I have never posted this particular chart before, and now seems like a good time to discuss it (click to enlarge):
This is the detailed version of the smoothed chart that can be seen here. Each dot represents the annual growth rate of federal withholding taxes as of that day.
The first thing to notice is that at the bottom of the last recession in 2002 (marked “2H02″), it took a solid six months for the data to stabilize before it began to move upward. After the economy ceases to recess, businesses still don’t hire until they are forced to do so by increased demand. And the time spent in such a purgatory can be substantial.
In 2003, the growth rate flattens out (marked “Tax Cut”) because there was a payroll tax cut passed into law. Economically, it wasn’t really needed because the economy was already expanding via an historic housing boom.
The growth rate at the peak of the cycle in 2006 crested around 8%, which was 2% below the peak of the dot-com bubble which exceeded 10% six years prior. That was a lower high. And in 2009, the growth rate plunged well below the trough of 2002. That’s a lower low.
So this chart, with its pattern of lower highs, and lower lows, paints a picture of long-term decline. I’m worried that our decline will continue until the USA reverts to a pre-NAFTA trade policy and brings the factories home.
In The Nineties, we had a massive internet-building boom, and an industrial base. In The Zips, we had a massive house-building boom, phony though it may have been. What massive project do we have now that will provide millions of new jobs? Does anybody see anything?
(Note: subscribers to The Daily Jobs Update can see the real-time version of this chart at the bottom of this page.)
The last decade could be called the “Zits” will all the bubbles popping.
XOM looks to be leading the charge lower, incredible that 62ish was the low March 6, now at 66 and falling it looks vulnerable to taking out yearly low, lots of 6′s for this beast…but I think we see 50′s very soon…
Here’s the SPY weekly with the marked gap which isn’t far away:
http://i45.tinypic.com/14c9ogj.jpg
If you assume that some form of increased healthcare insurance will be passed, and it will, that may do it. I’ve seen numbers ranging from between 20% – 40% uninsured. If you don’t pick nits, and assume that 20% will be able somehow to get health insurance, then the healthcare system, and *anything* associated with that, will be absolutely catapulted into overdrive.
Just consider a 20% increase in patients. Now, remember that will probably include medical, dental, and vision. Practicing professionals could not possibly handle that rapid increase at the beginning. Here’s what would need to fire up very very fast.
Professional training (MD, DDO, etc.) -Universities/Colleges
(Let’s add student loans backstopped by the feds right here)
BA/MBA etc training – Same
Technical training (MRI techs, dental, etc) – Same
Office training – Same
Office hardware/software
Medical records – voice recognition and database
Network infrastructure
Supply chain logistics – Think lab supply stuff (blood work/screens; dental lab stuff, etc.)
Disposal – Medical waste
Medical REITS – Walk-in shops will probably explode.
and on, and on, and on.
Bottom Line: Joe’s gonna get all that stuff (like his knees, feet, teeth, etc, as well as start taking meds for his Type II diabetes and BP) fixed.
I could see that pumpin the whole thing up, but to what extent I don’t know.
Manuelstop,
Good stuff to think about. I could see that affecting other industries as well, from shipping to construction.
Here’s the headline in the current StockChart newsletter:
“Hello Fellow ChartWatchers!
I am thrilled to officially announce that StockCharts.com now provides free real-time charts and quotes for everyone.”
This free exchange data is from the BATS data provider which is the same provider that FreeStockCharts uses. That means the data does not come directly from the exchanges nor does it include Canadian stocks or for Pink Sheet stocks. Volume is not the same either.
The current StockCharts newsletter can be accessed via their website for more in-depth information.
Nison’s candlestick seminar replay:
http://www.forexprofitaccelerator.com/nison_20100122/
Manuelstop,
Yes, health care could indeed be a big jobs-creator – especially because much of the business would stay in the USA. Once day the ranks of American doctors will be wiped out by doctors in India operating remotely on patients in the USA with robots from companies like Intuitive Surgical (ISRG), but that day is not quite here yet.
Matt
another site to add to your evergrowing pile of bookmarks
contraryinvestor.com
Guys & Gals, Ladies and Germs.
I will be seen on here mainly after trading hours so if you have any comments to make to me please do them after 4pm as I feel i will be unable to skim the entire day’s comments.
Ahh the joys of school.. Lets see if i will really take over the fund or if i will fight for it tooth and nail.
Nighty! Make brinks trucks load of money. I’m 5% short and 95% cash.
Yes, I am still alive. (is that considered a tweet Phil?
)
Great chart Matt.
Manualstop–dental isn’t in the bill yet. We’ve managed to avoid major gov’t influx of money (so far). It may be coming though.
Here is my latest S&P chart. I’m scared. Looks like we are in iii of 3 of A in a correction. Some will argue it is iii of 3 of I of C and others will say we are in iii of 3 of I of [P3]. Guess what, they are all the same beast–iii of 3. That wave specifically should have the lowest RSI reading. On a DAILY basis, the RSI is only 36.85. We are NOT oversold yet. Yikes! On an hourly, we are at 16.6. In other words, scary downside yet to unfold.
Futures are “up” about 5 points as I write this. Let’s see where it goes. Good trading to all. Brinks trucks for us all.
Here is the link…sorry.
http://www.freestockcharts.com/?emailChartID=75572c4e-5e78-4d25-ab47-31696bc368fe
2thfixr,
I think you did that on purpose. That chart looks like a giant tooth in a monster’s mouth.
Where is that bottom trendline coming from?
That trendline is the 1550, 1400 tops from 07 and 08. The “bear trendline” I’ve heard so much about. A retest of it? Also note the 50% Fib line at 1115 from the 1550-660 highs and lows.
Futures are up even more…
Okay, thanks.
Futures Prices
Market Last Change %
Crude Oil 74.55 +0.01 +0.01
Natural Gas 5.765 +0.015 +0.26
Corn 364.75 -7.25 -1.99
Soybeans 951.5 -2.5 -0.26
30yr Bond 118.40625 -0.4375 -0.37
10yr Note 117.90625 +0.09375 +0.08
NY Gold 1098.3 +8.6 +0.79
NY Silver 17.14 +0.208 +1.22
Emini S&P 1096.75 +5.75 +0.53
Emini Nasdaq 1804.00 +6.25 +0.35
Emini Dow 10188 +37 +0.36
Here’s the spy 5MIN showing a bullish wedge:
http://i50.tinypic.com/rkptur.jpg
Yup, that wedge should bring on the B wave in the correction upwards. That same wedge is noted in pink on my chart. There is also another wedge riding the top of the steep drop on Friday PM that I think will keep wave 3 inside/below it.