Skip to comments.Find The Hidden Economic Recovery - Hint: Its Bi-modal!
Posted on 02/16/2013 5:57:02 PM PST by whitedog57
I was watching former Fed Chairman Alan Greenspan on CNBCs Closing Bell with Maria Bartiromo on Friday. Greenspan seemed to be saying that the stock market is what is important, not the underlying economy.
Since the S&P 500 bottomed on 2009-07-07, it has risen from 881.03 to 1521.38 on Friday. That is a 73% increase.
But please find the hidden economic recovery in the data supporting this miraculous stock market recovery.
Industrial production in YoY terms is displaying a disturbing down trend in growth.
U6 unemployment is shaped like a sea serpent and still remains at 14.4%, far too high to call this an economic recovery.
The M1 Money Multiplier has settled in at below one and has remained there since Q1 2009.
M2 Money Velocity is at its lowest point since well, forever.
MZM Money Velocity (zero maturity) is now below 1.4.
My least favorite chart is wages and income divided by GDP. Also on a downward trend.
At least US Corporate Profits (after tax) divided by GDP are soaring.
At least we can seen what Greenspan meant about the stock market. Recently, corporate profits and the S&P 500 have been moving together.
Particularly after The Fed pushed down interest rates. Bubbleicious!
So, the underlying economic data for the economy is woeful, but the stock market parties on with help from The Fed.
This is a bi-modal recovery with the economy stalled like the Carnival Cruise Ship Triumph while the stock market is partying like its 1999.
We can has seen truly much about that.
Seen we much!
I don’t really understand it, but it kinda sounds like the sort of thing I heard about the old Samurai of Japan: when they had virtually no money [ie to buy food] they would buy toothpicks, to present the image that they had just eaten... it seems that this display is the same sort of outward-presentation.
It speaks of increasing costs of energy production, but doesn't look to the reasons for the increased price. REGULATIONS AND INTERFERANCE IN MARKETS!If The US Government in particular would remove it's regulatory boot heal from the private sectors neck an economic recovery would happen so fast the economy would get whiplash.
Imagine how quickly our economy would improve if we had a concerted effort to exploit the known reserves in Oil, natural gas, coal and nuclear energy that we possess hear in the U.S. alone. There is an almost infinite supply of natural gas with more and more exploitable reserves discovered almost daily.
We have not had a new nuclear plant in thirty years. We should start building 500 new ones TODAY! That would free up trillions of cubic feet of natural gas for use as a motor fuel.
We should also unleash the use of our vast coal reserves post haste. Newer coal fired plants are virtually free of pollutants. NO, CO2 is NOT a pollutant!
Enough Malthusian non sense. The problem with the economy is not chronic, it is not natural, it is not the fault of continued sky is falling idiocy like ‘peak oil’. It rests firmly on the shoulders of the stupid political class in DC!
Most of us are aware of the implications of cheap energy on the economy. The problem is that those who make all those regulations are also aware of the control they exert over the People by keeping energy high and pushing it higher.
Just my two cents...
There are a number of reasons why the market goes up, and goes down. P/E ratios, the price of oil, capitalization, interest rates, etc.. In this market it is the price of money. Money is cheap. Where are you going to get a possible return on investment (ROI)? Your bank? No. Corporate bonds? No. Annuities? No.
Other than the commodities market (which is very volatile), where is there an investment to yield a reasonable ROI?
Yep, the stock market.
Well, maybe guns and ammo...