USA - Bearish Outlook - Part 2

2020年5月26日

FOLLOW SKYLINEPRO TO GET UPDATES.This is the second post of 3 on the analysis of US economy and stock market. Top left we see the interest rate spread (3-month minus 10-year US Yields): a leading indicator of problems ahead is when this yield spread inverts down after coming up from the zero line. The real trouble occurs when it uninverts after reaching a low. Bottom left we see divergence between new house sales and median price for new house sales since April 2019, whereas sales was increasing while prices decreasing and since Jan, 2020 both metrics aligned in a downtrend. Middle top we see the PMI which is a leading indicator of recessions and we are in levels reached in 1991, 2001 and 2008. Middle bottom we see PPI index, showing a deflationary scenario as it has been trending down since late 2018. In the top right graph we show another interesting indicator, which is the relation between consumer discretionary purchases and staples. It has been decreasing since late 2018, showing that consumers are holding discretionary purchases, an indication of inversion in consumer mood. Bottom right you can see the Initial Unemployment Insurance Claims history and it reached the amazing level of 10 times higher than any other past crises since the beginning of the series.