BEWARE THE MOVE IN DURABLE GOODS
3 August 2010 by Cullen Roche
8 Comments
Last week’s data on durable goods might be the most important piece of data we’ve seen in many months. As David Rosenberg has previously noted, durable goods have a disturbingly high correlation with jobs growth over the last 15 years. This chart shows just how tightly correlated the labor market is with the change in durables. Last week’s data showed the second consecutive downtick in durable goods orders. While this is by no means a trend it does appear to rhyme with the continuing weakness in the labor market and the hesitancy of companies to bring on new workers. The next few readings could be quite telling. Renewed weakness in durables could be a good sign of what’s to come.
Source: GS
we are still in the beginning of this convulsion………..credit crisis bailed out by soveriegn crisis causes currency crisis(sooner or later……later for the world’s reserve currency nation to be sure)……precious metals a temporary store of value(right,wrong or evil, it is just the way it is)
DOW lows will be seen again and more…….eur fails, EU stays……China busts……western countrys get REAL leaders instead of car salesmen because they finally will demand the hard truth, …..you get good leaders in bad times…..the populace is not there yet…..they will still vote for anyone promising to restore the 2003-2007 beer party…………..everyone deserves a big house and the right to eat up a doctor’s time with the third cold of the year?…….stubbed toe?…..only the ones willing to work for it……
things then get better.
this is not a big mystery…..
Guess I am becoming a bit of a sceptic when it comes to David. I have been reading various blogs since October of 2009 and for as long as I have seen his name, collapse is just around trhe corner, there are inidcators pointing to trouble ahead or the eurozone/china are going to fall.
Well, here it is several months later and pretty much nothing has happened. So what is the time frame for these economic disasters? 3 years 10 years 20 years? Seems that in reality, things just keep plugging along with small improvements along the way.
So’ does David ever put a timeframe on his concerns? Maybe he has and I just haven’t seen it or recognized it in his work.
Boatman, you are being predictive when you wrote “sooner or later”. Is there a way to define the “sooner” and the “later”? I really am curious if there is a way to know when this end result will occur.
I just can’t seem to relate any of his observations to a time frame and it gets frustrating to read his prognosis and see the markets climb or maintain the status quo over and over.
Lastly, is it just me or does anyone else get the feeling that it isn’t likely the markets will fall significantly with interest rates at 0 and the fed actively persuing QE programs?
sooner or later is 2-5 years.
long way to go to get thru all this deleveraging and papered over debt.
the left over sentiment(hope) from the biggest credit expansion in history(keg party) is the only thing keeping the DOW up at 30% lower than the keg party high.
david missed the dead cat DOW bounce…..i didn’t……that cat is headed for the crematorium presently…….just my opinion…….all it is….
Boatmen,
Like your analogies and time line.
“david missed the dead cat DOW bounce…..”
thing is, while he did miss the DOW bounce, he did recommend corp bonds at the time, and corps had a 40-50% “bounce”… they are/were just A LOT safer
Darrell: If you’ve followed the hollowing of our economy, via the exodus of productive jobs, the debasing of our currency and huge debt load via deficit spending/entitlements and bailouts, that don’t even show up on the budget, you might change your tune.
The stock market may have been bouyed by te artificila stimuli and deliberate buy programs to support it. Look at how thinly traded it has been and whois buying. The index levels are unsupported by eranings.
It is said that a nation’s finnaceds are doomed when debt exceeds its GDP. Our $13 Trillion natonal debt is only the tip of the iceberg and is way les thatn te $121 Trillion total U.S. obligations. then, there are the enormous state and local obligations.
Finally, look at unemploymet and GDP. Te unemployment headline number of “only” 9.5% totaly fails to include people whose unemploymet benefits have run out and/or are no longer looking for wiork, as well as te idle self-employed, structuraly unemployeed and unedremployed, te real number may exceed 20%. That is a depression number.
The GDP asssessment, recently lowered to 2.4% growth, is probbaly a shrink, when one considers true consumer price inflation and the fact the much of the GDP is artificially injected spending of money created out of thin air. Heck, even the federal budget is 40%+ financed on deficit, This is insane!
The only question, is why is it taking so long to crash. TYha is probbaly because of extraordinary “life support” efforts, which, when withgdrawn, may result in death of the ‘patrient.” Our politcal and banking class doesn’t want to give up their power, so the will mortgae your future as long as they can to retain power and wealth.
Anonymous,
Thanks for the input. I have followed the hollowing of our economy; lived it actaully. I don’t doubt for a minute that data shows things are going to get bad and that they are not so hot right now, so I think I’m singing your tune.
My post is actually about the when it will happen. My point isn’t that David is wrong, only that there is a continual pediction of doom yet we grind along with nothing happening on a grand scale such as hyperinflation, governmental collapse or even a stock market collapse. So it becomes a question of when for me. I don’t have confidence in the “recovery” and agree it appears to be a prop job, but to that point is my question. Can we really expect a material deteriation in the markets with free money and endless QE promoted by the fed. You mention that the political and banking class don’t want to give up their power so they’ll mortgage your future for as long as they can.
For me the $64K questions is; “How long will that be?”
Again, thanks for the view point. I agree with you whole heartedly.
The truth is we are in the midst of at least 5-7 years of pain, with the sword of Democlies hanging over our heads. Personally I knew in 2006 that this financial mess was going to blow up big but had to wait 2yrs + before the first crash. My advice is that one needs to utilise technical analysis to trade in these markets, investing is DEAD! Wall St and the Fed were busy back in 2007-08 telling us that everything was contained, it was drivel. The leaders are playing for time and liquidating their portfolios to the numbnuts that believe the worst is over. Part 2 of this crash will make the first part look like a 4 yr olds birthday party, the Western World has self destructed financially. There are no longer any $64k questions the current questions start at $64 Billion.