The percentage of 41 OECD countries around the globe that have just posted a negative 1Q2016 on the back of a negative 4Q2015 (old fashion technical recession) has started to rise. Its nothing to be concerned about just yet but the rise itself, although shallow, is something worth watching as 2Q2016 numbers start coming out.
Archive | Reflections RSS feed for this section
Number of countries with back-to-back negative quarterly GDP prints is rising
Read full story · Comments are closed
U.S Economy most vulnerable to any shock since 2008
The #Brexit vote caught the consensus view off-guard and stock markets, currencies and commodity prices have made large responses. This may be bringing up thoughts if Brexit could be the external shock that marks the decent of the U.S economy. Whilst we will not entertain making predictions on this complex matter, we can however state […]
Read full story · Comments are closed
Recession Probability Roundup : Elevated levels
NOTE : This is a subscriber-only article that was made open for public viewership on 20 May 2016. A few subscribers have been concerned by the recent jump in recession odds of the Headwinds Index model to 60% A probability of recession of 60% most certainly also implies probability of no recession of 40% and […]
Read full story · Comments are closed
Over 30% of States with rising unemployment
The March 2016 figures are in for state-wide unemployment and the percentage of states with growing unemployment has risen to over 30% now: The useful thing with this breadth metric is that deterioration in unemployment is made visible long before it shows up in the average national unemployment rate. Whereas the national unemployment rate is […]
Read full story · Comments are closed
Labor market not as strong as you think
The strength of the labor market is constantly being trotted out in defense of the robust status of the US economy, but broad sets of labor data show this not to be the case. First, let us examine a very broad US labor market growth metric: This indicator needs to fall below -10 before the […]
Read full story · Comments are closed
Animation : The incredible US employment recovery
Below is an animation of the annual average unemployment rate per U.S state from 2011 onward. It’s quite incredible to see how unemployment was erased state-by-state over the years: However statewide improvements in employment have probably peaked-out as shown in the chart below, which depicts the aggregate (equal weighted) inverse 6-month unemployment rate growth for […]
Read full story · Comments are closed
How can we forecast 30% upside for 2016 with RAVI?
The RecessionALERT Valuation Index (RAVI) is currently forecasting 30% growth for 2016 for the SP500 with its 1-year forecast model. “How the heck is this possible given current overvaluation of the market?” we can hear you say. Let us show you how this is calculated so we can put the forecast into context: Firstly, we […]
Read full story · Comments are closed
Bear market rules still in force
Our first bear market signal was issued on 1 September 2015 when the Composite Market Health Index (CMHI) dipped below zero. Since then we had a sustained deterioration of the CMHI components to reinforce the signal, coupled with high stock market volatility. Although market breadth features prominently in the CMHI, there is another way to […]
Read full story · Comments are closed
Risk of U.S Economic Recession
A raft of analysts, perma-bears and bloggers are playing fast and loose with the R-word again. This is likely to reach a crescendo with the release today of the unexpected large drop in the ISM non-manufacturing survey. We recall a time in late 2011 when the mainstream perception was that we were headed for recession […]
Read full story · Comments are closed
Yellen Labor Dashboard reaches target
“Full Employment” target reached Shortly after taking up office, Federal Reserve Chair Janet Yellen used her “jobs data dashboard” to justify the Fed’s easy money policies and to argue there’s still considerable slack in the labor market five years after the recession’s end. Seven of the nine gauges on this dashboard had not recovered to levels […]
Read full story · Comments are closed
Things that go bump in the night
The U.S economy appears unstoppable right now. Just about every leading and co-incident indicator you can think of is pointing to positive growth. Among the hundreds of indicators we follow for our models on a daily basis, we have discovered a few that are displaying worrying trends and flagging a future recession. It should be pointed […]
Read full story · Comments are closed
SP-500 Returns Forecast, 4Q2014
The RecessionALERT Valuation Index (RAVI) is a multifactor valuation model that examines cyclically adjusted trailing SP-500 earnings (various multi-decade horizons), the SP-500 total-return index level, total stock market capitalization, Gross Domestic Product, non-financial corporate equities and liabilities, non-financial corporate business net-worth and percentage of investors’ allocation to stocks versus cash and bonds to determine 10, […]
Read full story · Comments are closed
Stresses are building up in the system
Despite a steady rise in the SP-500 Index, clear and persistent financial stresses are starting to build up in the system. We construct a composite of the St. Louis Fed Financial Stress Index, the Cleveland Financial Stress Index, the Kansas City Financial Stress Index and the Chicago Fed National Financial Conditions Index as shown below: […]
Read full story · Comments are closed
Valuation estimate of SP500 2015 returns : 2,246 target
The RecessionALERT Valuation Index (RAVI) is a multifactor valuation model that examines cyclically adjusted trailing SP-500 earnings (various multi-decade horizons), the SP-500 total-return index level, total stock market capitalization, Gross Domestic Product, non-financial corporate equities and liabilities, non-financial corporate business net-worth and percentage of investors’ allocation to stocks versus cash and bonds to determine 10, 5, […]
Read full story · Comments are closed
Valuations not at nose-bleed levels yet
The recent run in the major U.S stock indices has resulted in Shiller-PE charts being trotted out showing how far we are off the historical mean, implying a nasty pullback is in the works. The problem with a historical mean is that it is a single horizontal value on a chart that fails to take […]
Read full story · Comments are closed
“Baby” correction belies verocity of breadth sell-off
The current stock market correction is diminutive in relative terms – hardly anything to sit up and take notice of. However an examination of underlying breadth deterioration reveals an astonishing plunge of the net new quarterly highs (the percentage of new quarterly highs less the percentage of new quarterly lows). This percentage has been languishing […]
Read full story · Comments are closed
New improvements
We have introduced three new improvements to the web site to enhance the user-experience; 1.Progress Loader Some of our pages, particularly the CHARTS page, can take some time to load due to the amount of historical data we allow you to view in the charts. If web site usage is heavy and/or the internet is very […]
Read full story · Comments are closed
Liquidity Crunch warning finally materialised
Fifteen trading days after our Average Liquidity Index (ALI) issued a liquidity crunch warning, the SP-500 finally succumbed into a decent sized correction. The two short-term liquidity indexes, one of which is described in “The HI-LO Breadth Indexes for the SP-500” issued warning even sooner, as can be seen below: At a level of -2, […]
Read full story · Comments are closed
SP-500 Liquidity Crunch Warning
Losses on the SP-500 on Friday 11th saw all our measures of breadth-liquidity fall into contraction, warning of a highly vulnerable market subject to further liquidity tightness and raised volatility. To many of my staff that actively trade the SP-500, this is treated as a bona fide correction warning. If you are scratching your heads […]
Read full story · Comments are closed
Once in a year opportunity
We have spend the better part of a decade in the search for the ultimate indicator for the stock markets. Whilst it became clear early on in this quest that no one indicator would work all the time and every time, there are a few that stand out from the rest. One of them is […]