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1   marcus   2018 Jun 1, 5:45pm  

One question Logan. When the recession (big or small) is actually coming, are you going to call it ? Or will you be a perma bull ?

What will you be looking for as the early tells ? Perhaps the old inverted yield curve isn't going to work as well this time as in the past. What will be the signal this time ?
2   _   2018 Jun 1, 5:55pm  

marcus says
Or will you be a perma bull ?


I am already presenting my model on facebook live on how to call the recession with economic data because if you just input my model post 1960 it has called every single recession. Now, each cycle is unique and myself my big call this year was for an inverted yield curve because I am staying true to my 1.60% -3% 10 year yield channel and the 2 year yield is pushing higher

However.... as always, economics is a process not a date... Mother economics she is a serial killer and she wants to get caught, she will leave you clues for a recession. Of course the stock market will get ahead of the economic data.

But... for this purpose here are some keys and most important factor now is that we are running into a prime age labor force growth cycle not a peak and decline like we saw in 2007.

1. Find the over investment thesis in a cycle
2. Fed is fighting Inflation and yields invert ( this process has already started)
3. Housing Starts and LEI ( leading economic indicators) fall 4-6 months straight prior to every recession post 1960
4. Then you should see unemployment claims rise with breath in sectors not just the sector that has the major over investment








3   Strategist   2018 Jun 1, 6:56pm  

If unemployment keeps going down we will have a major economic problem.

https://www.cnbc.com/video/2018/05/28/shipping-retail-truck-driver-shortage-amazon.html
America needs 50,000 truck drivers ASAP
4   RWSGFY   2018 Jun 1, 6:59pm  

Strategist says
If unemployment keeps going down we will have a major economic problem.

https://www.cnbc.com/video/2018/05/28/shipping-retail-truck-driver-shortage-amazon.html
America needs 50,000 truck drivers ASAP


Pay MOAR MONEY, motherfuckers.
5   FortWayne   2018 Jun 1, 7:32pm  

Looking sharp there Logan.
6   _   2018 Jun 2, 5:44am  

Strategist says
If unemployment keeps going down we will have a major economic problem.


For now we are still good in terms of the Job openings to job gain numbers because we are still running double the jobs needed for population growth.

However, if Job openings head toward 8-9 million and job gains slow down to 80K per month that is a sign of a brutal labor shortage of just human bodies that productivity could not solve.

I was looking for peak JOLTS to be around 6,210,000 but the last print was near 6,660,000. If the cycle goes on for a few more years this could be the case because the biggest age group in America are ages 23-29.

I am really keeping an eye out of JOLTS data in the next 12 months

8   _   2018 Jun 2, 6:17am  

One thing that I have noticed in this economic cycle

The lack of understanding demographics, productivity and inflation has really put people into a spiral of useless ideological theories.
Irony is that real wage growth has had its best decade in a long time but because people don't know that the rate of growth of productivity and inflation has fallen they don't adjust the numbers.

To be fair, most people really shouldn't know this stuff and media doesn't really highlight it, so you a nation that is confused and in that confusion they missed economic history.





9   FuckTheMainstreamMedia   2018 Jun 2, 6:18am  

Like I said, time to end welfare and rexamine SS Disability claims.

If there’s still a labor shortage, continue to deport illegals, but implement a guest worker program.
10   _   2018 Jun 2, 6:22am  

CovfefeButDeadly says
Like I said, time to end welfare and rexamine SS Disability claims.


This has been an interesting take the disability thesis.

The job market is so good that its a miracle since 2014 people have been coming off disability to work again at a snail pace but still the number is very small to the total workforce and total people working.

A lot of these people on disability are really disabled, they can't walk, some can't breath properly without a device, etc etc but the recent spike post the Great Recession is starting to wind it self off and heading toward pre Great Recession trend.

In any case, this is and has always been a small pool of people anyway that were claiming disability but really could work.
11   _   2018 Jun 2, 8:09am  

On another note, I am deeming the retail apocalypse as the biggest fake news economic story over the last 100 years

That was another pathetic terrible thesis, dear lord!

https://www.facebook.com/Logan.Mohtashami/videos/vb.783163249/10155740365753250/?type=3
12   MisterLefty   2018 Jun 2, 8:12am  

Hi Logan, Can you discourse on a possible limit to the amount of sovereign debt that any one country that has its own currency can issue? Many claim that there is a cannot-pay-off limit to amount of US sovereign debt that can be issued, for example.
13   _   2018 Jun 2, 8:34am  

MisterLefty says
Can you discourse on a possible limit to the amount of sovereign debt that any one country that has its own currency can issue?



U.S. is unique because it has the biggest economy, biggest military, it has a prime age labor force growth model where other developed countries can't and because of the sheer size of the dollar dominance it has will always issue as much debt it needs without really creating any currency induced inflation

EURO was created to off set the dollar dominance and this is why no one will leave the Euro, no matter how much the MMT people don't want to believe in this, it is the reality of the world

The rest of the world has limits and if their economy is tied to a commodity then their currency will be an issue in a down turn, Russia was a good example of this recently with their oil to ruble correlation

14   _   2018 Jun 2, 1:49pm  

jazz_music says
In your other picture you had a cigar
16   mell   2018 Jun 2, 1:55pm  

Logan Mohtashami says
EURO was created to off set the dollar dominance and this is why no one will leave the Euro, no matter how much the MMT people don't want to believe in this, it is the reality of the world


Countries have already left and will continue to distance themselves form the EUrocrats until they adopt Europe first policies. Yeah the Euro will survive but it's current abysmal performance is directly correlated to the failed EU globalist leftist policies (poor performance of DB has been weighing on it as well lately). The German Deutschmark would easily trade 2x the Euro if they reintroduced it. Sure the EU will stay but there will be some more shifts. At least with finally accepting Italy's new - democratically elected - government they can focus on MEGA ;)
17   _   2018 Jun 2, 6:37pm  

mell says
Countries have already left


Whenever someone even talks about leaving the Euro the bond market puts them back in line with a reality check when yields head higher

Italy has bigger problems to deal with that aren't easy to fix

18   _   2018 Jun 2, 6:38pm  

Much more calm this time around, market made its point the past 2 times

19   Strategist   2018 Jun 2, 7:39pm  

Logan Mohtashami says


I find this chart a little bit perplexing. Usually productivity increases when unemployment is increasing, because the most unproductive workers are the first to lose their jobs. Vice versa when unemployment is falling, because businesses are forced to hire the least productive bums.
20   curious2   2018 Jun 2, 8:03pm  

Strategist says

I find this chart a little bit perplexing.


That is probably because the caption is wrong. Productivity is not falling. It is growing at a slower rate than in the past. The past rates of high growth in China and Japan resulted probably from mechanization and automation, and shifting from agriculture to manufacturing, delivering huge increases in productivity partly by copying or importing advanced equipment and techniques. As countries catch up with the leading edge of technology, their productivity growth rates fall into line with the already industrialized countries.

Also, the process of recruiting, hiring, and training people interferes with productivity. If a software engineer must travel to a college campus to interview 20 possible recruits in order to fill 2 jobs, then (s)he cannot code during that time. If each hire requires 4 interviews, including travel, then the hiring process consumes a lot of otherwise potentially productive time, reducing productivity.
21   _   2018 Jun 2, 8:20pm  

Strategist says
I find this chart a little bit perplexing.


Rate of growth of productivity is falling like the chart shows, this is similar to inflation and wages

Cumulative growth is always rising but the rate is just much slower

Inflation is the same trend direction

Cumulative chart looks like




Rate of growth looks like

22   _   2018 Jun 2, 8:21pm  

Strategist says
unproductive workers are the first to lose their jobs. Vice versa when unemployment is falling,


Another way to look at this and this is my most favorite productive chart ever as you can see we don't have much going with construction for a long time now

23   _   2018 Jun 2, 8:23pm  

If we can ever get productivity growing in construction that would be very beneficial for this country




Recent data in total productivity

24   _   2018 Jun 2, 8:27pm  

Just like in wages, people think that wages are falling for years but it is just the rate of growth, even if you broken them down to many sub categories, we haven't had a negative wage cycle but the rate of growth is slow recently but still much higher than inflation itself

25   _   2018 Jun 2, 8:30pm  

curious2 says
potentially productive time, reducing productivity.


This is also a good point productivity if done by a company through either investments or training does initially take away from productivity data as it takes time train people, so if people were looking for some boom in productivity rate of growth through investments that were supposed to be happening this year you really need to wait until 2019 to see it in the data in a more clean setting.
26   _   2018 Jun 2, 8:35pm  

Strategist says
most unproductive workers are the first to lose their jobs

27   _   2018 Jun 2, 8:41pm  

Strategist says
because businesses are forced to hire the least productive bums.


On another note I was on Bloomberg Financial recently talking about your favorite subject

https://www.bloomberg.com/news/audio/2018-05-23/there-is-no-such-thing-as-affordable-housing-in-america
28   everything   2018 Jun 3, 5:59am  

Thanks for a great post Logan. 2018 the year of fake economic data.

https://www.ft.com/content/c8aa1f1c-faae-11e7-a492-2c9be7f3120a
29   _   2018 Jun 3, 6:07am  

everything says
2018 the year of fake economic data.


The real interesting data line going out now for the next 12 months is this

We have near 6,600,000 job openings and civilian labor force that is unemployed currently is at 6,065,000 ( Some of this) natural discharge of layoffs that happen each month. Hence why a 0% unemployed rate is impossible and why unemployment claims cant go to zero either.

Breakdown the data even more real unemployment rate is roughly 3% and below today when you breakdown the data to a prime age labor force factor model

Men and Women ages 20 and above are Under 3.5% combined, teenagers are running at 12.8% but college grads are running at 2% unemployment rate 3.2% with some college


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