“A paper written by David Greenlaw, James Hamilton, Peter Hooper, and Frederic Mishkin for the U.S. Monetary Policy Forum in New York last Friday focused on this metric, and tried to identify a tipping point. The logic is that countries with too much debt enter a destructive negative feedback loop, and that instead of a slow descent there is a more well-defined debt-to-GDP level that is sort of the event horizon, beyond which recovery becomes tremendously more difficult…
Through this perspective, it looks like America is beyond that tipping point…
The paper concludes that “countries with debt above 80% of GDP and persistent account deficits are vulnerable to a rapid fiscal deterioration as a result of these tipping-point dynamics.” What’s more, “such feedback is left out of current long-term U.S. budget projections and could make it much more difficult for the U.S. to maintain a sustainable budget course. A potential fiscal crunch also puts fundamental limits on what monetary policy is able to achieve.” Full story at…
http://wallstcheatsheet.com/stocks/tipping-point-economics-suggests-u-s-is-at-risk-of-debt-crisis.html/
SOUNDS LIKE REINHART AND ROGOFF
This above news is very similar to Reinhart and Rogoff who have made
similar comments in the past. In their
book, “This Time is Different: Eight Centuries of Financial Folly”, they point
out that debt is a natural result of a financial crisis and the debt is primarily
caused by reduced tax receipts associated with economic slowdown. In most cases, nations have decided to
inflate their currencies rather than deal fully with paying down the debt. From cutting the silver content in the Middle
Ages to printing more paper money during the American revolution – it’s always
the same.
AMERICAN
TRUCKING ASSOCIATION
ATA Truck Tonnage Index Posts Best Ever January
"Arlington, Va. - The American Trucking Associations' advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 2.9% in January after jumping 2.4% in December...Tonnage has surged at least 2.4% every month since November, gaining a total of 9.1% over that period...Compared with January 2012, the SA index was up a robust 6.5%, the best year-over-year result since December 2011." Full press release at...
http://www.truckline.com/pages/article.aspx?id=1089%2F8e1c7279-ed27-4c03-b189-ceeee26bbb12
The ATA report certainly doesn't look like the economy is backsliding, but as always, I am not an economist so that’s an uninformed opinion.
ATA Truck Tonnage Index Posts Best Ever January
"Arlington, Va. - The American Trucking Associations' advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 2.9% in January after jumping 2.4% in December...Tonnage has surged at least 2.4% every month since November, gaining a total of 9.1% over that period...Compared with January 2012, the SA index was up a robust 6.5%, the best year-over-year result since December 2011." Full press release at...
http://www.truckline.com/pages/article.aspx?id=1089%2F8e1c7279-ed27-4c03-b189-ceeee26bbb12
The ATA report certainly doesn't look like the economy is backsliding, but as always, I am not an economist so that’s an uninformed opinion.
MARKET RECAP and
CORRECTION THOUGHTS
Monday, the
S&P 500 finished down 1.8% to 1,488 (rounded). There was a hard sell-off late in the day so
the Pros were spooked.
VIX was up a
whopping 34%, to 18.99. VIX is up 63% in
3-trading sessions.
NTSM
Monday, the NTSM analysis remained HOLD at the close.
Even the huge climb in VIX hasn’t sent the VIX indicator
to sell yet.
Both Volume and Sentiment are close to a sell. Price is on the negative side of neutral.
The S&P 500 is near its lower trend line, but it would
have to close below 1475 for 2-consectuvie days before an end to the up-trend
can be reasonably assured by chart analysis (at least the way I look at the
world). Other indicators are stretched
though and I think the NTSM analysis will switch to sell if the market falls
much further.
In spite of the fear in the air Monday, the market
internals haven’t completely collapsed yet, but they are stretched. Breadth says down; new-hi/new-lows are
neutral.
It looks like the correction is under way and I am not
going to get a nice clean top I wrote about a few blogs ago. In other words, it looks like the top was
4-days ago at 1531.
MY INVESTED POSITION
I’m going to wait and watch my indicators. I don’t plan to cut my stock position until
the NTSM system is a sell. I think the
correction has started; but I will wait for some more numbers to confirm it. Another strong down day would probably give
us a sell signal, perhaps as soon as tomorrow; however, my guess is that
Tuesday will be an up day…we’ll see.
Based on a BUY
signal 7 of 9-days, and more importantly, consecutive closes above the prior
high of 1466, I moved into the stock market at 1471 on the S&P 500 on 14
January. I am currently invested in a
range of near 50% invested in stocks.
