Again macro conditions don't foretell a crash soon
In May and August I made posts saying "Macro conditions don't foretell a market crash soon." Time has passed and it's all pretty much the same.
BUT!! Current world events might change everything. And see my other posts re likely imminent drops in the market. This post is just about macro.
Once again, some points here looking back to 2001. (2020 was an irregular event). Sorry for all the colors here, but everything is connected.
1. The Fed Rate (FEDFUNDS dark purple) falls before unemployment rises and recession. Note that the market rose while the interest rate was at its peak in 2006-2007 and 2019. So a further interest rate rise in November shouldn't be a worry, not that it seems likely today looking at the CME Fedwatch Tool cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
2. There are still more job openings than people to fill them (JTSJOL Non-Farm Job Openings minus USCJC US Continuing Jobless Claims - dark blue). Still unchanged since May.
3. Unemployment Rate (UNRATE dark gray) rises before SPX (yellow) drops. Currently UNRATE is up to 3.8% and unchanged August-September. Relatively static and close to multi-year lows.
4. Note that since May:
* Initial Jobless Claims (USIJC light blue at the bottom) have dropped
* Continuing Jobless Claims (USCJC light gray) are unchanged
* Non-farm Payrolls (USNFP green) are unchanged
* Job openings (JTSJOL light purple) fell slightly and rose back to the May level. At over 9m there are more available jobs that any time pre-COVID.
* The number of Employed Persons (USEMP light pink) is rising continuously and is now at 161.5m - almost 3m more that pre-COVID. There's your economic growth.
5. After a year in decline, M2 Money Supply rose during the summer but might now be falling - a negative indicator?
6. The SPX drop last year was a result of inflation -> rate rises -> fear. But the recession didn't happen and the economy still looks strong
Conclusion is that macro conditions still don't foretell a market crash in the immediate future.
NOT TRADING ADVICE. DO YOUR OWN RESEARCH.
BUT!! Current world events might change everything. And see my other posts re likely imminent drops in the market. This post is just about macro.
Once again, some points here looking back to 2001. (2020 was an irregular event). Sorry for all the colors here, but everything is connected.
1. The Fed Rate (FEDFUNDS dark purple) falls before unemployment rises and recession. Note that the market rose while the interest rate was at its peak in 2006-2007 and 2019. So a further interest rate rise in November shouldn't be a worry, not that it seems likely today looking at the CME Fedwatch Tool cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
2. There are still more job openings than people to fill them (JTSJOL Non-Farm Job Openings minus USCJC US Continuing Jobless Claims - dark blue). Still unchanged since May.
3. Unemployment Rate (UNRATE dark gray) rises before SPX (yellow) drops. Currently UNRATE is up to 3.8% and unchanged August-September. Relatively static and close to multi-year lows.
4. Note that since May:
* Initial Jobless Claims (USIJC light blue at the bottom) have dropped
* Continuing Jobless Claims (USCJC light gray) are unchanged
* Non-farm Payrolls (USNFP green) are unchanged
* Job openings (JTSJOL light purple) fell slightly and rose back to the May level. At over 9m there are more available jobs that any time pre-COVID.
* The number of Employed Persons (USEMP light pink) is rising continuously and is now at 161.5m - almost 3m more that pre-COVID. There's your economic growth.
5. After a year in decline, M2 Money Supply rose during the summer but might now be falling - a negative indicator?
6. The SPX drop last year was a result of inflation -> rate rises -> fear. But the recession didn't happen and the economy still looks strong
Conclusion is that macro conditions still don't foretell a market crash in the immediate future.
NOT TRADING ADVICE. DO YOUR OWN RESEARCH.
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