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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Phil's Favorites

The Market Message of the Midterms

 

The Market Message of the Midterms

Courtesy of 

I really liked Ari Wald’s weekly chart book for Oppenheimer this weekend.

Ari is arguing that the put/call ratio has jumped to a pessimistic extreme auguring well for a short-term buying opportunity. He does not believe the downturn in market breadth (NYSE advance-decline line) has put in enough time to serve as confirmation that the top of the 2016-? cyclical rally has peaked.

For my Chart o’ the Day, here’s an interesting look at the current market environment versus the last time we traded through the midterm elections in 2014…

...



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Zero Hedge

Tesla Employees Describe Musk As Polarizing, Wasteful Micromanager In New Expose

Courtesy of ZeroHedge. View original post here.

A new CNBC expose on Tesla, the product of conversations with 35 current and former employees, has revealed Elon Musk to be a polarizing and wasteful boss who micromanages too much.

The extended report gives yet another look into a personality and work environment that helps explain the exodus of senior executives that the company has suffered over its short lifespan; it also touches on some "creative" accounting allegedly taking ...



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Kimble Charting Solutions

Stock Market Crash Deja Vu? Keep An Eye On This Pattern!

Courtesy of Chris Kimble.

Just over 3 weeks ago, I shared a chart looking at the divergence that has been brewing under the surface of the S&P 500 (NYSEARCA:SPY). Since that post, the S&P 500 finds itself in a deep pullback, with other key stock market indices hitting correction territory at their lows.

Today we provide another look at the divergence and highlight why it’s time for investors to pay closer attention. In the chart below, we compare today’s setup to 2000 and 2007 and the market crashes that followed.  Note, though, that we have NOT broken trend support yet.

Similar to today, in 2000 and 2007 the S&P 500 made a...



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Chart School

History Rhymes with the Dow

Courtesy of Read the Ticker.

The next 10 years, or even the next 2 years will not be like any of the years in the past 10. Risk is moving closer and closer to the surface.

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Market risks coming to the surface:

1) Higher interest rates.

2) US Congress control.

3) China vs USA in trade.

4) World wide Leverage.

5) World wide liquidity issues.

6) US Pensions.

7) Corporate bond market....



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Digital Currencies

Grocers: Get ready to join the blockchain party

 

Grocers: Get ready to join the blockchain party

Five people died and more than 200 got sick during a 2018 E. coli outbreak, the largest in more than a decade. The bacteria was traced to contaminated romaine lettuce. (Shutterstock)

Courtesy of Sylvain Charlebois, Dalhousie University

In the wake of this year’s large E. coli outbreak, Walmart notified its leafy green suppliers that they must be using blockchain technology to trace their products before the end of 2019.

Walmart, one of the world’s largest retailers, has be...



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Insider Scoop

10 Stocks To Watch For October 18, 2018

Courtesy of Benzinga.

Some of the stocks that may grab investor focus today are:

  • Wall Street expects Philip Morris International Inc. (NYSE: PM) to report quarterly earnings at $1.27 per share on revenue of $7.15 billion before the opening bell. Philip Morris shares fell 0.07 percent to $84.50 in after-hours trading.
  • Analysts expect PayPal Holdings, Inc. (NASDAQ: ...


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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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Members' Corner

Why obvious lies still make good propaganda

 

This is very good; it's about "firehosing", a type of propaganda, and how it works.

Why obvious lies still make good propaganda

A 2016 report described Russian propaganda as:
• high in volume
• rapid, continuous and repetitive
• having no commitment to objective reality
• lacking consistency

...

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Biotech

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

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

 

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Breast cancer type 1 (BRCA1) is a human tumor suppressor gene, found in all humans. Its protein, also called by the synonym BRCA1, is responsible for repairing DNA. ibreakstock/Shutterstock.com

By Jay Shendure, University of Washington; Greg Findlay, ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

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All About Trends

Mid-Day Update

Reminder: Harlan 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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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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