Click to enlarge.
If cold weather is responsible for the exponential trend failure then, as seen in the chart, it sure has been cold over the past year.
Source Data:
St. Louis Fed: Custom Chart
Tampilkan postingan dengan label sarcasm. Tampilkan semua postingan
Tampilkan postingan dengan label sarcasm. Tampilkan semua postingan
The Pause That Depresses
The following chart shows the average of new private housing units authorized by building permits and new privately owned housing units started.
Click to enlarge.
If cold weather is responsible for the exponential trend failure then, as seen in the chart, it sure has been cold over the past year.
Source Data:
St. Louis Fed: Custom Chart
Click to enlarge.
If cold weather is responsible for the exponential trend failure then, as seen in the chart, it sure has been cold over the past year.
Source Data:
St. Louis Fed: Custom Chart
Parabolic Growth: Not Sustainable (Musical Tribute)
The following chart shows the annual growth in the S&P 500 Index divided by the annual growth in retail sales (excluding food services). I offer two data sets. One starts at 2004:Q1 (in black) and the other starts at 2010:Q2 (in blue). A parabolic trend line has been added for each series.
Click to enlarge.
Note that both parabolic trends are nearly identical. So much for the "fool me once shame on you, fool me twice shame on me" theory to investing.
We are currently seeing each 1% of retail sales growth turn into 6% in S&P 500 Index growth (a 6-1 leverage ratio), just like we were heading into the Great Recession. That is not the most disturbing part though. It's how we got here and where investors seem to think we're headed.
The future's so bright I gotta snipe hunt.
This is not investment advice.
Source Data:
St. Louis Fed: Custom Chart
Click to enlarge.
Note that both parabolic trends are nearly identical. So much for the "fool me once shame on you, fool me twice shame on me" theory to investing.
We are currently seeing each 1% of retail sales growth turn into 6% in S&P 500 Index growth (a 6-1 leverage ratio), just like we were heading into the Great Recession. That is not the most disturbing part though. It's how we got here and where investors seem to think we're headed.
Parabolic Growth: Not Sustainable
Extreme ways are back again
Extreme places I didn't know
I broke everything new again
Everything that I'd owned
Extreme places I didn't know
I broke everything new again
Everything that I'd owned
The future's so bright I gotta snipe hunt.
This is not investment advice.
Source Data:
St. Louis Fed: Custom Chart
The Next Recession Arriving Right on Schedule?
The following chart shows the annual change in the 2-year moving average of retail sales (excluding food services). I'm going for a maximum smoothing approach to remove as much noise as possible (while still seeing the underlying trend).
Click to enlarge.
Good luck blaming the slow and steady growth rate decline (since 2012) on this winter's weather.
In May of 2012, I predicted that the next recession would hit on or before October 2014. Eight months to go. I see little reason to alter my opinion. At the rate we're going, it could be close enough for government work anyway. I truly hope I am wrong. Seriously.
If I am right (might not be of course), this is going to be a nasty recession. Why? Many seem to think a recession is impossible during ZIRP and that the Fed has saved us. What a confidence shaking wake-up call that would be.
I am especially amused by the party of 1999. Had we not thrown such a spectacular one (and hoarded for the Y2K bug that was a non-event), the recession may have happened right then and there. Praise be to celebratory can-kicking.
And lastly, rising interest rate environment my @$$.
This is not investment advice. As always, just ugly charts and opinions.
Source Data:
St. Louis Fed: Retail Sales: Total (Excluding Food Services)
Click to enlarge.
Good luck blaming the slow and steady growth rate decline (since 2012) on this winter's weather.
In May of 2012, I predicted that the next recession would hit on or before October 2014. Eight months to go. I see little reason to alter my opinion. At the rate we're going, it could be close enough for government work anyway. I truly hope I am wrong. Seriously.
If I am right (might not be of course), this is going to be a nasty recession. Why? Many seem to think a recession is impossible during ZIRP and that the Fed has saved us. What a confidence shaking wake-up call that would be.
I am especially amused by the party of 1999. Had we not thrown such a spectacular one (and hoarded for the Y2K bug that was a non-event), the recession may have happened right then and there. Praise be to celebratory can-kicking.
And lastly, rising interest rate environment my @$$.
This is not investment advice. As always, just ugly charts and opinions.
Source Data:
St. Louis Fed: Retail Sales: Total (Excluding Food Services)
The Future of Nonstore Retail Sales (Musical Tribute)
The following chart shows annual nonstore retail sales as a fraction of total retail sales (excluding food services).
Click to enlarge.
The growth trend is extrapolated out to 2050. I'm simply showing what the future will look like if the current trend continues. If 10% causes shopping mall pain now (which it clearly does), then what would 20% do in just 17 more years? Or 40% just 17 years after that?
A 4.2% growth rate means that the thing growing doubles every 17 years. In this case, that thing is shopping mall pain.
If you get stung by a bee and every 17 seconds you get stung by twice as many, how many minutes will it take before you realize that you're standing on a bee hive? How's that for optimism?
The following chart shows retail employees as a fraction of all nonfarm employees.
Click to enlarge.
Although there has been recent illusionary relative strength brought on by misplaced faith in the Fed to heal all that ails us, I fully expect the downward trend in red to continue. Further, I do not expect the blue trend line to offer any meaningful support to halt the decline.
February 26, 2013
The Death of the American Mall and the Rebirth of Public Space
Our older less prosperous economy is divesting itself of older less prosperous malls? Shocking.
Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2
Click to enlarge.
The growth trend is extrapolated out to 2050. I'm simply showing what the future will look like if the current trend continues. If 10% causes shopping mall pain now (which it clearly does), then what would 20% do in just 17 more years? Or 40% just 17 years after that?
A 4.2% growth rate means that the thing growing doubles every 17 years. In this case, that thing is shopping mall pain.
If you get stung by a bee and every 17 seconds you get stung by twice as many, how many minutes will it take before you realize that you're standing on a bee hive? How's that for optimism?
The following chart shows retail employees as a fraction of all nonfarm employees.
Click to enlarge.
Although there has been recent illusionary relative strength brought on by misplaced faith in the Fed to heal all that ails us, I fully expect the downward trend in red to continue. Further, I do not expect the blue trend line to offer any meaningful support to halt the decline.
February 26, 2013
The Death of the American Mall and the Rebirth of Public Space
Now the ten massive REITs that own most of America’s malls are unwilling to invest the capital to reinvigorate older properties. Bloomberg reports that the biggest REITs – including General Growth Properties, which declared bankruptcy during the financial crisis – are recovering and growing by divesting themselves of old, less prosperous malls and concentrating on the most profitable.
Our older less prosperous economy is divesting itself of older less prosperous malls? Shocking.
Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2
Annual Housing Starts per Civilian Employed
Click to enlarge.
What's Plan B?
See Also:
Real Yields: Why They Are Falling (Musical Tribute)
Source Data:
St. Louis Fed: Custom Chart
Great Depressionary Quote of the 21st Century: "Massive Industrial Overcapacity"
The following chart shows industrial capacity per capita (industrial production index adjusted for capacity utilization and population).
Click to enlarge.
That's a 0.998 correlation over 27 years of data (Jan 1967 to Jan 1994). And then... Boom! Trend broken big time. That has to be one of the most impressive trend failures I've ever posted on this blog. It was so incredibly consistent and predictable right up until it wasn't.
It's not where we've been but where we are headed that concerns me most. Now that we have all this extra capacity, what's the worst that could happen from here?
File:Abandoned Packard Automobile Factory Detroit 200.jpg (Albert duce)
It's not just us.
February 17, 2014
China Crackdown Drives Business Off the Books
February 10, 2014
Guest post: dealing with 500m tonnes of global steel overcapacity
January 27, 2014
China’s Aluminum Overcapacity Seen by Fitch Holding Down Prices
January 23, 2014
PetroChina delays operation of refineries on overcapacity
December 11, 2013
Overcapacity Threatens China Growth
I have never been more permabearish.
This is not investment advice.
Source Data:
St. Louis Fed: Custom Chart
Click to enlarge.
That's a 0.998 correlation over 27 years of data (Jan 1967 to Jan 1994). And then... Boom! Trend broken big time. That has to be one of the most impressive trend failures I've ever posted on this blog. It was so incredibly consistent and predictable right up until it wasn't.
It's not where we've been but where we are headed that concerns me most. Now that we have all this extra capacity, what's the worst that could happen from here?
File:Abandoned Packard Automobile Factory Detroit 200.jpg (Albert duce)
It's not just us.
February 17, 2014
China Crackdown Drives Business Off the Books
The accuracy of China's economic estimates faces growing doubts as the government tries to cut industrial overcapacity, recent reports suggest.
February 10, 2014
Guest post: dealing with 500m tonnes of global steel overcapacity
Business models that have emphasised capacity expansion above all other considerations are now very exposed to changing patterns of demand.
January 27, 2014
China’s Aluminum Overcapacity Seen by Fitch Holding Down Prices
Rising capacity at aluminum plants in China, which account for almost half of world output, will weigh down prices this year in a market that’s already over-supplied, according to Fitch Ratings Ltd.
January 23, 2014
PetroChina delays operation of refineries on overcapacity
BEIJING: PetroChina has put off starting up two new refineries and delayed expansion of another to counter the threat of overcapacity as oil demand growth slows in the world's second largest oil consumer, a company official said on Thursday.
China's oil consumption last year grew at its slowest in more than 20 years, calculations on government data showed on Monday, as soft economic growth sliced demand for transportation and industrial fuels such as diesel.
China's oil consumption last year grew at its slowest in more than 20 years, calculations on government data showed on Monday, as soft economic growth sliced demand for transportation and industrial fuels such as diesel.
December 11, 2013
Overcapacity Threatens China Growth
The biggest obstacle facing China’s economy? Massive industrial overcapacity is near the top of the list as the country prepares to launch major reforms but seems intent on keeping gross domestic product growth from falling off too quickly.
I have never been more permabearish.
This is not investment advice.
Source Data:
St. Louis Fed: Custom Chart
Real Yields: Why They Are Falling (Musical Tribute)
The following chart shows real GDP.
Click to enlarge.
Four exponential trend lines and their growth rates have been added.
Note that each time an exponential trend fails, it is replaced with an exponential trend of lesser quality. What doesn't kill us, doesn't make us stronger. Go figure.
The next chart shows the long-term trend of those growth rates. I'm using the midpoint of my hand-picked expansions as the x-axis.
Click to enlarge.
The most recent data point is open to serious revision. The growth rate probably won't change much, but the x-axis position may (it could move to the right on the chart). It really comes down to how long this expansion lasts.
Real yields have fallen because real GDP growth has fallen (and continues to fall). It really is just that simple. Put another way, it is becoming harder and harder to make money off of money (current lofty stock market valuations notwithstanding).
Those hoping for a return to normal better hope that the downward trend does not continue, because that's about the only normal thing going on right now.
The future's so bright I gotta werewolves.
See Also:
The Long-Term Death of Real Yields
Source Data:
St. Louis Fed: Real GDP
Click to enlarge.
Four exponential trend lines and their growth rates have been added.
Note that each time an exponential trend fails, it is replaced with an exponential trend of lesser quality. What doesn't kill us, doesn't make us stronger. Go figure.
The next chart shows the long-term trend of those growth rates. I'm using the midpoint of my hand-picked expansions as the x-axis.
Click to enlarge.
The most recent data point is open to serious revision. The growth rate probably won't change much, but the x-axis position may (it could move to the right on the chart). It really comes down to how long this expansion lasts.
Real yields have fallen because real GDP growth has fallen (and continues to fall). It really is just that simple. Put another way, it is becoming harder and harder to make money off of money (current lofty stock market valuations notwithstanding).
Those hoping for a return to normal better hope that the downward trend does not continue, because that's about the only normal thing going on right now.
The future's so bright I gotta werewolves.
See Also:
The Long-Term Death of Real Yields
Source Data:
St. Louis Fed: Real GDP
The Stock Market: What Could Possibly Go Wrong?
Click to enlarge.
The line in black shows real net corporate dividends.
The line in blue shows the real trade deficit (same scale).
The red line shows the exponential trend in real dividends from 1947:Q1 to 1987:Q1. Note the exponential trend failure (to the upside).
Will real dividends stay permanently elevated? Will profit margins stay permanently elevated? Can we be assured that the worst is behind us? Can we expect future growth in real dividends to match the growth we've seen since the early 1990s? I wouldn't answer a resounding yes to any of those questions. Call me skeptical, to put it mildly. Instead, I would ask the following question.
Will we someday, using the power of hindsight, discover that our massive trade deficit was not the permanent free lunch that it was advertised to be?
Put another way, it really helped the corporate bottom line to transition from "Made in USA" to "Made in ____." Mission accomplished. Now what? Persistently high oil prices (financial meltdowns notwithstanding)? Persistently stagnant wage growth? Persistently high unemployment? Increased rate of US (and/or global) financial meltdowns? In and out of ZIRP from here on out (if ever out)? Even more giant sucking sounds?
February 13, 2014
China auto market growth slows sharply in January
Lines of cars are pictured during a rush hour traffic jam on Guomao Bridge in Beijing July 11, 2013.
CAAM last month said the auto market would likely grow 8-10 percent in 2014, echoing views from industry experts and analysts that 2014 would be another strong year for China's auto market.
Other than corporate executives wishing to boost the value of their net worth and retire before the @#$% really hit(s) the fan, did anyone in power really think this through?
The Chinese drive more. We drive less out of necessity (as seen in annual vehicle miles traveled per capita that fell apart during the Great Recession and has yet to make any sort of recovery). That's our plan for a more prosperous America? Seriously?
Source Data:
St. Louis Fed: Custom Chart
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