Disclaimer

Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can't by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

BTW, clicking on most charts will produce the original-sized, i.e., bigger version.

Tuesday, January 31, 2012

US recovery strengthening



I mentioned a couple of posts ago that the US data were surprising on the upside and that revisions were to the upside too.  These are usually signs of a strengthening economy.   Over the next few days we'll get a slew of new data: the labour market indicators and the ISM indices.

While the unemployment rate lags the cycle, the change in the unemployment rate coincides with the cycle.  You have to invert it, because unemployment falls as the economy recovers.  You can see from the chart below how strong this indicator now is, after the mid-cycle correction associated with the aftermath of the Japanese earthquake and tsunami.

Click to enlarge

Similarly, the change in payrolls is also improving, as the chart below shows.  Nowhere near fast enough, given the slump during the GFC, but still -- improving.

Click to enlarge

Meanwhile, housing appears to have finally turned the corner. But more of that tomorrow.

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