Four Pillars and One Direction

Over at a financial forum...

The Four Pillars

1. We know transportation as a part of GDP is an auto loan/leasing bubble wrought with no down fog a mirror loans, ready to explode.  

2. With the real jobs in energy getting wiped out, the service/retail sector is where the "jobs" are, great paying ones too. Not.

3. The expansion of credit, we're in more hock than ever before. And due to wage declines and stagnation, ability to repay is falling. 

4. And here is last "pillar" of our economy, the reflated housing bubble and Schillers latest warning:  "We’re in a puzzling economy,” Shiller told Bloomberg TV. “This weak economy, it’s worldwide, and it might be a long-term malaise." He warns that home prices could tumble in the next few years despite a 5.1% increase in August. "A year ago our Index was going up at a 10% rate, now it’s a five percent rate,” said Shiller. “This is not the stock market, this is the housing market, and that suggests there might be a lowering, and possibly even declines in home prices in the next year or two."

Meanwhile the talking heads or media narrative parrots are hopeful: A half-dozen reasons to be optimistic from BMO Capital's Brian Belski:

• Long-term rates are higher than short-term rates. Recessions usually happen when the opposite is true;
• Manufacturing surveys continue to signal growth, but at a slower pace;
• Consumer confidence is still rising;
• Homebuilder sentiment is the most optimistic since 2005;
• Sales of autos and other big-ticket items are still rising;
• Weekly claims for unemployment insurance are at their lowest in 15 years.

One Direction

And then regarding those that have been eating the parrot food, there is not optimism, not pessimism, just plain realism in what we see in their narrative from Jeffrey P. Snider:

1. Dollar doesn't matter, indicates strong economy relative to the world.
2. Dollar matters for oil, but lower oil prices mean stronger consumer.
3. Manufacturing slump doesn't matter, only temporary.
4. Manufacturing declines are consumer spending, but only a small part.
5. Manufacturing declines are becoming serious, but only from overseas.
6. Maybe domestic manufacturing recession too, but the rest of the economy is strong.
7. Rest of the economy might not be as strong as thought, but only an "earnings recession."
8. Maybe full recession, but only a small probability.
9. …

At each step, economists suggest how or why it doesn't matter and therefore that is the end of the progression for them; meanwhile, the economy continues in exactly that same headway forcing a further retreat and new denial every time. Like entropy, the economic "arrow" is moving only in one direction...

We Natter: and its the same direction as transports of late - sell off. With $2 gas and $50 oil in Q3, transports are yelling loudly and usually lead the way, up or down.

Pharmboy kept asking about those trannies, by plane, boat, train or truck, it doesn't matter, they are all showing the way.