Is the U.S. in recession or not?
Well, the U.S. printed a 3.3% number for growth in the second quarter according to the data released last week. Since then, I have been asking myself why we shouldn’t believe the U.S. is in an expansion right now. After all, the economy does not normally grow 3.3% [...]

For every business cycle since 1929, when U.S. unemployment data was first calculated, when the unemployment rate has gone up more than 1% in one year’s time, this has spelled recession. Moreover, the unemployment rate has never risen 1.0% in a year’s time without a recession (no false positives). The unemployment rate, therefore, [...]

The global economy is in the relatively unique but unenviable position of being bullied by both recession and inflation at the same time. This leaves central banks in a bit of bind. The Federal Reserve has thrown all caution to the wind and cut rates in a reflationary ploy rivaling its actions during [...]

Back in May, I showed you a chart of Total U.S. Debt which demonstrated that the United States was an increasingly indebted country. This chart was for all domestic debt minus financials and it topped out at about 225% of GDP.
Below is the same chart for the U.S., except this time I have added [...]

Five-year returns almost never exceed 100% (denoted by the dotted red line in the chart). There are three notable bubble periods in stocks above 100%: pre-1929, pre-1987 and pre-1999*. This is not one of those periods.

‘Buy and hold’ is a myth that I hope dies an ugly death just like the Efficient Market Hypothesis. When one looks at the numbers, it is as plain as day that the stock market moves in sweeping trends that take decades to unfold.

This chart from the New York Times demonstrates visually what happens when the Fed lowers interest rates too much: it skews simple economic decisions like what type of mortgage product to use, often with unintended consequences.

Similarly low rates on adjustable rate mortgages enticed buyers into the housing bubble.

Now that we are practically guaranteed to add the Fannie and Freddie debt to the already robust debt levels of the US Government, its a good time to look at what the Government’s accountant (GAO) says about its fiscal position going forward.

In two words: not good.

One reason many pundits feel this particular downturn will be quite nasty is the level of debt consumers have versus their savings. Since July 1982, when the stock market bottomed, Americans have been dis-saving and leveraging up like nobody’s business.
Since Alan Greenspan became Federal Reserve Chairman in 1987, the Federal Reserve has always supplied [...]

Here are some charts from the latest issue of Barron’s. They have a readable article on bear markets (for those of you subscribed to it) as the Dow was down over 20% last week. That’s supposed to mark the beginning of a bear market as the chart below suggests.

First off, I have no [...]