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[Jacob Snyder] SOX likely to dip to 200wsma in 2025. In 2022, SOX went from 4068 to 2090, a ...

Jacob Snyder — 3/13/2025 5:48:17 PM

SOX likely to dip to 200wsma in 2025.

In 2022, SOX went from 4068 to 2090, a 49% decline. A similar decline from the recent 5932 high, would go to 3025. In 2022, the SOX troughed well below the 200wsma, which is now at 3766. We didn’t have a recession in 2022, and my prediction does not require a recession now.

SOX also touched the 200wsma in 2020. When the 50wma fails, the decline doesn’t stop till the 200wma is reached.

SOX PE at 29, so valuations are still stretched even with the recent declines.

schrts.co

[Jacob Snyder] >50% of assets in stocks = lost decade for stocks: [graphic]

Jacob Snyder — 12/23/2022 10:14:46 AM

>50% of assets in stocks = lost decade for stocks:

[Jacob Snyder] IVPAF: now at $7.3, same as early 2021, when their Congo mine started production...

Jacob Snyder — 12/21/2022 8:20:57 AM

IVPAF: now at $7.3, same as early 2021, when their Congo mine started production. schrts.co

11/2021: Ivanhoe Mines’ office in Vancouver had been searched by the Royal Canadian Mounted Police… disclosed by Ivanhoe Mines on March 30, 2022.…

9/2022: Vidiye Tshimanga, a top aide to Congo’s President Felix Tshisekedi…was arrested…after a series of secretly-taped videos appeared to show him offering political protection for an unnamed mining deal in exchange for a stake in the venture. In the videos, Tshimanga alleged he’d made a similar deal with Ivanhoe. Tshimanga, who is currently on trial in Congo for passive corruption and influence peddling… “With Ivanhoe, Ivanhoe have 80, I have 20,” Tshimanga said in the videos…

12/2022: investigative organization the Sentry published a report titled: “Gaming the System: How a Canadian Mining Giant Undermined the Law in the DRC… The Sentry organization promotes itself as “an investigative and policy organization that seeks to disable multinational predatory networks that benefit from violent conflict, repression, and kleptocracy,”. thesentry.org

December 20, 2022) - Ivanhoe Mines is responding to a headline published on December 20, 2022, by Bloomberg related to Mr. Vidiye Tshimanga and Ivanhoe's supposed "link" to this individual. The Bloomberg headline infers that Ivanhoe Mines has a business relationship with a company controlled by Mr. Tshimanga, and further infers that Ivanhoe is in some way involved in an ongoing "copper corruption" case in the Democratic Republic of Congo (DRC), which is not true... In April 2021, Ivanhoe Mines signed a term sheet with Congo Bantu Mining SARL (Cobamin), a company in which Mr. Tshimanga is a shareholder.... For more than a year after the execution of the term sheet, Ivanhoe Mines tried to negotiate final agreements with Cobamin. These final agreements were never signed, considering that Cobamin kept on renegotiating the terms initially set out in the term sheet. No payment was made to Cobamin under this proposed agreement...

[Jacob Snyder] Since May 2022, SPX forward earnings estimates have declined by 15%. Now at $20...

Jacob Snyder — 12/18/2022 1:35:20 PM

Since May 2022, SPX forward earnings estimates have declined by 15%. Now at $205; forward PE 21.

Historically, when the Fed starts cutting interest rates, that is the beginning (not the trough) of the bear market:

SPX guesses for 2023: 2400-3100 range looks likely:

seekingalpha.com

[Sun Tzu] A few comments: Gold's longest and best run happened after gold spent several m...

Sun Tzu — 8/1/2022 4:07:15 PM

A few comments:

Gold's longest and best run happened after gold spent several months 20% *below* its cost of production. So while I have no reason to believe that gold will go that low, I also don't have any reason to believe it can't go there.

As countries try to defend their currency, central banks will be forced to sell their gold *and* US treasuries. This dynamic is a double whammy for gold: it raises the interest while at the same time increases the supply of gold. The key is the extent of USD strength. So long as it falls, as has been the case recently, gold will do well. But should the USD resume its rise, gold (and all other metals) will be in trouble l.

The good news for the bulls is that Drukenmiller expects USD to nosedive. The bad news is that I think he's mistaken <G>. Ultimately it's a matter of timing the USD trade.

[Jacob Snyder] GOLD: Gold has been in a $1675-2000 channel since 4/2020. The cost of productio...

Jacob Snyder — 8/1/2022 11:03:13 AM

GOLD:

Gold has been in a $1675-2000 channel since 4/2020. The cost of production is $1000-1100/ounce and rising, placing a floor under price. The Fed incorrectly says interest rates are now neutral. They cannot let interest rates get above 4%, given the size of the federal debt, and Fed balance sheet. So real interest rates will stay negative, which is bullish for gold. Inflation is not going to decline to the Fed’s 2% target without much higher interest rates, and/or a recession. schrts.co

Barrick:

Net cash now $743m, so forward yield = (0.2 X 4)/15.75 = 5.1%

[Jacob Snyder] Copper demand in China: [graphic][url=https://static.seekingalpha.com/uploads/2...

Jacob Snyder — 7/8/2022 9:01:19 PM

Copper demand in China:

[url=https://static.seekingalpha.com/uploads/2022/7/7/54866661-1657224185614715_origin.png]
[url=https://static.seekingalpha.com/uploads/2022/7/7/54866661-16572242160550144_origin.png]
[url=https://static.seekingalpha.com/uploads/2022/7/7/54866661-16572242412071652_origin.png]

[/url][/url][/url]

[Jacob Snyder] Change in gold price vs change in real LT interest rate expectations: [graphic]

Jacob Snyder — 4/18/2022 12:31:45 PM

Change in gold price vs change in real LT interest rate expectations:

[Jacob Snyder] Dividend Growers LT outperformance: [graphic] seekingalpha.com

Jacob Snyder — 4/8/2022 12:16:26 PM

Dividend Growers LT outperformance:

seekingalpha.com

[Jacob Snyder] SPX drawdown history 60y: [graphic] 5% = st volatility 10% = yearly during bul...

Jacob Snyder — 4/6/2022 12:42:25 PM

SPX drawdown history 60y:

5% = st volatility
10% = yearly during bull markets
15% = max, except during recessions
30-50% = expected during recessions

[Jacob Snyder] Bernard Baruch’s 10 Investing Rules: 1. Don’t speculate unless you can make it ...

Jacob Snyder — 4/5/2022 11:16:44 AM

Bernard Baruch’s 10 Investing Rules:

1. Don’t speculate unless you can make it a full-time job.

2. Beware of barbers, beauticians, waiters — of anyone — bringing gifts of “inside” information or “tips.”

3. Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibilities for growth.

4. Don’t try to buy at the bottom and sell at the top. This can’t be done — except by liars.

5. Learn how to take your losses quickly and cleanly. Don’t expect to be right all the time. If you have made a mistake, cut your losses as quickly as possible.

6. Don’t buy too many different securities. Better have only a few investments which can be watched.

7. Make a periodic reappraisal of all your investments to see whether changing developments have altered their prospects.

8. Study your tax position to know when you can sell to the greatest advantage.

9. Always keep a good part of your capital in a cash reserve. Never invest all your funds.

10. Don’t try to be a jack of all investments. Stick to the field you know best.

[Jacob Snyder] Trading discipline: Homo Sapiens was not designed for constant risk. Our fight-...

Jacob Snyder — 2/19/2022 2:00:12 PM

Trading discipline:

Homo Sapiens was not designed for constant risk. Our fight-or-flight reflex works poorly, damaging us mentally and physically, if it is triggered constantly. This is not cultural; it is biological, in our hormones, in the way our neurons are wired. Monkeys get chased by jaguars, but not every hour.

Trading stocks requires constant accurate risk assessment. Making money = taking risks. So, we have to constantly think about what disaster could be imminent. We have to constantly ask ourselves, “what am I not seeing that could hurt me?” Every tree in the forest could be concealing a jaguar. Guaranteed, there are jaguars in some trees, and some stocks are going to zero.

Our emotional response to any threat, works for avoiding jaguars, but consistently does not work for investing. Emotions give us a totally inaccurate risk/reward balance.

Mistakes we all might make, because we are human:
1. Over-estimating our ability to predict the future. Linear extrapolation fails, because change usually happens on a curve (sine wave, bell-shaped, parabola, S-shaped, approaching a limit).
2. Forgetting tail risk.
3. Cherry Picking Fallacy: Ignoring facts that do not reinforce prior conclusions, and then never admitting mistakes.
4. An investing or trading style that does not fit our personality. I am not a day-trader. I can do swing-trading and LTB&H.
5. False choice = only considering 2 possible outcomes, when there are 3, or 30.
6. Bandwagon Fallacy: Believing things because “everyone knows that”. Once upon a time, everyone knew disease was caused by sin; the cure was bleeding and purging, or burning witches.
7. Hasty Generalization = claim based on too few data points. Special or spectacular cases, local or recent trends, given too much importance.
8. Causal fallacy: our brains seek patterns and certainty. But reality is often chaotic. So we invent patterns; we see causation when there is only correlation or chaos.
9. Sunk Cost Fallacy: the value of anything, is what the market says it is, not what you paid for it.
10. Magical Thinking. Things don’t happen because you want them to happen. You cannot control external reality with your thoughts, or rituals, or wearing magic amulets.

list of Cognitive Biases: en.wikipedia.org
list of Logical Fallacies: mindtools.com
examples: indeed.com

My solution:
1. Act on facts, not emotion. Don’t do anything because it “feels right.”
2. Constantly test my conclusions: backtest, read contrary opinions, review results, willingly admit mistakes.
3. Before doing anything, research and make a plan.
4. Follow the plan, unless my initial assumptions and facts have changed.
5. Do everything in increments. I will never pick the exact top or bottom, but I can often get the range.
6. Simple plans are idiot-proof, and I am sometimes an idiot. You too.
7. Remember that list of mistakes our brains are hard-wired to make.
8. Diversify, but not so much I cannot follow everything I own. 15 stocks and ETFs, in 5 industries, is about right for me.

[Jacob Snyder] I will admit, I am guessing. It just felt more comfortable, not to be holding sh...

Jacob Snyder — 2/18/2022 4:49:00 PM

I will admit, I am guessing. It just felt more comfortable, not to be holding shorts over the weekend. In this market, any uncertainty, and I go to the sidelines, cash in hand. The indexes may continue down, but this will happen with a lot of volatility. So I will have opportunities to re-short. I hope.

[Rarebird] In a cyclical bear market, what makes you think that "war fears will subside" fo...

Rarebird — 2/18/2022 4:35:19 PM

In a cyclical bear market, what makes you think that "war fears will subside" for more than a day or two any time soon?

Message 33716119

The Fed is on the war path to bring inflation down.

Not saying there will be Ukraine/Russia war. Honestly, I'm not privy to that information one way or the other. But the uncertainty of War can linger unless concessions are made to Russia, such as assuring Russia that Ukraine will not become part of NATO with weapons pointed directly at Russia.

War and/or the fear of War are features of a Bear Market.

[Jacob Snyder] INTC: plan: buy at $42. Trade half the position (sell when 10wma fails on upmove...

Jacob Snyder — 2/18/2022 3:10:24 AM

INTC: plan: buy at $42. Trade half the position (sell when 10wma fails on upmove; buy back at $42).
Stock: support at $42 since early 2018 schrts.co
Forward PE 13 = 47/3.50 (guidance in February, for 2022)
Dividend yield 3.1% = 1.48/47
Shares -2%/y (average last 9 years)
28b$ cash
33b$ debt LT

Huge capex spend, not expected to improve results till 2025:
Intel (NASDAQ: INTC) said it expects its profit margin to drop in 2022 and then be steady for several years as it invests in new technologies and factories to meet rising chip demand, but added it forecasts climbs from 2025. Intel predicted a revenue increase of 1.7% to $76.0 billion in 2022 vs. consensus of $75.48M, then mid-to-high single digit percentage point growth in 2023-2024, followed by gains of 10-12% for 2025-2026.

Company / Stock	CY21 YoY GAAP Revenue Change %
Intel	1.5%
TSMC ( TSM)	18.5%
Qualcomm ( QCOM)	42.7%
Advanced Micro Devices ( AMD)	68.3%
Samsung Electronics	18.1%

Company / Stock	CY22 YoY revenue change % consensus estimates
Intel	1.2%
TSMC	26.2%
Qualcomm	26.7%
Advanced Micro Devices	35%
Samsung Electronics	11.6%

[Jacob Snyder] Fed Hiking Cycles and the Stockmarket: Stocks do well, when the Fed is not rai...

Jacob Snyder — 2/15/2022 11:24:35 PM

Fed Hiking Cycles and the Stockmarket:
Stocks do well, when the Fed is not raising rates, or raising slowly.
From when the Fed starts raising rapidly, stocks go sideways for 4 months, and then down.

[Jacob Snyder] Signatures of recessions: 1. S&P 500 below its level of 6 months prior 2. emplo...

Jacob Snyder — 2/14/2022 9:23:27 AM

Signatures of recessions:
1. S&P 500 below its level of 6 months prior
2. employment: total nonfarm payrolls growth below 1% year-over-year
3. GDP growth below 2% year-over-year
4. Treasury yield curve flat
5. Junk Bond Spread: widening of credit spreads on corporate debt versus 6 months prior
6. ISM Purchasing Managers Index below 54

Other indicators:
Inflation tradingeconomics.com
Fed balance sheet tradingeconomics.com
Copper schrts.co
Wage growth atlantafed.org
Consumer Spending tradingeconomics.com
Consumer Sentiment tradingeconomics.com

S&P500 schrts.co

Non Farm Payrolls tradingeconomics.com
125k/month = 1.5m/year = 1% of 150million total payrolls fred.stlouisfed.org
reported monthly

GDP growth rate YOY: reported quarterly tradingeconomics.com

Yield curve 10y - 2y schrts.co

Junk Bond Spread: fred.stlouisfed.org
tradingeconomics.com

ISM PMI: reported monthly tradingeconomics.com

[Jacob Snyder] The Capital Sponge The United States put in place a set of policies over the pa...

Jacob Snyder — 2/14/2022 7:31:27 AM

The Capital Sponge

The United States put in place a set of policies over the past four decades that pulled a lot of domestic and global capital into its stock market. This naturally had some pros and cons associated with it.

Each country generally has a set of political priorities, and those priorities can change over time. Compared to other developed nations, the US has favored its corporate sector above most else since the early 1980s, which made the US stock market an attractive sponge to absorb capital from everywhere.

As a result, the US stock market capitalization currently represents 61% of the global stock market capitalization, despite the fact that US GDP is only 23% of global GDP.

MSCI ACWI Index

This also means, however, that the US economy is more reliant on consumer spending and external financing than most other developed countries. As a result, the “tail can wag the dog”, meaning that a drop in the stock market can negatively affect consumer spending, economic growth, and foreign investment to a greater extent for the US than other developed countries.

For example, public US equities now represent about 200% of US GDP, which is an all-time high:

St. Louis Federal Reserve

If the stock market falls by one quarter, it would evaporate an amount of net worth that is equal to about half of the country’s GDP. That doesn’t mean GDP itself goes down by 50%, but it means that a massive amount of purchasing power relative to the size of the economy would go away if even that type of moderate price decline were to occur and remain down for a while.

Some people assume that this increase in market capitalization to GDP is just because companies are selling more products like iPhones abroad. However, the opposite is true; US companies have a slightly lowerpercentage of their revenue coming from outside the US today when the market capitalization is 200% of GDP, than they did ten years ago when the market capitalization was 90% of GDP. So, it’s not as though the US market simply became more global during that time.

Instead, the increase in stock prices are primarily due to higher domestic corporate earnings and especially from higher valuations on those earnings, rather than international expansion.

We can list some of the primary policies that fueled this effect.

Reason 1) Lower Interest Rates

After a very inflationary period in the 1970s, the US and the rest of the developed world have been in a four-decade trend of declining treasury rates.

This chart shows 10-year Treasury yields in red compared to the cyclically-adjusted price/earnings ratio of the S&P 500 in blue:

Robert Shiller, Yale

There is a significant inverse correlation between long-term interest rates and S&P 500 valuations over the long run, although not on a year-by-year basis. The main exception to that general trend of inverse correlation was in the 1940s during World War II, when interest rates were low (artificially pegged at 2.5% by the Fed), inflation was high, and the future was more uncertain than usual, resulting in low equity valuations as well.

And this next chart shows the federal funds rate compared to headline price inflation. Short-term yields have spent most of the past twelve years below the prevailing inflation rate, meaning that bank accounts and Treasury bills have gradually lost purchasing power over time:

YCharts

Lower interest rates allow for equity valuations to be higher, and incentivizes owning excess stock exposure, because it reduces the hurdle rate for investment.

If 10-year Treasury notes yield 5%, for example, and you want at least a 3% equity risk premium, then you’ll only invest in a stock if you think you can get an 8% annualized return or higher. However, if 10-year Treasury yields are 1.5%, and you still want a 3% risk premium, then you’re willing to pay a higher valuation, and thus accept a lower dividend yield and lower expected returns from stocks; even 4.5% expected annualized returns would be better than a 1.5% Treasury yield.

The danger comes, however, if interest rates start going sideways, or even start going up, structurally.

Low interest rates have affected different countries in different ways. For many countries such as Canada, Australia, and several European nations, the low rates have propped up their real estate valuations more-so than their equity valuations, in part because their domestic investors instead invest a lot of their capital into US growth stocks.

In the US, people tend to have a lot more equity exposure, and the rest of the world buys our stocks as well, and so it has pushed up US equity valuations to a greater extent than our housing valuations. US home prices are not expensive relative to the rest of the world, while our equity market is, even on a sector-by-sector basis.

Growth stocks are more sensitive to interest rates than value stocks, and the S&P 500 has become very growth-heavy over the past decade compared to most other international equity indices. The US stock market is more vulnerable to rising interest rates than many other stock markets that are more value-oriented.

Reason 2) Corporate Tax Cuts

Headline tax rates get a lot of attention, but it’s the effective tax rate after all the deductions and loopholes that matters in practice.

The United States has reduced its effective tax rate for corporations persistently over the past several decades:

St. Louis Federal Reserve

This came partially from declining headline tax rates, but also from an increase in deductions for companies. Companies spend increasing sums of money for lobbying efforts, and these investments have provided a high rate of return.

The tax base has shifted away from taxes on corporate profits, and more towards payroll taxes, which are paid by workers (the employee side) and by companies that employ a lot of workers (the employer side). The big winners of this tax shift are labor-light companies (software, pharmaceuticals, finance, and so forth) that don’t need to employ a lot of domestic workers to earn high revenue.

Reason 3) Recycled Trade Deficits

In 1974, the United States set up the petrodollar system with the Kingdom of Saudi Arabia and then the rest of OPEC, which was an agreementwherein OPEC countries would only sell their oil in US dollars (no matter which country is buying it) and would also invest a good chunk of those dollars that they earn in Treasury securities. In exchange for this commitment, the US would provide military protection, arms deals, and other benefits to the kingdom, as well as maintain stability in the region with its military might.

If you want to go down the rabbit hole of the geopolitics on this situation and the cost associated with this relationship, simply start with the Wikipedia article on the subject of US and Saudi relations to see how much the US looks the other way on Saudi issues in order to keep them in this deal. Let’s just say, the dollar isn’t exactly the most ESG-friendly asset out there.

This agreement, maintained for nearly five decades now despite multiple scandals, made it so that every energy importing country in the world needs dollars, and they would generally sell their non-oil exports in dollars as well so that they could get dollars to buy oil. This maintained the dollar as the global reserve currency despite the United States’ default on the 1944-1971 Bretton Woods system, and specifically put the US Treasury security at the heart of the global financial system as the primary reserve asset.

As the FT described in a clever article back in 2019, this petrodollar system ironically gave the United States a form of Dutch Disease. For those who aren’t familiar with the term, Investopedia has a good article on Dutch Disease. Here’s a summary:

The term Dutch disease was coined by The Economist magazine in 1977 when the publication analyzed a crisis that occurred in the Netherlands after the discovery of vast natural gas deposits in the North Sea in 1959. The newfound wealth and massive exports of oil caused the value of the Dutch guilder to rise sharply, making Dutch exports of all non-oil products less competitive on the world market. Unemployment rose from 1.1% to 5.1%, and capital investment in the country dropped.

Dutch disease became widely used in economic circles as a shorthand way of describing the paradoxical situation in which seemingly good news, such as the discovery of large oil reserves, negatively impacts a country’s broader economy.

As the FT argues (correctly in my view), making virtually all global oil priced in dollars basically gave the United States a form of Dutch Disease. Except instead of finding oil or gas, we engineered a system so that every country needs dollars, and so we need to export a lot of dollars via a structural trade deficit (and thus, the dollar as a global reserve asset basically served the role of a big oil/gas discovery).

This system, much like the Netherlands’ natural gas discovery, kept US currency persistently stronger at any given time than it should be on a trade balance basis. This made actual US exports rather uncompetitive, boosted our import power (especially for the upper classes) and prevented the US balance of trade from ever normalizing for decades.

Japan and Germany became major exporters at our expense, and for example, their auto industries thrived globally while the US auto industry faltered and led to the creation of the “ Rust Belt” across the midwestern and northeast part of the country. And then China grew and did the same thing to the United States over the past twenty years; they ate our manufacturing lunch. Meanwhile, Taiwan and South Korea became the hubs of the global semiconductor market, rather than the United States.

The top 10% or so of the US income spectrum benefited from this policy at the expense of the bottom deciles. If you worked in healthcare, government, technology, media, or finance in the US, you got all of the primary benefits of living in the country with the global reserve currency, without the drawbacks. But if you worked in manufacturing or other blue collar jobs centered around manufacturing (including various service jobs in manufacturing regions), you got some of the benefits but also got the full force of the drawbacks (lost jobs, suppressed wages, economic stagnation, etc).

Meanwhile, the accumulated US trade deficits from this system and associated policies are a staggering $14 trillion:

Trading Economics

All of those trillions in accumulated trade deficit dollars are surplus dollars for other countries, like OPEC nations, Japan, Germany, Switzerland, Taiwan, China, etc. Those countries take those dollars and buy a lot of US assets for their foreign-exchange reserves, sovereign wealth funds, and pension funds. Decades ago, they primarily bought US Treasuries, but they increasingly now use those dollars to buy other assets as well, including US corporate bonds, US equities, US real estate, and US private companies.

This chart shows the value of US equities held by foreign entities. It’s up to over $12 trillion:

St. Louis Federal Reserve

The chart is parabolic with very large numbers, so perhaps it helps to explain it in percentage terms instead. At the end of World War II, the rest of the world owned about 2.6% of non-bank US corporate equities. About three decades later when the petrodollar system began in the mid-1970s, the foreign sector owned about 4.3% of non-bank US corporate equities. So, the percentage increased moderately from a low base before this system was put in place. Then, from the mid-1970s into 2021, this percentage rapidly increased, and the foreign sector now owns about 25% of non-bank US corporate equities.

The net international position of a country measures how much foreign assets they own minus how much of their domestic assets are owned by foreign entities. When a country runs persistent trade surpluses, it collects capital and buys foreign assets. On the other hand, when a country runs persistent trade deficits, it sends capital to the rest of the world, and the rest of the world uses that capital to buy larger and larger percentages of that country’s productive assets.

The US used to be the world’s largest creditor nation (meaning it had a massively positive net international investment position), but now it’s the world’s largest debtor nation (meaning it has a massively negative net international investment position). Here’s a long-term chart of net international investment position as a percentage of GDP:

Ray Dalio, The Changing World Order

Specifically, US entities own $34 trillion in total foreign assets, while foreign entities own $50 trillion in total US assets, as of late 2021. As a result, the US net international investment position is $16 trillion, and foreign entities increasingly own the productive assets of the US. Basically, the US in aggregate is selling its appreciating capital assets in exchange for depreciating consumer products.

Imagine, for example, that there are two corporations. Corporation A sells a lot more products to Corporation B than the other way around, and so Corporation A collects a lot of dollars each year from Corporation B, and then uses them to buy shares of Corporate B. Over time, Corporation A will own a larger and larger percentage of Corporation B. Corporation B is constantly selling parts of their own company to pay for ongoing deficits to Corporation A.

Or imagine, as a second example, that there are two neighbor homeowners. Homeowner A sells his services to Homeowner B each month, including mowing his lawn, repairing things, and cleaning his pool. In exchange, Homeowner B sells off small chunks of his property to pay for it. Homeowner A ends up owning a portion of Homeowner B’s yard, owns his shed and tools, and then owns his pool. Homeowner A just keeps using the money he makes by providing value to Homeowner B each month, and using it to buy more and more of Homeowner B’s property over time.

That’s what the United States is doing with the rest of the world with its productive assets as it goes deeper and deeper into a negative net international investment position.

This is the multi-decade capital sponge. The US began exporting tons of dollars to the rest of the world via structural trade deficits month after month, and by extension, basically exported its industrial base piece by piece over decades since our industrial base was relatively uncompetitive. The foreign sector would then take these dollars and buy US capital assets. After decades of this, the US became a major debtor nation, and many other countries became massive creditors, meaning they own a lot more US assets than the US owns of their assets. It has been great for the US stock market at the cost of other things, and is arguably stretching the bounds now for how far it can go.

As for the median American? They didn’t necessarily benefit from this situation:

Credit Suisse, 2021 Global Wealth Databook

And that is in large part because the top 10% of Americans own 89% of US household equity exposure and are not really impacted by the persistent labor offshoring, while the other 90% only own the remaining 11% of equities and face most of the consequences of that offshoring. And I say that as someone comfortably in the top 10%, enjoying these benefits.

Basically, a sizable portion of the bottom 90% of Americans have been getting their jobs or wages geographically arbitraged by rapid globalization trends over the past 25 years (more so than other developed countries, many of which have trade surpluses), and the gains from this arbitrage are going towards corporate profit margins, which are 89% owned by the top 10% of the population.

US policies (under both Republican and Democrat administrations) put pressure on the working class and middle class in order to maintain US hegemon status and to enhance the status of US corporations and the US wealthy.

I don’t comment on politics in my analysis unless it directly ties into investment implications, and this is an example where it does. Kind of like how a potential corporate tax cut or a tax raise would be important to monitor for investment performance, we need to be aware of the existing policy structure in order to observe the ongoing status of its investment implications as it relates to equity valuations, trade balances, rising populist sentiment against this establishment, and so forth. A growing number of politicians have been raising concerns about the trade deficit in recent years, and yet those trade deficit dollars are in significant part responsible for pushing up US stock valuations to such high levels.

Reason 4) Passive Investing

Especially in the United States where stock ownership is very common, passive investing has become the main trend over the past decade. Indeed, fund flows into passive index investments have now surpassed fund flows into active products. Many 401(k) plans just pour money each and every week into the S&P 500 and similar indices that closely benchmark themselves to the S&P 500.

Since most passive indices are weighted by market capitalization, it means that more and more capital flows into the largest and most expensive companies. In addition, because passive global indices are mostly weighted by market capitalization as well, it means more capital flows to the largest and most expensive stock markets around the world. It’s inherently a large cap momentum strategy.

For lack of good money, we monetize other assets instead. Rather than holding cash that offers interest rates that are below the rate of price inflation, we shovel money into market-weighted equities even if their valuations go up dramatically. This works well as a rather liquid store of value until we stretch valuations to their sustainable limits, and those limits are not really knowable in advance.

US households now have record high allocations to equities, from a combination of inflows and valuation increases. The red line in the chart below is US household equity exposure (currently 29% of total assets) and the blue line is US household real estate exposure (currently 25% of total assets):

St. Louis Federal Reserve

That means we have to start asking where the marginal buyer will keep coming from. What pools of capital, domestic or foreign, will shift more of their capital into US equities than they have already allocated?

Will US household allocations of equities go higher, to 35%? Will US market capitalization eventually reach 65% of global market cap, even as its share of GDP continues to decline from 23% of global GDP? Probably it could, but the higher these numbers go, the heavier they get.

There may be more places out there to draw from (and there is technically no hard limit), but we’re probably scraping the bottom of the jar by this point in terms of how much discretionary domestic and global capital can be further allocated to US equities.

Potential Catalysts for ReversalA few months ago I joked on Twitter that if I summed up my last five years of investment research it would be, “Stocks are kind of expensive; here’s why I’m buying them anyway.”

And indeed stocks have kept going right up, recovering from every dip and correction that they encountered.

Basically, despite being on the expensive side, stocks over this period appeared at the time to be a better investment than bonds, and better than holding cash, given how low yields were on bonds and cash. And I knew with a high probability that due to how indebted everything was, that large fiscal stimulus, monetized by the central bank, would be used for major crises, which was correct.

However, I am becoming less bullish on US equity indices going forward. That’s not to say this is necessarily “the top” or anything like that (trying to time tops and bottoms is usually a fool’s errand), but I increasingly want to be diversified into other types of assets when looking out multiple years.

There are a handful of possible catalysts that could cause a structural stagnation of this four-decade US equity bullish trend:

1) As of now, although long-term interest rates bounced from their mid-2020 pandemic lows, they are still within their four-decade downward channel of lower highs and lower lows. A cessation of the structural decline in interest rates would be a significant headwind against ever-higher US equity valuations. In other words, if 10-year Treasury rates start trending sideways or up, that’s likely not good for stock indices.

2) If US corporate tax rates don’t keep going lower like they have been, that also takes away another lever that has contributed to their persistently strong performance. There seems to be less political and public appetite for more corporate tax cuts.

3) If supply chain problems, conflicts with China, and other global issues became more persistent, the cost/benefit ratio and deflationary impact of labor offshoring could diminish, putting a stop to the profit margin arbitrage that US corporations have enjoyed between high revenue and suppressed labor costs for the past several decades. That doesn’t mean globalization goes away; it just means the world might stop getting more globalized than it already is.

4) Voters and politicians seem to have an increasing (and somewhat bipartisan) appetite to take anti-trust measures against mega-cap tech stocks, which have been the main drivers of the US stock market outperformance during the past decade.

5) The commodity supply/demand situation could shift from abundance to scarcity ( as I’ve argued is happening lately), resulting in persistently higher average inflation in the 2020s decade than the 2010s decade (which is my base case). That would put pressure on corporate margins and their equity valuations, especially if central banks try to fight that inflation by tightening their monetary policies.

6) Equity valuations in general could simply become so high that the ongoing fund flows required to keep them up at these levels could become insufficient, especially as the Federal Reserve tightens its monetary policy in response to inflation. Upward momentum could turn into downward momentum, causing the marginal investor to shift away to other assets and other markets.

The Dollar on WatchThe dollar index, which tracks the US dollar compared to a basket of major foreign currencies, gave a warning sign last week. Historically, when the dollar index becomes overbought on the weekly chart (green boxes in the chart below), and then rolls over into negative momentum (purple boxes in the chart below), that often leads to a significant decline in the dollar index after that point:

Stock Charts

There are some instances of that signal where the dollar merely goes flat or grinds up more slowly rather than going down, but more often than not, it goes down more than ten points after giving that signal.

My base case is towards a weaker dollar in 2022, but I’ll be monitoring the technicals on that view.

A trader saw my dollar chart on social media and posted a cleaner version which I find to be very illustrative as well:

@SwellCycle

It’s quite possible that after the Omicron wave of the virus winds down, global markets will open up more and collect some of the capital that has poured into US growth stocks during the pandemic. A weaker fiscal environment in the US, along with high valuations, could lead investors to look elsewhere, resulting in both lower equity valuations and a weaker dollar.

Final ThoughtsA lot of US growth stocks look like this:

F.A.S.T. Graphs

In other words, Costco’s fundamentals (blue and orange lines) did amazing, but their stock price (black line) did even better thanks to a major valuation increase on top of that fundamental performance. Interest rates came down, domestic and foreign investors alike piled quite heavily into it, and their tax rate was cut significantly in 2018.

Over the past decade, Costco went from trading at 25x annual earnings to 43x annual earnings, and also had a significant tax cut that gave it a stepwise boost in earnings. That’s what happened to a lot of the top companies in the S&P 500.

Does that mean I think Costco ( COST) is topping at these lofty levels? Maybe, but not necessarily. That’s too specific of a call. I think over the very long term, it’s a great company and at certain price points will be a good investment, like it often has been in the past for nearly four decades since it was founded.

Instead, I would merely say that I don’t love the risk/reward ratio on it at a 43x price/earnings level with its expected level of growth compared to other alternatives, such as certain high-quality value stocks, certain international stocks, certain commodity exposures, and so forth.

For example, after a massive period of outperformance, Costco stock has been underperforming energy stocks since autumn 2020. This chart shows the ratio of Costco to the energy sector, and we can see that the ratio is getting rather heavy around high levels:

Stock Charts

The case for this continuing to trend down (Costco underperforming energy stocks over the longer-term) is that we may have entered a more structural inflationary period in the 2020s with tighter labor and energy capacity compared to the disinflationary 2010s decade. This would be an argument against overweighting expensive growth stocks like Microsoft ( MSFT), Apple ( AAPL), Tesla ( TSLA), Nvidia ( NVDA), Costco ( COST), Nike ( NKE), Cadence Design ( CDNS), and various names like that until they come down to more normal valuations.

On the other hand, the case for this just being a minor reversal before another big leg up in terms of Costco’s (and other expensive growth stocks’) outperformance is that after this post-pandemic inflationary impulse, disinflationary trends will regain control and growth stocks will resume their march upwards in terms of price/earnings ratios compared to cheaper sectors like energy or healthcare. Global economic growth will be slow, yields will fall, and capital will keep pouring into growth sectors at any price.

My base case is towards the former (energy sector and overall value outperformance compared to many growth stocks), but I continue to watch some of the indicators to see if that thesis remains on track.

Back in the 1960s, there was a group of large growth stocks referred to as the “ Nifty Fifty” that were considered so good that you could basically buy at any price. It was inconceivable to people that they would be bad investments, because their growth was so strong. They included names that are well known today like Disney ( DIS), Coca-Cola ( KO), Procter & Gamble ( PG), Texas Instruments ( TXN), and Sears (now bankrupt).

Most of them indeed went on to perform wonderfully over the next several decades, with rising revenue and earnings. Analysts were correct about that.

However, the majority of them were terrible stock investments for a 10-15 year stretch starting in the 1970s, as inflation and interest rates ramped up. In other words, their stock prices did a lot worse than their fundamental performance, due to overvaluation in the late 1960s, and a transition from a disinflationary period with oversupplied commodities to an inflationary period with undersupplied commodities.

I think some of today’s big growth plays could run into 5-year performance stagnations, where their underlying business continues to grow but their stock prices offer less-attractive returns, especially when indexed against inflation.

This article was written by

Lyn Alden Schwartzer

39.17K Followers seekingalpha.com

[Jacob Snyder] Metals Required For Making Electric Cars And Producing Clean Energy[graphic] So...

Jacob Snyder — 11/21/2021 4:16:42 PM

Metals Required For Making Electric Cars And Producing Clean Energy

Source: IEA (2021), The Role of Critical Minerals in Clean Energy Transitions, IEA, Paris.

Batteries require copper, cobalt, nickel, lithium.

seekingalpha.com

[Jacob Snyder] RIO: iron ore, dividends, stock correlation: [graphic] [graphic] Out of the si...

Jacob Snyder — 10/25/2021 12:14:06 PM

RIO: iron ore, dividends, stock correlation:

Out of the six major future developments, four focus on copper and lithium. Current major funding:
Oyu Tolgoi, Mongolia; copper, gold
Jadar, Serbia; lithium

[Jacob Snyder] Who mines what: elements.visualcapitalist.com BHP: fe 75%,cu 25%,oil,met coal R...

Jacob Snyder — 10/22/2021 12:25:59 AM

Who mines what: elements.visualcapitalist.com

BHP: fe 75%,cu 25%,oil,met coal
RIO: fe 77%,cu 10%,al 9%
VALE: fe 85%,nickel 10%
Fortescue: fe
FCX: cu 70%, au
SCCO: cu
Nutrien: fertilizer
IVPAF: cu

[Jacob Snyder] rules for using Bollinger Bands, by John Bollinger 1. Bollinger Bands provide...

Jacob Snyder — 10/20/2021 1:37:39 PM

rules for using Bollinger Bands, by John Bollinger

1. Bollinger Bands provide a relative definition of high and low. By definition price is high at the upper band and low at the lower band.

2. That relative definition can be used to compare price action and indicator action to arrive at rigorous buy and sell decisions.

3. Appropriate indicators can be derived from momentum, volume, sentiment, open interest, inter-market data, etc.

4. If more than one indicator is used the indicators should not be directly related to one another. For example, a momentum indicator might complement a volume indicator successfully, but two momentum indicators aren't better than one.

5. Bollinger Bands can be used in pattern recognition to define/clarify pure price patterns such as "M" tops and "W" bottoms, momentum shifts, etc.

6. Tags of the bands are just that, tags not signals. A tag of the upper Bollinger Band is NOT in-and-of-itself a sell signal. A tag of the lower Bollinger Band is NOT in-and-of-itself a buy signal.

7. In trending markets price can, and does, walk up the upper Bollinger Band and down the lower Bollinger Band.

8. Closes outside the Bollinger Bands are initially continuation signals, not reversal signals. (This has been the basis for many successful volatility breakout systems.)

9. The default parameters of 20 periods for the moving average and standard deviation calculations, and two standard deviations for the width of the bands are just that, defaults. The actual parameters needed for any given market/task may be different.

10. The average deployed as the middle Bollinger Band should not be the best one for crossovers. Rather, it should be descriptive of the intermediate-term trend.

11. For consistent price containment: If the average is lengthened the number of standard deviations needs to be increased; from 2 at 20 periods, to 2.1 at 50 periods. Likewise, if the average is shortened the number of standard deviations should be reduced; from 2 at 20 periods, to 1.9 at 10 periods.

12. Traditional Bollinger Bands are based upon a simple moving average. This is because a simple average is used in the standard deviation calculation and we wish to be logically consistent.

13. Exponential Bollinger Bands eliminate sudden changes in the width of the bands caused by large price changes exiting the back of the calculation window. Exponential averages must be used for BOTH the middle band and in the calculation of standard deviation.

14. Make no statistical assumptions based on the use of the standard deviation calculation in the construction of the bands. The distribution of security prices is non-normal and the typical sample size in most deployments of Bollinger Bands is too small for statistical significance. (In practice we typically find 90%, not 95%, of the data inside Bollinger Bands with the default parameters)

15. %b tells us where we are in relation to the Bollinger Bands. The position within the bands is calculated using an adaptation of the formula for Stochastics

16. %b has many uses; among the more important are identification of divergences, pattern recognition and the coding of trading systems using Bollinger Bands.

17. Indicators can be normalized with %b, eliminating fixed thresholds in the process. To do this plot 50-period or longer Bollinger Bands on an indicator and then calculate %b of the indicator.

18. BandWidth tells us how wide the Bollinger Bands are. The raw width is normalized using the middle band. Using the default parameters BandWidth is four times the coefficient of variation.

19. BandWidth has many uses. Its most popular use is to identify "The Squeeze", but is also useful in identifying trend changes...

20. Bollinger Bands can be used on most financial time series, including equities, indices, foreign exchange, commodities, futures, options and bonds.

21. Bollinger Bands can be used on bars of any length, 5 minutes, one hour, daily, weekly, etc. The key is that the bars must contain enough activity to give a robust picture of the price-formation mechanism at work.

22. Bollinger Bands do not provide continuous advice; rather they help identify setups where the odds may be in your favor.

[Jacob Snyder] Commodity prices, inflation, wages vs. productivity: [graphic] [graphic] [gra...

Jacob Snyder — 10/18/2021 12:10:40 PM

Commodity prices, inflation, wages vs. productivity:

[Jacob Snyder] Green energy: A bubble in unrealistic expectations? blog.evergreengavekal.com Pa...

Jacob Snyder — 10/16/2021 6:28:00 PM

Green energy: A bubble in unrealistic expectations? blog.evergreengavekal.com
Part 2:

BlackRock’s CEO recently admitted that, despite what many are opining, the green energy transition is nearly certain to be inflationary.It used to be that the cure for extreme prices was extreme prices, but these days I’m not so sure. Oil and gas producers are very wary of making long-term investments to develop new resources given the hostility to their industry and shareholder pressure to minimize outlays.I expect global supply to peak sometime next year and a major supply deficit looks inevitable as global demand returns to normal.In Norway, almost 2/3 of all new vehicle sales are of the electric variety (EVs) – a huge increase in just over a decade. Meanwhile, in the US, it’s only about 2%. Still, given Norway’s penchant for the plug-in auto, the demand for oil has not declined.China, despite being the largest market by far for electric vehicles, is still projected to consume an enormous and rising amount of oil in the future.

Part 2 blog.evergreengavekal.com

Overall, 70% of China’s electricity is coal-generated. This has significant environmental implications as far as electric vehicles (EVs) are concerned. Because EVs are charged off a grid that is primarily coal- powered, carbon emissions actually rise as the number of such vehicles proliferate.

[Jacob Snyder] the economy rotates through a four-stage business cycle: Recovery, in which the...

Jacob Snyder — 9/13/2021 3:32:57 PM

the economy rotates through a four-stage business cycle:

Recovery, in which the economy is rapidly rebounding from a recession.Expansion, in which the economy is growing at a moderate rate.Slowdown, in which economic growth has peaked and then slows.Recession, in which economic output is declining.

[Jacob Snyder] Market top leading indicator: margin debt: [graphic] advisorperspectives.com f...

Jacob Snyder — 9/11/2021 11:16:29 AM

Market top leading indicator: margin debt:

advisorperspectives.com
finra.org

[Jacob Snyder] AMZN vs BABA: 1.6 0.5 market cap T$ 56 19 PE gaap ttm 3.6 3.6 P/S ttm 443B$ 119...

Jacob Snyder — 8/20/2021 3:12:30 PM

AMZN vs BABA:

1.6 0.5 market cap T$
56 19 PE gaap ttm
3.6 3.6 P/S ttm
443B$ 119B$ revenue ttm
14 3 P/B ttm
27 13 P/cash flow ttm
30% 47% revenue growth, 5Y cagr
66% 34% EPS growth, 3Y cagr
41% 40% gross margin
90 75 cash B$
123 28 total debt B$
3.0 0.9 debt/free cash flow

Everything I read about BABA, is about the China risk. I see no sector or company risk. The CCP is saying: private companies cannot operate against the national interest (as defined by the CCP). I can live with that. I do not think BABA’s business model is incompatible with the government’s goals. BABA is one of China’s golden geese, and the CCP is not going to kill those geese. Scary stories predicting China will expropriate US investors, is silly fear-mongering.

BABA’s EPS has not been increasing as fast, because BABA is investing in more growth opportunities (expansion beyond China, cloud services, finance, media). Both companies dominate their market, but China is growing faster than the US. BABA has a better balance sheet than AMZN.

Conclusion: BABA deserves a PE similar to AMZN.

[Sun Tzu] There are 2 ways to play this. As a trader, or even a value investor, there are ...

Sun Tzu — 8/19/2021 8:35:43 PM

There are 2 ways to play this. As a trader, or even a value investor, there are big cap Chinese stocks that are trading below cash. BABA is one. BIDU is another. You can run screens to find the rest.

As a longer term or growth investment, buy an ETF of small and mid cap Chinese stocks. The same logic that is hurting Chinese big caps is helping the smaller companies.

For the record, if someone pays attention to what the Chinese government is saying about the regulations, they see that they are right and that in the long term they are doing the right thing. But they failed in signaling it to the market properly.

PS I asked about MT before I saw this. I think it will be worth your while to research the subject. But you don't have to answer me.

[Jacob Snyder] Sorry, I know nothing about MT. I am currently thinking about China stocks I wan...

Jacob Snyder — 8/19/2021 8:16:13 PM

Sorry, I know nothing about MT. I am currently thinking about China stocks I want to buy at some point. Other than BABA, what is on your China buy-list? CCP is saying: private companies cannot do things incompatible with national interests (as defined by CCP). Looks like private education and crypto have business models likely to be banned. What else?

[Jacob Snyder] Message 33399440

Jacob Snyder — 8/19/2021 7:46:18 PM

[Sun Tzu] Did you get rid of all your VALE? A short VALE - long MT as I hinted would have ...

Sun Tzu — 8/19/2021 7:38:58 PM

Did you get rid of all your VALE?
A short VALE - long MT as I hinted would have been a great pair trade.
What do you think of MT now?

[Jacob Snyder] IVPAF, Ivanhoe Mines, Canada-based: This will be a 10-bagger if: 1. copper pric...

Jacob Snyder — 7/24/2021 2:43:42 PM

IVPAF, Ivanhoe Mines, Canada-based:

This will be a 10-bagger if:
1. copper price >4$/lb LT
2. max 800,000 tons/y copper production ramp-up happens on schedule (by 2028?)
3. DRC political/military conditions allow
4. continued good cooperation between JV partners Ivanhoe and Chinese.

Kamoa-Kakula in DRC:
5-2021: first copper concentrate produced

The Kamoa-Kakula Project. A joint venture between Ivanhoe Mines and Zijin Mining Group Co., Ltd., (“Zijin” or “Zijin Mining”) within the Central African Copperbelt in the Democratic Republic of Congo’s (DRC) southern Lualaba province. Following the signing of an agreement with the DRC government in November 2016 to transfer an additional 15% interest in the Kamoa-Kakula Project to the government of the DRC, Ivanhoe Mines and Zijin Mining each hold an indirect 39.6% interest in the Kamoa-Kakula Project, Crystal River Global Limited (Crystal River) holds an indirect 0.8% interest and the DRC government holds a direct 20% interest. The Kamoa-Kakula Project is independently ranked as the world’s fourth largest copper deposit.

The combined Kakula-Kansoko production benefits from an ultra-high feed grade averaging 6.2% copper over the first five years of operations, and 4.5% copper on average over a 37- year mine life.

The 19-Mtpa scenario shows the potential for average annual production of 501,000 tonnes of copper at a total cash cost of $1.07/lb copper during the first 10 years of operations, and production of 805,000 tonnes of copper by year eight. At this future production rate, Kamoa-Kakula would rank as the world’s second largest copper mine.

At a 1% cut-off, the current, combined Indicated Mineral Resources for the Kamoa-Kakula Project now totals 1.387 billion tonnes grading 2.74% copper, containing 83.7 billion pounds of copper. At the same 1% cut-off, Kamoa-Kakula’s combined Inferred Mineral Resources now totals 339 million tonnes grading 1.68% copper, containing 12.5 billion pounds of copper.

The Company closed a private placement offering of $575.0 million of 2.50% convertible senior notes maturing in 2026 on March 17, 2021.

2 other mines in development:
Kipushi, zinc, in DRC
Platreef, platinum, in S. Africa

[HairBall] Jacob Snyder, The stock market today smells like 2000, just as the tech mania p...

HairBall — 7/7/2021 12:04:51 PM

Jacob Snyder,

The stock market today smells like 2000, just as the tech mania peaked. No fear. Selling into irrational exuberance is a good idea.

Agree...

Regards,
LG

[Sun Tzu] The comparison to MT seems to confirm your conclusion, though there is no sign t...

Sun Tzu — 6/30/2021 11:28:57 PM

The comparison to MT seems to confirm your conclusion, though there is no sign that the end is near.

[Jacob Snyder] VALE: limit orders to sell, beginning at $23, 10% of my LT position every $1 fu...

Jacob Snyder — 6/30/2021 7:13:05 PM

VALE: limit orders to sell, beginning at $23, 10% of my LT position every $1 further increase in the stock price. Reasons:

1. Iron ore at 220$/ton, an all-time record.

2. Stock at a resistance line going back to 2008.

3. In 2011, the last time things were this good:
$23 stock high
$180 iron ore price high
5.3 = 23/4.33 = PE high; today: 5.0
2.1 = 23/11.2 = P/S high; today: 2.1
So, valuation is at the 2011 high.

4. Large increases in supply will happen in 2022-2023. It is unlikely demand will increase as much. Many hi-cost mines have shut down during the years of low prices, especially in China. At current prices, these mines can be profitably reopened. It is easier to increase iron ore supply than other metals.

5. During downturns, iron ore troughs around $50. We will see those prices again (time very uncertain).

6. I would rather own silver, copper and other base metals at this time. I will be holding my FCX, PAAS, RIO, BBL. May add SCCO, others.

7. The stock market today smells like 2000, just as the tech mania peaked. No fear. Selling into irrational exuberance is a good idea.

schrts.co

[Jacob Snyder] Iron price charts: [graphic][graphic] infomine.com [graphic] infomine.com [gra...

Jacob Snyder — 11/20/2014 2:47:56 PM

Iron price charts:

infomine.com

infomine.com

strayanomics.com

Chart (6 months to 30 years) China import Iron Ore Fines 62% FE spot (CFR Tianjin port), US Dollars per Dry Metric Ton indexmundi.com

Future's prices indicate LT price going to $66 barchart.com

[Jacob Snyder] 6 Signatures of recessions: 1. S&P 500 below its level of 6 months prior 2. empl...

Jacob Snyder — 9/20/2011 11:49:27 PM

6 Signatures of recessions:
1. S&P 500 below its level of 6 months prior
2. employment: total nonfarm payrolls growth below 1% year-over-year
3. GDP growth below 2% year-over-year
4. Treasury yield curve flatter than 2.5% (10-year minus 3-month)
5. Junk Bond Spread: widening of credit spreads on corporate debt versus 6 months prior
6. ISM Purchasing Managers Index below 54

...100% sensitivity (these conditions have always been observed during or just prior to each U.S. recession)
and 100% specificity (the only time we observe the full set of these conditions is during or just prior to U.S. recessions).
Message 27615430

other charts, confirming recession:
7. initial jobless claims (reported weekly)
8. Oil price over $100, Brent
9. copper price falling
10. inflation rising
11. consumer confidence falling
12. VIX
13. Consumer disc./staples ratio falling

Long-term charts:
14. Inflation-adjusted S&P500
15. PE10
16. dividend yield
17. 130Y comparison of interest rates and stock valuations
18. Home Price Index, Shiller

S&P 500 5Y:

Jobs: 110K/month increase = 1%/Y increase; reported on 1st Friday of each month
tradingeconomics.com
(131M = Total nonfarm payroll employment; 1.31M/12 = 109K

http://www.tradingeconomics.com/united-states/gdp-growth-annual

online.wsj.com

Yield curve:

Junk Bond Spread:
research.stlouisfed.org

online.wsj.com

Unemployment claims, reported weekly:

Oil Brent 1Y:
http://www.oil-price.net/

Inflation 3Y:

online.wsj.com

VIX 5Y:

Consumer disc./staples ratio 5Y:

Inflation-adjusted S&P500, since 1880:

PE10 of S&P500 (based on average inflation-adjusted earnings from the previous 10 years, by Shiller):

Dividend Yield, S&P500:

130Y comparison of interest rates and stock valuations:

Home Price Index, inflation adjusted, by Shiller:

Other sites:
Oil price Brent: livecharts.co.uk
multpl.com
multpl.com