Global Recovery 'Peaked' in 2013 and Has Been Declining Ever Since As Measured by PMI

Not everyone can become a waiter or a bartender.  And as more disposable income accrues to the top, and is deployed in luxury goods and the pursuit of rents and acquisition, the rest have lest to spend for goods that stimulate the aggregate demand.

As you know I would ascribe this slow decay in economic activity to the 'top down' monetary stimulus being deployed by the Western central banks, and their overattention to the well being of the largely broken and misdirected financial sector that was in fact primarily responsible for the crash in 2008.  That they corrupted the regulatory process along the way for their own benefit is an ancillary cause at best.

As I have been saying since roughly 2008, the Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

Since greed has no limits by its very nature, and since the credibility trap is preventing the one percent and their enablers from engaging in meaningful reform, I conclude that things will continue to get worse until there is a real break in the system that ends the feedback loop of the abuse of power and corruption of public policy.

I believe that the current election in the US, which is surprising to so many establishment pundits, is a clear indication of this.   Now whether it is fruitful change or not is another thing altogether.  We do see that the odds in the post 1930s political changes were a rather mixed bag.

This chart is from Nick Laird at sharelynx.com.

Looks like the Paint is Peeling

In case you missed the hint we posted last Wednesday, the Wall Street wiseguys were painting the tape into the fiscal year end of many of their funds.

Chicago PMI Worst Since 1982

This week is a return to reality as we digest more ugly economic statistics showing without a doubt that the US is heading into a deep recession.

If only predicting the course of the markets was simple, reducible to glib one-liners and simple courses of action and perpetually safe investments.

There is plenty of hot money drifting around, and at some point a terrible inflation is going to appear. But when? We simply cannot know this in advance.

Trading in a monster bear for the short term, with leverage is a fool's game unless one is a seasoned professional. And a fool and his money are soon parted.

If you look at the previous blog entry the best store of value for your wealth is quite obvious, if you have patience and do not succumb to leverage, and keep in mind the principles of diversification and portfolio management. But, even that is no certainty, for there are none in this world except death, change and the unexpected.

For the punters, its most likely we will muck around and set some sort of a bottom, in fear and trembling ahead of the Jobs Report which has expectations set extremely low.

At some point we will get a monster retracement rally, but that will be difficult to predict in advance, and its extent may be dependent on the trigger and how low we go first. Lots of variables. Afraid you'll have to stay tuned for updates.

Chicago PMI Worst Report Since 1982

It may seem counterintuitive that US stocks are resilient after a morning of some of the bloodiest economic numbers to date.

Talking heads were on the financial channels proclaiming "Priced In!" and "a bottom is at hand."

It should be noted that this is a holiday-shortened week, heading into the November weekend close. Many financial institutions end their fiscal year in November.

The nation will not recover until the financial sector is brought back into a balance with the real economy.

Increasingly the public is not believing the usual lies and deceptions. A bottom may be in for the willing acceptance of fraud and a tolerance of white collar crime. The backlash could be terrific.

Dollar briefly extends declines vs yen after Chicago PMI
Wed Nov 26, 2008 9:58am EST

NEW YORK, Nov 26 (Reuters) - The U.S. dollar briefly extended declines versus the Japanese yen on Wednesday after a report on business activity in the Midwest fell more than expected...

The Institute for Supply Management-Chicago said its index of Midwest business activity fell in November to 33.8 from 37.8 in October. Economists polled by Reuters had forecast a drop to 36.7.

"The Chicago PMI is the worst number since Feb. 1982 and the numbers continue to show that the economy is still deteriorating," said Andrew Bekoff, chief investment officer at LPB Capital LLC in Doylestown, Pennsylvania.