There Is A Big Reckoning Coming

You want to make sure that you have a chair to sit in when the music stops.  Of course, the critical flaw in thinking that a chair will be there is that the Fed has sawed all the legs of the chairs.  –  Investment Research Dynamics

I stopped into Super Target to pick up some tennis balls.  I saw several young moms with 2 or 3 kids bouncing around.  The moms I’m sure were thinking “life is good.”  These people have no clue what’s going to hit this country.  If they understood, I doubt many of them would have bothered having kids. There’s going to be mass economic and social devastation.

A couple days ago I wrote that the economy appears to be in trouble.  The majority of economic indicators are falling back to 2008, pre-Lehman levels.  This morning May factory orders continued the theme, falling .4% from April and 6.4% vs. May 2014.  This was the sixth month in a row factory orders declined year over year.  The index has been negative in 8 of the last 9 months.

Gallup reported that it’s U.S. Economic Confidence Index dropped to -7 in May, down from -3 in April.  This is the third straight month in negative territory.  The economic outlook component was -10.   What’s shocking about this poll result is that, historically, there has been a very high correlation between consumer confidence measures and the direction of the stock market.   The S&P 500 hit a new all-time high last week.   If consumer confidence is diverging negatively from the upward bias in the stock market, then the economy must in far worse shape than is reflected in the Q1 GDP contraction.

Speaking of an indicator that measures economic health, pre-tax corporate profits fell 5.9% in the first quarter of 2105.  It was the biggest drop in corporate profits since…2008.  It was the first time since the middle of the 2007-2009 recession that corporate profits dropped two quarters in a row.

Please click here to read the rest of this:  A Day Of Reckoning Approaches