Thursday, April 24, 2014

The economy: riding for a fall

Here's some worthwhile material on the current state of the US economy and where it might be headed.

1.  The record levels being achieved by the stock market simply aren't justified by the underlying economic numbers.  As Zero Hedge points out concerning one bellwether stock:

Moments ago CAT stock touched 52 week highs, or a level not seen since April 2012. Why? The chart below which shows Caterpillar dealer retail sales by region [over the past five years] surely has something to do with it.

. . . we can only assume the company is well on its way to an epic collapse in its top and bottom lines as well.

And since this is nothing short of the bizarro, insane new normal, it is only a matter of time before the crash in retail sales sends the stock to plus infinity.

I couldn't agree more.  With such pathetic sales results, the stock should be tanking, not rising!  'Bizarro World' indeed . . .

2.  Zero Hedge also charts the sales of new residential units in the USA from 1960 to date, using data from the US Census Bureau.

So much for the alleged current 'housing recovery' . . .

3.  Charles Hugh Smith has two long and thought-provoking essays on what's caused the current mess, and where it might be leading us.

Both are very useful and highly recommended reading.

All the above are food for thought.  I continue to believe we're overdue for a significant economic correction, and the only direction for it to go is downward.  YMMV, of course.


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