Will Rahal

Durable Goods and Initial Claims Softer Than Expected

I have charted the ratio of Core Capital Equipment(CCE) orders expressed as percentage of Durable Goods Orders(DGO). CCE is used as a proxy for Business Investment.The ratio tracked the investment boom/bust of the 1990's.Both CC and DGO have declined more than 5% yr/yr.
This is the worst showing since the 2001 recession and portends a weak economy. Y

PPI: What it Says, and Why We're Concerned

There are reasons to be concerned.
I charted the relative direction in Employment
between Financial Services and Mining & Natural Resources.
As in the 70's, the implication is for P/E contraction for the Stock Market as tangible assets outperform financial assets.

Strong Retail Report, Core PPI Boost Futures

I have posted the YTD (9 months) annualized % change of Retail Sales vs. CPI. RS is timely data and can be used as a proxy for the overall direction of the economy.
Real Retail Sales are at 1.3% for 2007 and have been at less that 2% for the last year.

Something's Fishy About the Jobs Number

I do not believe that these data are manipulated. They are simply subject to huge revisions. But I do not think that they are benign.

An average monthly job gain of 110K translates to a 5.3% unemployment a year from now.
I have taken Employment of Goods-Producing relative to Education and Health and this ratio points to a recession. Also Employment of Financial Services relative to Mining and Natural Resource point to a P/E contraction.

Its Non-Farm Payroll Day!

The Employment rate (100 minus Unemployment) y/y % change is just above zero.
I have posted a chart showing how when this number drops below zero, an accelerated drop occurs.

Strong Payrolls Number: Good Sign For U.S. Equities

Th 5.3% unemployment in a year assumes an average 1.5% growth for the Labor Force.

Jobs Growth Bounces Back

At this rate of job creation(110K), we will have a 5.3% Unemployment ratein a year!
I have posted a chart indicating how when the Employment rate drops below zero, an acceleration to the downside occurs.

What's Behind the Spending Momentum?

The consumer is changing habits.
I have posted charts showing how the consumption of Durable Goods (DG) as % of PCE dropped to a new recession-level low. Also, in the last few years, consumption of DG + Services has failed to grow above
its 38-yr average. This portends a scary change for the economy.

Complete Consumer Capitulation?

I have posted charts indicating a change in Consumer behavior.
Durable Goods relative to PCE hit a new recession-level low.
Also ,in the last few years, Real Discretionary spending has not been able to climb above its 38-yr average. This has great implications for the economy.

Market Shrugs Off Disappointing Durable Goods Figures

I have posted a chart of Core Capital Goods expressed as % of Durable Goods Orders. This percentage tracks Business Investment and it is at the second lowest level this decade.
Also charted is the deceleration in Employment pointing to future weakness in DGO.

Are We Headed Towards a Recession?

I charted Durable Goods Consumption expressed as percentage of Personal Consumption. The current level is at the recession levels of 1982 and 1991.

Commodities, China Selloff Based On Need For Liquidity, Not Growth Concerns

I have taken a look at YTD Retail Sales and CPI.

CPI is increasing at an annual rate of 4.8%.
In an credit crunch panicky environment
Inflation is still tying Mr. Bernanke’s hands.

Real Retail Sales is at .9% indicating a weak economy.
The weakness in the US will have repercussions in the
stronger overseas economies.

The US slowdown and the unwinding of the Yen carry trade will cause massive liquidations of assets, including commodities.

The Fed Finally Wakes Up and Cuts the Discount Rate

I have taken a look at YTD Retail Sales and CPI.

CPI is increasing at an annual rate of 4.8%.
In an credit crunch panicky environment
Inflation is still tying Mr. Bernanke’s hands.

Real Retail Sales is at .9% indicating a weak economy.The weakness in the US will have repercussions in the stronger overseas economies.

CPI will end 2007 at around 3%. Core at around 2%.

With a slowing economy and decelerating inflation, Fed easing is a close call. The perception of a "benign" Ben will be accentuated and this could cause loss of credibility.

The Fed Panics and Cuts Rates

I have taken a look at YTD Retail Sales and CPI.

CPI is increasing at an annual rate of 4.8%.
In an credit crunch panicky environment
Inflation is still tying Mr. Bernanke’s hands.

Real Retail Sales is at .9% indicating a weak economy.
The weakness in the US will have repercussions in the
stronger overseas economy.

CPI will end 2007 at around 3%. Core at around 2%.

With a slowing economy and decelerating inflation, Fed easingis a close call. The perception of a "benign" Ben will be accentuatedand this could cause loss of credibility.

Anatomy of a Crash: Moving Into the Panic Stage

Do not forget the economy!
People are, understandably, concentrating on credit woes and forgetting about the economy. We have an aging economic cycle with the consumer in distress.
Once Employment-a lagging indicator- weakens, is too late to avoid a recession. The Household survey is pointing to imminent danger. It tends to lead the
Non-Farm Payrol and has decelerated considerably.