Economy
Unemployment, FED Rates, SPXLooks like market bottoms just before the Unemployment peak.
Market peaks just before fed starts reducing the rates.
At the current situation, we have fed fund rates high and also unemployment started to climb.
Will be looking at the unemployment going high and markets roll over and fed cuts rates.
if FED keeps the same rate for long, something in the economy will break and they have to reduce the rate and if it happens then it's already too late.
Looks like CD's and earning ~5% interest on cash is much better than risking for very limited upside in the market.
Global money supply increasing! Same as during pandemic When the money supply started rising in 2020, the SPX started by crashing before going on one of its biggest bull runs.
Maybe the same thing is happening now. We crash now for another couple days or weeks before having one last explosion upwards.
DXY : The Dollar SMILEThe chart above explains.
Just a while ago, Nikkei drop nearly 6%. When NY opens, things are going to be HOT and SPICY.
Good luck.
$GBINTRS - BoE's Snowball - The Bank of England (BOE) decided to deliver its #inflation medicine in a bigger dose
at their recent monetary policy committee meeting.
The bank made the shock decision to raise borrowing costs a half percentage point,
taking the official rate to 5% ;
double the size of the increase anticipated by most economists.
BoE hiking interest rates to 5% ,
it adds further strain to millions of homeowners across the country.
The Central Bank Rates was upped by 0.5% from 4.5% previously
and remains at it's Highest Level since 2008 Financial Crisis.
Thesis: slightly higher SP500, before crash due to unemployment12/9/2023
I - Issue:
Yesterday, the latest unemployment rate for the USA were released. The current rate stands at 3.7, reflecting a decrease of 0.2. The key question now is whether this is merely a test of support or a signal for a potential invalidation of the bottom structure.
R - Rule:
Since 1950, we observe numerous instances where the unemployment rate proves to be a reliable indicator for determining the macro trend of the stock markets.The formation of a bottom signals a peak for the S&P 500, and the initiation of an upward trend is generally considered the least favorable time to invest in stocks.
A - Application:
As per the latest data, the unemployment rate stands at 3.7. As evident from the charts, this marks a breached resistance that is now expected to serve as support. Additionally, there is a current rejection of the upper band of the Bull Market Support Band, but the price remains above it, indicating potential support in this range as well.
Furthermore, in accordance with the Phillips curve, there is a negative correlation between inflation and unemployment. This relationship suggests that the declining inflation, results in an rising unemployment.
C - Conclusion:
The lower unemployment rate currently appears to be a retest of the 3.7 level. It is highly likely that it will stay above this level, given the substantial support from the horizontal support and the Bull Market Support Band. Additionally, the Phillips curve provides an additional reason why unemployment may increase in the coming months. This suggests that, based on this scenario, the stock markets could be approaching a potential peak. Take this into consideration.
$USINTR - A Month of BreathThe Federal Reserve left the target for the Fed Funds Rate ECONOMICS:USINTR
unchanged at 5%-5.25%, as expected, but signaled rates may go to 5.6% by Year-End if the Economy and Inflation do not Slow down more.
It is the first pause in the tightening campaign following ten consecutive hikes that lifted borrowing costs by 500bps to the highest level since September 2007.
Throughout Fed's announcement The Dollar Index TVC:DXY
plunged to what can be said Wave C completed from A-B-C
Elliot Waves Correction
(attached ideas)
Have the markets priced in Inflation ECONOMICS:USIRYY and Interest Rates ECONOMICS:USINTR ?
TRADE SAFE
*** NOTE that this is not Financial Advice !
Please do your own research and consult your Financial Advisor
before partaking on any trading activity based solely on this Idea .
A Possible Recession Coming: What to Invest in During DifficultChart Analysis:
The chart depicts the relationship between the M2 money supply, US Consumer Price Index (CPI), labor market trends, and historical recessions. Key observations include:
Recessions:
-Historical recessions are marked and correlated with significant economic downturns.
-Each recession coincides with substantial drops in the labor market and fluctuations in the M2 money supply and CPI.
M2 Money Supply and US CPI:
-The M2 money supply (blue line) shows a steady increase over the years, reflecting ongoing monetary expansion.
-The US CPI (orange line) follows a similar upward trend, indicating rising consumer prices and inflation.
Current Economic Conditions:
-The chart suggests a potential recession on the horizon, marked by the recent economic indicators and historical patterns.
Bitcoin's Role in the Current Economic System:
This is the reason the goverments wants to stop Bitcoin. People want out of their slave system where they create abundance for themselves with money printing while our labor value is always decreasing.
Recession Expectations and Market Opportunities:
Be open to a recession in the coming winter. The CME is having a meeting today where there is a 5% chance for a 0.25 rate cut and a 95% chance for a cut in September. Historically, there is a two-month window where the market booms and then rolls over into a recession after rate cuts. This supports the idea of a left-translated cycle and a longer multi-year cycle. For more information, see "The Fourth Turning."
Investment Opportunities_
With this information, there can be good opportunities to get in early on investments in the precious metal markets like gold and silver, and also mining stocks. Production materials like copper, oil, and steel can be great shorting opportunities in the coming weeks and months.
Conclusion:
Understanding these economic indicators and historical patterns provides valuable insights for making informed investment decisions. While the future economic landscape looks challenging, strategic investments in precious metals and shorting opportunities in production materials could offer significant returns.
A look at M2 Money Stock Out of curiosity I took a look M2 to see the trends over the years and how it compares to COVID and the last few years. I don't have any great revelations to share about what to do, but I thought the chart was interesting. I also did some research and used ChatGPT to help me create a summary about M2. Please note that I cannot guarantee the following text is perfectly accurate, I am not a financial expert or advisor, but it is an interesting overview. Enjoy.
1) Introduction:
Money Stock Measure 2, or M2, is a comprehensive measure of the money supply that includes various types of financial assets held by the public. It encompasses M1 — which consists of the most liquid forms of money like cash and checking deposits — and adds less liquid forms such as savings deposits, time deposits under $100,000, and retail money market mutual funds. This broader measure provides a more complete picture of the available money within an economy than M1 alone.
2) Why M2 Matters to the Economy and the Stock Market:
Monetary Policy Indicator: M2 growth rates can indicate the looseness or tightness of the Federal Reserve's monetary policy. Rapid growth in M2 may suggest a looser policy with potential implications for lower interest rates, while slower growth could indicate a tightening policy stance.
Economic Health Predictor: Fluctuations in M2 can signal upcoming changes in economic activity. An expanding M2 typically suggests that more money is flowing into the economy, potentially boosting consumer spending and overall economic growth. However, if this expansion leads to inflation without an accompanying increase in real output, it could be detrimental.
Interest Rate Influence: Since M2 impacts interest rates, it indirectly affects the stock market. Lower interest rates from an increased M2 can reduce borrowing costs and stimulate both capital expenditures and consumer spending, which generally supports higher stock prices.
Inflation Expectations: Inflation can erode the purchasing power of money. An inflating M2 can lead investors to adjust their expectations, impacting bond yields and stock valuations.
3) As an investor, monitoring M2 can enhance decision-making in several ways:
Growth Trends: Observing whether M2 is expanding or contracting can provide clues about future economic conditions and monetary policy directions, helping investors anticipate market movements.
Asset Allocation: During periods of M2 expansion (indicative of lower interest rates), investors might favor stocks, particularly in sectors like consumer discretionary that benefit from increased consumer spending. Conversely, a slowdown in M2 growth could be a signal to move towards safer assets like short-term bonds, which are less sensitive to interest rate rises.
Sector Impacts: Different sectors react differently to changes in M2. For example, financials might benefit from higher interest rates, while sectors sensitive to consumer spending could gain from an expansionary M2 environment.
Inflation Hedge: Rapid increases in M2 that might lead to inflation suggest that investors should consider assets that typically perform well during inflationary periods, such as commodities or real estate.
Global Considerations: For those invested internationally, understanding how M2 changes affect global markets and capital flows is crucial, particularly in how developed economies' liquidity influences emerging markets.
4) Conclusion:
M2 is a critical economic indicator that offers valuable insights into future monetary policies, economic health, and market directions. It is not a perfect metric on its own, but by integrating M2 data into broader market analyses and considering its implications on different sectors and asset classes, investors can make more informed decisions, optimizing their portfolios to better navigate the complexities of financial markets.
Euro-Zone GDP Quarterly *3M (QoQ)ECONOMICS:EUGDPQQ (+0.3 %)
Q1/2024
source: EUROSTAT
The Eurozone’s economy expanded by 0.3% in the first quarter of 2024, the fastest growth rate since the third quarter of 2022, to beat market expectations of a marginal 0.1% expansion and gain traction following muted readings since the fourth quarter of 2022.
The result added leeway for the European Central Bank to refrain from cutting rates to a larger extent this year should inflationary pressures prove to be more stubborn than previously expected.
Among the currency bloc’s largest economies, both the German and the French GDPs expanded by 0.2%, while that from Italy grew by 0.3% and that from Spain expanded by 0.7%, all above market estimates.
Compared to the same quarter of the previous year ECONOMICS:EUGDPYY ,
the Eurozone’s GDP grew by 0.4%, beating market expectations of 0.2%, and gaining traction after two straight quarters of 0.1% growth.
Industrial Production, and how it can help us time larger cyclesIn this video I use Industrial Production, and more specifically, its Rate Of Change to show how we can approximate Booms and Busts in the "Business Cycle".
I also go over previous cycles, and what to look for in our current cycle.
As always, good luck, have fun, and practice solid risk management.
$USGDP - Quarterly DataECONOMICS:USGDPQQ (Q3/2023)
The American Economy ( ECONOMICS:USGDPQQ ) expanded an annualized 4.9% in the Third Quarter of 2023, slightly below 5.2% in the second estimate,
but matching the 4.9% initially reported in the advance estimate.
It still marks the strongest growth since Q4 2021.
Consumer spending rose less than initially anticipated (3.1% vs 3.6% in the second estimate), but remained the biggest gain since Q4 2021.
The slowdown was mainly due to services spending.
Also, private inventories added 1.27 pp to growth, below 1.4 pp in the second estimate and both exports (5.4% vs 6%) and imports (4.2% vs 5.2%) increased less than initially anticipated.
On the other hand, nonresidential investment was revised higher to show a 1.4% rise (vs 1.3% in the second estimate) as investment in structures surged way more than expected (11.2% vs 6.9%).
Both residential investment (6.7% vs 6.2%, the first rise in nearly two years) and government spending (5.8% vs 5.5%) were also revised higher.
source: U.S. Bureau of Economic Analysis
The Implications of the US Unemployment Rate - It Is Higher Now What is moving lately? The US unemployment rate has edged up.
We can see from past cycles that when unemployment numbers started breaking above their downtrend, crisis occurred.
Micro E-Mini Nasdaq Futures and Options
Ticker: MNQ
Minimum fluctuation:
0.25 index points = $0.50
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
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Fed Funds, return to the mean? You can see what a sharp increase in the Funds rate results in, sharp cuts later on.
Will we spiral into the death zone as the dollar dies and even go negative rates? Or can they hold above 0%, we will see.
russian rates bonds and stocksHi all! I feel the approach of good times in Russia!!💓
On the chart - at the top in black is the rate of the Central Bank of the Russian Federation, next to it in blue - the yield rates on short-term bonds, at the bottom - the RTS.
There will be a meeting of the Central Bank of the Russian Federation soon and everyone will be given the message that “the Central Bank should raise the rate by 2%.”
Short debt is already trading at 18%+.
How to practically apply this? The phase of raising rates always ends for stocks with a vigorous decline, a bang. The shares follow the RGBI index, so clients do not have any Russian shares.
But! The main thing will begin after the Central Bank begins to reduce the rate - the stock market in currency terms can grow by 100..300% in €£$
It would be better for conservative comrades at this moment of lowering rates to withdraw money from deposits and invest in long bonds, both corporate and government.
While we are in no hurry to switch to rubles and Russian shares, we need to wait
- corrections
- a real decrease in profitability on the Russian market (see two-year plans, ticker RU02Y)
- changing the Central Bank’s narrative to lower rates.
The US national debt is approximately $32.6 trillion.I did the math we're all phucked..
The current population of the US is about 335 million people.
By my formulating and calculating and asking ChatGPT=
Debt per person≈97,313.43
The last time the US turned a profit was 2001
The total federal spending for the fiscal year 2023 was approximately $6.3 trillion
Mandatory Spending: $3.85 trillion
Discretionary Spending: $1.79 trillion
Interest on Debt: $663 billion
$JPIRYY -Japan Inflation Rate YoYECONOMICS:JPIRYY (March/2024)
The annual inflation rate in Japan ticked lower to 2.7% in March 2024 from February's 3-month peak of 2.8%, matching market consensus.
There were slowdowns in prices of transport (2.9% vs 3.0% in February), clothes (2.0% vs 2.6%), furniture & household utensils (3.2% vs 5.1%), healthcare (1.5% vs 1.8%), communication (0.2% vs 1.4%), and culture & recreation (7.2% vs 7.3%).
At the same time, inflation was stable for food (at 4.8%), housing (at 0.6%), education (at 1.3%), and miscellaneous (at 1.1%).
Meanwhile, prices of fuel, and light dropped the least in a year (-1.7% vs -3.0%), with electricity (-1.0% and -2.5%) and gas (-7.1% vs -9.4%) falling at softer paces as energy subsidies from the government would fully end in May.
The core inflation rate fell to 2.6% from a four-month top of 2.8%, slightly below forecasts of 2.7%. Monthly, consumer prices rose by 0.2% in March, the most since last October, after being flat in the prior two months.
source: Ministry of Internal Affairs & Communications
$EUINTR - Highest Level since 2000The European Central Bank raised Interest Rates by a Quarter of a percentage point Thursday, judging that Inflation remains too High ;
even as data points to a deepening economic downturn in the 20 countries that use the euro.
The move takes the benchmark rate in the euro area to 3.75%, the highest since October 2000.
$GBIRYY - CPI (YoY)ECONOMICS:GBIRYY 2.3% (April/2024)
source: Office for National Statistics
The annual inflation rate in the UK eased to 2.3% in April 2024,
the lowest since July 2021, compared to 3.2% in March and market forecasts of 2.1%.
The largest downward pressure came from falling gas (-37.5% vs -26.5% in March) and electricity (-21% vs -13%) cost, due to the lowering of the Office of Gas and Electricity Markets (Ofgem) energy price cap in April.
At the same time, prices slowed for food (2.9%, the lowest since November 2021 vs 4%) and recreation and culture (4.4% vs 5.3%).
On the other hand, the largest, partially offsetting, upward contribution came from cost of motor fuels.
The average price of petrol rose by 3.3 pence per litre between March and April 2024 to stand at 148.1 pence per litre, up from 145.8 pence per litre in April 2023. Prices also rose faster for restaurants and hotels (6% vs 5.8%) and miscellaneous goods and services (3.6% vs 3.4%).
Compared to the previous month, the CPI rose 0.3%.
Money Supply and RecessionsMoney supply or credit creation always peaks prior to a Recession.
Please see charts for information
Shelter Inflation. The Tail That Wags The DogInflation is finally cooling off as inflation gradually loosened its grip on Wall Street and the economy in 2023, raising hopes for a gentler Federal Reserve and further gains for the market in 2024.
Stocks rallied to their best 9-weeks stripe over the past 20 years in November and December, 2023 (so-called 'Santa Rally') as investors raised their bets that the Fed is done hiking interest rates to fight inflation.
6Mo USCPI Inflation was at its lowest levels since Covid-19 pandemic in early 2023
Top 4 U.S. stock market Indices were in rally in 2023
The economy has cooled under the weight of rising interest rates, as the central bank intended, but remains surprisingly resilient.
Energy prices are down. Food prices are mellowing out. But the cost of having a place to live is still rising much faster than just about every other essential.
U.S. Consumer Price Index inflation
Headline inflation was up 3.1% from a year ago, and so-called "core" inflation, which excludes volatile food and energy prices, was up 4%. But the cost of shelter, which is the biggest component of the basket of goods the BLS uses to measure the cost of living, was up 6.5%.
"The shelter index was the largest factor in the monthly increase in the index for all items less food and energy," read the Bureau of Labor Statistics report accompanying the latest data on consumer prices.
"The shelter index increased 6.5 percent over the last year, accounting for nearly 70 percent of the total increase."
When the covid-19 pandemic hit, the cost of housing surged as those who could afford it sought out bigger homes and many city-dwellers transitioned to the suburbs.
What goes into Consumer Price Index
That and a glut of savings unhindered by low interest rates combined to exacerbate what had been a long-simmering Housing crisis the U.S.
But now that baked-in price hikes and rising mortgage rates spurred by tightened Federal Reserve monetary policy have put a bit of a damper on things, the housing market is also starting to cool.
U.S. Single Family Home Prices in "Bubble Mode"
30Yrs Fixed Mortgage Rate is at 20Yrs Highs.
30Yrs Mortgage Annual Payment U.S. Single Family Home, only Interest.
Housing prices tend to be “much stickier” than most costs, which means that when they rise we feel it more - and for longer (read - "for ever").
Housing prices do not compressed like just baked iPhone or iMac later in few years of its release.
- Does all af that mean that pre-covid levels of relative housing affordability are coming back?
- Sure "No". But at least American wages, which are still rising faster than before the pandemic thanks to increased worker power, will have a little chance to make up some lost ground.
The issue is still Federal Reserve' lagged tightening policy, that is "The Tail That Wags The Dog".
