Hi, I'm back again to my Gloom & Doom Report.
Sorry, but enjoyable I can not report reliably. The S & P this week at 1040, the major neck broken through the line (even a little shaky) SKS-Formation on Friday and then formed a Death Cross still (50 - to 200-day line). Technically the chart looks really bad.
In the USA, the "R-word" back into fashion, ie recession. The main reason is the Weekly Leading Index of Economic Cycle Reseach Institute (ECRI), which I've used the last time, even more often. Respectively. more precisely the problem identified by the ECRI growth rate, a somewhat peculiar "smoothed 6-month changes Derse rate" is (exactly speaking, there is the 1-month average compared to the 12-month average; sounds sillier than it is: The time series is thus neither unique nor particularly outlier prone to base effects). Well, at any rate is the so-determined "ECRI Weekly Leading Index Growth" (green line) now fallen to such an extent as in the past just before recessions. And since this indicator was previously a very good, many are now nervous. Looks really bad, admittedly from:
For all who are interested in more detail: a little smarter now I am regarding the ingredients (which may be a little on assumptions and a more extensive Google-research, ECRI is something to cover). There are three market factors and 3 macro-economic time series: first
Stock prices, ie S & P 500 or the like (yes, which of course is debatable whether one should use it)
second Credit spreads (presumably the spread between AAA and BBB-bonds based on Moody's time series)
third Industrial metals (because they use a proprietary index, but the size differences between the indices are not already)
4th Mortgage Applications (the MBA Purchase Index series, which I also always use is. According to my regression, the most important indicator of the unique and the reason why the index time series (not the growth rate) since 1990 so strange to "shake" begins. This ZR's only since then, so the index is calculated from 1990 inevitably different than before)
5th Initial Claims (the second most important input, according to my analysis)
6th the money supply (M2 probably the weekly time series)
Another interesting leading indicator, I've just found. That means I got it from an article on dshort.com, one of my favorite sites at present:
http://dshort.com/articles/Consumer-Metrics-Growth-Index.html
The Consumer Metrics Growth Index is calculated from daily consumer surveys regarding the willingness to buy in discretionary consumer spending, so not everything for daily needs is (car, travel, etc.).
Here Website: http://www.consumerindexes.com/
and explanation: http://www.consumerindexes.com/faqs.html
Well, again the same message: The U.S. is facing a new recession. By the way, while the U.S. advertise worldwide for economic programs, they fail to mention that expire by the 01.01.2011 (issued only temporary) tax cuts from the era of George W. Bush, which will lead to a huge tax increase. Not exactly conducive to consumption. Otherwise
were mainly the real estate markets good for a lot of bad news. New Home Sales and Pending Home Sales at All-Time Low. Get a brief digression: The Tax Credit's were for purchases, the contract was signed until the end of April, for the remainder (land registry, if so what is in the U.S., etc.), there is time to end of September. In the New Home Sales is one of the contract, on Existing Home Sales, however, the entire process. The equivalent here is the Pending Home Sales, which are therefore at 1-2 months ahead. Ie New and Pending Home Sales in May were already ex-Tax Credit, which is why so terribly bad. For the Home Sales Eisting the crash is still, to see
go: the original Deadline of the tax credits last fall.
The weekly mortgage applications still show no signs of recovery, so we should stick to the sales at that level. Without state assistance at this price level there's hardly any buyers. Without question this will have consequences on the price development. And that bodes well for the stock market no good:
When I completed but still wants to find a few positive words, think about that the U.S. Immobileinmarkt may now so fast is going down, that we are already beginning could in 2011 the ground. But then really a very good deal lower than now. Buckle up!
And another thing: The last days and weeks the market appears believes to be the economic slowdown concerns especially the U.S., the strong is U.S. dollar based, Europe is in better (hence the outperformance of the european indices in local currency and thanks again. stronger euro is clearly on a uniform currency basis). Dream on! The U.S. has always had a slight lead of a few months in the economy (only exception: In the early 90s after the special situation in consequence of German reunification). The upcoming recession is probably a few months later, also with us:
So, that's it. This time, annoying "thanks" of a Cold despite perfect swimming weather. For the rest of the summer, my motivation to keep writing but probably limited. Complaints to the Salt Office. Does not matter anyway. The next month I will probably not be the cops anyway. And so until next time!
Greetings
Franz
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