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Posts Tagged ‘L-shaped recovery’

When will the Fed start hiking?

When will the Fed start hiking?

Courtesy of Mish

Calculated Risk has an interesting chart and discussion on the unemployment rate and Fed rate hikes.

Unless inflation picks up significantly (unlikely in the near term with so much slack in the system), it is unlikely that the Fed will increase the Fed’s Fund rate until sometime after the unemployment rate peaks.

Following the peak unemployment rate in 2003 of 6.3%, the Fed waited a year to raise rates. The unemployment rate had fallen to 5.6% in June 2004 before the Fed raised rates.

Although there are other considerations, since the unemployment rate will probably continue to increase into 2010, I don’t expect the Fed to raise rates until late in 2010 at the earliest – and more likely sometime in 2011.

I think CR is a little optimistic on the recovery. However, I certainly agree with him on the inflation front. Please see Is Pent-Up Inflation From Fed Printing Waiting On Deck? for details.

Here is Calculated Risk’s chart. My annotations are in hot pink.

click on chart for sharper image

Look for unemployment to rise until late 2010 at a minimum. Mid-to-late 2011 is a distinct possibility as is an unemployment rate north of 11%. Of course real unemployment is already approaching 20%.

Assessing the Odds of a Double-Dip Recession

It is rare that I agree with Paul Krugman, even more so when I like his assessment more than Paul Kasriel’s. However, I agree with Krugman’s assessment that unemployment will not peak until 2011 and a double dip recession is a possibility.

Please consider this snip from Assessing the Odds of a Double Dip Recession for details.

Unemployment in the United States will peak only in early 2011 because of a slow and painful recovery from the global economic crisis, Nobel Prize-winning economist Paul Krugman said on Wednesday. He said the global economy seems to be stabilizing at a level that is "unacceptably poor" and added it is possible that the recession will be a double-dip one.

In this recession, assuming one believes it has ended now, unemployment is likely to keep rising for another 18 months. Yes I know that unemployment is supposed to be a "lagging indicator" but "lag" does not do justice to what happened in 2001 or what I think is likely


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Assessing the Odds of a Double Dip Recession

Assessing the Odds of a Double Dip Recession

recessionCourtesy of Mish

If you have a job and it is not in jeopardy, pull out the party hats and toot your horns. The OECD calls an end to the global recession.

The global downturn was effectively declared over yesterday, with the Organisation for Economic Co-operation and Development (OECD) revealing that "clear signs of recovery are now visible" in all seven of the leading Western economies, as well as in each of the key "Bric" nations.

The OECD’s composite leading indicators suggest that activity is now improving in all of the world’s most significant 11 economies – the leading seven, consisting of the US, UK, Germany, Italy, France, Canada and Japan, and the Bric nations of Brazil, Russia, India and China – and in almost every case at a faster pace than previously.

Each of the 11 economies saw an improvement in July, the OECD said, with only France improving at a slower rate than in June. The July figures are the most encouraging since the indices began ticking downwards during the first quarter of last year.

The OECD’s leading indicators are considered a key economic yardstick because they measure the sectors of countries’ economies that tend to react first to upswings and downturns. As such they provide early evidence of the way in which the overall economy is progressing.

Unemployment Likely To Rise For A Year

If you don’t have a job or your job is in jeopardy you may not feel like partying much. Unemployment is likely to rise for another year.

Moreover, there are strong reasons to expect Structurally High Unemployment For A Decade.

In the Incredible Shrinking Boomer Economy I noted a harsh reality quote of Bernanke:

"It takes GDP growth of about 2.5 percent to keep the jobless rate constant. But the Fed expects growth of only about 1 percent in the last six months of the year. So that’s not enough to bring down the unemployment rate."

Pray tell what happens if GDP can’t exceed 2.5% for a couple of years? What about a decade (or on and off for a decade)?

If you have come to the conclusion that we are going to have structurally high unemployment for a decade, you have come to the right conclusion. Ask yourself: Is that what the stock


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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743"

Thank you for you time!

 
 

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There's ALWAYS a divergence

There’s ALWAYS a divergence

Courtesy of 

“There’s no science behind that, people look at that kind of thing and they point out what they want to see.”

In the above image, you’ll see the photograph that became the cover shot for the Beatle’s final album, Abbey Road. The photo contains one of the most talked about divergences of all time – Paul McCartney being both shoeless and out of step with the rest of the band. This divergence sparked all manner of conspiracy theories as people took observations from the image and ascribed a deeper meaning...



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Zero Hedge

Fed Tapers Another $10 Billion, Raises Inflation Concerns, Plosser Dissents - Statement Redline

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As expected, The FOMC continued its taper pace at $10bn but what was supposed to be a 'steady as she goes' statement had a few surprises:

  • *PLOSSER DISSENTS ON DECISION, CITING GUIDANCE ON RATE OUTLOOK
  • *FOMC SEES SIGNIFICANT UNDERUTILIZATION OF LABOR RESOURCES
  • *FOMC: ODDS OF PERSISTENT SUB-2% INFLATION `DIMINISHED SOMEWHAT'

More of the same but some modestly hawkish sentiment sneaking in regarding improving labor markets. Oddly - no trade recommendations from Yellen. 

Of note, the addition of the following language about labor slack:

...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Chart School

Real GDP Per Capita Rises to 3.31%

Courtesy of Doug Short.

Earlier today we learned that the Advance Estimate for Q2 2014 real GDP came in at 3.95 percent (rounded to 4 percent), up from -2.1 percent for the revised Q1 data and well above most forecasts. Real GDP per capita was somewhat lower at 3.31 percent.

Here is a chart of real GDP per capita growth since 1960. For this analysis I've chained in today's dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence my 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED series POPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale...



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Insider Scoop

Orbitz Worldwide Annouces Large Stakeholder Will Sell Shares In Public Offering

Courtesy of Benzinga.

Related OWW Morning Market Losers UPDATE: Oppenheimer Initiates Coverage On Orbitz Powerful Proxy Adviser Blasts Target Board Over Breach (Fox Business)

In a press release Wednesday, Orbitz Worldwide (NYSE: OWW) announced its largest stakeholder will sell 20 million shares of the company.

Orbitz released a separate press release stating mostly ...



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Option Review

Kellogg Call Options Active Ahead Of Earnings

Shares in packaged foods producer Kellogg Co. (Ticker: K) are in positive territory on Monday afternoon, trading up by roughly 0.20% at $65.48 as of 2:20 p.m. ET. Options volume on the stock is well above average levels today, with around 12,500 contracts traded on the name versus an average daily reading of around 1,700 contracts. Most of the volume is concentrated in September expiry calls, perhaps ahead of the company’s second-quarter earnings report set for release ahead of the opening bell on Thursday. Time and sales data suggests traders are snapping up calls at the Sep 67.5, 70.0 and 72.5 strikes. Volume is heaviest in the Sep 72.5 strike calls, with around 4,600 contracts traded against sizable open interest of approximately 11,800 contracts. It looks like traders paid an average premium of $0.37 per contrac...



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Sabrient

Sector Detector: Bold bulls dare meek bears to take another crack

Courtesy of Sabrient Systems and Gradient Analytics

Once again, stocks have shown some inkling of weakness. But every other time for almost three years running, the bears have failed to pile on and get a real correction in gear. Will this time be different? Bulls are almost daring them to try it, putting forth their best Dirty Harry impression: “Go ahead, make my day.” Despite weak or neutral charts and moderately bullish (at best) sector rankings, the trend is definitely on the side of the bulls, not to mention the bears’ neurotic skittishness about emerging into the sunlight.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, incl...



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OpTrader

Swing trading portfolio - week of July 28th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW in the comments below each post. 

Our weekly newsletter Stock World Weekly is ready for your enjoyment.

Read about the week ahead, trade ideas from Phil, and more. Please click here and sign in with your PSW user name and password. Or take a free trial.

We appreciate your feedback--please let us know what you think in the comment section below.  

...

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Digital Currencies

BitLicense Part 1 - Can Poorly Thought Out Regulation Drive the US Economy Back into the Dark Ages?

Courtesy of Reggie Middleton.

An Op-Ed piece penned by Veritaseum Chief Contracts Officer, Matt Bogosian

This past weekend (despite American Airlines' best efforts), Reggie and I made it to the Second Annual North American Bitcoin Conference in Chicago. While there were some very creative (and very ambitious) ideas on how to try to realize the disruptive Bitcoin protocol, one of the predominant topics of discussion was New York Superintendent of Financial Services Benjamin Lawsky's proposed Bitcoin regulations (the BitLicense proposal) - percieved by many participants at the event as an apparent ...



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Market Shadows

Danger: Falling Prices

Danger: Falling Prices

By Dr. Paul Price of Market Shadows

 

We tried holding up stock prices but couldn’t get the job done. Market Shadows’ Virtual Value Portfolio dipped by 2% during the week but still holds on to a market-beating 8.45% gain YTD. There was no escaping the downdraft after a major Portuguese bank failed. Of all the triggers for a large selloff, I’d guess the Portuguese bank failure was pretty far down most people's list of "things to worry about." 

All three major indices gave up some ground with the Nasdaq composite taking the hardest hi...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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