Leading Indicators Turn Positive, But Don't Call it a Comeback

Daily Forex Fundamentals | Written by Wachovia Corporation | Oct 20 08 15:03 GMT |

That was not the "all clear" signal you heard. The index of Leading Economic Indicators (LEI) climbed 0.3 percent in September, but the index was boosted higher by an outsized contribution from an increase in the money supply. Our forecast for slower economic growth in the months ahead has not changed. Increase in the Money Supply Buoys Index The U.S. government has attempted to break the log-jam in credit markets by injecting a tremendous amount of cash into the financial system. The increase in the money supply was the largest positive contributor to the LEI in September. Despite the recent up-tic, we expect to see a contraction in economic growth in the months ahead. Same Familiar Challenges: Housing and Job Market The ongoing difficulties in the housing market manifested themselves in the contraction in building permits, a large negative for the LEI in September. Weekly jobless claims were another negative, along with a down month for stocks in September. Both the employment situation and equities look worse so far in October Wachovia Corporation http://www.wachovia.com Disclaimer: The information and opinions herein are for general information use only. Wachovia Corporation and its affiliates, including Wachovia Bank, N.A., do not guarantee their accuracy or completeness, nor does Wachovia Corporation or any of its affiliates, including Wachovia Bank, N.A., assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or any foreign exchange transaction, or as personalized investment advice. Securities and foreign exchange transactions are not FDIC-insured, are not bank-guaranteed, and may lose value.