Over the past week, the LPL Financial Current Conditions Index rose by 0.2 to 1.6, making a new high for the year. The index reflects current conditions aligned with the high end of our base case outlook and low end of our bull case outlook, established at the end of last year. Consistent with this outcome, the markets have achieved gains better than our original base case outlook for 2009, but not as strong as those in our bull case.
The improvement in the index can be primarily attributed to Retail Sales and Shipping Traffic. Most components of the CCI have improved substantially since the start of the year.
The LPL Financial Current Conditions Index is a weekly measure of the conditions that underpin our outlook for the markets and economy. The CCI provides real-time context and insight into the trends that shape our recommended actions to manage portfolios. This index has proven to be a useful tool for investment decision-making. This weekly index is not intended to be a leading index or predictive of where conditions are headed, but a coincident measure of where they are right now. We want to track the conditions in real-time to aid in investment decision making.
There are thousands of indicators-some lead the economy, some lag, while others merely offer a lot of statistical noise. We chose to create our own index tailored to the current environment to provide the clearest and most useful way to track how conditions are aligned with the expectations embedded in our investment recommendations. The components of the CCI are periodically changed to retune the index to those factors most critical to the markets and economy over the next year so it may continue to be a valuable investment decision-making tool.
Comments on this entry are closed.