The LPL Financial Current Conditions Index is a weekly measure of the conditions that underline 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 been a useful tool for investment decision making.
Over the past week, the LPL Financial Current Conditions Index rose slightly to 236, the highest level in the past year. The stock market has tracked the CCI closely this year as it did last year reflecting the attention investors are paying to real time measures of economic and market conditions as they assess the likelihood of a successful transition from recovery to sustainable growth. The level of the Current Conditions Index indicates an environment fostering strong growth in the economy and markets. We expect that the CCI may weaken in the latter half of 2010 to reflect an environment of slow growth.
The CCI component that demonstrated the most improvement during the week was Shipping Traffic as inventory restocking continues along with rising demand. Retail Sales also improved with sales on a year-over-year basis jumping to 4.6% last week from 4.0% the prior week. Business Lending demonstrated some improvement in each of the past two weeks. While still down 18% year-over-year, bank loans have demonstrated a modest pick-up for the first time since early January. Disappointingly, Mortgage Applications deteriorated slightly in the past week even as interest rates fell slightly and the looming expiration of the first time homebuyer tax credit (buyers must have a signed agreement of sale by April 30 to qualify).
