OT: the next recession- when?

[mauser96]

labeled OT because the only good indicator has been endeared useless by the Fed.
And because timing isn’t the point of the Saul method. Though looking at the ragged saw pattern of prices of Saul type stocks indicate that the price fluctuates more than the fundamentals Is there any real data suggesting Sketchers suddenly is not selling shoes, that people have decided going barefoot is the best way?

http://ggc-mauldin-images.s3.amazonaws.com/uploads/pdf/15100…

And No , I don’t know when.

IMO the stock market itself is a good indicator. Every recession has been accompanied by a bear market- actually the bear comes first. But you have already lost too much money by then. Also sometimes markets anticipate recessions that never happen.

If you could make money in markets by studying economics, all economics majors would be rich. They aren’t

we are in an environment where we can look only at “predictive” indicators that are not 100% reliable. Actually, most are not even close. Some indicators have predicted seven out of the last four recessions. Some never trigger at all.
Personally I am leery of any kind of predictive measure when it comes to markets. Complex interactive systems are never the same two times in a row. Afterwards looking in retrospect it seems clear but it never does at the time.
I just try to be not too far from the front of the exit and entry lines to the biggest show in earth, the Stock Market.
The line is already formed, already moving when I join. Sometimes the line doesn’t lead to any door but the men’s room. So you call it a mistake and start all over again. Having reduced your risk but maybe losing a little money (never very much)

Real egress lines are harder to find than real entry lines. At panic times the exit line is moving so fast that trying to join it will likely result in getting trampled. Markets move down quicker than they go up because fear is more potent than greed

[captainccs]

OT but interesting. I read Mauldin’s letter earlier.

When in a storm, why abandon ship for a life raft? Only if the ship is sinking. It has been shown that survivorship on board is better than in a raft or a lifeboat, not to mention in the water. What does his have to do with the market?

Your stocks are your ships and cash is your life raft. If the stock sinks (Global Crossing, Lehman Bros.) you are better off in cash but if the stock survives (AmEx, Exxon) likely you are better off holding. While stocks crash faster than cash they also recover faster. If you picked sound stocks instead of risky speculations, you can avoid the harrowing experience of selling and buying back. I’m talking about reacting to the market as a whole, not the decision to sell some bad acting stock.

What I think is a better alternative is to always have some cash, maybe one or two positions worth, and in the case of a crash use it to buy some unduly distressed stocks.

Denny Schlesinger

[mauser96]

the real sad part of that report for the middle class is the jobs.
Unemployment rates are politically important , a simple number the mass can hear, so they are manipulated by whichever party is in power
It’s easier to do if you have a more servile press so some Presidents do it more, But the intent is the same -“Don’t get mad, we are doing a great job here, we are looking out for you, all of our programs are working fine” Often the main goal is to make sure bad recessions happens on the other guys watch. Because they have no idea how to actually prevent one…

from the link

The jobs report on Friday was just ugly. Private payrolls increased by just 118,000, which is about the minimum level needed for unemployment not to rise. Government payrolls added 24,000. There were serious downward revisions to the last two months, as well. August was taken down by 37,000 jobs, and July was reduced by 22,000. The last three months have averaged just 167,000 new jobs compared to 231,000 for the previous three months and 260,000 for the six months prior to that.
My friend David Rosenberg dug a little deeper into the numbers and noted:
Adding insult to injury and revealing an even softer underbelly to this report was the contraction in the workweek to 34.5 hours from 34.6 hours in August, which is effectively equivalent to an added 348,000 job losses.
So take the headline number, tack on the downward revisions and the loss of labour input from the decline in the workweek, and the “real” payroll number was [a minus] 265,000. You read that right.
He added: “Have no doubt that if the contours of the job market continue on this recent surprising downward path… [m]arket chatter of QE four by March 2016 is going to be making the rounds.”
While the unemployment rate remained at 5.1%, it did so largely because of a significant drop in the labor participation rate, which is not a good way to enhance employment. Further, the U-6 unemployment number is still a rather depressing 10%. Those are the people who are working part-time but would like full-time jobs, as well as discouraged and marginally attached workers.

Nearly 1/4 of the jobs went to government. Jobs are not being created fast enough to keep up with population growth. People are arbitrarily removed from jobless if they have been jobless too long. Disability is increasing rapidly even though hard manual jobs are decreasing, many of these are fraudulent (ask any doctor) but are not counted in the unemployed. People are working fewer hours yet are counted as full time employed. Even if you have a job incomes adjusted for inflation have been sinking for a long time under both Republican and Democrat leadership. And this is happening under a very accommodating Federal Reserve .

How much does a poor job picture have to do with onset and timing of a recession? Nobody really knows.

Are any of the above actionable, do they give any signals for changing equity allocation?
NO.
The only actionable one was the now defunct inverted yield curve.

Nobody knows how much unemployment or under employment is too much for any particular bull market to survive, or how much consumer spending has to decline to reach a tipping point. The above is not the stuff rip roaring bull markets thrive on but they might not be bad enough to produce a bear market either.