Bookmark and Share
Blog Post On: 4/23/2009

We review the MTR-TM from time to time for improvements. Back testing showed that even though the MTR-TM caught just about every major move in the market there were a couple of moves that were missed. This revised model has 12 more trades, 36% higher returns, and improved accuracy of trades.


Bookmark and Share   
Blog Post On: 4/22/2009

The MTR Economic Model (MTR-EM) was updated with March 2009 data. You can customize the chart below on the Economic Model page of this site.

The year over year percentage change of the number of people employed (blue line) continued to move lower in March in a sharpening pace. Real-Wages year over year (green line), which is deflated by CPI and multiplied by the number of people employed, broke a recent uptrend. Real-Wages (gray line) which does not consider the number people employed also retreated but by a fractional amount. This chart would imply that the the consumer is still under deep pressure to make ends meets. This in turn will impact company earnings and would imply the recent stock market up trend may not continue.


Bookmark and Share   
Blog Post On: 4/22/2009

In a recent article on RGE Monitor Nouriel Roubini expressed he view regarding growth and "Green Shots" (a term we shall surely get sick of hearing).

Article: End of Economic Gloom? Not as Early as You Wish

Mild signs that the rate of economic contraction is slowing in the United States, China and other parts of the world have led many economists to forecast that positive growth will return to the US in the second half of the year, and that a similar recovery will occur in other advanced economies

This consensus optimism is, I believe, not supported by the facts. Indeed, I expect that while the rate of US contraction will slow from -6 per cent in the last two quarters, US growth will still be negative (around -1.5 to -2 per cent) in the second half of the year (compared to the bullish consensus of +2 per cent).

Given this outlook for the real economy and financial institutions, the latest rally in US and global stock markets has to be interpreted as a bear-market rally. Economists usually joke that the stock market has predicted 12 out of the last nine recessions, as markets often fall sharply without an ensuing recession.

Given this outlook for the real economy and financial institutions, the latest rally in US and global stock markets has to be interpreted as a bear-market rally. Economists usually joke that the stock market has predicted 12 out of the last nine recessions, as markets often fall sharply without an ensuing recession

Newsletter: RGE 2009 Global Economic Outlook

Many analysts and commentators are pointing out that the second derivative of economic activity is turning positive (i.e. economies are still contracting but a slower rather than accelerated rate) and that green shoots of an economic recovery are blossoming. RGE Monitor’s analysis of the data suggests that the global economic contraction is still in full swing with a very severe, a deep and protracted U-shaped recession.

RGE Monitor’s analysis of the data suggests that the global economic contraction is still in full swing with a very severe, a deep and protracted U-shaped recession. Last year’s economic consensus forecast of a V-shaped short and shallow recession has vanished. While the rate of economic contraction is slowing compared to the free fall rates of Q4 of 2008 and Q1 of 2009, we are still a long way away from the economic bottom and from a sustained recovery of growth. In particular, in Europe and Japan there is little evidence of a positive second derivative of economic activity.

  • Job losses during the current global recession might exceed those in recent recession, contributing to increases in defaults and posing additional risks to banks. The unemployment rate in developed countries will reach double-digits by 2010 (as early as mid-2009 in the U.S.) and push more people in developing countries into poverty. Moreover, despite new funding from multilateral institutions, severe contractions will raise the risk of social and political unrest.
  • Commodities as a class are likely to come under renewed pressure in 2009 despite some support from production cuts. RGE expects the WTI oil price to average about $40 a barrel in 2009 as demand destruction continues to outweigh crude supply destruction.

Bookmark and Share