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50 Signs That We’re Due For A Major Crash

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This indicator is suggesting slower economy and lower stock prices

Lumber prices over the past 25 years have been a quality leading indicator for the future direction of the economy and thestock market, in both directions.

Back in March, the Power of the Pattern pointed out that Lumber was at the top of a 25-year channel (formed a bearish rising wedge), where 50% declines in Lumber often happen in the past…. which was followed by a slowing economy and lower stock prices.  (see post here)

CLICK ON CHART TO ENLARGE

This trend/pattern has only happened for the past 25 years!!! 

Doc Copper bullish sentiment plunges… Critical price point for Copper & Crude Oil!!!

CLICK ON CHART TO ENLARGE

Speaking of Dogs, Copper comes to mind over the past two years as Copper has lost 25% of its value.  The decline of late has few people liking Copper as bullish sentiment has plunged. (see inset chart).

I believe Copper is a quality barometer for the global economy, especially the Emerging markets/China story.  Copper is on a three-year support line that needs to hold!  With Copper on support and sentiment so low, a short-term rally should not be a surprise!

Global Slowdown – 70% Of China’s Export Partners Saw Orders Plunge

Growth in China exports to its Top 20 trading partners…

Source: Bloomberg Briefs

We discussed previously the slowing of the global economy and the drag on global trade and it appears that despite some hope-ridden headline data from China, things are definitely troubling under the surface. As Bloomberg Brief’s Michael McDonough notes, while superficially, export growth was a rare bright spot in the first quarter, it may have been exaggerated by exporters inflating invoices. Excluding exports to Hong Kong, March’s export growth would have fallen 4.8 percent year-on-year compared with the reported 10 percent. China’s exports to 14 of its top 20 trading partners declined in March year-on-year. Tepid global demand may continue to weigh on China’s exports and domestic economy – and in its vicious cycle manner, feed back into global growth (and stain the US ‘clean’ shirt).

Dark side to jobs report: Big drop in hours worked - Shorter work week equivalent to 500,000 jobs lost


MarketWatch

Hours worked in April fell 0.4%, equivalent to the loss of more than 500,000 jobs.

Think of it this way: If companies had hired all 12 million unemployed people in April, but had cut everyone’s hours in half, the unemployment rate would have fallen to zero, but we’d be much worse off. Our paychecks would be much smaller, and the economy would contract violently.

In April, companies hired 165,000 more workers, but they cut everyone’s hours (on average) by 12 minutes. That doesn’t sound like much of a decline, but spread out over the 135 million-strong work force, the decline in hours worked is the equivalent of firing more than 500,000 workers while keeping hours steady.….

Too Much Debt And Too Little Savings Continue To Be The Major Problems

It has long been our underlying thesis that the huge amount of household debt accumulated during the housing boom would inhibit consumer spending and economic growth for some time to come, and this is what has been happening over the last few years.  The errors recently found in the famous Rogoff-Reinhart (RR) book do not change this view.

Simply put, household debt averaged 77% of disposable personal income (DPI) over the 61-year period since 1952.  It crossed over the average line in 1985 and took a sharp upward turn in 2000, eventually peaking at 130% of DPI in 2007.  Since that time, consumers have reduced their debt to a level that is now 105% of DPI, still significantly higher than in the past.  The result has been a significant slowdown and tepid recovery in consumer spending growth, a process that is far from finished.

The role of household savings is a key element in analyzing both debt and spending.  For 41 years between 1951 and 1992 household savings rates as a percent of disposable income were consistently between 7% and 11%.  However, as income growth started to slow down, consumers increasingly maintained their old spending habits by going into more debt and reducing their savings rate.  This reached an extreme during the prior decade, when the savings rate stayed below 2% from 2005 through 2007, while debt soared.  We all know how that ended….

CONFIRMED: GLOBAL ECONOMY IS COMING TO A SCREECHING HALT

The magic number for the PMI is 50. A reading of 50 or higher generally indicates that the economy is expanding.

Manufacturers Around The World Slowed Down In April

April 29, April 30 (All Times EDT)

April 30, May 1

May 1, May 2

 

Margin debt hitting levels only seen ONE other time in history!

Some times in history, investors feel so confident about the future of stocks, they actually use up all their available cash and then borrow money to invest in the stock market.  Now is one of those times!!!

The chart below was created by Doug Short, see his outstanding work here.

CLICK ON CHART TO ENLARGE

Positive net worth takes place when.….Investors have little money borrowed and plenty of cash in their brokerage accounts.  (2003 & 2009)

Negative net worth takes place when.…Investors have large amounts of money borrowed (on margin) and little cash in there brokerage accounts. (2000, 2007, 2011 & now)

The Worse The Numbers, The Greater The Misses, The HIGHER The Markets Will Rally!!!

The worse the data, the more parabolic the move. This is great news. Let’s all hope for a negative non-farm payroll on Friday. That could push the dow to 16,000 by Monday.

Here’s The Great Disconnect That Has People Saying The Market Is Rigged By The Fed

Business Insider/Matthew Boesler, data from Bloomberg

HALF of all Americans over 14 ate at McDonald’s in March

Staggering figure despite a reported one percent sales drop in first quarter of 2013

The numbers are out for 2013 and the verdict is in: More people make purchases under the golden arches than anywhere else.

McDonald’s beat out such behemoth’s as Wal-Mart, Walgreen’s, and Target to stake its claim as the country’s most visited retail business.

And the numbers behind it are staggering. In March, 49 percent of Americans over 14 years old ate at McDonald’s.

22 Facts That Prove That The Bottom 90 Percent Of America Is Systematically Getting Poorer

#1 According to the Pew Research Center, the top 7 percent of all U.S. households own 63 percent of all the wealth in the country.

#2 Between 2009 and 2011, the wealth of the bottom 93 percent of all Americans declined by 4 percent, while the wealth of the top 7 percent of all Americans increased by 28 percent.

#3 On average, households in the top 7 percent have 24 times as much wealth as households in the bottom 93 percent.

#4 In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

#5 According to the Economic Policy Institute, the wealthiest one percent of all American households have 288 times the amount of wealth that the average middle class American family does on average.

Read more at http://investmentwatchblog.com



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