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Market Direction Is Important –
Updated Chart of the S&P 500 and Secondary Signals
Of our Four secondary indicators under our MTI:
Relative Strength Index (RSI)-Negative
Chaikin Money Flow (CMF)-Positive
Money Flow Index-MFI-Positive
More on the Market and the Economy:
Stocks rose on Friday, erasing losses that followed the jobs report, with both the Dow and the S&P 500 posting their sharpest reversal in four years. Friday’s gains pushed major indexes into positive territory for the week, and the S&P 500 finished the week up 1%. Earlier in the week, the index ended a volatile third quarter with a 6.94% loss, the worst since 2011.
This week data will be released on the service sector, the trade deficit, consumer credit and the FOMC meeting minutes.
Speaking last Wednesday, IMF Director Christine Lagarde said there is reason to be concerned about the global economy, and that growth will likely be weaker this year. While advanced economies are experiencing a “modest pickup”, emerging economies continue to see declining rates of growth. “On the economic front, there is also reason to be concerned. The prospect of rising interest rates in the United States and China’s slowdown are contributing to uncertainty and higher market volatility. There has been a sharp deceleration in the growth of global trade. And the rapid drop in commodity prices is posing problems for resource-based economies…We see global growth that is disappointing and uneven. The ‘new mediocre’ of which I warned exactly a year ago — the risk of low growth for a long time — looms closer”.
The World Trade Organization cut its forecast for global trade growth due to slowing emerging markets, trimming its outlook to 2.8% for this year and 3.9% for 2016,noting that their concerns “include a sharper-than-expected slowdown in emerging and developing economies, the possibility of destabilizing financial flows from an eventual interest rate rise by the US Federal Reserve, and unanticipated costs associated with the migration crisis in Europe.”
The Atlanta Fed’s GDPNow forecast was lowered to .9% for the third quarter following the release of the advance report on international trade.
As the Fiscal Year 2015 came to a close last Wednesday, a few highlight numbers from the Committee for a Responsible Federal Budget:
“$13,142,733,278,888: Debt held by the public. Debt held by the public rose from $12.8 trillion at the beginning of the fiscal year to more than $13.1 trillion as we approach the new fiscal year.
70%: How much the deficit has shrunk since 2009. After recording a deficit in FY 2009 of $1.4 trillion, the Congressional Budget Office’s (CBO) latest projection for FY 2015 shows a deficit of $426 billion, 70 percent less than the 2009 deficit.
778%: How much the deficit grew between 2007 and 2009. The 70 percent drop in the deficit since 2009 followed a period when the deficit increased by nearly 800 percent, rising from $161 billion in 2007 to $1.4 trillion in 2009.
74% of GDP: Debt as a share of the economy today. Largely because of the Great Recession and policymakers’ responses, debt surged in recent years well above its historical average to 74 percent of GDP in 2015. This marks the highest total since World War II.
38% of GDP: The average debt as a share of the economy over the past 50 years. Since 1965, debt has averaged 38 percent of GDP.
$5 trillion: Ten-year deficit reduction needed to get debt back to historical average by 2040.Based on a reasonable path of deficit reduction, it would take $5 trillion over the next ten years to get debt back to its historical average by 2040.
$1.9 trillion: Deficit reduction needed to reduce debt to 70 percent of GDP in a decade.CBO projects that debt will reach nearly 77 percent of GDP in 2025. This means that it would take $1.9 trillion of savings over the next ten years to hold debt to 70 percent in that year.
$275 billion: Total amount lawmakers added to 10-year deficits in FY 2015. In addition to the $140 billion permanent doc fix, lawmakers added $40 billion to deficits from tax extenders, $30 billion through gimmicks in the CROmnibus legislation, and $65 billion from other pieces of legislation and interest costs.
199: Number of days since we hit the debt limit. The debt limit, which was last suspended in February 2014, was re-instated on March 15 of this year, but the Treasury Department has used “extraordinary measures” to avoid hitting the limit for the last 200 days.
1: Number of years until Social Security Disability Insurance (SSDI) goes insolvent.Although there has been plenty of discussion about SSDI lately, there has been no major action from policymakers, meaning that the trust fund is still set to become insolvent during FY 2017.”
As Manufacturing Day was observed on Friday, an infographic on the sector: