Seems like everyone is a bear nowadays and expecting the US economy to TANK.
I've looked at the US economic data and most analysts are saying it's looking at a slower rate of growth but with only 40% chance to lead to recession.
Nice little report to read:
http://www.tradingfloor.com/blogs/e...-report-but-theres-a-silver-lining-1496247708
Job data are not pointing towards recession
The flat reading for the August change in NFPs may have caught some bulls off guard, but when we dig deeper the report it was actually better than the headline flat reading suggests.
The ADP Employment Change of 91K may have given hopes of a better number, but methodological differences explain much of variation since the Verizon (-45K) strike does not feature in the ADP data but does in the Bureau of Labor Statistics. Adding the strike back, we land at +45K, not bad for a month mired by strikes, debt discussions and recessions fears. Though in no way does this mean that this is a good number by any means.
The unemployment rate held at 9.1% despite a gain in labour participation to 64% from 63.9%. This was due to a large influx of employees in the Household Surveys – on which the Unemployment Rate is based – of +331K. However, other measures of labour market health such as weekly hours and average hourly earnings deteriorated and thus this report cannot be labelled as anything but weak.
Overall, we deem this report to be positive given the news surrounding the report, but weak on an absolute basis. It is certainly not impressive by any standards, but also not the thing of recessions. The Verizon strike should add back in the September report (note how Household Employment grew despite the strike since it does not count such) and we remain faithful to our “not-recession, but bumbling-along scenario”.
But, to say that the USA is doomed is crazy, there will still be consumption happening, and good and services will be moving, and profits will be made by business.
Putting aside the fact that the consensus of economists has never predicted a recession in history, quoting the consensus of economists does not qualify as looking at US economic data. Have you looked at the ISM's, regional PMI's, credit spreads YoY GDP growth, YoY Non-farm payroll growth along with the stock market? Taken together all these indicators represent a syndrome of conditions that have always and only been present either immediately prior to or during recessions. This is not an opinion, it is a fact of the data. Of course this time could be different, but I think most would agree it is not advisable not to build an investment strategy around that outcome.
The biggest problem with this report is that the author doesn't know what he's talking about. Firstly, employment data is not predictive of recessions, it is a lagging indicator, if you wait for employment to give you a recession signal, you are already in recession and thus too late.
At the official start of the recession in December 2007, the 3 month moving average of payroll growth was 101k per month. We are now at 35k per month, even if you add back the Verizon workers you are at 50k per month, well below the levels that kicked off the last recession. That doesn't mean that we are already in recession but that the authors of the above report are ignorant of the historical data.
In December 2007, payroll growth was 84k, employing the logic of the authors above, they would have concluded that the jobs data was not pointing to recession when in fact the economy was already in recession.
I just don't think optimism is a trait that will prevent me losing money in the stock market.
The only thing that really worries me is that market sentiment is at an all time LOW, so with inaction, yes, I do think the US economy may have a higher risk of entering a recession.
Would a recession cause share prices to sink? Probably yes,
But would a recession have a terrible longterm effect on the earning power of good companies? Probably not,
As far as I can see a recession is nothing to fear, We will have recessions in the future, lots of them, every country will, even china. We have had many recessions in the past, Even periods that people look back on as being very prosperous were dotted with recessions along the way.
Even if you started dollar cost averaging into the market during the great depression you would have made money.
I've looked at 3 things. ISM, unemployment and GDP growth.
ISM is above 50, indicating that the economy is only slightly expanding.
GDP growth was 0.4% in the first quarter, and 1% in the second. Unemployment remained stagnant.
Isn't a recession characterised by TWO quarters of negative growth?
During a recession, a significant decline in economic activity spreads across the economy and can last from a few months to more than a year.....
The Committee does not have a fixed definition of economic activity. It examines and compares the behavior of various measures of broad activity: real GDP measured on the product and income sides, economy-wide employment, and real income. The Committee also may consider indicators that do not cover the entire economy, such as real sales and the Federal Reserve's index of industrial production (IP)....
I think all this talk about recession is actually going to fuel enough fears to drive the U.S. into a recession. That's why we have the politicians! They need to do something and do something NOW (which I guess is what everyone is waiting for).
Show us the plans. Boost some confidence. Maybe the US economy is going to get out of this mess.
The only thing that really worries me is that market sentiment is at an all time LOW, so with inaction, yes, I do think the US economy may have a higher risk of entering a recession.
One problem............this time is different
Seriously normally recessions come from the business cycle, this one coming for the USA and possibly here is far more insidiousness in that its forming as a result of dept, more importantly sovereign dept is in the mix.
Until the dept problems are addressed (there currently is no political will in USA to do this as it means pain) then the markets will continue to measure stock pricing world wide by risk.
BTW Europe is the real elephant in the room, the US is really just a side show.
400K figure relates to how many people signed to claim unemployment, if after 4 weeks their have been 1.6M make the claim it does not mean their are 1.6M extra people that are unemployed.
That's because there wasn't zero jobs created this month, there was probably somewhere between 1 - 2 million jobs created, only problem is that the same number was lost, the number you see reported is just the net of the two.
Interesting position for those that like charts.
Contrast with ASX200. We are actually looking stronger that the DJIA now ... Could even form into an ascending triangle ... if this is the case I'd expect 4150 to hold this week.
News came out in fri noon aus time about banks being sued for $50bil.
So I'd guess a bit of it is expected
down 2.2% and only 1 post today. Whats going on guys!
Havent time to post too busy panicking.
I don't believe that for a second tech/a, I reckon you would have a dozen or so on a short list that you will dig out when the XAO hits 3700
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