Talk about sheep being led to the slaughter. The S&P 500 is up 11% from its February 11th intra-day low (1812) because Wall Street still has inventory to unload. That much is par for the course.
Yet the signs of an impending macroeconomic and profits implosion are now so overwhelming that it is truly remarkable that there are any bids left in the casino at all. This morning’s release of business sales for January, for example, showed another down month and that the inventory-to-sales ratio for the entire economy is now at 1.40X—–a ratio last recorded in May 2009.
As Zero Hedge so aptly put it:
“Look at this chart!”
Once upon a time, real economists, investors and traders knew that business sales, wages and profits are the heart of the matter. No longer. The self-referential sentiment surveys, financial conditions indices and bullish spin on Fed word clouds which animate today’s casino muffle the fundamentals almost entirely.
Yesterday on Bloomberg TV, for example, my downbeat view was challenged with a chart showing that Goldman’s financial conditions index had perked up during the last 5-weeks. Where, I was asked, is the recession?
How about the quarter century of history shown below? Business sales reported this morning were down by 5.1% from their July 2014 cyclical peak. Self-evidently, declines of that magnitude have occurred only twice since 1992, and both of them bear the shaded imprint of recession.
How about the quarter century of history shown below? Business sales reported this morning were down by 5.1% from their July 2014 cyclical peak. Self-evidently, declines of that magnitude have occurred only twice since 1992, and both of them bear the shaded imprint of recession.
The chart also bears something else. Namely, real economic meat and potatoes. Even at their slumping January level, business sales came in at a $15.5 annual trillion rate. That’s something; it measures the entire churn of manufacturing, wholesale and retail sales from coast-to-coast
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