The following chart shows the annual change in the semiannual average of new one family homes sold in the West Census Region.Click to enlarge.What's the worst that could happen from here? Okay, sure. The growth rate is currently negative and has been falling for 18 months. That's just this winter's East Coast's polar vortex temporarily rippling back through space and time though. Any rational optimist can see that.Further,...
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Free Advice for Fed: Raise Rates When Furniture Sales Fully Recover
The Fed isn't quite sure what threshold it should be using to determine when to raise interest rates. Can't say I blame them. I therefore thought I'd offer some free (deflationary) advice.Furniture sales and new home sales go hand in hand. Right? So simply raise rates when furniture store sales (as a percentage of disposable personal income) reach "normal" levels again. What could be easier? Transparent. Clean. Consistent.Click...
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...
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...
China's Growth Story: Running on Vapor (Musical Tribute)
The following chart shows the US trade deficit with China divided by the price of crude oil (annualized billions of barrels).Click to enlarge.It shows the amount of oil China could buy if they were to use their entire trade surplus with us to do so. That's assuming the price of oil would not be driven even higher in response to increased purchases of course, which is no doubt a bad assumption.The next chart plots the...
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...
Early Indications of Hypersarcasm
The following chart shows the annual change in the semiannual average of the producer price index for finished goods.Click to enlarge.1. Heckle the Fed for achieving long-term "stable price" certainty?2. Heckle Jeremy Siegel for warning us that the Fed would raise rates well before 2014?3. Heckle CNBC for warning us what the taper would do to interest rates?4. Heckle Shadowstats for misguided hyperinflation theories?So...
Pent-Up Layoff Surprise Demand
The following chart shows nonfarm payrolls divided by initial claims. I'm using quarterly averages to smooth things out a bit (1967:Q1 to 2013:Q4). In my opinion, the higher the ratio, the higher the potential for layoff surprises.Click to enlarge.The 3rd order polynomial trend channel in red uses the red data points.The 3rd order polynomial trend in blue uses all the data points.I would be among the last to argue that...
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