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Return To BaseA "back to the basics" analysis. Let's leave behind the stock markets and look at the slow and deep fundamentals of the worldwide economy. Today I will attempt to make a simple analysis using GDP. This is the net profit of one country. The miracle of China caught the West in the sleep. It outperformed the largest economy of the world. And by incredible speeds. Many use the "stochastic" indicator, and rightfully so. The word stochastic may be coming from the Greek word "stochasmos" which means "thought process". To get a new perspective on these charts we must let nature think for us objectively. The mind of nature spoke. The miracle of China is fading. And the same happens when compared to the "treasure" called Taiwan. Many are willing to fight for it. For experimentation, let's compare the US with the Eurozone. For some unknown-to-me reason, GDP has embedded in it the relative strength of currencies between the two countries. Do note that all GDP is measured in USD. In a sense, relative GDP growth is another way of comparing currency strength. We have gone from comparing equities, to comparing GDP. We concluded that comparing GDP is simply comparing purchasing power of two countries. Currency strength comes from yield rates. The power is given from those who make and define money. Supply + Yields. Power = Money Supply * Money Strength MV = PQ Tread lightly, for this is hallowed ground. -Father Grigori P.S. You want to see an Easter Egg? Consider the following equations: MV = PQ Q = GDP M = M2SL V = FRED:M2V P = "price level" 1 / P = "currency strength" Currency Strength = Q / MV In the end, it is up to the FED to decide the future.
FRED:GDP
by akikostas
SPY - NIKKEI225 - We're In The Great Depression + INCOME DATA Problem with monetary fiscal policy and debasement? your markets start to hyperinflation especially when you try to patch previous bubbles *cough* QT *cough* BTFP *cough* ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- The average net yearly income of Americans during 1930 was $4,887.01 Unemployment Rate (UNRATE) 8.7% AFTER TAX - $4,788 $4,788 in 1930 is worth $87,476.76 today ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- The average net yearly income of Americans during 1933 was $4,218.40 Unemployment Rate (UNRATE) 24.9% AFTER TAX - $4,045 $4,045 in 1933 is worth $94,935.84 today ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- The average net yearly income of Americans during 2023 $74,738. Unemployment Rate (UNRATE) 3.6% AFTER TAX - $57,237 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- CONCLUSION - The average American is 65.83% poorer than the average American during the great depression. Debasing the currency does not solve poverty and enhances it. All of this data is from the IRS FRED seems to not provide information prior 1960 now you know why they don't include this on the charts. Sadly I feel most people don't understand that what is coming is not a "recession" not a "08 RE crash" its going to be a foundational collapse of the entire US debt system / treasuries / stock markets / credit crisis / liquidity crisis. ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- United States Government Debt: % of GDP 2023 = 133% Japan General Government Gross Debt to GDP 1989 = 65% Federal Debt: Total Public Debt Q1 2023: 31,458,438 or 31.4 Trillion I'm personally putting a target for 2026 for the end of the US currency reserve system The only option here is to either print more 100s of trillions than Weimar Germany Or force the entire US & Allies onto a new dollar that will combine all G7 currencies. Hopefully people can understand why there's so much controversial developments on Russia & BRICS +, this current war is nothing to do with helping another country. Its because BRICS see's the end of the US system and they are preparing for it. (sources) www.irs.gov www.irs.gov Tax rates include normal taxes of 1.5 percent on the first $4,000 of taxable income, 3 percent on the next $4,000, and 5 percent on taxable income over $8,000, plus applicable surtaxes. Last law to change rates was the Revenue Act of 1928.
FRED:NIKKEI225
by FederalXBT
2
Market Insight: Week Ending 21 JulyIn the US: It was quite a week for the US. According to the Bureau of Labour Statistics (BLS) on Wednesday, consumer price inflation slowed to its lowest level since March 2021 at 3.0% in the twelve months to June (vs expected 3.1% ). Core inflation—excludes energy and food—also cooled to 4.8% (vs expected 5.0% ). Additionally, Thursday revealed that the US Producer Price Index (PPI) printed a smaller-than-expected increase. This indicator measures inflationary pressures on the wholesale side: before it reaches the consumer. US wholesale prices rose less than anticipated in the twelve months to June, gaining 0.1% (vs expected 0.4% ), with core wholesale prices—less foods, energy, and trade services—slowing to 2.6% (vs expected 2.6% ). This, as well as softer jobs growth (the US economy added 209,000 jobs in June ), is unlikely to derail the Fed from raising the Fed Funds target rate on 26 July, but casts doubt on the Fed hiking beyond this month’s meeting, despite Fed officials’ forecasts. In the US this week, industrial production is expected to remain suppressed, with US retail sales and housing data also on the radar. While retail sales data are expected to increase from May to June by 0.5%, the YoY measure is anticipated to slow to 1.1% in June, down from 1.6% in May. Regarding housing data, economists are forecasting a correction, with housing starts, building permits and existing home sales projected to come in lower. Overall, though, these releases are unlikely to alter the Fed’s decision to push rates higher by 25bps later this month. Also notable this week, Fed speak will be on pause as Fed officials enter their blackout period (15-27 July) ahead of the Fed rate decision. The US Dollar Index is testing long-term support at 99.67, following a one-sided tumble last week. This could prompt profit-taking this week and see a minor recovery unfold. In the UK: Inflation data is back in the spotlight this week; only this time, it’s June’s inflation numbers from the UK. It is certainly an economic event worth pencilling in the diary this Wednesday at 7:00 am GMT+1. You will recall that UK wages were 7.3% higher (vs 7.1% expected ) in the three months to May, compared to a year prior, and, including bonuses, wages were 6.9% higher (vs 6.8% expected ) for the same period. Although the unemployment rate climbed to 4.0% in May, up from 3.8% in April (median consensus: 3.8%), the latest UK pay data will concern the Bank of England (BoE), which next meet on 3 August. Wednesday’s consumer price inflation data for June, as aired above, will be a key watch this week, with both headline and core measures poised to slow. Headline YoY inflation is expected to cool to 8.3% (median forecast), down from 8.7% in May. YoY core annual inflation is also expected to slow to 7.0% for the same period, down from 7.1%. A marked deviation to the upside in inflation this week would likely seal the deal for a 50bp rate increase. As of writing, short-term interest rate markets are pricing in a 60% probability that the BoE will hike by another 50bps, bringing the Bank Rate to 5.5%. Interestingly, the terminal rate has nudged lower, currently forecasted to reach around 6.18% in early 2024 and remain at this level for most of the year. The GBP/USD surged north last week, adding 2.0%. Key technical indicators suggest the currency pair is overbought (overvalued), with price action also nearing long-term resistance at $1.32.
ECONOMICS:GBIRYY
by Aaron-Hill
The end of the tightening cycle is nighThe decline in the US inflation rate to more than a two-year low, marks a major step towards the end of the Fed’s historic monetary tightening cycle1. We believe key deflationary forces are in play – (1) weaker commodity prices (2) improvement in global supply chains (3) moderation in demand (4) lower inflation expectations. Therefore, the June decline in inflation is just the start of a series of decreases. Softer than expected inflation report As highlighted in the chart below, the details for June were also better than expected with key measures of underlying inflation coming in below forecasts. The inflation report suggests that some of the stickier components of inflation such as used cars and airline fares are also moderating. It’s important to note that most of the rise in the June CPI can be attributed to housing, however because of the way it is calculated it tends to lag current conditions. The S&P Case Shiller Home Price Index which tends to lead CPI shelter by roughly a year, is already flat which highlights US inflation is likely headed lower. Inflation for labour intensive services such as restaurants, recreation and personal care remained higher in June reflecting the pass -through of higher wages and robust services demand2. Potential further softening in the labour market could bring these categories back to target consistent levels. Softening in the labour market was evident in June’s employment report (nonfarm payrolls rose by 209k versus consensus 230k) which was weaker than expected for the first time in 15 months3. US Producer Prices confirmed a similar deflationary theme. The US Producer Price Index (PPI) inflation for June was softer than expected with headline and core PPI advancing 0.1% over the prior month4. Business surveys are also pointing to weakening pricing power, such as the Institute of Supply Management (ISM) services index which ties in with a lower inflation backdrop. US inflation can’t prevent the July rate hike While expectations for the July rate hike of 25Bps remain firmly in place, the market has scaled back expectations for a second hike – with 21bps / 3bps / 3bps of hikes priced for the July / September / November FOMC meetings5. The disinflation trend increases our belief that the Fed is close to, or will be, at the end of the current rate hike cycle. Earnings take centre stage for the next leg of the rally The key question now remains whether the market continues to trade off expectations of an easing narrative. Central bank policy has been the biggest drag for equities last year. The timing of the easing narrative comes at the heels of a volatile Q2 2023 earnings season. The S&P 500 Index earnings in the Q2 2023 are expected to decline 6.8% y/y, worse than the decline of 3.9% in the Q1 20233. This would be the largest earnings decline since the pandemic-fuelled 31.6% y/y decline in the Q2 2020. Earnings will be the key deciding factor for an extension in the current rally. Investors will be keen to hear from management whether they are looking to adopt a leaner cost structure and ways they are looking to remove excess capacity. Investors will be looking for guidance on productivity and efficiency gains rather than the financial engineering we have witnessed over the past decade. This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
FRED:DFF
by aneekaguptaWTE
1
CPI tomorrowU.S. Consumer Price Index (CPI) tomorrow at 8:30am. If CPI comes in below 3% the stock market will rally strong. If the CPI print is an upside surprise the stock market will go red. If CPI comes in at 3.1% forecast the stock market will whipsaw and then go up. The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It's a key way to measure changes in purchasing trends and inflation. The 2s10s yield curve is a measure of the difference in interest rates between the two-year and ten-year Treasury bonds, which generally tend to trend together with 10s yielding a premium to 2s. However, on rare occasions, the front end of the curve can become inverted as a result of the Federal Reserve (FOMC) policy intervention via raising short-term rates. Historically, an inverted yield curve has been a reliable predictor of an impending economic recession. Release Date Time Actual Forecast Previous Jul 12, 2023 (Jun) 08:30 TBA% 3.1% 4.0% Jun 13, 2023 (May) 08:30 4.0% 4.1% 4.9% May 10, 2023 (Apr) 08:30 4.9% 5.0% 5.0% Apr 12, 2023 (Mar) 08:30 5.0% 5.2% 6.0% Mar 14, 2023 (Feb) 08:30 6.0% 6.0% 6.4% Feb 14, 2023 (Jan) 09:30 6.4% 6.2% 6.5% Jan 12, 2023 (Dec) 09:30 6.5% 6.5% 7.1% Dec 13, 2022 (Nov) 09:30 7.1% 7.3% 7.8% Nov 10, 2022 (Oct) 09:30 7.7% 8.0% 8.2% Oct 13, 2022 (Sep) 08:30 8.2% 8.1% 8.2% Sep 13, 2022 (Aug) 08:30 8.3% 8.1% 8.5% Aug 10, 2022 (Jul) 08:30 8.5% 8.7% 9.1% Jul 13, 2022 (Jun) 08:30 9.1% 8.8% 8.6% Jun 10, 2022 (May) 08:30 8.6% 8.3% 8.3% May 11, 2022 (Apr) 08:30 8.3% 8.1% 8.5% Apr 12, 2022 (Mar) 08:30 8.5% 8.4% 7.9% Mar 10, 2022 (Feb) 09:30 7.9% 7.9% 7.5% Feb 10, 2022 (Jan) 09:30 7.5% 7.3% 7.0% Jan 12, 2022 (Dec) 09:30 7.0% 7.0% 6.8% Dec 10, 2021 (Nov) 09:30 6.8% 6.8% 6.2% Nov 10, 2021 (Oct) 09:30 6.2% 5.8% 5.4% Oct 13, 2021 (Sep) 08:30 5.4% 5.3% 5.3% Sep 14, 2021 (Aug) 08:30 5.3% 5.3% 5.4% Aug 11, 2021 (Jul) 08:30 5.4% 5.3% 5.4% Jul 13, 2021 (Jun) 08:30 5.4% 4.9% 5.0% Jun 10, 2021 (May) 08:30 5.0% 4.7% 4.2% May 12, 2021 (Apr) 08:30 4.2% 3.6% 2.6% Apr 13, 2021 (Mar) 08:30 2.6% 2.5% 1.7% Mar 10, 2021 (Feb) 09:30 1.7% 1.7% 1.4% Feb 10, 2021 (Jan) 09:30 1.4% 1.5% 1.3%
ECONOMICS:USCCPIEducation
by Options360
10
Recession Timeframe Horizon Macro Monday (2) Potential Recession Time Horizon Below you will find a breakdown of how many months pass before a confirmed Economic Recession (shaded grey areas) after the yield curves first definitive turn back up towards the 0% level: 1) 13 Months (Dec 1978 – Jan 1980) 2) 9 Months (Nov 1980 – July 1981) 3) 16 Months (Mar 1989 – Jul 1990) 4) 12 Months (Mar 2000 – Mar 2001) 5) 22 Months (Feb 2006 – Dec 2007) 6) 6 Months (Aug 2019 – Mar 2020) 7) 4 Months so far (Mar 2023 - ????) Average Time frame: 13 months (reasonable time horizon would be 6 – 18 months). I consider the first definitive turn up towards the 0% level as no. 7 on the chart (March 2023). Since this date we have rolled over below the -1% level (see additional chart in comments). March 2023 appears similar to the bounce in Dec 1978 (No. 1 in the chart), it also rolled over to the lower sub -1% level. If we assumed a similar 13 month timeframe to recession commencement as in Dec 1978 of 13 months, which also aligns with our 13 month average above, we would be looking at April 2024 for a recession to commence. Interestingly 1978 - 1980 was a similar peak inflationary period known as the Great Inflation, a defining macroeconomic period of high inflation. You might be wondering, has a recession ever occurred in the month of April before? I personally thought this was a strange month but it has occurred in the past. In April 1960 a recession commenced and lasted 10 months to February 1961. The 1960 recession was mainly a result of an over-tight monetary policy whereby the Federal Reserve raised interest rates from 1.75% in mid-1958 to 4% by the end of 1959 and maintained them at that level until June 1960. The Federal Reserves motive for raising interest rates and maintaining them was fear of high inflation (as in early 1951 inflation soared to +9.5%). Is it just me or is this all starting to sound a little too familiar? If we wanted to cater for all time scenarios in the chart and noted above (no. 1 - 6) we could argue that the start of a recession is possible at the earliest within 6 months (Sept 2023) and at the latest 22 months (Jan 2025). Also, the month of April 2024 has some eerie similarities to two prior recessions, the 1978 and 1960 Recessions. Lucky 13 Since World War 2 bear markets have on average taken about 13 months to reach their bottom and a further 26 months to recover their losses. Our average time before a recession would start is 13 months. It’s worth remembering that it could take an additional 13 months before a bottom is established and then 2 years or 26 months (2 x 13) of price action below the pre-recession price highs. Over 3 years is a long time to wait to recover losses. It would be pertinent to start deleveraging or increasing your hedge from the 6 month mark (Sept 2023 in this case) as subsequently the likelihood of a 3 year period below the Sept 2023 price levels increase as each month passes. For reference the S&P 500 index has fallen an average of 33% during bear markets over the avg. timeframe of 13 months to the bottom. I actually find it very hard to accept that a recession is possible in the near term (within 6 - 12 months) and I would in fact argue against it, however I cannot explain away the data in the chart which speaks for itself and warrants at least some consideration & caution. Nothing is a guarantee and maybe this time it will be different, especially factoring in the amount of unprecedented liquidity added to the market in recent years, sticky inflation and financial supports provided to systemically important banks. All the chart really indicates is a probable window for a recession to start some time between Sept 2023 – Jan 2025 and no guarantees. The rule of 13 is worth remembering, simply from a timing perspective (before and during a recession) as it may help your timing. Based on two similar periods in history, the 1978 and 1960 recessions suggest the month of April 2024 may be a key date. Again, no guarantees. It is also worth noting that for the last six recessions, on average, the announcement of when a recession started was up to 8 months after the fact…meaning we will have no direct indication when a recession starts, however the un-inversion of the yield curve (back above the 0% level) and a rise in unemployment will be the early tells, so these are worth paying attention too. We will keep you posted on any sudden changes in these metrics. I hope the chart is helpful, provides one perspective of which there are many, and can help time and frame the situation we currently find ourselves in. NO GAURANTEES, just probable timeframes that may be worth paying attention too. PUKA List of Recessions: 1. COVID-19 Recession (February - April 2020) 2. The Great Recession of 2008 (December 2007 - June 2009) 3. The September 11 Recession (March - November 2001) 4. The Gulf War Recession (July 1990 - March 1991) 5. The Iran/Energy Crisis Recession (July 1981 - November 1982) 6. The Energy Crisis Recession (January - July 1980) 7. The Nixon Recession (December 1969 - November 1970) 8. The “Rolling Adjustment” Recession (April 1960 - February 1961) 9. The Eisenhower Recession (August 1957 - April 1958) 10. The Post-Korean War Recession (July 1953 - May 1954)
FRED:T10Y2Y
by PukaCharts
5
UNRATE Update | December 2021 - PresentThe US unemployment rate can double from here and still be within the long-term range and still below the extremes that have occurred during more recent recessions. Also worth point out that the only time we have been below this level of unemployment (higher employment) was during the Korean war in the early 1950s. Sure, we could see the rate of employment increase - that can happen. But it's unlikely, based on 75 years of data that spans everything from Post-Keynesianism, to Real Business Cycle (RBC), to Monetarism, to MMT. As such, it is safe to conclude that a lower UE rate, from "here", is unlikely. So unemployment has probably bottomed, stocks are yet to recover their December 2021 highs (19 months) and the interest rate on the US10Y is up roughly 200% (having gone as high as + 215%) over the same 19-month period and currently offering a yield of 4.049%; the US10Y maintains it's lag of the US02Y, which is currently offering a yield of 4.95%. In other words, bank lending is more constrained... Wow, even the banks are telling us there is significant risk in the market. Meanwhile a lot of folks are running around telling you how great fake-money crypto supposedly is. Maybe the banks are right about risk.... Oh! one more thing: the VIX has also reached a bottom of sorts.
FRED:UNRATEShort
by ChiefMacro
Build Back BetterBuild Back Better is a disaster for the economy. Banks are failing and Inflation is killing middle class America. The wealthy are above inflation rates in a top down economy where they receive their money before the full effect of inflation kicks in at the lower levels. "Trickle Down Economics". Non Farm Payrolls are down again marking a decisive trend. Fewer jobs being created in the workforce along with flooding Illegal migrants along the border and you have a catastrophe that is just waiting to happen. A third world country in the making.
ECONOMICS:USNFPEducation
by cldx
1
Virulent inflation raises pressure on the Bank of EnglandThe inflation battle is far from over in the UK. In fact, the nature of inflation is taking a new form as the root cause moves away from external to more domestically driven shocks. While the headline rate remained unchanged at 8.7%yoy in May, core inflation accelerated to 7.1% in May from 6.8% in April, marking the highest rate since March of 19922. In response the Bank of England (BOE) raised interest rates by a bumper 50Bps to a 15-year high. While the Federal Reserve (Fed) and the European Central Bank (ECB) have made progress on bringing down inflation, the BOE still has some ways to go. Current market pricing assumes the terminal policy rate will go to 6% by year end3. UK inflation proving to be virulent The UK has the most severe entrenched inflation problem across developed markets. The domestically driven increase of services prices advanced from 6.9% to 7.4%yoy in May4. As services are labour intensive, they are being impacted by strong wage gains. Employment growth has been stronger than projected underscoring continued robust demand for labour. This high demand caused the rise in weekly average earnings (ex-bonus) to 7.5% in April5, well above the BOE’s forecast. Brexit has been partly responsible for the rise in wages. Brexit reduced the mobility of European workers. The resulting lack of non-qualified workers has not yet been reabsorbed. The situation was clearly exacerbated during the Covid pandemic that left a large part of the workforce sick. The shortage of workers in the UK continues to weigh on the supply side and has been the key reason inflation has remained stubbornly high. The resilient gains in employment (up 1.2% in April 20236) have allowed UK households to continue spending on services. Thereby contributing to higher services inflation, prices for recreational and cultural goods and services rose by 6.8%yoy in May 20237. At the same time, due to the shift away from floating rate mortgages towards fixed rate products over the last decade, the pass through of higher rates is taking longer to feed through the economy, thereby enabling the consumer to appear more resilient. However, headwinds are appearing from higher mortgage rates, with at least 800,000 fixed mortgages due to move on to significantly higher rates in H2 20238. Rents have also been rising, at an annualised pace of 5.6% in May compared to 3.2% in 20229. This is likely to place further pressure on real disposable incomes and simultaneously fuel core inflation higher. The Institute for Fiscal Studies estimates that higher interest rates will cause the average mortgage holder to suffer an 8.3% fall in disposable income compared to a scenario where rates remained at March 2022 levels. For 1.4 million of those borrowers, disposable income will fall by more than 20%10. BOE guided dovish The BOE’s guidance implied that no further rate hikes should be needed bar evidence of more persistent inflationary pressures however the market ignored this. Money markets priced a terminal rate of 6.25% by February 202411. The BoE did not rule out further rate increases should the inflation data continue to be unfavourable. However, they did downplay the unexpected surge in core inflation in May owing to special contributing factors such as the sharp rise in vehicle excise duty and the erratic contribution of airfares and holiday packages. The BOE also highlighted that forward looking indicators are pointing to material falls in future wage inflation which could then lower the pressure on services prices. We share that view, as producer price inflation which tends to serve as a leading indicator for consumer price inflation, eased more than expected in May. The June composite Purchasing Managers Indices (PMI) dropped for a second month in June, showing price pressures easing across the board, suggesting the economy could be turning. Sterling Positive rate surprises are not always positive for the currency. The Pounds muted response (-0.17%)12 to the BOE meeting despite the hawkish surprise and its negative reaction (-0.21%)13 to the hawkish May inflation data suggest that the BOE is prepared to endure a deeper slowdown in order to bring inflation under control. As a growth sensitive currency this is likely to remain an important headwind for the Pound. Sources 1 Bloomberg as of 23 June 2023 2 Bank of England as of 22 June 2023 3 Bloomberg, as of 23 June 2023 4 Bank of England as of 21 June 2023 5 Office for National Statistics as of 31 May 2023 6 Office for National Statistics as of 31 May 2023 7 Bank of England as of 22 June 2023 8 Source: Bank of England, Bloomberg as of 22 June 2023 9 Office for National Statistics, as of 22 June 2023 10 Institute for Fiscal Studies as of 30 April 2023 11 Bloomberg as of 23 June 2023 12 Bloomberg GBP/USD as on 22 June 2023 13 Bloomberg GBP/USD as on 20 June 2023
ECONOMICS:GBINTR
by aneekaguptaWTE