ECRI Watch: Be prepared for a shocker!

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The ECRI Weekly Indicator for the week ended August 20 came in at 120.9 compared to the previous week’s downward adjusted 120.7. The closely watched ECRI WLI Smoothed Annualised Growth Rate came in at -9.91% compared to the downward adjusted -10.1% (previously -10.0%) of the previous week. That compares to our forecast of “weakened”.

In the same week the smoothed annualised growth rate of the S&P 500 growth rate fell from 0.6% to -1.5%.

Sources: ECRI (various internet sources); I-Net; Plexus Asset Management.

The smoothed annualised growth rate of the 10-year bond yield deteriorated further to -43.4% from -38.2%.

Sources: ECRI (various internet sources); I-Net; Plexus Asset Management.

Initial jobless claims decreased from an adjusted 504 000 (500 000 previously) to 473 000 in the week to 21 August – significantly below market expectations. While the smoothed annualised growth rate of initial jobless claims continued to be positive, the growth rate declined from an adjusted 2.6% (2.1% previously) to 2.0%.

Sources: ECRI (various internet sources); FRED; I-Net; Plexus Asset Management.

The ECRI WLI smoothed annualised growth rate for the week ended 27 August (to be released today, 3 September) is likely to be a shocker. Based on last week’s closing level the smoothed annualised growth rate of the S&P 500 weakened significantly from -1.5% in the previous week to minus 5.2%. The smoothed annualised growth rate of the 10-year bond yield continued to weaken rapidly from -43.4% to -47.6% last week. Only initial jobless claims may save the day somewhat. If jobless claims remain at 473 000 the smoothed annualised growth rate of initial jobless claims is likely to decrease to 0.5% from 2.0% the previous week.

Gauge of this week’s ECRI WLI Smoothed Annualised Growth rate based on the week closing 27 August 2010:

ComponentLast week

20 August

Previous week

13 August

Momentum
Smoothed Annualised Growth
S&P 500-5.2%-1.5%Weakened sharply
10-year bond yield-47.6%-43.4%Weakened sharply
Initial jobless claims*+0.5%+2.0%Losing momentum
Conclusion
ECRI WLI Weakened sharply-9.9%

*Based on unchanged 473 000 initial claims.

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1 comment to ECRI Watch: Be prepared for a shocker!

  • bob

    Hi,

    I believe that the other 3 components of the ecri index are money supply, JOC industrial prices, and mortage applications.

    What are the smoothed growth rates for these ?

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