Tag Archives: economy

“No Recession, But…”

By Biiwii

Excerpted from the September 13 edition of Notes From the Rabbit Hole, NFTRH 360…

I am personally not yet convinced an ultimate bull market top is in despite the obvious similarities of the recent interim top to 2007 [the first sign in this regard would be a loss of the October 2014 and August 2015 lows]. It could also be a 1998 clone, as we have noted by chart similarities and by global financial similarities (China/Asia). However, in 2007 the stock market did a good job of forecasting the coming “Great Recession” (a sanitized way of saying ‘impulsive unwinding of leverage’). Here is what economists think today (ref. Bloomberg article): http://www.bloomberg.com/news/articles/2015-09-11/here-s-when-economists-expect-to-see-the-next-u-s-recession. 2018 it is, according to a majority of buttoned down dart throwers.

recession predictions by economists, from Bloomberg
Source: Bloomberg News Survey

What were they saying in December 2007? Let’s take a look, also from Bloomberg…

(Dec. 17, 2007): No Recession, But… http://www.bloomberg.com/bw/stories/2007-12-19/no-recession-but.

“The bottom line looks like this: The economists project, on average, that the economy will grow 2.1% from the fourth quarter of 2007 to the end of 2008, vs. 2.6% in 2007. Only two of the forecasters expect a recession, although it might feel like one if there’s sluggish growth over the next couple of quarters, as many predict. Almost all think the risk of a downturn has risen substantially in recent months.”

A year later came (December 1, 2008): US Recession Started in 2007, Longest Since 1980’s http://www.bloomberg.com/apps/news?pid=newsarchive&sid=al4iyIoRhvao.

The point is that the majority of experts usually do not (maybe even never) see recessions coming in advance. That is why they are economists. They will tell us all about its factors and elements after the fact. They will jargon us to death with all the why’s and what for’s after the fact.

Our job is to track events in real time, protect and deploy capital and most definitely not be part of the herd. In service to that, let’s look at one more graph (courtesy of TradingEconomics.com, mark ups mine) and go on our merry way, having fully put in context the opinions of experts like Bloomberg’s recent survey of 31 economists.

Despite already having the hindsight benefit of a readily quantifiable deceleration in economic activity (orange arrows) by December 2007, economists surveyed cautiously predicted 2.1% economic growth on average by the end of 2008. They were only off by about a million miles.

Today, with an uptrend in the GDP growth rate most economist do not see trouble until 2018 or later. Of course they don’t, because all they do is extrapolate trends in good times, as with a similar uptrend leading into the 2001 recession (green arrows) and put their heads in the sand in questionable times (fading GDP into 2007).

gdp growth rate, recession

NFTRH 360 Out Now

By Biiwii

NFTRH 360 does a 360 all around the oh so highly anticipated FOMC ‘decision’, talks a little about the accuracy of professional economists’ recession predictions and talks a lot about the US stock market.

Playing it straight, we update the market’s long and short-term technical status and get more slanted in reviewing why this is not an organic stock market bull or economic recovery.

We cover most of the other usual suspects as well, including global stock markets and a clear view of the gold sector, which made a ‘Hammer’ on Friday, can bounce, but is giving a couple of concerning sentiment signals.

NFTRH 360, another in a long line of quality market reports, is out now.

nftrh 360

Only Two Points Left…

By Alhambra Investment Partners

Only Two Points Left Meaningful in Payrolls; Both Look Downward

There are only two numbers in the monthly payrolls report that have any meaning, and both came up quite short yet again. The first, as always, is the labor force itself as that population estimate more than any other indicates the relative station of the US economy. There has never been any time in recorded economic history where economic growth is satisfactory, let alone booming, and labor participation isn’t rising. As per usual, that continued to be the case, assuming the growing economy, in August.

The labor force was down another 41k last month and remains 115k below January. Since October 2012, the labor force has only added 1.57 million, of which 1.05 million was in January 2015 alone (a likely statistic discontinuity). That means an increase of just 523k where jobs are purported to have been solid and even highly expansionary. In the greater sense of economic advance, even the Establishment Survey’s addition of 7.7 million jobs falls short when compared to the 7.1 million increase in the civilian non-institutional population. None of these figures add up to much actual economic gain, which is the greater sense of the trajectory since the global economy slowed precipitously in 2012.

ABOOK Sept 2015 Payrolls LF (payrolls report) Continue reading Only Two Points Left…

GPD +3.7%; Another Parallel to 2000

By Biiwii

GDP +3.7%; Another Parallel to the Run Up to 2000

marketwatch headline
Click graphic for MW article

As we have been noting for months now, we are in the back end of the economic expansion, where growth in consumption of services is driving the bus.  Here is the breakdown of the most recent Payrolls report from FloatingPath by way of NFTRH 355.


For a country with a relatively strong currency and what it seems to view as a right, even a duty to consume, it makes sense.

In short, Goldilocks is in play with the world gripped in deflation.  Goldilocks is usually a transitional thing.  She tries 3 bowls of porridge, consumes one of them, takes a nap and then gets the hell out of there… or does she get eaten?  I am hazy on my fairy tales.

Anyway, the GDP number is not surprising.  So many parallels to the time period that led up to 2000’s climax are in play now, including this ‘strong dollar spurs consumption’ dynamic.  Another interesting one is the ‘Asian Contagion, part 2’ that is in play.  So we continue to manage the market with the view that this is a correction only (currently in a well-anticipated ‘bounce’ mode), with no need to define what comes next.

s&p 500 monthly chart

Even Slower Now

By Alhambra Investment Partners

June was the for-sure liftoff point early in the year. That followed last year’s for-sure exit as March, April at the latest. Now more than a halfway through 2015 September is increasingly in doubt. They have to start somewhere even if they claim a methodical and slow pace to ensure as little disruption (in their twisted view). As I wrote yesterday, “’Intend to move slowly’ gets slower with each ‘dollar’ wave and that is the relevant motion of policy and economy quite against all the continued propaganda.

The first reaction from the Wall Street Journal is telling in that regard:

The Federal Reserve’s next policy meeting is four weeks away and officials show no clear sign of having settled on a decision about whether to raise short-term interest rates at that time.

That cannot be in light of all the certainty with which the recovery was given and not all that long ago. Last year was 5% GDP and full employment while this year stands as the gaining drip of “downside risks.” At the very least, it shows the FOMC knows nothing when it comes to this economy (and any other).

Continue reading Even Slower Now

Gold’s Safe Haven Status is Not in Doubt

By Steve Saville

Gold is very different from all other commodities. This is due to physical characteristics that caused it to be money for thousands of years and led to its aboveground supply becoming orders of magnitude greater than its annual production*. However, despite the huge size of its existing above ground supply relative to the rate at which new supply is created, that is, despite its massive stocks-to-flow ratio, gold is still a commodity and its US$ price is still affected by the overall trend in commodity prices. In particular, a major decline in commodity prices will naturally put downward pressure on the gold price and a major advance in commodity prices will naturally put upward pressure on the gold price. That’s why gold’s performance can be most clearly ‘seen’ by comparing it to the performances of other commodities, with the most appropriate comparison being with ‘non-monetary’ metals**. Such a comparison reveals that gold has performed exactly as a safe haven should have performed given the economic and financial-market backdrops.

Continue reading Gold’s Safe Haven Status is Not in Doubt

Around the Web

By Biiwii

Market Analysis & News From Around the Interconnected Global Buzz Factory


State of the US Economy

By Biiwii

Actually, this work is by Nick at FloatingPath, an excellent aggregator and illustrator of financial data.  Click the graphic for the full PDF from FloatingPath.com.  Very well done!


Productivity and the Dueling Economies

By Alhambra Investment Partners

Productivity estimates were better in Q2 than certainly Q1, even revised, but that still doesn’t change the clear disassociation between the BLS’s version of the economy and the BEA’s. That disparity becomes even messier as the BEA’s last benchmark revision sawed off significant “output” dating back to the now-recognized 2012 slowdown. In tandem, the BLS only revised hours worked (back to 2010) down by the slightest, almost insignificant amount. They just do not want to show anything less than the Establishment Survey’s unconfirmed recovery.

Since productivity is, in the numbers anyway, a statistical bridge or fudge factor between output and labor activity the hardline approach by the BLS has led to, especially recently, some productivity numbers that just make no sense. Even with Q1 “output” revised up from -1.5% to +0.5% productivity is still negative and not really that much different than the advance or first estimate for Q1.

Continue reading Productivity and the Dueling Economies