Opinions vary... An alternative view on the markets
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Hi,
Just for those who read the original long post and enjoyed it.
The US market due to these fiscal and monetary government actions being turned wide open has risen MORE than here in Australia. The UK has the fiscal side being turned down whilst monetary policy is still wide open and as such has performed between our own performance and the US. In the UK however this year their fiscal deficit is 131 billion pounds or 8.6% of GDP even MORE than the USA. Its monetary policy is open just as wide as the US with rates also at zero with inflation at 2% ish.
No prize for seeing the end results.
Off the low in 2009 the US from 6,547 in the DOW to 15,659 has risen 9,112 points or up over double and 139% of the low hit then.
In Australia the All Ord s hit 3090.80 in 2009 and hit a high of 5229.80 not so long ago. This rise was a mere 69.2% from the lows vs the US. We have not hit a new high and this is a direct result of both Fiscal and monetary policy being set much higher. Even with recent cuts in domestic rates the cash rate is 2.5% ABOVE us rates and in fact post GFC after easing we raised rates for some time. Monetary side government spending which many have been trying to whine about or spending has not gone over 5% of GDP deficit vs the US at 10.11% in 2009 and still 6% for this year … 7% for last year. In effect they have pushed and kept pushing and still keep pushing which has created this bubble yet again I talk about. The UK is running a fiscal deficit of OVER TWICE our own with obvious results.
In the UK I use the FTSE 250 or all shares index as the FTSE 100 is too concentrated in oil and financials, anyhow the FTSE 250 hit a high of 11,926.90 in May 2007 hit a low in November 2008 of 5491.3 and the recent high 15,231.90 is actually 177% higher than the lows. If anything in even more scary regions than the US. Part of this has to do with the concentration of Oil and Gas plays in that index especially in the top 100 stocks.
The UK running the largest fiscal hole around has risen even more than the US.
This to me is of a concern, as is the US.
Our own market is where it is because of government policies along with a view that commodity prices have somehow peaked or are in threat of going down. If say one looks at FMG profits on 80 million tons of production vs an expected 155 MT by end of 2014 and the 1.7 billion profit vs a market cap of 12 billion its well under 10 and its cost per ton are falling. A fall in the currency of late will only help things. With a debt overall of 12 billion it was interesting to read the papers and journalists criticise the paying out of 10 cents per share or 300 million in dividends. It still left 1.3 billion to pay down debt and as it would appear at least for now things are on track with both production targets and even the raw price of iron-ore one year at full production of 155 million tons should bring about 3.3 billion profits and even if they paid out another 10 cents per share or 300 million debt would go from 12 billion to 9 billion and if another year went on down to 6 billion. This said the perception is still there and it has hit our market with a more commodity based profile and the performance of Rio and BHP to me have been a vast disappointment over the last 5 years.
UK market with the more focus on oil and gas and oil back over $100- its has benefited in the opposite way to our own. This said the policy of the UK has been even more aggressive than the US to accommodate financial markets and with monetary policy set at zero and HIGHER yield rates for UK stocks vs US ones this makes them even more attractive and in effect an even bigger positive to the UK market direction along with government spending even more insane than the US the results speak for themselves.
The US barely broke the old high in 2007 for the Dow 15,658 the 2013 high vs the 2007 high of 14,164 or 10.5% higher than the old high, the UK FTSE pre GFC peaked at 12,282.2 vs a high of 15,231.90 or a whopping 24% above the old high.
The result of this is clear via examining government policies both fiscal and monetary.
When we look at 2007 we in hindsight know it for what it was a bubble. Same for the 2000 and same for each of the smaller but no less violent moves of the 1960-1985 period in particular the 1972 and 1980 regions.
As I went back 120 years with the paper and have gone back even further myself to booms and busts in the 1700 and 1800's the same sort of things occurs again and again.
With the Australian market here lagging all the others the impact of the correction I think if it comes will obviously be less, but this said the governments of UK and US and others have built a perception of market value based on hot air in the 2008-2013 period. As such I would proceed with caution. Since we are so very undervalued due to our own governments stance and sensible stance vs the other nations we have risen less. Like in the GFC we were in reality hit less on the obvious fronts of job loss and housing crashes and bank runs, so too this correction I suspect we will do far better.
I suppose the 2000 boom is the best to see what possibly may happen. The US DOW fell from peak to bottom 37.8%, but this is only 30 stocks and not that tech orientated the S+P 500 in the US fell more and the very tech orientated NASDAQ fell from a high of 5,132 in March 2000 to a low of 1,108 in October 2002 or a massive 78.4% . The less tech orientated UK index fell around 47% in the 2000 period having risen slower and less into 1998-2000, so the fall was much less !! Same happened with the all ords and ASX 200, the ASX 200 I think fell from a high of 3,506 to a low in March 2003 of 2,693.3 or a fall of just 23%.
Yes it goes ON ... not too far this time
Here is the PDF of it for light reading if interested.
Take care Mark M
Just for those who read the original long post and enjoyed it.
The US market due to these fiscal and monetary government actions being turned wide open has risen MORE than here in Australia. The UK has the fiscal side being turned down whilst monetary policy is still wide open and as such has performed between our own performance and the US. In the UK however this year their fiscal deficit is 131 billion pounds or 8.6% of GDP even MORE than the USA. Its monetary policy is open just as wide as the US with rates also at zero with inflation at 2% ish.
No prize for seeing the end results.
Off the low in 2009 the US from 6,547 in the DOW to 15,659 has risen 9,112 points or up over double and 139% of the low hit then.
In Australia the All Ord s hit 3090.80 in 2009 and hit a high of 5229.80 not so long ago. This rise was a mere 69.2% from the lows vs the US. We have not hit a new high and this is a direct result of both Fiscal and monetary policy being set much higher. Even with recent cuts in domestic rates the cash rate is 2.5% ABOVE us rates and in fact post GFC after easing we raised rates for some time. Monetary side government spending which many have been trying to whine about or spending has not gone over 5% of GDP deficit vs the US at 10.11% in 2009 and still 6% for this year … 7% for last year. In effect they have pushed and kept pushing and still keep pushing which has created this bubble yet again I talk about. The UK is running a fiscal deficit of OVER TWICE our own with obvious results.
In the UK I use the FTSE 250 or all shares index as the FTSE 100 is too concentrated in oil and financials, anyhow the FTSE 250 hit a high of 11,926.90 in May 2007 hit a low in November 2008 of 5491.3 and the recent high 15,231.90 is actually 177% higher than the lows. If anything in even more scary regions than the US. Part of this has to do with the concentration of Oil and Gas plays in that index especially in the top 100 stocks.
The UK running the largest fiscal hole around has risen even more than the US.
This to me is of a concern, as is the US.
Our own market is where it is because of government policies along with a view that commodity prices have somehow peaked or are in threat of going down. If say one looks at FMG profits on 80 million tons of production vs an expected 155 MT by end of 2014 and the 1.7 billion profit vs a market cap of 12 billion its well under 10 and its cost per ton are falling. A fall in the currency of late will only help things. With a debt overall of 12 billion it was interesting to read the papers and journalists criticise the paying out of 10 cents per share or 300 million in dividends. It still left 1.3 billion to pay down debt and as it would appear at least for now things are on track with both production targets and even the raw price of iron-ore one year at full production of 155 million tons should bring about 3.3 billion profits and even if they paid out another 10 cents per share or 300 million debt would go from 12 billion to 9 billion and if another year went on down to 6 billion. This said the perception is still there and it has hit our market with a more commodity based profile and the performance of Rio and BHP to me have been a vast disappointment over the last 5 years.
UK market with the more focus on oil and gas and oil back over $100- its has benefited in the opposite way to our own. This said the policy of the UK has been even more aggressive than the US to accommodate financial markets and with monetary policy set at zero and HIGHER yield rates for UK stocks vs US ones this makes them even more attractive and in effect an even bigger positive to the UK market direction along with government spending even more insane than the US the results speak for themselves.
The US barely broke the old high in 2007 for the Dow 15,658 the 2013 high vs the 2007 high of 14,164 or 10.5% higher than the old high, the UK FTSE pre GFC peaked at 12,282.2 vs a high of 15,231.90 or a whopping 24% above the old high.
The result of this is clear via examining government policies both fiscal and monetary.
When we look at 2007 we in hindsight know it for what it was a bubble. Same for the 2000 and same for each of the smaller but no less violent moves of the 1960-1985 period in particular the 1972 and 1980 regions.
As I went back 120 years with the paper and have gone back even further myself to booms and busts in the 1700 and 1800's the same sort of things occurs again and again.
With the Australian market here lagging all the others the impact of the correction I think if it comes will obviously be less, but this said the governments of UK and US and others have built a perception of market value based on hot air in the 2008-2013 period. As such I would proceed with caution. Since we are so very undervalued due to our own governments stance and sensible stance vs the other nations we have risen less. Like in the GFC we were in reality hit less on the obvious fronts of job loss and housing crashes and bank runs, so too this correction I suspect we will do far better.
I suppose the 2000 boom is the best to see what possibly may happen. The US DOW fell from peak to bottom 37.8%, but this is only 30 stocks and not that tech orientated the S+P 500 in the US fell more and the very tech orientated NASDAQ fell from a high of 5,132 in March 2000 to a low of 1,108 in October 2002 or a massive 78.4% . The less tech orientated UK index fell around 47% in the 2000 period having risen slower and less into 1998-2000, so the fall was much less !! Same happened with the all ords and ASX 200, the ASX 200 I think fell from a high of 3,506 to a low in March 2003 of 2,693.3 or a fall of just 23%.
Yes it goes ON ... not too far this time
Here is the PDF of it for light reading if interested.
Take care Mark M
CanOz
Home runs feel good, but base hits pay bills!
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Another one in cash since 2009?
You can't fight it....
Let the price action tell you when to bail, ignore the fundamental stuff. The entire world is in debt....to who? The entire world?
No one cares about debt anymore...one day they're just gonna write off the whole 2222 bazillion and call it even among friends...
Give me a break, this isn't real...trade what you see.
You can't fight it....
Let the price action tell you when to bail, ignore the fundamental stuff. The entire world is in debt....to who? The entire world?
No one cares about debt anymore...one day they're just gonna write off the whole 2222 bazillion and call it even among friends...
Give me a break, this isn't real...trade what you see.
Porper
Ralph Nelson Elliott
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Another one in cash since 2009?
You can't fight it....
Let the price action tell you when to bail, ignore the fundamental stuff. The entire world is in debt....to who? The entire world?
No one cares about debt anymore...one day they're just gonna write off the whole 2222 bazillion and call it even among friends...
Give me a break, this isn't real...trade what you see.
Seconded...this would be a good post to put in the Gold thread for the likes of Uncle to read. They've been bearish for years & keep predicting Armageddon. It isn't going to happen. Conspiracy theorists need to come into the real world.
There is a lot of money to be made in the markets at the moment, why would you be waiting for the world financial system to collapse?
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No, I was fully invested in 2009.
I usually post on another site. A Google will confirm this kahuna1. And actions.
It is an aside. In 2007 and in 2000 I exited markets only to re-buy when the hot air had been let out. A view shared in public in real time on forums.
Many thanks for your view that I have in some way missed the recent rise or panicked at the lows.
Enjoy I suggest you go get some leverage at these levels. Trying to prove an opinion or view before it eventuates is not possible. I have however shared views as mentioned for many years. If you Google Kanuna1 Uranium you may actually learn something about whom you just took a cheap shot at. The post that I see comes up from 2005. and read on. Cigar lake flooding took 8% off the table with obvious impacts to the price.
As for the economic side if you think I was fully invested at the peak in 2007, go to a chart, Google my name and read the relevant date.
I stopped bother positing for a long time for reasons like you just reminded me.
Take care
I usually post on another site. A Google will confirm this kahuna1. And actions.
It is an aside. In 2007 and in 2000 I exited markets only to re-buy when the hot air had been let out. A view shared in public in real time on forums.
Many thanks for your view that I have in some way missed the recent rise or panicked at the lows.
Enjoy I suggest you go get some leverage at these levels. Trying to prove an opinion or view before it eventuates is not possible. I have however shared views as mentioned for many years. If you Google Kanuna1 Uranium you may actually learn something about whom you just took a cheap shot at. The post that I see comes up from 2005. and read on. Cigar lake flooding took 8% off the table with obvious impacts to the price.
As for the economic side if you think I was fully invested at the peak in 2007, go to a chart, Google my name and read the relevant date.
I stopped bother positing for a long time for reasons like you just reminded me.
Take care
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You are not alone here kahuna....
Many read these forums everyday like myself, in hope of gleaning some pearls of wisdom, but post rarely as some posters turn it into a personal challenge to beat down and discredit the contributor. It comes under the guise of "healthy and robust debate" and "off topic until I finish my personal lambasting"
Check out the Gold price, where is it heading thread, a classic example of a battle of egos.
Sometimes I open the thread and say to myself, the lads are at it again, nothing new here, why did I bother.
CanOz
Home runs feel good, but base hits pay bills!
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I personally apologize if i came across as rude...no excuse for that.:bad:
Good to have an alternate view, i actually downloaded it too so appreciate you posting the PDF.
Keep posting Kahuna, don't mind little ole me...
Good to have an alternate view, i actually downloaded it too so appreciate you posting the PDF.
Keep posting Kahuna, don't mind little ole me...
pixel
DIY Trader
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Keep posting, Mark
An Open Forum is full of different opinions. Some are expressed more politely than others. Some traders are taking a multi decade-long view, while others trade single tick swings by the minute. Very few try to apply both.
I fall into the latter camp: As an old fossil, I don't have enough time left to to worry about decades or generations to come. Therefore, I trade the way that suits me, offer my opinions as I see them, and can't be offended by disagreeing posts - no matter how politely or rudely expressed. If my opinion is opening just one pair of eyes, helpful to just one reader, I feel it's been worth posting.
Looking at people's reaction at that other site, I'm sure you agree that you have reached more than one
An Open Forum is full of different opinions. Some are expressed more politely than others. Some traders are taking a multi decade-long view, while others trade single tick swings by the minute. Very few try to apply both.
I fall into the latter camp: As an old fossil, I don't have enough time left to to worry about decades or generations to come. Therefore, I trade the way that suits me, offer my opinions as I see them, and can't be offended by disagreeing posts - no matter how politely or rudely expressed. If my opinion is opening just one pair of eyes, helpful to just one reader, I feel it's been worth posting.
Looking at people's reaction at that other site, I'm sure you agree that you have reached more than one
I personally apologize if i came across as rude...no excuse for that.:bad:
Good to have an alternate view, i actually downloaded it too so appreciate you posting the PDF.
Keep posting Kahuna, don't mind little ole me...
CanOz
The apology is good but it would be better if you learnt a lesson.
You are meant to be a moderator FFS.
The truth is that if a person doesn’t share the dominant group mentality on ASF you have to be very thick skinned to bother persevering and that results in lots of posts never being made.
Kahuna1 don’t let the noisy ‘geniuses’ ruin it for those that quietly ponder your points and I am sure appreciate your effort to convey your thoughts.
CanOz
Home runs feel good, but base hits pay bills!
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Fair comment Craft, however i am human and i do make mistakes. I'm happy to apologize when i realize my mistakes.
If you prefer i not be a moderator, please let Joe know and I'll resign.
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Thanks for the apology, not really needed.
Each of us does what they like with investments.
Whilst I post here not a lot, I have for many years in fact well over 15 years shared views on various chat sites.
I have been threatened by companies with legal action, in fact kicked of Hot copper for actually talking about some companies during the dot com era. One which i just loved to hate I look now its GONE and into a small mining thing but in 2003-4 it was one of the very few survivors, it had no income, no sales but a great PR company which included media identities all talking billions in revenue. They had a device which saved 50% in power. It was a great Fad in the bounce 2002-3.
What people didn't read is how it saved the power. Most amusing, it was turned off for 50% of the day during sunlight and that's how its saved.
Needless to say, it rallied 30 fold. It was being pushed on HC like you would not believe. Also by some owners of the site I suspect. Anyhow the share price in today's terms after all the splits went from 30 cents to $9.30. The actual price then may have been prior to all the splits and recaps from $0.05 to $1.50. Still made it no less silly.
So after this peak in today's terms of $9.30 where is it today ? .... 0.006 cents less than 1 cent.
Opinions are opinions and I made no friends during the Uranium peaks, despite knowing the game and what it was I jumped on and went in and out but always knew it was a game that ended with the music stopping and it ending with 90% losses.
We shall see if I am correct being wary, or not.
Only time will tell
take care M
Each of us does what they like with investments.
Whilst I post here not a lot, I have for many years in fact well over 15 years shared views on various chat sites.
I have been threatened by companies with legal action, in fact kicked of Hot copper for actually talking about some companies during the dot com era. One which i just loved to hate I look now its GONE and into a small mining thing but in 2003-4 it was one of the very few survivors, it had no income, no sales but a great PR company which included media identities all talking billions in revenue. They had a device which saved 50% in power. It was a great Fad in the bounce 2002-3.
What people didn't read is how it saved the power. Most amusing, it was turned off for 50% of the day during sunlight and that's how its saved.
Needless to say, it rallied 30 fold. It was being pushed on HC like you would not believe. Also by some owners of the site I suspect. Anyhow the share price in today's terms after all the splits went from 30 cents to $9.30. The actual price then may have been prior to all the splits and recaps from $0.05 to $1.50. Still made it no less silly.
So after this peak in today's terms of $9.30 where is it today ? .... 0.006 cents less than 1 cent.
Opinions are opinions and I made no friends during the Uranium peaks, despite knowing the game and what it was I jumped on and went in and out but always knew it was a game that ended with the music stopping and it ending with 90% losses.
We shall see if I am correct being wary, or not.
Only time will tell
take care M
Trembling Hand
Can be found on the bid
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Actually many go broke from jumping off too soon but its clear that there is some nasty losses and massive amount of wasted time from falling in love with an approach, idea, sector or company. For some reason people fall in love with the silliest of things. A stock ticker!!!
A game it is. If the one you are on aint working it always stuns me why people choose not to jump onto one that is.
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Hi,
Well US and UK markets struggling up here. My view is based upon the US side and UK which are 30-40% higher than the ASX and the valuations there scare me as opposed to here.
That said, if the ASX 200 went another 5% higher it still would be in relative terms 25% below the US and further behind the UK.
Our policies both fiscal and monetary have us here. So too for the EU on the whole, tighter fiscal and monetary sides have them trading at similar value levels to Australia.
Any how have written a few things for anyone interested over last 6-8 weeks. Since my first one upset so many here are some more.
Just opinions and time will only tell.
Bubble-mania 2013 is the first
View attachment Bubblemania 2013.pdf
Well US and UK markets struggling up here. My view is based upon the US side and UK which are 30-40% higher than the ASX and the valuations there scare me as opposed to here.
That said, if the ASX 200 went another 5% higher it still would be in relative terms 25% below the US and further behind the UK.
Our policies both fiscal and monetary have us here. So too for the EU on the whole, tighter fiscal and monetary sides have them trading at similar value levels to Australia.
Any how have written a few things for anyone interested over last 6-8 weeks. Since my first one upset so many here are some more.
Just opinions and time will only tell.
Bubble-mania 2013 is the first
View attachment Bubblemania 2013.pdf
CanOz
Home runs feel good, but base hits pay bills!
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Opinions are like ********s, everyone has one!
And you are a moderator ?
You will not like the rest of what I will post here.
I at least in 2000 wasn't told I was an a)*&)*@& by the moderator
In 2007 when I did the same on yet another site ... I wasn't told I was an *)$@*)&@$_
But 2013, the moderator knows best.
I have my opinion of you, you may have yours of me. I will however not respond in kind.
Once I was voted the biggest looser on a thread on another site, It was sad but amusing but the stock fell 99% and as suspected it was worthless.
In 2006-7 I actually got booed as the only presenter at an Uranium conference who was bearish and my own long term view of Uranium was a price 40% of the spot. It sadly went lower than my $50- per lb call.
Had the same each and every time for 15 years, at lows ... its going lower ... at highs its going higher.
As an advisor to two of the largest funds in the country I got sat in the corner and thought of as some fruitcake in late 2007 because I was of the view equity markets fell 30% in 2008. When they fell 26% and recovered 19%, my own well publicized view was the conditions were even worse, and they fell 40% overall.
I was wrong, they fell over 50%. I was still sitting in the corner at two of the three funds I advised. The one who didn't make a big deal about it, followed their own course and mine was just a voice, an opinion, sold all banking stocks early 2008 into the GFC. They are of course one of the most successful fund managers of the last 10 years in Australia. I had nothing to do with this it was their doing not mine. I did however chew off the investment managers ear who also happens to share the same surname as the author of the piece you just derided.
Had the same in 2000, same on the view the AUD at 60 cents went to 90 cents, then to $1.10-. I gave it for free, shared the view with others.
Had the same in 2003/4/5/6 on oil view when it was $25- I thought it went to $60- then 80- then late 2007 as the US dollar fell out of bed it went to $150- was my view, I was wrong it only went to $144-. Up there I thought it halved and again an opinion shared and laughed at. I was wrong about it halving from the high, it went I think to US$33-, before bouncing.
I should be used to it I suppose. Not however from a moderator but nothing new.
My view is shared I might add about US and UK equities by quite a few. As you can see my surname it might be an idea to actually see if there is anyone with the same name running the most successful fund manager in the country over the last 10 years and get back to me.
Take care
And you are a moderator ?
You will not like the rest of what I will post here.
I at least in 2000 wasn't told I was an a)*&)*@& by the moderator
In 2007 when I did the same on yet another site ... I wasn't told I was an *)$@*)&@$_
But 2013, the moderator knows best.
I have my opinion of you, you may have yours of me. I will however not respond in kind.
Once I was voted the biggest looser on a thread on another site, It was sad but amusing but the stock fell 99% and as suspected it was worthless.
In 2006-7 I actually got booed as the only presenter at an Uranium conference who was bearish and my own long term view of Uranium was a price 40% of the spot. It sadly went lower than my $50- per lb call.
Had the same each and every time for 15 years, at lows ... its going lower ... at highs its going higher.
As an advisor to two of the largest funds in the country I got sat in the corner and thought of as some fruitcake in late 2007 because I was of the view equity markets fell 30% in 2008. When they fell 26% and recovered 19%, my own well publicized view was the conditions were even worse, and they fell 40% overall.
I was wrong, they fell over 50%. I was still sitting in the corner at two of the three funds I advised. The one who didn't make a big deal about it, followed their own course and mine was just a voice, an opinion, sold all banking stocks early 2008 into the GFC. They are of course one of the most successful fund managers of the last 10 years in Australia. I had nothing to do with this it was their doing not mine. I did however chew off the investment managers ear who also happens to share the same surname as the author of the piece you just derided.
Had the same in 2000, same on the view the AUD at 60 cents went to 90 cents, then to $1.10-. I gave it for free, shared the view with others.
Had the same in 2003/4/5/6 on oil view when it was $25- I thought it went to $60- then 80- then late 2007 as the US dollar fell out of bed it went to $150- was my view, I was wrong it only went to $144-. Up there I thought it halved and again an opinion shared and laughed at. I was wrong about it halving from the high, it went I think to US$33-, before bouncing.
I should be used to it I suppose. Not however from a moderator but nothing new.
My view is shared I might add about US and UK equities by quite a few. As you can see my surname it might be an idea to actually see if there is anyone with the same name running the most successful fund manager in the country over the last 10 years and get back to me.
Take care
tech/a
No Ordinary Duck
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Yeh as he said Opinions are like ********s, everyone has one!
YOURS is no different.
Nor is MINE.
You/I or He don't have to agree with any opinion expressed.
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I agree,
you don't have to agree.
Don't expect anyone to. Just expressing my own.
take care
you don't have to agree.
Don't expect anyone to. Just expressing my own.
take care
tech/a
No Ordinary Duck
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Well that's YOUR opinion!
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kahuna, this is not what happened.
CanOz made a very general remark, and then posted a contrasting article in response to your post, to demonstrate that there is a great diversity of views about where the market is heading.
What he said was not aimed at you, nor anyone else in particular.
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I know Joe,
No problemo. Congrats by the way !!
My view on the leading indicators.
Composite Index of Leading Indicators'
An index published monthly by the Conference Board used to predict the direction of the economy's movements in the months to come. The index is made up of 10 economic components, whose changes tend to precede changes in the overall economy. These 10 components include:
1. the average weekly hours worked by manufacturing workers
2. the average number of initial applications for unemployment insurance
3. the amount of manufacturers' new orders for consumer goods and materials
4. the speed of delivery of new merchandise to vendors from suppliers
5. the amount of new orders for capital goods unrelated to defense
6. the amount of new building permits for residential buildings
7. the S&P 500 stock index
8. the inflation-adjusted monetary supply (M2)
9. the spread between long and short interest rates
10. consumer sentiment
Its nice to present a chart, but above is what it represents.
So to impose a chart which has a component of the S+P 500 in it against the current market to predict its future direction to me at least seems somewhat silly, but this is an opinion. 7. the S&P 500 stock index
As I am sure you are aware the US participation rate has fallen 3.2% in recent years. In the EU theirs has fallen 1% off its peak. Australia has barely moved. If you equate back 3.2% of 65% of people over the age of 15 in the workforce being doctored and taken off an index the fall in the US Unemployment rate if it used the 1% the whole of the EU has used is overstating their unemployment by over 3%. The reported 7% ish unemployment rate is if reported the same way as the EU likely over 10%. Makes measures one and two pretty useless. 1. the average weekly hours worked by manufacturing workers 2. the average number of initial applications for unemployment insurance
In the USA as I am also sure your aware, the weekly unemployment benefits STOP after 26 weeks in MOST US states so if you have been unemployed longer than that, you disappear from the radar totally. This is reflected of course in the massive fall in the participation rate and those marginally attached to the workforce. Again makes measures one and two useless.
Number 8 the inflation adjusted money supply as I am sure all have heard of QE and the US fed entering the market and now has a balance sheet of 3.8 trillion, this has a massive effect on money supply, it is expanding money supply in the extreme. I am unsure whether this has BEEN removed from this leading indicators but I suspect NOT as there seems to be a pause in the chart exactly when the US fed stopped and then started again with QE2/3/4. So this takes the total to 4 out of 10 indicators on this precious chart.8. the inflation-adjusted monetary supply (M2)
As I am also sure you are aware US manufacturing jobs lost between 2000 and January 2009 was over 6 million jobs lost. This is from the US BLS or Bureau of Labor Statistics. As I am also sure your aware that since 2009 despite over 6 million new jobs announced, the number of US working are about the same as they were in 2008 in 2013. In other words no real jobs have been created. As I am also sure your aware in 2009 US manufacturing according to BLS lost over 1.5 million jobs. Since 2009 in total there have been 500,000- manufacturing jobs added. In total I make the loss of jobs in this sector at over 7 million or 33% of the WHOLE sector. I question the use of the leading indicators as a tool when number 1,3,4,5 measures DONT show an industry which has lost 33% of the workers in it in 13 years as being a valid measure of anything.
So out of the 10 arguments about leading indicators used I question, as an opinion, 1,2,3,4,5,7 and 8. Which to me makes the measure 70% useless as is consumer sentiment.
As to spreads between long rates and short rates, as I am sure you are aware the QE action via the US fed in buying 3 trillion more assets, bonds and MBS is actually targeted at this spread.
So this makes the number 9 a useless measure totally when the government is buying long bonds to deliberately lower this spread. 9. the spread between long and short interest rates
I will not go on, that makes it 8 out of 10 things that make up the Composite Of Leading Indicators in my view, an opinion, but I think one can see as having some validity, making the use of this measure on market direction in 2013 not much use. It may have had some correlation pre 2007 as the US fed was NOT in the Bond market buying MBS securities, not inflating the money supply and pre 2007 there was no massive adjustments to participation rate and other measures.
Just an opinion.
Thanks
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