Today’s results of the Conference Board’s Leading Economic Indicators showed another monthly increase climbing .3% compared to December 2009 bringing the annual increase to 8.92% and leaving the index at a level of 107.4.On the face of it this is clearly a Bullish development as this series (an aggregate of 10 component leading indices) is signaling a clear shift from leading contraction to expansion.
Although, one has to keep in mind that the leading index is strongly influenced by growth in the money supply (M2), Average weekly manufacturing hours and the price of stocks (S&P500).
Could we be headed into a second dip (… similar to mid-1981) as the government’s Keynesian chicanery shows itself to have only propped demand and temporary inventory restocking but failed to encourage real “organic” demand?
Only time will tell…
