Get started

Economy

INFLATION HAS TOPPED OUT!Good day We have all heard the news regarding the FED increasing interest rates in order to solve the inflation "crisis" we are currently enduring. Some say this is great, some say this is horrible, however, overall this move was inevitable as markets such as this are cyclical and manipulatable by those who control monetary policy. For those who are in the market for a quick buck that follows the advice of so-called pro traders, this may not be the greatest time for you. On the other hand those with diamond hands, the smart money understand the benefits of this very rare occurrence in time. Not only will you be handed a highly decreased asset to invest in, in the next few days/weeks but, your spending power will increase due to the FED's attempt to bring inflation to 2% on top of a substantial increase in wealth once we are out of the thick of it. (2024) It is not possible to know when inflation will reach 2%, only those who control the market fluctuation know these dates but for now, we need to understand that we are going to be in a recession most likely for the better part of 2 years, which coincidentally will line up with the cyclical bull market structure of BTC. Could this be a coincidence or are we heading for a bull market never seen before? it could be argued that the crypto space specifically has been held back in the recent bull market and like a spring will eventually jump to levels only one could dream of. This statement will be strengthened dramatically as the world moves into a space where digital currency becomes the framework of the exchange of value internationally and in all aspects of the current macroeconomic structure. This narrative will only be pushed on an institutional level once the ever-desired and increasing space achieves regulatory clearance of some sort in order to enable governments to sustain some sort of market dominance. This idea is widely unexcepted by the retail investor as most feel governments must be done away with in order to open up for a fully decentralized network to govern our financial sector globally... as great as this sounds it just sounds more and more like a pipe dream. We as people need to have some sort of governance and a system that regulates our decision-making on a financial level or else chaos will break out leading to potentially societal collapse. But on the bright side, the crypto space will eventually allow for a stable deflationary environment where our wealth will have a safe haven to grow. All we need to do is sacrifice complete decentralization in order to achieve a potential innovation of the financial system that will revolutionize finance forever... In this case, we all win... @TradingView
ECONOMICS:USIRYY
by Crisp_Flow
2
Unemployment is inevitable according to market history.Graph of the inflation rate with unemployment rate laid over top. EVERY TIME that inflation has peaked and rolled over, unemployment has spiked shortly after. If you wonder why Powell says things like "The labor market is unsustainable." it's because he and every central banker in the world (more or less) are trying to kill inflation. Inflation dies, it takes out employment. So the next time someone points to labor statistics as a sign of economic health, you can tell them that employment is transitory.
ECONOMICS:USIRYY
by stockpreacherman
1
Deep Qualitative Fundamental Analysis of US EconomyWe are going to look the US Economical situation in order to understand what moves the markets. There are few factors, that should be observed and based on historical behaviour a long or short bias can be made. Most important factor for the economy is how GPD behaves, that is why a deep analysis of GDP is required. Technical Recession is defined when Real GDP has 2 negative consecutive quarters. ISM PMI, NMI Basics: The historical correlation between Real GDP Growth and ISM PMI/NMI is 85%. PMI/NMI are leading indicators and they are going to predict how GDP will move. It is short to long term prediction (within 12 Months) If PMI/NMI is above 50 means that overall economy is growing and if it is below 50 – economy is slowing. ----- Current: PMI 52.8, but slowing; NMI 56.7, but slowing Score: 2 – Inflation Prediction: slowing GDP From chart a correlation between ISM PMI, NMI and GDP can be seen, and how GDP follow PMI and NMI. Consumer Sentiment Index Basics: The level of confidence that consumers have about the stability and future prospects can be used to understand the overall trend of the economy. If the Sentiment is low this will cause the economy to shrink, if it is high – expand. ---- Current: 51,5 Score: 10 – high Inflation Prediction: very low GDP <-3% Building Permits Whether or not developers are bullish/ bearish on the prospects of the future home sales. More applications mean an expectation of future sales. This will increase the supply of loans. Building permits gives an insight into liquidity and health of US and banking sector. ---- Current: 1674(very high), but slowing. It seems that Permits already peaked. Score: 9 – high Inflation Prediction: lower GDP Money Supply M2 Basics: The supply of money coming from central authorities being injected or withdrawn. More money causes more inflation. M2 is most important measure of money supply and is used as injection and withdraw to control inflation, growth and value of the currency. We can analyse the data by looking at the long term growth rate of M2, analyse the trends and when the trend is broken ---- Average rate of change – 6,71 M2 peaked at 2020 with, since 2022 growth rate is 1,71 Score: -4 – started to deflate Prediction: lower GDP <-3% In 2020 money supply growth peaked and since 2022 has started to slow down. It means that at the moment the monetary policy is tightening. Interest rates Basics: The Fed decreases liquidity by selling Government bonds (withdraw). This rises the Fed Funds Rates, because banks have less liquidity to trade with other banks. The Fed increases liquidity by buying Government bonds (injection). This lowers the Fed Funds Rates, because banks have more liquidity to trade with other banks. In low Interest rates environment, money is cheaper and currency will lose value and vice versa. When GDP is very high, the FED must decrease the Rates in order to slow GDP. When GDP growth is contracting, FED must increase Interest Rates to bring it to the normal. When inflation is above long term average trend the FED begin to increase the rates, usually at a slow pace then at faster pace if inflation is too high. Long decreases in rates are associated with falls in GDP ---- Current: 2.33% (before - long time 0%) Score: 9 – high Inflation Prediction: increase Rates GDP already have started to fall below 0%, this will make the FED to increase the rates until GDP is back to normal (average trend). Since 02.2022 Interest rates are growing, but GDP is still falling, it means that the FED will continue to increase the rates next months even more aggressively, because of the magnitude of the GDP fall. CPI / Core CPi Basics: It is normal to have average inflation between 0,5% and 1%. Increasing GDP growth and Inflation go hand in hand, because nominal growth causes prices to rise. Inflation must be kept under the target rates in order to obtain GDP growth. This year the FED target was 2% , currently is 8,5% (last month 9%). The current inflation is much higher than the FED wanted. Interest rates were a bit increased last few months and this measure slowed down the inflation from 9% to 8,5%, but it is still to high. If GDP falls a lot this will cause deflation. In this case very high Interest rates will be seen. Negatives are very rear and the FED will not allowed this to happen at any cost. ---- Current: 8,5% Score: 10 – high Inflation Prediction: increase Rates PPI / Core PPi Basics: Business inflation is normal. The Business react strongly to Oil and Food prices. That’s why deflationary months are also normal. GDP growth correlate with PPI. ---- Current: -0,5% Score: -4 Prediction: increase Rates NFP Basics: NFP can affect Consumer Sentiment. Unemployment rates rises but there are no extremes. So, the numbers will not affect the economic so far. NFP is interesting only if there is extremes in % change. Lower GDP levels can cause stronger unemployment rates. Debt to GDP Ratio Basics: If the Government spend more than it is receiving in Tax Revenues this will continually add more debt. As the debt to GDP ratio increases, Economic growth becomes more depend on public spending. The public spending needs to be cut in order to reduce the debt. Higher debt to GDP ratio means more pressure to inflate. The only choices are to deflate, default on debt or inflate further. If Levels are above 100%, Government have very little choices - to inflate further. Central bank must keep the interest rates low and/or increase the money supply in order to print higher levels or GDP. ---- Current: 122% Score: 10 – high Inflation Prediction: The debt was above 100% in past few years, that is why the FED kept low rates and printed a lot money. This brought the enormous inflation. Surplus/Deficit Basics: If debt rise, deficit will rise too. The Government must continue to inflate or risk deflation or/and default. ---- Current: -12% Score: 10 – high Inflation Prediction: Interest bill Basics: If there is no debt there will be no interest bill. The bills are always deflationary, important is how much. If the interest rates rise, the bills will rise too – this will be very deflationary for the country. ---- Current: 1,53% Score: -6 Prediction: increase of the bills, because of the Interest rates. This will be causing deflation in 6-12 months. Liquidity Cover Basics: Liquidity cover is the Government’s ability to pay the interest bills. It calculates how many Taxes Revenues will cover the interest bills. Higher level means that the Government can pay the interest bill and continue current levels of public spending. The low Interest rates helps Government to stay liquid, means to service the debt and maintain public level of public spending – to inflate more ---- Current: 11,5% Score: 2 Prediction: increase of the bills, because of the Interest rates. This will be causing deflation in 6-12 months. Balance sheet Basics: When officials want to stimulate the economy, they buy more assets and expand their asset portfolio. When they want to restrict growth, they let assets roll off and shrink their balance sheet. If Interest rates goes higher, the balance sheet goes lower. The FED sells government assets (Bons). During economic crises, the Fed can expand its balance sheet by buying more assets under LSAPs, a policy also known as quantitative easing (QE). ---- Current: Score: 9 Prediction: Increasing the Interest rates, will shrink more the Balance Sheet. 10 years Yields Basics: If Yields goes lower this creates lower interest bill on outstanding debt and this is inflationary, because it allows more room for spending (injections). Low levels of Yields increases the ability of the Government to create more inflation. ---- Current: around 6% Score: 0 Prediction: goes higher Summery: Because of the high levels of debt ( over 100% ), the FED had no choice, but inflate further. That’s why they kept extremely low the interest rates in order to expand the Real GDP Growth, Balance Sheet and printed big amount of money. These actions brought the enormous inflation over 8% (target 2%). Because of high GDP levels and high inflation, the FED must increase the Interest rates. They already began few months ago with small pace, but this is only the beginning. The leading economic indicators are showing that GDP will continue to fall and this will cause hiking the rates more aggressively. The FED already have announced on Jackson Hall meeting, that they will fight with the inflation with more aggressive moves. High increasing the FED Fund Rates, cause the Treasury Yields go rise, that’s why every investor will invest in US Securities and not in other currency. The higher interest rates also will make the economy to deflate. There is a high risk of Recession. High Scale 160 Low Scale -150 Full Scale 310 SCORE 57 Bias: Long against the other currencies, commodities, metals at least to the end of 2023, then further analysis will be required. The future deflation/recession probably change the bias to Short.
M
by SerpentForexClub
Bottoming of 70s correlated to 2022Assumptions: - Taking into account 70s - Vertical line at the point where a recession start ( SPX500 start to retrace) and M2SL make new low When Bottom: - Interest rate start to decline, it's imply easy to borrow money, the stock growth quickly - Inflation start to decline In 2022 the market is in similar situation but not identical: - inflation may be at peak - Interest rate have to growth more due to prevision (strong economy and low unemployment), in the market there are to much liquidity printed in the last 2 year - high probable the interest continue to grow, to reduce the dollar supply and inflation.
FRED:M2SLShort
by lupas92
M2SL/SPX vs inflation and interest rateIndicator under study: - M2SL (dollar supply) - SPX500 (standard & poor 500) - USINTR (interest rate) - USIRYY (inflation) Consideration on how the market could move: - M2SL Up - SPX500 Down - USINTR Up - USIRYY Up - Inflation should be at peak - Interest rate not at peak and the prevision tell they can double during the next month - The Fed start to increase interest rate late respect the growth of inflation - The Dollar supply is 27% over the trendline Until the interest rate reach a peak it's difficult to see green candle in SPX. Because now it's more important slow down the inflation. In history high interest rate imply bear market and recesion
FRED:M2SLShort
by lupas92
M2SL/SPX500 ratio Analysis combined with M2SL and SPX500Assumptions: - Taking into account the last 20 year of history - Vertical line at the point where a recession start (SPX500 start to retrace) and M2SL make new low - The last 3 cycles last almost the same (6-7 years) Analysis: - The trend of M2SL/SPX500 inversely proportional to the price of SPX - M2SL/SPX500 approach a big resistance - In the last cycles M2SL have a steady growth but in this last one we have a lot of liquidity, up-trend of interest rate. This could imply a fall of SPX
FRED:M2SLShort
by lupas92
#SPX 5th Corrective Wave Continuation for #SP500 4 corrective waves succesfully done and now proceed to 5th wave. Probable targets are given on the chart. This was the most important part, the technical analysis . Neither global conditions (EU Energy crysis, war threats, inflation and covid rise), neither astrologic conditions (Jupiter retro will not leave 23 - 28th Oct) doesn' t allow a real bounce. And #dollar index $DXY is growing and EUR is weakening. It' s time be most careful. After the 5th wave dip, an ABC bounce is expected. Not financial advice. DYOR.
FRED:SP500Short
by naphyse
Inflation / Unemployment / Stocks2022 is most comparable to 1978 in terms of the current jobs & inflation situation. Seven decades of history concerning the 3, shows that the current drop in stocks is more likely a correction and not the start of a true bear market. 1972-73 scenario is 1 against 6 odds (and that's after demoting 1978 to equal the others). It also usually takes a long time for unemployment to carve a bottom. Even if we assume that right now it's doing so, we're still too early.
FRED:UNEMPLOY
by Indotermes
6 Rules of SuccessI get asked all time how I've been successful in my lifetime. I started out with nothing. $0 and living on my own at an early age, a high school dropout. I worked at learning computers every minute of the day for decades. Before I knew it, everyone around me was coming to me for the next idea, the next problem to solve. Not having a strong support system that most post-sec schooling students had. I clung to 80s and 90s role models in Hollywood like Arnold Schwarzenegger. His 6 rules of success resonated with me and I adopted them in the same regard as others would adopt religious beliefs. His rules of success are: 1) Trust Yourself - If you don't believe you will be successful, nobody else will. 2) Break Some Rules - Not the law , but the rules you think society has placed on you or holding you back. 3) Don't be Afraid to Fail - Learn from your mistakes and eventually there won't be any failures you are not prepared for. 4) Ignore the Naysayers - The easiest rule but sadly the hardest to follow. When people tell me I'm wrong, or a clown I feel energized that I'm on the right path. 5) Work Like Hell - I can't understate how much this rule is required. If you're not constantly learning and working towards your goal, others will pass you. 6) Give Something Back - When you mastered the other 5 rules, you will be successful. When you are, help someone out, encourage others, tell your story and it might inspire the next Arnold. When I was given my first shot, everyday I worked overtime. In the office before everyone, the last to leave. I wasn't even paid OT (salary position). It wasn't long before I noticed the CEO getting to the office earlier to beat me in and staying until I left. My first pay raise was x2 my salary after the first 3 months. That was shortly after I cost the company nearly 100k in shipping charges when I made a mistake in programming that was shipped out across the country. The moral of the story is the CEO saw how hard I was working, changed his routines to support me (giving something back, working like hell) and looked past any mistakes. When I left and went to my next job, I was senior, then given ownership, now on my own. If you work like hell for what makes you happy. You will get it.
FRED:A072RC1Q156SBEA
by SPYvsGME
7
10 Charts You Must See#10 Mortgages The chart below shows the average single-family U.S. home price multiplied by the 30-year fixed mortgage rate. This chart attempts to show how dramatically higher the financial burden of home ownership has become in the United States. Using a cross chart allows us to better visualize the rate of change. Each cross represents one month. We can see that the current situation looks even more drastic than the subprime mortgage crisis that preceded the Great Recession. Although wages are rising, the rate of change in the cost of home ownership is rising much faster. In this regard, one may conclude that extreme inflation in home prices coupled with a rapidly rising mortgage rates makes every borrower today subprime. #9 Tech Bubble The yearly chart below shows the ratio between tech's performance (QQQ) and the performance of the S&P 500 (SPY). Notice that in 2020 and 2021 tech tried but was unable to close above the peak before the Dotcom Bust. Tech stocks then crashed in the first half of 2022. Take a look at the yearly (or semi-yearly) Stochastic RSI oscillators in the series of relative charts below. Could these charts suggest that Microsoft is about to underperform the Nasdaq for years, that the Nasdaq in turn may underperform the S&P 500 for years, that the S&P 500 in turn may underperform Gold for years, and that Gold may underperform U.S. Treasuries on the 6-month timeframe? Using oscillators in this manner is limitedly valid but one may ponder what these charts say about the future. A shift of investment allocation in this manner typically occurs during a financial crisis. For those who may not already be familiar, check out Exter's Pyramid below. During financial crises market participants typically flee the riskier assets near the top of the inverted pyramid due to these assets' vulnerability to default. Simultaneously, market participants accumulate the more secure and tangible assets lower on the inverted pyramid. This is not a trade or portfolio reallocation recommendation. The QQQ/SPY chart is adjusted for dividends. The GOLD/TLT chart is on a 6M rather than yearly chart merely because not enough data exists to generate a Stochastic RSI on the yearly level. #8 Japan's Debt Although what you see below may look like a single chart of a bell curve, it is actually two charts placed side-by-side. On the left side is a quarterly chart of the balance sheet of Japan's central bank. As you can see, the amount of Yen on the central bank's balance sheet is trending up toward one quadrillion. In contrast, on the right side is a chart that shows the amount of gold that each Japanese Yen can purchase. As you can see, the amount of Gold that a single Japanese Yen can purchase is quickly approaching zero. Smoothened moving averages were used to generate these charts to simplify and enhance the visualization of trends. #7 Crypto Winter The below yearly chart shows the equation 1/BTCUSD, which mathematically represents how much Bitcoin a single U.S. dollar can buy, (or simply USD/BTC). Despite having major “crypto winters” about once every several years, the amount of Bitcoin that one fiat U.S. dollar can buy continues to trend endlessly toward zero (not much unlike the Yen to Gold chart above). The U.S. dollar loses value over time as more and more dollars are created, which must always continue in a debt-based economy. During periods when the Federal Reserve tightens the money supply, the rise in the U.S. dollar’s value relative to Bitcoin is barely noticeable in the chart, even when log-adjusted. Next time someone tells you that Bitcoin is going to zero show them this chart, which technically shows that the exact opposite is more true. This is not trading or investment advice, Bitcoin and all intangible cryptocurrency assets are highly volatile. You can lose a lot or all of your money trading or investing in these assets. #6 Dollar Index As the below chart shows, the dollar index appears be breaking out of a yearly bull flag and breaking above the yearly exponential moving averages (EMA) ribbon for the first time ever. If this trend continues, what economic consequences might this have? The Dollar Milkshake Theory attempts to answer that question: www.youtube.com #5 Shiller PE Ratio The Shiller PE Ratio is often used as a measure of stock market valuation. The below chart shows that stocks are so overvalued that even after one of the worst first halves of the year in stock market history, stock valuations have merely come down to the same level as the peak before the Great Depression. #4 Stock Market Channel The below stock market channel was created by me using a series of regression lines based on standard deviation from the mean price of the entire history of the S&P 500. As the charts show, the S&P 500 is near record levels above the mean even after the selloff during the first half of 2022. #3 Cost of Debt The below chart attempts to illustrate the cost to the United States of servicing its debt (i.e. interest payments). More specifically, the chart shows the monthly rate of change for the equation of total public debt multiplied by the Fed Funds rate (as a decimal). As you can see, we've never seen an explosive jump in the monthly rate of change in debt service to this degree ever since data became available about 55 years ago. This chart was introduced to me by @prd001 . It is unscientific and is a mere thought experiment. For official, but lagging, data you can view the Federal Reserve's data on interest payments (Symbol: A091RC1Q027SBEA). #2 Monetary Easing The below chart attempts to illustrate just how unprecedented monetary easing is. It provides a visual representation of the total assets on the government's balance sheet as a percentage of nominal GDP. It uses the Bank of England's balance sheet because it provides the most reliable comprehensive records since 1700. The chart then superimposes the Federal Reserves' assets (relative to the U.S. nominal GDP) in the present-day to illustrate the fact that at no point over the past 322 years has such a large amount of assets, as a percentage of nominal GDP, been the norm. Monetary easing is therefore a modern economic experiment. How might it end? #1 Climate Change This chart is so consequential that it has led to the creation of a new epoch in human existence: the Anthropocene Epoch. The chart shows the meteoric rise of carbon dioxide in the earth's atmosphere. Here are some video you should watch: Climate Spiral: www.youtube.com Carbon Dioxide Pump Handle: www.youtube.com If there is one chart that all future generations will attribute to everyone living today, it is this.
ECONOMICS:USSFHP
by SpyMasterTrades
18
The Only Chart That Matters for The Next DecadeConsumer Price Index Year over Year (CPI YOY) vs 2 Year Yield (2YY) vs Fed Funds. To even begin to arrest inflation, the Fed has to get Fed Funds above the 2YY. To break the back of inflation, the Fed must get Fed Funds above CPI YOY. Does the most recent drop in CPI YOY mean that peak inflation is already in? People forget that when inflation runs hot, so does its volatility. For lasting inflation reduction, the Fed has to get to the real neutral rate. And consider that the CPI formula you are seeing in this chart has been altered numerous times, proponents would say to better reflect productivity gains, critics would say to mask real inflation to benefit the government. Whatever you believe, if we calculated CPI the way we did in 1980 it would be nearing 18% . So it's much, much worse than this. This is the only chart that matters for the next decade.
FRED:FEDFUNDS
by UnknownUnicorn1334230
UK House prices have toppedUK house prices seem to have topped and look likely to correct to uptrending support. If history repeats (like 2008) then it will take 19 months for the retracement to complete. If you are looking to buy a house in the UK then you are advised to wait until April 2024, and buy the bottom. If we enter a protracted recession / depression then house prices may fall to the 2008 high. My estimate for UK house price retracement is 19-20% at best, with up to 33% at worst. Hold on. ECONOMICS:GBHPI
ECONOMICS:GBHPIShort
by Algorithm
Global Commodity Price Index versus SPXCommodities are basic good used in commerce of primary origin, produced on a large scale and used as raw materials by various economic agents. Examples are soy, corn, cotton, meat, oil, natural gas, wood and water. They are classified, according to their origin, into agricultural, livestock, mineral and environmental. Its main function is the supply of raw materials for the production of industrialized goods. Its commercialization works, according to the international market, through negotiations carried out on stock exchanges. They are of paramount importance for the supply of primary goods for the functioning of society. (Mundo Educação - UOL) This index represents the benchmark prices which are representative of the global market. They are determined by the largest exporter of a given commodity. Prices are period averages in nominal U.S. dollars. (fred.stlouisfed.org) This index is at an all-time high, due to the high cost of energy and the world apocalyptic scenario. The Stochastic RSI on the monthly chart is about to cross downwards. Allied to this, the correlation with SPX is decreasing, which could indicate an important moment. Historically, when these two technical events happened (stochastic crossing down and correlation falling), there was a sharp drop in SPX. This can be seen in the red circles.
FRED:PALLFNFINDEXQShort
by andre_007