Well, now that the Fed has plunged us all $18 trillion in debt, their efficacy is starting to become more clear. Based on the latest GDP figures, the economy has ground to a complete halt and, as I’ve been predicting on my Tastytrade show (and here), the bond bears are returning to their glory.
It all conjures up the real prospect of me hearing, again and again, three words that I crave more than “I love you.” Those three are, in order: Yellen. Is. Screwed.
There is so much data flying around out there. From the Credit data we reviewed yesterday to weakening manufacturing and exports to employment up nicely one month and down big the next, to frisky consumers (the economy’s ‘back end’, putting it nicely) out there confidently living it up.
Big pictures help us let it all simmer and take out the noise. Here is a big picture for you… and it is an unchanged story; America has eaten its financial seed corn (replacing it with the soft meal known as credit) and financial market analysis is now in the hands of data freaks parsing and quantifying every little twitch on short time frames to draw conclusions and extrapolations based on little more than a black hole (that would be debt).
Excerpted from the March 15 edition of Notes From the Rabbit Hole, NFTRH 334:
As the title suggests I want to talk more and chart a little less this week. We do so much charting and parameter management that I think we are in no danger of falling behind the curve in those areas. The same goes for the indicators and sentiment tools we use. It is all still there, available and ready for use at the drop of a hat.
As for economic data and projections, that too has been an area that in my opinion we have been on top of. Going back to the early 2013 Semiconductor ramp up right on through late 2014’s projections for European exporters due to currency dynamics, we have been on the job and things have been generally according to plans.
In light of the positive February Employment report NFTRH 333 opened up with some discussion of the details (the devil after all, is in those details)…
Employment, the Economy & Interest Rates
The February Employment report was a strong +295,000 with unemployment dropping to 5.5%. In Friday’s Market Notes update we highlighted that per BLS this was a services-driven report as the leading edge of the economy, the smaller but key manufacturing and industrial sectors, have begun to decelerate (notably in forward-looking ‘New Orders’).
From FloatingPath.com (markups mine) we see the breakdown…
Only minutes ago, an absolutely horrific Chicago PMI number came out, and the market, ever so briefly, reacted as it should have: it went down swiftly. But, in the New Normal in which we live, it certainly didn’t take long to shake off reality. After all, only the Fed matters. The actual “markets” were killed off in early 2009.
This segment is excerpted from this week’s Notes From the Rabbit Hole, NFTRH 329, and was originally titled…
Does the US Economy and Stock Market Need Manufacturing?
The ISM PMI reports for December and January showed deceleration in line with our view that a persistently strong US dollar would begin to eat away at US manufacturing, exporters and other companies that depend on significant foreign business. But in an age where investors will bid up Twitter* (with its forward P/E of 141 and 30B market cap to 1.2B revenue) by 16% in a day, are we returning to the old days of ‘PE’s don’t matter’ with the hook or tout being ‘it’s all about ad revenue’?
The current hot button issue lately has been the “Great Wealth Divide.” Pundits across the world have given their two cents about how to fix the ever growing wealth divide. Ideas range from tax reform to tax increases; giving more power to the workers or further encouraging the rights of corporations; education reform in low income areas and making community college free. The big bright headline of “in the next year the top 1% of the world’s population will control over 50% of global wealth” has sent the globe, and the mouth breathing media, into a complete and total frenzy. Yet with all the hot air being spewed from the mouths of Democrats, Republicans, Communists, Libertarians, MSNBC, Fox News, and just about every other dope with access to a microphone and camera I still have yet to hear a single person address the actual reason behind this ever growing wealth divide. The reason for the ever growing wealth divide is quite simple but we, in our Politically Correct Society, are too cowardly to actually mention the true reason for the wealth divide in polite company.