DO WE HAVE A NEW U.S. CRISIS IN VICINITY?
Updated
Guys, honestly, until few months ago I would doubt about it... But as it approaches, I do not feel confortable to keep optimist.
1st - ISM PMI is still above 50, but since september 2018 it has been falling, which means that might be a fact that the economy is slowly contracting. In my opinion, if it falls under 48 it's to be really concerned.
* ISM PMI - The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) report on business is based on data compiled from monthly replis to questions asked of purchasing and supply executives in over 400 industrial companies. It measures: New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers Inventories, Employment, and Prices. If it's higher than 50 it's good, means that these indicators are increasing, if it's under 50, it means that it's decreasing.
2nd - Data released on every payroll shows a HUGE increase on job creations, the number of unemployed Americans has not being so low since 1969. And it can create a inflation, as more money circulares in the economy, more the price of products become high, as it happens, more the interest rates increase to control an inflationary boom and it makes the consumption and das the whole economy to contract. Debt with higher interest rates becomes more expensive, the business and consumers start having problems to pay their debt and the offer of credit (98% of the money in circulation are credit) decreaces, which also contract consumption, which bring problems for business to keep their solvency and so on.
GREEN BARS means the record of low unemployment rate today and in 1969. The RED BARS means the years of MAJOR FINANCIAL CRISIS in the U.S.A. It usually happens after a great time of prosperity because the markets, are ciclicle! Every period of prosperity had an average duration of 10 years followed by a major a crisis!
3rd - The world trade has not being so low since the subprime crise in 2008. As you can see in the next picture.
4th - Increase of Federal Debt in the past 10 years
Hardly we'll have a crise so strong and deep as the subprime's crisis. Today we have more M1 Money stock, Gold and hedge instruments. The financial infrastructure of the markets as well as the leasons lerned with the previous mistakes might help to make the efects of the crisis less letal for the financial instituitions, the people and the markets in general.
What do you think?
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The expectation of profit within the S&P500 companies didn't follow it's rally. It keeps falling...Note
After some time, I forgot to update this idea. It was stopped around august 2019 with a marginal profit. As it was sideways for several weeks. After that the market rallied and before the COVID19 hit Europe around January we started thinking if China would be able to keep the virus within it's borders. So we shorted the SPY, IBOV, and went short EURJPY.With a very small portion of the capital as nobody as a clue about the future with the present data.
Two possible things can happen fron now on:
1st Economy reopening and slow going back to the 'normal' across the globe.
2nd a new wave of the virus. Which could cause a crash similar to the 1929-1932 as well as the Chinese Coronavirus to be conteined in 3 years, similar the Spanish flu (Jan1918 to Dec1920).
Now, we are not opening any long term positions and only trading within a week time horizon.
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