Investiv Daily Has Arrived

[Major Indicators Are All Positive, But Is It Time To Get Fearful?] By Sven Carlin on July 7, 2016 [pexels-photo-4] - Economic data is strong and positive. - Neither jobless claims nor consumer spending show signs of weakness. - The issues remain in valuations, optimism and low yields. Introduction In the post-BREXIT world, there is a lot of speculation but no one knows what will happen. This article is going to provide a general outlook on how the economy is doing and try to extrapolate trends while ignoring the noise provided by the media. Unemployment As initial unemployment claims are reported on a weekly basis, the number can be used to forecast the monthly job report. On Friday the Bureau of Labor Statistics will release its job report for June. The previous report was scary with 38,000 jobs were added, but the number of initial unemployment insurance claims still remains at multi-year lows as well as the current unemployment rate, which sits at 4.7%. [figure 1 jobless claims] Figure 1: Initial unemployment insurance claims. Source: [FRED]. [figure 2 unemploment rate and claims] Figure 2: Unemployment rate and claims since 1990. Source: [FRED]. By plotting the unemployment rate and claims we can see that the unemployment claims precede changes in the unemployment rate. Any increases in jobless claims are clues that there may be trouble brewing though the market may not recognize it yet. What’s most alarming about the above data is the impossibility for the unemployment rate to stay stable. As it is coming close to the natural unemployment rate, we should expect a trend shift in the coming years, though what we cannot know is if the unemployment rate will drop lower or if it will go up next month. [Why This Trading Genius Makes Money On Almost Every Trade He Makes] 89 of his last 92 trades have been profitable ... That’s a 96% win rate! Now he wants to send you his exact trades and teach you his strategy. [Click Here To Learn More!] [Easy-to-use Signal System Picks Stocks With Uncanny Accuracy] Here are several stocks our system said to buy: WNC shot up 288% after system said BUY VCI shot up 233% after system said BUY ETM shot up 953% after system said BUY Plus ... get over $398 worth of valuable books, videos, and reports just for trying this system risk-free for the next 30 days! [Click Here To Try It Risk-Free For The Next 30 Days!] Consumer Spending Consumer spending is growing and shows no indications of slowing down. A slowdown in consumer spending is also a leading indicator, and only after it begins to drop does it indicate trouble in the economy. [figure 3 consumer spending] Figure 3: Consumer spending and GDP. Source: [FRED]. Similar to consumer spending, the consumer sentiment index is a great signal for forecasting a recession. The index hit its lows in the midst of 2008 while the deepest part of the recession was half a year later. It is now at its pre-recession highs, which would indicate there is no trouble for now. Since consumer spending is still strong and consumer sentiment sits at its pre-recession highs, neither of these indicators point to trouble in the short term. [4 figure consumer sentiment index] Figure 4: Consumer Sentiment Index. Source: [University of Michigan]. Inflation Inflation is tame compared to the 1980s, but it has picked up somewhat since the Great Recession indicating the economy is healthier. Over the last 12 months, overall [prices] increased by 1%. Energy prices are at multi-year lows and favorable weather conditions have brought high crop yields which lowered food prices, therefore 1% inflation rate should be considered very good. [figure 4 consumer price index] Figure 5: Consumer price index (1984 = 100). Source: [FRED]. Issues With The Above Data With all of the favorable data, it might be tempting to pay higher prices for riskier assets, but that is exactly the biggest trap such economic indicators create. A closer look at the above data shows that current indicator levels are similar to those from 2007, so even though they are all positive it might not be the best time to be heavily invested. Keeping in mind the essential investing quote of “being greedy when other are fearful and being fearful when others are greedy,” this might be the time to be fearful and wait for a future recession to be greedy. [figure 6 sandp gdp] Figure 6: S&P 500 and GDP since 2007. Source: [Yahoo]. The market is far more volatile than the economy because investors tend to be overoptimistic in good economic times—as is the case now—and overly pessimistic in a recession. As all indicators are at their best levels, it is time to be fearful. The issue here is that this is contrary to human nature as we are social creatures. Doing things differently than the rest of the pack makes us very emotional, but investors have to learn how to set emotions aside as markets and money have no emotions. Valuations Except for the fact that the market is finding it very difficult to grow and all economic indicators are more likely to worsen than improve in the next few years, another important indicator—which is the result of the positive economic developments—are valuations. Simply put, relatively high valuations increase the risk of holding stocks and minimize long term returns. With 7 years of positive economic developments, investors should carefully analyze growth and clearly separate the growth coming from the general high liquidity artificially created by the FED, and real business qualities. A good way to do that is to look at debt levels. If revenues increase slower than a company’s debt level it means that the return on capital is lower than the cost of capital. Such a situation can be sustainable in an economic growth cycle but comes to an abrupt end at the first signs of a recession. Conclusion One has the be foolish to look only at the positive economic indicators and assume that everything is good and being long stocks is the best option. Stocks will be the first to react if any of the forecasting economic indicators turn negative, so [careful stock selection] is the only option to preserve capital in these uncertain times. Other risks come from exuberant optimism which inflates asset prices as well as low yields, which pushes investors toward stocks in search of higher yield, but which also comes with higher risk. As we do not know when the economic winds will change, the current market volatility gives great opportunities to increase portfolio returns with well placed trades and a more [active investing strategy]. [No Comments »] | Filed under: [View all posts in Investing Strategy], [View all posts in Investiv Daily], [View all posts in Jobs Report], [View all posts in Market Forecast], [View all posts in Recession], [View all posts in US Economy] | Tags: No Tags --------------------------------------------------------------- If you are having trouble reading this email, you may [view the online version] This email was sent to {EMAIL} by Investiv, LLC 3400 North Ashton Blvd. | Suite 170 | Lehi | UT | 84043 [Forward to a friend] | [Unsubscribe] Disclaimers Investing is Inherently Risky There are risks inherent in all investments, which may make such investments unsuitable for certain persons. These include, for example, economic, political, currency exchange, rate fluctuations, and limited availability of information on international securities. You may lose all of your money trading and investing. Do NOT enter any trade without fully understanding the worst-case scenarios of that trade. And do NOT trade with money you cannot afford to lose. Past performance of an investment is not necessarily indicative of its future results. No assurance can be given that any implied recommendation will be profitable or will not be subject to losses. Hypothetical Results Are Reported Results and examples used in the Company’s advertisements, books, videos, websites, and other media—including on the Site and the Network—are, in some cases, based on hypothetical (simulated) trades. Plainly speaking, these trades were not actually executed. Hypothetical performance results have certain limitations. Unlike an actual performance record, hypothetical results do not represent actual trading. Also, since the trades have not been executed, the hypothetical results may have under-or-over compensation for the impact, if any, of certain market factors, such as lack of liquidity. Hypothetical trading programs generally are also subject to the fact that they are designed with the benefit of hindsight. Hypothetical results also do not account for commissions or slippage. The Company’s simulations assume purchase and sale prices believed to be attainable. Yet traders are going to be getting into trades at different times and using various exit approaches, which may result in different pricing and outcomes. You may or may not receive the best available price on the purchase or the sale of a position in actual trading. Information provided by the Company is not investment advice. The Company is not a registered investment adviser, stock broker, or brokerage. You agree that the Company does not represent, warrant, or take responsibility that any account will or is likely to achieve profit or losses similar to those shown. Examples published by the Company are selected for illustrative purposes only. They are not typical and do not represent the typical results of all stocks within the Company’s software or its individual scans and searches. No independent party has audited any hypothetical performance contained at this Web site, nor has any independent party undertaken to confirm that they reflect the trading method under the assumptions or conditions specified. Offers Disinterested Commentary and Analysis The Company does not receive any form of payment or other compensation for publishing information, news, research, or any other material concerning specific securities on the Network that is intended to affect or influence the value of securities. The Company, and its personnel, do not engage in front-running of recommendations and do not trade against one’s own recommendations. The Company and its management may benefit from an increase or decrease in the share prices of the profiled companies, and/or may have other actual or potential conflicts of interest. If a particular security featured in a newsletter publication is concurrently owned by the Company in its corporate brokerage account, or in any of the individual accounts of the Company’s principals or analysts / writers, that fact will be disclosed. The Company, its principals, analysts and writers may choose to purchase a security or derivative featured in one of its newsletter publications, but typically will wait three (3) trading days from the date of publication before initiating said purchase. [Disclaimers, Terms & Conditions] | [Privacy Policy] Copyright 2016