Feb

27

Well, as long as you are here, let's see what the entrails say:

Fundamentally, there is no recession in sight. Here's a look at one of our best indicators on that front, the comparison of Total Loans and Leases against Initial Claims. There were some fundamental data that foretold a problem, but they have dissipated with the recent selloff.

However, the current growth of Payroll Taxes is disappointing, meaning that the stock market should not get a boost from the next Non-Farm Payrolls (i.e. Jobs) Report. Many of the changes enacted by the new Administration have not yet taken effect. You will know that is underway when you see the Payroll Taxes accelerate. It will happen; just not yet. Use any weakness as an opportunity to get long and longer.

N.B. The effective date of the Non-Farm Payroll Report this month is February 16, but this chart follows through another week. We have several ways of showing the Payroll Tax data. The view here is the one we usually display, and it is illustrated for consistency. However other views are considerably more pessimistic. Rather than be alarmed, look at this as opportunity.

What you must watch out for is sentiment, or its partner "exuberance", which had a monumental effect recently. Here's an update on the "Smarts vs. Amateurs" which we had posted before.

As always, please feel free to contact us with questions.


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1 Comment so far

  1. Anonymous on February 28, 2018 6:07 pm

    links don't work

    Ed.: Thanks. I believe I fixed it.

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