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Sentiment And Economic Data Mostly Positive

A colleague and I just returned from a week long trip in south Florida visiting some of our clients on both the east and west coast of the state. One notable factor was the very high level of activity everywhere we visited. Restaurants were all packed, road traffic was unbelievably jam packed and the number of semis on the road seemed higher than usual, and usually those trucks do not drive around empty. We visited a new golf course development and the activity was anything but recessionary like. The bottom line is sentiment is highly positive and supports recent economic data releases focused on sentiment and economic indicators.

Several weeks ago the Conference Board released data for the Leading Economic Index through January and the report noted the LEI increased 1.0% in January to 108.1 and follows a .6% increase in December and a .4% increase in November. In other words, the LEI has accelerated over the last three months. The report stated,

"The U.S. LEI accelerated further in January and continues to point to robust economic growth in the first half of 2018. While the recent stock market volatility will not be reflected in the U.S. LEI until next month, consumers' and business' outlook on the economy had been improving for several months and should not be greatly impacted," said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. "The leading indicators reflect an economy with widespread strengths coming from financial conditions, manufacturing, residential construction, and labor markets" (emphasis added.)

The first chart below shows a long-term view of the year-over-year change in the Leading Economic Index. Historically, recessionary periods do not occur until the year-over-year percentage change is negative as noted by the yellow circles on the chart. The recent LEI report shows a continued increase in

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HORAN Capital Advisors is an SEC registered investment advisor that manages investment portfolios for individuals and institutions. Our firm utilizes a disciplined investing approach that should create wealth for our clients over time. Our investment bias is to invest in companies that generate a steady return over time, i.e., singles and doubles. This singles and doubles approach tends to lead to investments in higher quality dividend growth/cash flow growth companies. On the other hand, there are times when a company's stock price seems to be trading below its fair valuation. Short term gains are possible in these situations. I have been managing investment portfolios for individuals and institutions for over fifteen years and believe investing is like running a marathon and not a sprint. Taking the road less traveled, more often than not, leads to higher returns. Visit: The Blog of HORAN Capital Advisors at (https://horanwealth.com/insights/market-commentary-blog)

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Comments (2)

Won't a trade war change prospects for the market quickly and dramatically?
OK, but with the high level of consumer debt, and consumer credit delinquencies rising, the stock market will turn down well before we go into recession.
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