Leading Economic Indicators

We Now Know "Who Hit The Brakes" As Loan Creation Crashes To Six Year Low

We can now close the book on the WSJ's previously unanswered question of "who hit the breaks?" The answe the US consumer, the driver behind 70% of US GDP, officially tapped out. In fact, it was almost as if US consumers were hit by a perfect storm of adverse events in late 2016 and early 2017

Jeff Gundlach's Forecast For 2017

Investors will confront excessive debt, high P/E levels and political uncertainty as they enter the Trump presidential era. In response, according to Jeffrey Gundlach, U.S.-centric portfolios should diversify globally.

Market Trapped As Recession Risk Rises

With the ongoing political circus, weak corporate earnings (considering the massive reductions in expectations since the beginning of the year), Apple and Amazon both missing expectations (which really goes to the heart of the consumer), and consumer sentiment waning, it is surprising the markets are still holding up as well as they are. As long as the markets can maintain support about 2125, the bull market is still in play, but at this point, not by much.

GDP - A Grossly Defective Product

There have only been TWO previous points in history where real economic growth was below 2% at the time of the first quarterly rate hike – 1948 and 1980. In 1948, the recession occurred ONE-quarter later and THREE-quarters following the first hike in 1980. But then again, if you can just keep changing the data calculation to goal seek a better economic picture, then surely that is enough. Right? Might want to ask those 100 million on government welfare what they think.

The Federal Reserve Is Hillary Clinton's Secret Weapon

Say what you want about Donald J. Trump, but he is correct about one thing: the Federal Reserve has, with near certainty, been holding interest rates down for political purposes - namely, to aid Hillary Clinton in getting elected president of the United States.

S&P Futures Unchanged As Europe Rises; Dollar Slide Sends Oil Above $47

In the latest quiet trading session, European shares rose while Asian stocks fell and S&P futures were little changed. Minutes of the Fed’s last meeting damped prospects for a U.S. interest-rate hike, sending the Bloomberg Dollar Spot Index doen 0.3%, approaching a three-month low. Dollar weakness continues to buoy commodities, with the Bloomberg Commodity Index set for the most enduring rally in more than two months, as WTI flirted with $47

The Message From The Collapsing Yield Curve

The FOMC is tightening monetary policy because Fed officials believe that the US economy is showing more signs of sustainable growth with inflation rising back near their 2% target. Yet the yield curve is warning that the Fed’s moves could slow the US economy and halt the desired upturn in the inflation rate. Most worrying for the Fed's narrative is the fact that the yield curve spread on a weekly basis has been highly correlated with the y/y growth rates in both the forward revenues and forward earnings of the S&P 500. The recent narrowing of the spread isn’t a good omen for either of them.

The Economy In Pictures: Weakness Continues

While there is currently a plethora of commentary strongly suggesting that the U.S. economy is nowhere near recession, it should be remembered the economy has NEVER been in a recession until future negative data revisions revealed it to be the case. Unfortunately, for investors, by the time a recession is widely recognized and accepted by the mainstream media and analysts, it will be far too late to do anything about it.

Cycles, Bounces, & The Only Question That Matters

Unfortunately, when central-planners "drag forward" future consumption today, you leave a "void" in the future that must be filled. That future "void" continues to expand each time activity is dragged forward until, inevitably, it can not be filled. This is currently being witnessed in the overall data trends as seen in the deterioration in corporate earnings and revenues. The only question is whether Central Banks can continue to support asset prices long enough for the economic cycle to catch up. Historically, such is a feat that has never been accomplished.

Earnings Implosion Looms Amid The Illusion Of "Permanent Liquidity"

The problem with forward earnings estimates is that they consistently overestimate reality by roughly 33% historically. The illusion of“permanent liquidity,” and the belief of sustained economic growth, despite slowing in China, Japan, and the Eurozone, has emboldened analysts to continue push estimates of corporate profit growth higher. Even now, as the earnings recession deepens, hopes of a sharp rebound in profitability remains ebullient despite the lack of any signs of economic re-acceleration.

Biggest Short Squeeze In 7 Years Continues After Bullard Hints At More QE, OECD Cuts Global Forecasts

Just when traders thought that the biggest and most violent 3-day short squeeze in 7 years was about to end a squeeze that has resulted in 3 consecutve 1%+ sessions for the S&P for the first time since October 2011, overnight we got one of the Fed's biggest faux-hakws, St. Louis Fed's Jim Bullard, who said that it would be "unwise" to continue hiking rates at this moment, and hinted that "if needed", the most natural option for the Fed going forward would be to do further Q.E.

Neil Howe Warns The 'Professional Class' Is Still In Denial Of The Fourth Turning

"The world has fundamentally shifted over the last decade, especially since we’ve emerged from the Great Recession... But the professional class has been very slow to understand what is going on, not just quantitatively but qualitatively in a new generational configuration that I call the Fourth Turning. They don’t accept the new normal. They keep insisting, just two or three years out there on the horizon, that the old normal will return – in GDP growth, in housing starts, in global trade. But it doesn’t return."