For definitions, reference show FOUNDER SERIES: S10.2.
If forced to provide an explanation, the answer remains we are in the early stages of a recession. With more announcements by major employeers of layoffs by the end of the year, a forecasted reduction in the PMI (Purchasing Managers Index),and the #rd Quarter in a rom of negative GDP, these events will accelerate the contraction. By the end of the year the picture will be clear.
One additional note, we have recalibrated our numbers as the govermen has adjusted the numbers. Today we are using 'official' numbers as it is available.
EPISODE 37: LEADING INDICATORS
EPISODE 38: REAL-TIME INDICATORS
EPISODE 39: TRAILING INDICATORS
EPISODE 40: WHERE WE ARE TODAY AND WHAT TO EXPECT NEXT MONTH
Good: 4 (13%)
Neutral: 4 (13%)
Bad: 18 (60%)
No Data: 4 (13%)
Our analysis: given the 3 Quarters of negative GDP growth, it fits the technical definition of a recession. Lookig at manufacturing activity and therfore jobs, we are at the beginning of the contraction.
Left alone by the government, the market can clease itself in 6-8 months, certainly within a year. However government will not resist the political pressure to do something and that will lead to distorting the contraction.
Remember the goal of a contaction in the business cycle is remove bad investing decisions (all uses of capital) to bring a balance between demand and supply, between the value of something and its price.
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