Are CEOs about to boost the economy?

While consumers remain nervous, the corporate sector is gearing up for increased spending.

By Anthony Mirhaydari Sep 25, 2013 2:19PM

Image: CEO (© Photodisc/Getty Images)People have a lot on their minds right now. Mortgage rates are up. Housing has cooled. Job gains have slowed. And now, Democrats and Republicans are once more at loggerheads over the federal budget and the debt ceiling. Thus the recent weakness in measures of consumer confidence.

 

Expectations for the future, as reported by the University of Michigan's Consumer Sentiment report, have dropped to lowest level in nearly a year.

 

But executives are feeling pretty good. So good, in fact, that we could be looking at a resurgence in economic growth on a scale not seen in more than a decade.

 

Both manufacturing and non-manufacturing ISM surveys have surged on a scale not seen since 2003 -- a period that featured an annual GDP growth rate of nearly 6% versus the 1.6% rate we've averaged over the last four quarters.

 

Another indication comes from Tuesday's Richmond Federal Reserve manufacturing activity survey. While the overall report was a bit of a disappointment (missing expectations on a drop in shipments and hiring) something startling was hidden deep in the details of the report.

 

No, I'm not talking about signs that inflationary pressures -- something I warned about in a recent column -- are bubbling through the supply chain as the prices paid sub-index rose to an 11-month high or that the prices-received sub-index jumped to its highest level since November 2011.

 

While it's true that higher inflation is a proxy measure for faster economic growth (since it reflects increased demand and/or a reduction in available capacity), I'm talking about a much more direct measure of strength.

 

 

I'm talking about the way spending intentions on capital expenditures surged to +31 in September from +15 in August -- reaching 13-year highs.

 

This is a big deal because a lack of corporate investment has been one of the main reasons the economy has been so lackluster to date.

 

 

If this is true, that it'll provide a boost to economically-sensitive material and industrial metal stocks like Molycorp (MCP), which is up 13% since I added it to my Edge Letter Sample Portfolio on Sept. 12.

 

 

Disclosure: Anthony has recommended MCP to his clients.

 

Check out Anthony's new investment newsletter, the Edge, and his money management service, Mirhaydari Capital Management. A two-week free trial has been extended to MSN Money readers. Click the link above to sign up. Mirhaydari can be contacted at anthony@edgeletter.c​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​om​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.

 

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34Comments
Sep 25, 2013 2:57PM
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What exactly is a CEO? Once upon a time, the Founder took that role to retain control while some replacement functioned at the helm. The Founders are all dead and the boobs in control came up the college ranks without ANY entrepreneurial exposure at all. They are-- bookkeeper financiers... not leaders. We are cancer-ridden with "business platforms" that couldn't do real business if their existence depended on it now. This is GARBAGE believing zillionaires are anything more than the makers of our catastrophic end. The government is at loggerheads because citizens no longer have access to them... lobbies do. Lobbies are the spokespeople for corrupt business and wealth. The government is more infected by Law Biz legalese and lawyer mentalities. Can anyone in DC recite our Laws? Why have them if no one can. Time to issue the 2x4's and FIX America. Nobody on a government salary bothered to do it and we gave them 5+ years to get it done. 
Sep 25, 2013 3:00PM
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Share buybacks are not my idea of capital expenditures.  This is what mostly we are seeing. They are insiders selling their shares at top dollar.  And now Wall Mart is saying they see weakening demand and are pulling back on orders? Inflation may be surging but only until pricing collapses, which will happen eventually, then the race to the bottom.   HMMM Tony cmon it just isn't going to happen.
Sep 25, 2013 4:10PM
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ATF Cigs For Sale............. ATF Cigs For Sale......... STEP RIGHT UP FOR HALF PRICE SMOKES.

 

Get em quick they are going Fast and Furious. 

 

 

 

 

Sep 25, 2013 4:42PM
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You used the word intentions of more capital spending by CEO s.  We are tired of words like intentions. Most of the economic reports are not thrilling. But, reporters comb thru them looking for anything they can exploit to make the reports seem positive. Things are bad.  Can we all be honest. Fairy tales are not helpful. We need to make plans for the futures of our families. There are things more important than supporting the stock market.  The so called wealth influence can't buy groceries.
Sep 25, 2013 2:32PM
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Wow! Recovery is just around the corner!

Unfortunately, under the shackles of this administration - it always will be!
Sep 25, 2013 2:55PM
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Spending intentions for capital expenditures?  Still just intentions six months out.
 
"Richmond Fed Manufacturing Data Plunges To Zero" Sept. 24,2013

www . businessinsider . com/september-richmond-federal-reserve-data-2013-9

 

 

Sep 25, 2013 2:54PM
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Budget talks puzzling the investors????  I don't think the investors of this world care too bits about the USA's budget. Perhaps the article headline should be "Budget talks puzzling the Traders and Brokers of Wall Street". They are the one's that are making a big to do over this yearly process. It happened last year and it's happening again this year. And 10 times out of 10 it will happen again next year.
Sep 25, 2013 4:25PM
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How can CEO's boost the economy when the consumer doesn't have money to increase spending?????? And here comes Obamacare which will reduce the consumers spending power!!!!!!

 

The fed should have only three jobs.

 

1. Maintain an accurate and honest CPI.

 

2. Keep the real inflation rate between a deflationary 1% and 0% inflation (no more inflation). This will increase the purchasing power of the consumer. Also, this will bring real earnings to saving. If, savers can earn real income on savings, interest rates will stay low.  Also, it will increase the value of the dollar. This would move money to America (an estimate 5 trillion dollars).

 

3. Replace the fed with a computer program ASAP

Sep 25, 2013 8:18PM
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CEO Boost the Economy That must be a Joke !  Multi- National Corporations out to rape , pillage and plunder the American People ! GREED IS THE ONLY OPTION !
Sep 25, 2013 3:06PM
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Anthony, I hope your reading of the tea leaves is correct. However, I fear the activity you mention is pent up demand, focused by the threat of higher interest rates.
Sep 25, 2013 8:51PM
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We have been waiting for the CEOs for at least 3.5- 4 years; While they have been fattening their pockets and bank accounts offshore...

 

And half our Nation is going to Food Banks.

 

I'm really impressed.

Sep 25, 2013 5:42PM
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Hilarious DLH, hilarious. Gives new meaning to the term Marlboro Men.
Sep 25, 2013 8:16PM
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EX-REPUBLICAN

WHY DID YOU RUN AWAY FROM OUR CONVERSATION

I AM  STILL WAITING ON THE 18 OUTSTANDING OBAMA ACCOMPLISHMENTS

I LISTED 68 BY BUSH THAT YOU REQUESTED
Sep 25, 2013 7:57PM
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Wow...Mirhaydari really is a buffoon. Bloomberg reported that capital spending was below forecast in August, yet we're expected to think that capital spending will increase going forward? Based on rising consumer sentiment? Not!! Based on increased consumer demand? Not! Walmart expects a lackluster Christmas shopping season due to crimped consumers. Without increased consumer demand, there is no reason for increased capital spending. My does MSN continue to keep this idiot???? 
Sep 25, 2013 9:38PM
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YEAH TOG      GO HERE   I KNOW YOU ARE OLD AND SENILE..   YOU DO KNOW HOW TO COPY AND PASTE??               LOVE YA YOU OLD FART

http://money.msn.com/top-stocks/post--6-days-to-a-shutdown-and-all-is-quiet
Sep 25, 2013 2:28PM
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Time to reset tax rates for the upper tiers,
all the more to re-engage business with
realities such as revival of the economy
THEY helped crash. 

When it becomes a choice of being
taxed to death or spending to bring the
system back to more life, I doubt even
the dumbest (or greediest) zillionaire will
have to reflect too far and wide.

Sep 25, 2013 8:53PM
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68 accomplishments you say?....ROTFLMFAO....

 

#5 from the bottom..? LMAO.

Sep 25, 2013 7:38PM
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DYAD:Hey bonehead, the turn around has already happened.The Dow is up over 7,000

points in 4 and a half years and we`ve had 38 straight months of job growth.What moron

have you been listening to ?

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