Fed’s Recessionary Indicators

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

How likely is a recession in the United States? Predicting a recession is difficult, but one can make some nice money with a good forecast. So let’s focus on the most important recessionary models developed by the Fed.

The first model is the smoothed recession probabilities for the United States developed by Marcelle Chauvet and Jeremy Piger based on the research published in the International Economic Review and Journal of Business and Economic Statistics. The odds are obtained from a dynamic-factor markov-switching model applied to four monthly coincident variables: non-farm payment enrollment, the index of industrial production, real personal income excluding transfer payments, and real manufacturing and trade sales.

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Cleaning Up After The China Trade Summit

By David Haggith – Re-Blogged From Silver Phoenix

That didn’t take long. On Saturday, well before the US stock market opened post-China-trade-talks, I wrote:

The next step for the market would likely be that the remaining stock indices that have not pushed past their own previous peaks would now punch through. By that … I meant those indices like the Dow that were very close to breaking past their old heights

Best-Case Scenario Has a Worst-Case Twist

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Borrowing, Spending, and Sustainability

  By Bob Shapiro

Keith Weiner blogged recently explaining how borrowing to consume is a bad thing. Nice job Keith.

However, extending Keith’s arguments, it would imply that any consumption makes us poorer. Do you really need to trade in your 10 year old car when it’s still doing a fine job getting you where you want to go?

Keith makes the distinction between borrowing to consume but I don’t see it. Consuming is consuming. It’s only in the aggregate that the situation makes a difference.

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GDP Begets More GDP (Positive Feedback)

By Keith Weiner – Re-Blogged From Gold Eagle

Last week, we discussed the fundamental flaw in GDP. GDP is a perfect tool for central planning tools. But for measuring the economy, not so much. This is because it looks only at cash revenues. It does not look at the balance sheet. It does not take into account capital consumption or debt accumulation. Any Keynesian fool can add to GDP by borrowing to spend. But that is not economic growth.

Borrowing to Consume

Today, let’s look at another problem with GDP. To understand it, let’s walk through a plausible scenario. It begins with Johnny Fastlane. Johnny borrows $10,000 on his credit card to (yes, our favorite example) go on a gambling vacation in Las Vegas. An airline carries away some of his cash. A hotel lodges some. A few restaurants eat it. And of course, the casinos roll in his dough.

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A Look At Futures Contracts

Mark J Lundeen – Re-Blogged From Gold Eagle

Every bull market advance eventually sees its last all-time high. No one rings a bell when it happens, but from that point on things begin to change for the worse for the bulls.

The Dow Jones’ BEV chart below begins at the -54% bear-market bottom of the 2007-09 credit crisis. We don’t see a -54% BEV value as I began this series on the March 09, 2009 bear-market bottom. So instead we see a 0.00%, as the first data point of all BEV series begins at zero percent.

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Best-Case Scenario Has a Worst-Case Twist

So, I did say my “worst-case scenario” did not seem like the most likely scenario to play out from the G-20 summit. Now we know my “best-case scenario” and most likely scenario is the one Trump and Xi have chosen, but what does that mean for the month of July?

Here was the best-case scenario

Xi and Trump agree to come out of their meeting sounding like there is hope for a future agreement soon (albeit with nothing specific that has been agreed upon). We all know there is no chance they come out with a deal. So, the best hope is they come out with Trump talking (again) like a deal is imminent and, therefore, he’ll hold off on his tariff increases a little longer. The market feels relief and breaks resoundingly through its eighteen-month ceiling. The remaining indices that have not cleared through their upper barrier manage also to poke through to a new high and manage to hold … for a little while.

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Dancing Closer to the Exits

By Rick Mills – Re-Blogged From Ahead of the Heard

When Americans elect or re-elect a president in the fall of 2020, there is a very good chance the closest thing to their hearts – their wallets – will be top of mind.

 

That’s because many are predicting the longest-running economic expansion in US history is about to slam on the brakes. It’s been over a decade since The Great Recession of 2007-09 plunged the world into monetary despair. That downturn was particularly bad because it combined an economic slowdown with problems in the financial system, rudely exposed by the sub-prime mortgage crisis.

 

In this article we are asking, what is the best indicator for predicting the next recession? What does the current data say about a recession?

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