $146.5 billion for the first quarter of 2017, up $3.5 (+/- 0.8) billion from fourth quarter of 2016. Positive
07/14 - RETAIL SALES (Dept of Com.) -0.2% from previous month: Negative
07/14 - MANUFACTURING AND TRADE INVENTORIES AND SALES (Census Bureau): + 0.3%: Positive
07/15 - INDUSTRIAL PRODUCTION INDEX (INDPRO) - Positive
Dntick: 105.1241 - 105.0284 105.1600 Positive
(Year over Year 102.7552 - 105.1600 Positive
07/19 - HOUSING STARTS (Dept of Commerce): Positive
(month over month) + 8.3% Positive
(yr over yr) + 2.1% Positive
07/20 - CONFERENCE BOARD
LEADING ECONOMIC INDICATORS ™ Increased: Positive
07/20 - CONFERENCE BOARD
COINCIDENT ECONOMIC INDICATORS ™ Increased: Positive
07/26 - NEW RESIDENTIAL SALES (Census Bureau) + 0.8% Positive
(Overall in uptrend)
07/24 - EXISTING HOME SALES (NAR) - 1.8%: Negative
(Overall in uptrend: + % yr over yr)
07/28 - REAL GDP (BEA) + 2.6%: Positive
08/01 - PERSONAL CONSUMPTION EXPENDITURES (Dept of Commerce - BEA) + 0.1%: Positive
08/01 - PERSONAL INCOME (Dept of Commerce - BEA) - 0.1%: Negative
07/25 - CONSUMER CONFIDENCE
(Conference BoardTM) Increased: Positive
07/31 - RESTAURANT PERFORMANCE INDEX: 101.0 - Expanding: Positive
05/29 - Corporate Profits BEA Decreased: Negative
Profits from current production (corporate profits with inventory valuation adjustment and capital consumption adjustment) decreased $48.4 billion in the first quarter, in contrast to an increase of $11.2 billion in the fourth quarter.
4) RITE Investment Strategy Index
0 = Neutral;
+10 = High Opportunity Environment;
-10 = Extreme Negative Risk Miasma
EFFORT, RISK, FREEDOM,
1) Domestic Political Risk + 7 Good: A tax reduction package will pass
2) Tax Risk + 6 Taxes to go down but when is not clear
3) Individual Incentive (Freedom) + 8 Regulations are to decrease in 2017
4) Production of Knowledge + 6 Economy positive, GDP increased to +2.6
5) Technical Analysis + 8 Market: Bullish
of the U.S. Stock Markets
6) General Business
& Economic Snippets + 4 Positive Snippets 60%
7) Economic Indicators + 8 Improved: 14/4/3 to
16 Pos; 4 Neg; 1 Neu
Sum of Total + 47
Average of Total + 6.7
RITE Strategy Index: 83.5%
History of Strategy Index (Started 2009) Statistics noted below are approximate.
Month/Yr Index % DJIA Gold Oil WSJ Dollar Index
Feb 29 56.1% 16,516.50 1,244.7 33.74 89.88
Mar 31 55.6% 17,685.09 1,233.1 37.79 86.58
April 30 53.3% 17,773.64 1,294.9 45.99 84.98
May 31 57.2% 17,787.20 1,220.4 48.82 87.50
July 1 57.8% 17,929.99 1,344.9 49.28 86.58
July 29 55.5% 18,432.24 1,357.9 41.38 86.50
Sept 02 58.9% 18,491.96 1,328.8 44.20 86.84
Sept. 30 57.9% 18,308.15 1,318.8 48.05 86.37
Nov 2 60.7% 17,959.64 1,305.7 45.81 87.70
Dec 1 77.1% 19,191.93 1,176.3 50.64 91.50
Jan 2 77.1% 19,762.60 1,152.0 53.89 92.94
Feb 9 87.8% 20,172.40 1,232.9 53.03 90.94
Mar 1 90.0% 21,142.85 1,243.0 53.93 91.41
April 4 88.5% 20,689.24 1,257.2 51.32 90.29
May 3 85.7% 20,579.90 1,248.5 47.82 89.89
June 7 85.0% 21,173.69 1,293.2 45.92 88.10
June 30 82.1% 21,349.63 1,241.2 46.29 87.74
Aug 4 83.5% 22,092.81 1,264.3 49.52 86.32
EQUITY MARKET CONCLUSION:
Stocks: Stay Long
The RITE Index is high. This indicates strong bull market forces present.
PART 2: HEDGING
1) HEDGING/INFLATION SNIPPETS FROM THE WSJ
DEFLATION SNIPPETS 2/67%
BLS: In June, the Consumer Price Index for All Urban Consumers was unchanged seasonally adjusted; rising 1.6 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy rose 0.1 percent in June (SA); up 1.7 percent over the year
WSJ: Fed’s preferred measure of inflation flat in June
INFLATION SNIPPETS 1/33%
The Producer Price Index for final demand rose 0.1 percent in June after no change in May. In June, prices for final demand services increased 0.2 percent and the index for final demand goods climbed 0.1 percent. Final demand prices advanced 2.0 percent for the 12 months ending in June.
(RITE Report Issue Date is the first of the month; Statistical Data is the latest closing price which is noted in the WSJ on the close of the last day of the month, but the RITE Report does not represent that these data are accurate.)
Month Inflationdata.com CRB
Annual Inflation Rate
Sept 02 0.84% 179.99
Sept 30 1.06% 186.32
Nov 02 1.46% 184.29
Dec 01 1.64% 191.41
Dec 31 1.69% 192.512
Feb 09 2.07% 192.756
Mar 01 2.50% 190.81
April 04 2.74% 185.59
May 2.38% 176.96
June 2.20% 176.30
June 30 1.87% 174.776
July 31 1.63 180.68
2) HEDGING SUMMARY
Inflation remains subdued.
Gold: No call
Oil: No call.
The U.S. Dollar: Stay Long (Economy to go up)
For your reference we include a directory of:
The RITE Report Major Trade Advice Summary
Mrkt Level Market Advice
2009/05/01 8,212 Stocks Go long.
2009/05/01 895 Gold Go long.
2009/05/01 USD Go short
2009/06/01 51.12 Oil Go long
2010/02/01 USD Stop going short;
Take profits. get out.
2011/04/01 12,376 Stocks Market to go sideways;
end of bull.
2011/05/01 12,763 Stocks Take profits 55.4% Gain
2011/06/01 102.7 Oil Go Neutral 100.9% Gain
2011/06/01 12,441 Stocks Take profits (re-confirmation)
2011/07/01 USD Go short
2011/08/01 USD Cover the short; no direction
2011/08/01 12,240 Stocks Trading Range
2012/03/01 107 Oil Go long
2012/05/01 104 Oil Go neutral 2.8% Loss
2012/06/01 12,772 Stocks Take profits; a downtrend started
2012/06/01 1,564 Gold Sell: Take profits 74.7% Gain
2012/07/01 1,604 Gold Buy: Go long
2012/08/01 13,090 Stocks Advised not to be in the Stock Market at all
2012/09/01 80.025 USD Go short
2012/11/01 13,096 Stocks Confirmation: Not to be in Stock Market
2013/01/02 13,104.30 Stocks Go Long
2013/03/01 82.47 USD Index Take loss; go neutral
2013/05/31 15,115.57 Stocks - Take profits 15.3% Profit
2013/08/01 15,499.54 Stocks Go Long
2013/12/01 92.78 Oil Go Short
2014/01/02 98.70 Oil Take off short: Go Neutral 6.38% Loss
2014/02/28 16,321.71 Stocks Take profit; go to cash 5.0% Increase
2014/03/01 16,532.61 Stocks Go long (Unrealized gain potential)
2014/10/31 1,173.5 Gold Sell (1,604 to 1,173.5 loss of 430.5) 36.8% loss
2015/01/30 1,283.0 Gold Go long
2016/04/04 35.32 Oil Go long
2016/07/01 49.05 Oil Take Profit - 38% Gain
2016/12/02 1,176.3 Gold Sell - Loss 8.3%
2016/12/02. 91.50 WSJ Dollar Index Go Long
Stocks (DJIA) 22,092.81 Stay Long (Unrealized gain potential)
Gold 1,264.3 No call
US Dollar 1,264.3 Stay Long (Unrealized loss potential)
Oil 49.52 Neutral; No Call
Please note that custom economic and/or macro investment research and advisory services are available on request.
1) Past performance is not indicative of future results.
2) Trading stocks, futures, and options involves substantial risk of loss and is not suitable for all investors.
222 Boston Post Rd., #244
Waterford, CT 06385
(The RITE Report’s name was derived from the acronym of the four variables inherent in all economic transactions; Risk, Information/Knowledge, Time, and Effort. Of course, this would be for a service, and if the product were a material good, there would be an additional factor of Material - or Land as the economist would say. See The Philosophical Equations of Economics at www.philosophypublishing.com for further info on this subject.)
FOR YOUR REFERENCE
1) Chris Angle is the author of:
The Nature of Aesthetics - 978-0-9661126-4-1
Defining Ethics Good & Evil - 978-0-9661126-5-8
Truth and the Nature of Decisions - 978-0-9661126-6-5
The Philosophical Equations of Economics - 978-0-9661126-3-4
These books may be viewed at: www.philosophypublishing.com
2) Chris Angle is the host of The Philosophical Angle, a TV and Podcast Program, which discusses concepts in current media.
1) Past performance is not indicative of future results.
2) Trading stocks, futures, and options involves substantial risk of loss and is not suitable for all investors. Carefully consider the suitability based upon your experience, objectives, financial resources and other relevant circumstances. Alternative investment products, including hedge funds and managed futures, involve a high degree of risk. Alternative investment performance can be volatile and are not suitable for all investors. An investor could lose all or a substantial amount of his or her investment.
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4) The RITE Report has been prepared either from publicly available information or reflects the opinions of the author. Information contained in this report is believed to be reliable but may not have been independently verified. The RITE Report does not guarantee, represent or warrant, or accept any responsibility or liability as to, the accuracy, completeness or appropriateness of the information contained herein. At no time will the RITE Report make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Information contained herein may not be current due to, among other things, changes in the financial markets or economic environment. Opinions reflected in the materials are subject to change without notice. Forecasts represent estimates. Information provided by the RITE Report is expressed in good faith, but it is not guaranteed. Long-term success, trading or investing in the markets, demands recognition of the fact that error and uncertainty are part of any forecasting effort. Investing carries risk of losses. Information provided by the RITE Report does not constitute, and should not be used as a substitute for tax, legal, or investment advice. Please ask your broker or your advisor to explain all risks before making any trading and investing decisions.
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