Will Rahal

Unemployment Rates, Recession Periods and Stock Market Prices

I posted on the relationship between Employment, Business Investment and the S&P-500.
We are heading lower.

Offshore Troubles, Domestic Fears

It is a scary looking chart. Inflation is staring to be considered a more serious threat to the markets. Also, next week's reports will show that this is far more that a "slowdown" and more like a recession.
There is plenty of room for inflation to deteriorate the earnings picture further, causing more stock market losses.
See

wrahal.blogspot.com/20...

What Was Left Out of the Jobs Report

Wages and wealth are dropping rapidly.
These are the driving force behind the US economy.
As earnings decrease, the only catalyst for the stock market improvement, is a drop in commodity prices.
After a rally, the strong commodity-related sectors will also contribute to further stock market declines.

The Current Market: Investors Lack Fear

Investors should be fearful.
The recent action of the markets with the DJIA and breadth making new low, confirm the weak economic data I have been posting for over a year. Even after the tax rebate , consumption is concentrating in essential items as Food & Energy vs Discretionary items.
The ratio of these two series continue to rise indicating more economic weakness.

Will the Nasdaq Take a Mean Bounce?

The NASDAQ will take a bounce but tha tis it: just a bounce.

On a relative basis business is in better shape than the consumer as evinced by a ratio I keep track of Business Investment expressesd as percentage of Durable Goods Orders.
This ratio keeps climbing but it is close to a relative peak suggesting that business will follow the consumer into recession.
The action in the stock market confirms this.

See
wrahal.blogspot.com/20...

Another Record Oil Surge Leans on Stocks and Dollar

Oil prices are exacerbating our economic woes.
I still expect the dollar to firm up as we continue to be in a weak economic environment.
Despite the tax rebates the ration od ND to Durable Goods consumption keeps rising, I have been claiming for a year that this would lead to recession. The Stock Market confirmed it this week.

Financial Fears Sweeping the Globe

In the US most analysts are claiming that "the worse is over" Investors who believed that we are bouncing at the bottom of the economic cycle , pushed the market higher.
There is little doubt about the consumer slowing.
The business sector (reflected by the NASDQ out performance) is still holding up.

How Much Inflation Will We Have to Endure?

The slowdown in the economy will moderate inflation.
The difference between the annualized rate (AR) 6-month in the CPI and the AR 18-month CPI is rolling over. This number always ends up in negative territory during economic weakness.

Timing the Rise of the Phoenix (and Markets)

It is too early to buy stocks.
Most analysts expect no recession and very few expect a deep one.
I think this recession will be long and harsh.
Despite the jump in retail sales (due to the tax rebate), this indicator is deep into recession territory.

Recession to Inflation: Transitions Benefit the Dollar

I think the dollar should be bought.
Despite the jump in retail sales, the economic indicator point to a recession.
I expect inflation as measured by the CPI to start heading lower.
The difference in the 6-month vs 18-month annualized rate always dips into negative territory as the economy softens.

Does the Mini-Bounce in Retail Sales Mean Anything?

If you look at the y/y % change in Retail Sales deflated by CPI(Real RS) it is simply scary. It is deep into negative territory and deteriorating rapidly.

Economic Report Summary: Stalled Growth, Eroded Consumer Confidence

I think there is a change in consumption taking place.
During economic recoveries DG Consumption as % (DG+ND) tends to increase as Wages increase.
In the last recovery, despite Wages rising strongly, DG did not perform well.At the same time ND/Wages increased to a record high, leaving less income for discretionary spending.

Stagflation in the 1970s vs. Today’s Economy

Great material, Thomas!

Stagflation in the 1970s vs. Today’s Economy

We currently emphasize "ex Food & Energy"

The dangers of analyzing "ex a variable" can lead to wrong conclusions.

ND-Goods are greatly affected by food & energy.

I created an index of ND-Consumption/Wages and it shows that a greater proportion of Wages is going to ND goods and, therefore, less to Discretionary Spending.

Consumer Spending: Up, Down or Flat?

There is a change in Consumption.

I created an index of ND-Consumption/Wages and it shows that
a greater proportion of Wages is going to ND goods and, consequently, less to Discretionary Spending.