One Thing for Sure

We are sitting at a time in the economic universe when conventional measures sit at extremes. To me this means not so much what changes things but that things will change dramatically from here. Over the past year I have listed factors that are involved, but do I know for sure which one will change things?

NO…

No doubt on this list are FED actions since QE2 in 2011, but there is a lot of other stuff, like interest rates and leverage levels, but it may not matter which factor that it is.

Here are the pictures..

Here are a couple of charts that show the picture. It is probably important to note in the Depression/Euphoria chart that the economic impact of the COVID crisis is less a factor than the response to it and in fact the real point at which the economy was in crisis was in December 2018 when it became obvious that Trump’s tax cuts and tariff initiatives were slamming the country.

The chart below shows how FED actions pushed economic aggregates higher from the December 2018 levels but that those aggregates began to falter in August 2021 and are currently starting to head lower. Some of this is probably due to leverage and liquidity issues that have raised their heads recently, but in any case we are at precarious point at this time.

(Chart is updated through March 31, 2021.)

Over the weekend and after the employment report on Friday I will add another 4 or 5 charts that will show a broader picture of the quarter going forward.