Monday, October 12, 2015

2nd Chance

Hi Folks,

On my August 21st post I said that if you did not sell or hedge your positions, not to worry you would get a 2nd chance.  We are in the midst of that 2nd chance in my opinion.  In the short term we could go back up near the highs.  I urge you to use this opportunity to sell or hedge your positions.

I also mentioned that I believe that we are already in a recession.  The technical definition of a recession is 2 consecutive quarters of negative GDP growth.  The real economy shows signs prior to the GDP releases.  The last 2 jobs reports have been awful and then revised even lower the following month.  The jobs numbers show a labor force participation rate of 62.4% which is the lowest in nearly 40 years.  This number is more important than the unemployment rate.  It shows that an alarming number of people are dropping out of the work force because of extended unemployment and no ability to find a higher paying job so they are forced to not work or to work part time.

The Q3 GDP number will be released on October 29th.  The street is expecting 2.5%.  It will be interesting to see what the number comes in at.  My guess is far below 2.5%.  Could this be the 1st negative GDP quarter to start the official recession?  It's possible but I doubt it.  My guess is much lower than expected and then possibly Q4 being negative followed by Q1 2016 as a negative as well.

Thanks and Good Trading,


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