Manufacturing Employment, New Orders & Production Fall Fastest Since Apr-Aug 2009

An ugly report. How will it impact the overall economy?

By Wolf Richter for WOLF STREET.

US manufacturing took a turn from lousy to worse in December, according to the Manufacturing ISM Report On Business, released today, with employment, new orders and new export orders, production, backlog of orders, and inventories all contracting.

The overall Purchasing Managers Index (PMI) dropped 0.9 percentage points from November to 47.2% in December 2019, the fifth month in a row of contraction, and the fastest contraction since June 2009. Values below the 50% mark signify contraction, values above it signify growth (data via YCharts):

PMIs like the ISM report are private-sector measures, based on how a panel of manufacturing executives – names are not disclosed – see new orders, production, employment, etc. at their own companies in the current month (December). PMIs are the timeliest measure.

In terms of demand: The ISM’s New Orders Index dropped to 46.8%, the fifth month in a row of contraction, with new export orders having been in contraction mode in five of the past six months, and “recording 10 months of poor performance and likely contributing to the faster contraction of the New Orders Index,” the ISM report said. The contraction in the New Orders Index was the fastest since April 2009 (data via YCharts):

The Employment Index fell to 45.1, the fifth month in a row of contraction, and the fastest contraction since August 2009 (data via YCharts):

Order backlogs contracted for the eighth month in a row to 43.3 as manufacturers have been eating into their backlogs while new orders have declined.

The Production Index plunged nearly 6 percentage points to 43.2, the fifth month in a row of contraction and the fastest contraction since April 2009 (data via YCharts):

The executives on the panel of the Manufacturing ISM Report represent 18 manufacturing industries. Only three industries reported growth in December – down from five in November:

  • Food, Beverage & Tobacco Products
  • Miscellaneous Manufacturing
  • Computer & Electronic Products.

The remaining 15 industries reported contraction in December, with Transportation Equipment being the weakest.:

  • Apparel, Leather & Allied Products
  • Wood Products
  • Printing & Related Support Activities
  • Furniture & Related Products
  • Transportation Equipment
  • Nonmetallic Mineral Products
  • Paper Products
  • Fabricated Metal Products
  • Petroleum & Coal Products
  • Electrical Equipment, Appliances & Components
  • Textile Mills
  • Primary Metals
  • Chemical Products
  • Plastics & Rubber Products
  • Machinery

While the declines were very broad affecting 15 out of 18 industries, December also saw some big special items: Boeing suspended production of the 737 Max and GM’s strike bled into the beginning of December.

How hard will this hit the US economy?

Services-producing industries amount to the equivalent of 70% of US GDP by value added, and to 80% of the private sector economy.  In the third quarter, revenues by the services-producing industries rose 4.9% from a year ago. In the Finance and Insurance sector, the biggest of them all, revenues soared 6.6%; in health care, revenues grew 4.4%; in professional services and information services – which include the tech and telecom sectors – revenues grew 6.0% and 5.8% respectively.

We have to wait a little while for the detailed Q4 services data to emerge, but at this point, there are no indications that there was a sharp deterioration in Q4.

But with manufacturing deteriorating at this pace, and based on the historical relationship between manufacturing and the rest of the economy, the ISM Report estimates that the December manufacturing index value corresponds to a 1.3% increase in real GDP in December on an annualized basis, which would be a lot slower growth than the range between 2.5% and 2.1% over the past four quarters.

“The capital markets for oil and gas remain extremely difficult.” Read… Dallas Fed Outlines Somber Oil & Gas Industry, “Flaring” of Natural Gas Comes into Focus

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  91 comments for “Manufacturing Employment, New Orders & Production Fall Fastest Since Apr-Aug 2009

  1. A says:

    I’m calling the bottom here.

    Trump and the FED see the same data we do. That’s why the FED pumped the market and Trump surrendered on his china trade war. All that will turn around the economy.

  2. naive98 says:

    your market short is looking good, wolf… i’m with you on that

    It will be interesting to see the effects of the fires on our economy here in Oz

    • Old-school says:

      I like to look at the different historical valuation metrics. I checked out several today. Gurufocus market to gdp is estimating -2.7% annual return next 8 years. Crestmont has a great scatterplot of 150 years and valuation using their method just hit highest ever. Hussman method is highest ever. I saw another method regression to the mean that showed highest ever with just crossing the 3 sigma line. Only other time crossed was tech bubble.

      I like to look at it on a two factor basis. There is no doubt we are set up for a great fall in asset pricing on the valuation factor. It’s really the timing now which is more a confidence thing.

      Timing is the most difficult element to get right. Wolf just might do it. At least anyone cashing out of the sp500 at this level can say they are cashing out at the highest valuation in 150 years. If you are shorting you can say you are shorting at highest level. If it keeps going there is more pain being short, but I think the logic is sound if you just don’t get washed out of your position by losing faith in your decision.

      • Bobber says:

        The way I look at it, shorting is recreation and should be done only with a small percentage of your capital. Why not be patient, hide out in short term bonds, and wait for the 10-bagger stocks that will surely come down the road after SHTF. You might have to wait 2-5 years, but so what.

        As prudent investors, we have lots of time to wait this out. The Fed, on the other hand, is running out of time.

  3. 2banana says:

    With the Iranian issue and oil prices heading higher.

    I am wondering what Wolf would think.

    Overall, a net positive to the American economy?

    • HowNow says:

      Wow, 2banana. I guess it follows that if we wage war on Canada our GDP will soar.

    • The last two times oil hit 72 dollars a barrel Trump got on the phone both those afternoons and the bottom fell out of the oil market the same day he made those phone calls in the afternoon. West Texas can never get above 72 dollars a barrel with Trump in power.

  4. Bobby 1971 says:

    Yes, good question! Would the dollar go lower if more US military spending resulting in less S&P foreign earnings and potentially profit warnings? Higher gas prices for consumers that also need to buy new iphones. So many moving parts!

    • Bobby 1971 says:

      reply is meant 2 banana.. A sign of a wacky market. Market isn’t moving much on the ugly ISM report.

      • Unamused says:

        Market isn’t moving much on the ugly ISM report.

        If at all. It’s expected. This phase of the liquidation of the US economy has already been priced in. It was priced in higher, years ago. The decline of US manufacturing weakens the position of US workers relative to that of Wall St., and that’s a primary strategy and goal of the Masters of the Universe.

        That manufacturing been treading water since 2009 has been of no real concern because Wall St has long militated its decline as the long-term trend. Only his gaslighted minions believed him when The Chosen One promised to bring manufacturing jobs back to the US, and Wall St. just chuckled at the bluster.

        • 2banana says:

          Turn those machines back off!

          Americans can only sling coffee and flip houses after the magic one was done structurally transforming the economy.

          The Trump Manufacturing Jobs Boom: 10 Times Obama’s Over 21 Months

        • Wolf Richter says:


          Check the date of the article you linked: Oct 2018, at the peak of the manufacturing boom that has now turned to bust.

        • 2banana says:

          Even more recent articles.

          Trump’s Policy “Magic Wand” Boosts Manufacturing Jobs 399% In First 26 Months Over Obama’s Last 26

          “In fact, over the past 26 months, there were 168% more jobs in manufacturing created than in government, while during Obama’s last 26 months, there were 303% more government jobs created than in manufacturing. This was not sustainable. Government jobs don’t pay for themselves.”


          U.S. enjoys best manufacturing jobs growth of the last 30 years


        • Wolf Richter says:


          Good lordy, I’m getting worn out by this fake political interpretation of whatever BS. Here are the total number of employees in manufacturing. I marked roughly Obama’s and Trump’s reign. Note that the curve has now turned down. And note what happened under Bush and prior Presidents:

        • wkevinw says:

          The macro-economics textbooks said (and still say – according to the quackery that is today’s economics profession), that the global markets would create more wealth. At the macro level, for a certain period of time, they were right.

          The big problem is that the “rules of the game” in the different economies are NOT accounted for in these economic models.

          The GDPs continue to rise! But, the working class is suffering.

          They are still saying the “service” economy (read “servant” economy) is even better than the old days.

          This whole thing in the developed economies has turned into crony capitalism coupled with redistribution of wealth. They have to buy the working class- which is a lose-lose. (see the mental health and drug abuse stats)

        • Nicko2 says:

          The working class in developed economies like the US continue making poor political choices. Meanwhile, the middle class across the developing world/emerging markets continue rising.

        • Crush The Peasants! says:

          The arrogant dopes at UC Berkeley were preaching this version of economic Kool-Aid during the late ’80’s.

          I actually took a course taught by Yellen, who seemed like an old kindly and clueless grandmother even then. Laura Tyson was an equally clueless dogma regurgitater, but with decent legs, which I am sure Bill found stimulating.

  5. John says:

    Hey Wolf,
    Looking good next week, 72 billion coming out from what I read about reverse repo’s. Iran too! Watching with you and your readers. Brilliant!

    • David Hall says:

      Construction spending surged from .1 to .5 in today’s report. That might bump up GDP growth a bit.

      I went to the mall today. Sears once anchored one end. That empty space has been vacant since the Sears bankruptcy. With little traffic at that end, small shops also closed and boarded up. JC Penny is rumored to be having problems. The food court was full for lunch hour. I looked for a pair of shoes. They did not have my size in the style I wanted. I wrote down my favorite brand on my iPhone and decided to shop online.

  6. Why don’t they say to every Mexican worker who is manufacturing a US product at a fraction of the wages, come to the US, where you can make $20 an hour. Our tax revenues will increase, the healthcare costs for younger workers is minimal. I am just paraphrasing some Greenspan boilerplate, but it bears repeating. With labor this tight, why is manufacturing slowing down?

    • Unamused says:

      With labor this tight, why is manufacturing slowing down?

      In manufacturing circles it’s common knowledge that Wall St. will try to punish firms that are determined to stay domestic.

      • Lisa_Hooker says:

        Planning a roadshow to fund your software startup? Venture capitalists won’t even consider you unless you have offshore development written into your business plan.

        • Unamused says:

          All too true. US software and systems engineers have long been seen as insufficiently subservient. Two million in the US were systematically replaced with south Asians twenty years ago, regardless of relative ability.

          When IT took over the heart of modern company operations – finance, accounting, marketing – having non-management workers involved with IT put management control of the firm too much at risk. That’s why domestic IT workers are typically disempowered foreign imports and temporary contractors now, as an alternative to offshoring which is also seen as putting management control at risk. Relative cost may also be important but is a secondary issue.

    • rhodium says:

      Well depending on who you are you might claim it’s the inventory buildup hangover from trying to frontrun tariffs. Depending on who you are, you might then say this is momentary because the best trade agreement ever is coming any day now. Depending on who are though, you might just be a pessimist or an optimist screaming recession or growth forever, especially because of how you vote or your tinted outlook on life. Just whatever you do, keep buying stocks, reshort Tesla at 700, and make sure you finish all that eggnog before it goes sour. Right?

    • Nicko2 says:

      Maybe…just maybe….the average American consumer is close to tapped out.

      • MD says:

        I’m sure some new ‘financial innovation’ will sort that out.

        The 25 year ‘automobile mortgage’, perhaps? Your shiny new car for no cash down and only $25 per moth!

        • Jim Shea says:

          That’s a good deal in the winter up here in NE, but come the Spring and Summer, there are too many moths to make that work?

  7. Ken Honeycutt says:

    Not sure if this means much, but the resort we’ve been going to for the last 4 years has always been 95% booked during our stay. This year it is down to 80%.

  8. Brant Lee says:

    Maybe it would help if one could actually buy any USA made products at your favorite retailer. Walmart and Amazon seem to think it’s the last resort to stock US made items. If I had a choice on shelves between Chinese and US, I wouldn’t mind, in most cases, paying more for domestic-made.

    • Unamused says:

      You have a lot of company, but Wall St. prefers otherwise:

      . . . according to a BCG survey, 80% of American consumers would be willing to pay more for American-made goods—and nearly a quarter of them willing to pay a price premium of at least 10% across all categories of goods surveyed—, and 60% reported having done so in the past month. These numbers are corroborated in a 2013 Gallup poll indicating 64% of American adults would be willing to pay more for a good manufactured in the U.S. versus a comparable good manufactured elsewhere.

      It has always been known that the offshoring of US manufacturing has been engineered for the benefit of Wall St., even though it is contrary to consumer preferences, contrary to market forces, and even contrary to the preferences of many US manufacturers. This situation contributes to the view that the US economy is being liquidated for purposes of profiteering, not in the interests of the country or its people.

      • Root Farmer says:

        Interesting article. Unfortunately, the continued squeeze on most consumers over the 4.5 years since that was published has most likely continued a poor trend, i.e., consumer emphasis on finding lowest cost over perceived quality and local impact. After some time, a principled stand such as reinvesting purchase dollars locally, seems such a terribly lonely position when so many forces are glorifying the low acquisition cost, ignoring the externalities. A recurring question of life: Do I maintain a principled position or accept the inevitable? As the article points out, principles and behavior may never be at one.

        • Unamused says:

          Always vote for principle, though you may vote alone, and you may cherish the sweetest reflection that your vote is never lost.

          – John Quincy Adams

      • Escher says:

        Is is true that consumers will pay more for US manufactured goods, or will the mega corporations simply have to adjust their earnings to more realistic levels?

  9. Mira Konestabo says:

    It is the same scenario in Australia
    Terrafirma is eroding at an even pace
    Dear God in heaven what is to become of us
    Should we .. the population of the Western world move ??
    Would it be a beneficial tactic
    Beneficial to us persons of western origins
    Beneficial to the developing nations of the 3rd world
    If we migrated to developing nations ??
    I’m not kidding
    How would it change the dynamics of the world
    Peace wise
    Labor wise & every other wise
    If we moved to 3rd world nations
    An exodus
    Like the pioneers from Europe all those years ago
    Would it
    Could it change the world& for the better ??
    The current establishment rely’s on our compliant .. sedentary behavior
    Let’s surprise them .. we need it & so do they.
    Happy New Year to All.

    • John Taylor says:

      If moving to third world nations is so desirable, then why do we have so much immigration and demand for immigration into developed countries – including the US, Europe, Australia, and so on?

      Being an underpaid worker in a 3rd world country is not a desirable situation.

      Free trade simply means that manufacturing moves to regimes that are willing to exploit their workers the most and protect the environment the least.

    • HowNow says:

      Interesting proposition, Mira. But consider: the migration of Europeans to America, Central America, South America, and even Australia resulted in the near-complete destruction of native peoples. You suggest that a migration from Oz might generate “world peace”. Wonderful notion, but is it at all likely? Early migrants to the U S from Europe… some came due to religious persecution. In short order, those who were persecuted turned 180 degrees and became persecutors.
      I’d love to think that somehow humans have learned something about living with other humans and animals. You, in Oz, are witnessing the damage that global warming is bringing and your PM is in total denial (well, his political career depends on it). What’s the prospect that anyone in the “Western” world has learned to behave with decency toward other living things?

    • Or bring the 3rd world economy to us.

  10. van_down_by_river says:

    And yet the market is unfazed.

    Gosh, I wonder where all that money could possibly come from?

    Doesn’t seem to be any shortage money flowing through Wall Street these days – those guys must be really productive to earn that kind money.

    A fool knows the cost of everything but the value of nothing. 140 hours of the typical American’s pay can buy one share of the S&P 500 but the value of that pay over time is a bag of pooh.

    • Unamused says:

      Which suggests that a share of the S&P 500 equals that of a bag of pooh, which makes shorting the market something that’s done by people who know their sht.

      I am quiet now.

  11. Paulo says:

    You guys are forgetting that next week is Infrastructure Week. :-) Think of all the new and real jobs! Meanwhile, Iran…….

    Unintended consequences, abound. The weather makes more sense than this economy as far as I’m concerned. Services makes up almost 70% of the US economy and medical costs/spending comprise the bulk of that. Almost a pun, but that doesn’t sound healthy to me.

    Want a laugh?

  12. Ed Walsh says:

    I think we are now in the Bonnie and Clyde days except for the fact that the characters now involved are wearing neckties and everyone gets absolution for their part in the money scam!

    • echodelta says:

      I would say Dillinger per Woody Guthrie, but maybe that’s no longer a thing.

    • NBay says:

      Very good analogy, and especially so when one considers that a huge part of the population is rooting for them, just as before.

  13. james wordsworth says:

    An alternate data point. A large university in our neck of the woods runs an excellent co-op program (primarily engineering related) with students often in high demand. However, this term things are far worse than normal with a quite low employment rate compared to average numbers. It tells me that companies are starting to pull back some. An early indicator perhaps as often the students they hire as co-ops end up being full time hires later on. If they are cutting back now, what are they thinking about the future?

    • Jackson says:

      C-Suite Compensation…

    • 2banana says:

      It is a single data point.

      I was recently consulting at a large space related business.

      Largest crop of engineering interns and coops ever.

      Management decided to give them all job offers (upon graduation). Every single one. To include the freshmen.

      Nice to know that a job is waiting, even three years out.

      • Unamused says:

        Management decided to give them all job offers (upon graduation). Every single one. To include the freshmen.

        Freshmen? Really? They haven’t done the work of education, don’t have any useful training, and aren’t going to be hired as if they did. If you’re going to write fiction you have to keep it plausible.

      • NBay says:

        I bet I can predict your take on Paulo’s link above.

    • Lisa_Hooker says:

      They are planning on moving engineering to the well educated STEM graduates in other countries where salaries for engineers, hard and soft, are much lower than in the US. High-speed global internet.

      • Paulo says:

        About 20 years ago I used to teach Auto Cad at a local high school/college. Students transitioned right into the college program and from there to local engineering firms. It soon became apparent those jobs no longer existed as the scut work of design was done overseas and electronically transferred.

        My son works in the Oil Patch and engineering has been contracted out for most construction, and has been for years. India.

        The only engineering I see these days is the privatisation of building inspection, where permits require a sign-off during construction phases; rebar inspection, etc. This all used to be done by a low level municipal employee, and now costs are borne by the eventual homeowner as part of the building costs. I also see on-site grade inspections for new road construction.

        And who did Boeing’s software for the Max 8?

        • Implicit says:

          True that. The testing of cement, rebar and metal structual stability for building inspections has treated an engineering cousin well.

  14. Breta says:

    Except Tesla…
    Firing on all cylinders … no, all cells. ?

    • Wolf Richter says:

      Tesla is even more ludicrously overvalued now than it was two days ago. Tesla reported 367,500 GLOBAL deliveries in 2019. This just 6% of GM’s global deliveries of 6 million. Tesla is losing money, GM is making money. Yet, Tesla is valued at $80 billion; GM at $52 billion.

      Do you see how nutty Tesla’s valuation is?

      • Andy Fanter says:

        Wolf, Tesla is another ” cult ” stock like Chipotle, Apple, Shopify, Carvana. People loving the product or service translate that love into owning the stock with no research of company financials. I have made big gains riding all of the mentioned stocks at some point, but never let any get bigger than 10% of the portfolio.

      • The price of Copper, or rather the ETF, has been catching a bid. Crude is out of sync as well. In the 70’s drivers were stuck with gas guzzlers when prices went up, and Honda couldn’t keep cars on the lot. Alternate explanation Tesla will get a fat DOD contract. With Star Wars, I mean US Space Force, there will reasons to sell a few missiles, I mean rockets.

      • Mike - Tuna hunter :) says:

        Yes, true, Tesla reported 367,500 deliveries in 2019. Not a big number for skeptics. However, if you were a Tesla fan (maybe one day you will be :) ) then you would be super excited because not too long time ago Tesla had challenges delivering 100 cars a week. Each car earns 20% profit for Tesla and they reinvest the money. They also build charging stations, a whole network of charging stations. GM has $70 or $91 billion debt, huge number, plus other liabilities and old factories producing legacy tech cars. Tesla now has 4 or 5 state of the art factories, only $11 billion debt, the latest/best self-driving technology and the only true battery factory (or two) on planet Earth. Plus one more thing that Tesla has: hundreds of millions GM/Mercedes/BMW/etc.. customers who are sick and tired with the fact that as soon as their car’s warranty expires their car is a junk, a big “check engine” garbage.

  15. Breta says:

    Clinton attacked Iran too when he was being impeached. The distraction worked that time. Will it work again?

  16. Worldly says:

    The market has written off US manufacturing, so forget about it.

    As Wolf stated in an earlier article, it’s the US service economy that matters and that’s doing great. I’m sure banks are expanding sub-prime credit card offerings and there no limit to how much credit the Fed can extend.

    I thought car loans were dead, but they keep coming up with more creative measures to extend more car loans.

    This is a credit based economy, and the old ways of ‘work= money’ have long since died. The market views Wolf’s ISM charts as being the minimum and its only up from here.

    Things are likely much better for the US than they appear. The strong dollar will keep things afloat much longer than most would think possible. Everywhere I see new housing being built, and the recent spike in oil will be a big contribution to US GDP. War with Iran might possibly spike US GDP!

    • MD says:

      Hmmm well I guess the question therefore is how long can the pretence be extended – how much more debt can you foist onto people to give the false impression of prosperity before the whole thing implodes?

    • Paulo says:

      Foreign wars work real well. Just ask the Romans. Of course then they had to pay costs with stolen and confiscated silver. These days it’s paper and digital. No, this is not an enduring situation. It’ll eventually come down to basic necessities and who owns them.

      Spike GDP with war? You didn’t know GDP is an acronym for God Damn Proxies, did you? This is a mess. It’ll never end until printed deficits to pay for absolutely everything has totally debased the currency. And then, it will be too late.

    • Endeavor says:

      In Metro Detroit badly needed strip malls are being constructed and lining the streets everywhere but the inner city. The hungry can find a sub sandwich shop every 800 ft. If you are into vaping you have the ability to create clouds of smoke like a San Francisco bay scene. Nail shops, pizza parlors and Thai food carry outs galore. Lots of parking as the shops tend to have few customers.
      I’m old enough to remember driving past hundreds of small factories and tool and die shops to go to the relatively few but busy retail centers. How is this working out? Well, just pegged this area as #182 out 182 cities for economic gumption.

    • NBay says:

      They had a fund called the “Vice” fund years ago, honest! The 4Bs.
      Booze, Bombs, Babes, and Betting. Pre FC, IIRC.

  17. Willy2 says:

    – It only confirms what the data on the (shrinking) Trade Deficit say.

  18. Nicko2 says:

    Yea….high dollar and high oil aren’t too healthy for the US economy long term.

    • tom cahill says:

      Actually, now the high oil price helps us as the worlds largest producer.

      • Frederick says:

        We are also the worlds largest consumer( waster) of petroleum products so I doubt that is true It would probably help the frackers from burning even more investors cash though

  19. Realist says:

    Q1 will be interesting because of Boeing …

  20. Andy Fanter says:

    The decline in manufacturing jobs should not be difficult to understand. The US can produce machinery: construction machinery has been up, agriculture has been down, aircraft starting to decline, oil and gas drilling declining but pipeline good, autos declining slightly, steel industry weakening. Add in some trade wars and dollar value a little too strong and result is a decline in manufacturing.

  21. Keepcalmeverythingisfine says:

    The report tells me that we are building fewer buildings, fewer transportation products, fewer oil and gas wells/equipment products, and the outsourcing of apparel/textiles/printed materials to Asia continues unabated. These sectors have not bottomed and have breached the 2016 slowdown lows. The “save” that the Fed engineered in Q4 appears to have not stopped the slide in these sectors of the economy and it makes sense to wait for a bottom. A severe slowdown in the services sector of the economy is not apparent. Slow overall growth ahead at best. Stock prices to remain elevated due to Fed money printing. As an investor, nothing to get excited about yet, and Wolfe’s big short still seems to be too early.

    • Bet says:

      The spx and the ndx are putting in long term negative divergences. Higher highs on lower indicators. This Means markets are going up on less gas. On fumes. On FOMO. Wallstreet has finally found their muppet bag holders. Wolf might be a few weeks early. But high odds will be rewarded. Watch AaPL. Heavily weighted in indexes. Hugely parabolic on declining sales and growth. Fewer soldiers Are leading the way up. Nosebleeder smallies like SHOP get whacked first. 2020 going to be a very interesting year

  22. Augusto says:

    Current slow down looks a lot like 2015-16. Back then I thought we were all going down. However, recession was avoided by major Chinese government and Central Bank intervention. Now it seems every government and central bank in the world are easing and stimulating to keep the Everything Bubble from popping. Can they do it again, this time that is?

    • A TEAM says:

      I’ve heard the current central bank intervention into a slugglish world economy is umprecedented.

      We have

      1. Fed stimulating
      2.Japan stimulatin
      3. ECB stimulating
      4. China stimulating
      5. Various other banks (Canada coming soon!)

      And all that stimulation has just begun. It will likely increase in intensity. Central banks are a hammer and every problem is a nail.

      So it is understandable why people are buying stocks hand over fist waiting for at least a minor bounce. One day many decades hence this will stop working. But for now…

    • Keepcalmeverythingisfine says:

      I got faked out by the 2016 slow down too, sold and then had to buy back in at a higher level. Here we are again, and the central bankers are doing what they do, print. That save in Q4 was enough to convince me they will prevail again with regard to stock prices, so as long as the central bankers are printing I am staying pat. I’ll buy the S&P 500 if we get a decent pull back (5-10%), I guess I am taking the opposite side of the trade as Wolfe.

  23. Implicit says:

    The financialization of the economy continues with an accelrating debt issue. One could hypothesize that we are a big Japan, but with a smaller export to GDP ratio.
    We are not immune to the laws of physics, and the gravitational weight of the US economy with the incomprehensible number of the various weighted variables that affect/effect outcomes. These weighted variables will not allow the US economy to ratchet lower at the same speed as the smaller Japan.
    The gravitational pull of our size and the myriad of variables will become harder to juggle, and time of descent will accelerate as the massive size will warp the time/space more quickly than Japan.
    One weighted major variable is that most people don’t think it will happen. A necessary constant for life is change.

  24. Implicit says:

    Place your bet according to your inflection point bias ;>[}

  25. Randy says:

    Many people are betting this will end like 2009. I don’t think so. I think there’s more power to be had for the elites if they go the high-inflation route, and maybe even hyper-inflation (say over 20%).
    The 2008 collapse made Obama. The 2020 collapse wouldn’t be good for powers that be.
    I have no proof for this. Just a gut feeling. It’s just that so many folks expect the repeat, the “Greater” depression and what not.
    Seems to me dollar printing galore until around 2030, then dollar loses reserve currency status, slowly, and then suddenly.

  26. Implicit says:

    Your not alone in feeling that way. But is it mathematically possible for things to go that far before a collapse, or at least a 20% correction?

  27. Lucy's Fur says:

    Great, so we end up with an America that can’t make anything, but which has lots of rich, obnoxious lawyers, bankers, brokers and dealers. Welcome to Hell.

  28. WSKJ says:

    First, good luck with the big short, Wolf.

    I continue standing pat, largely because most of my holdings have withstood several major market crashes/corrections, and I consider them likely to withstand another crash. That doesn’t mean that losing half of my stock portfolio valuation is of no concern to me. I should probably Do Something. (have made a few stock sales in the last 5 years, so the broker accounts are partly cash)

    The other consideration that has occupied my thoughts about the market (and where my portfolio is headed) is the question as to what sort of Something the Fed will Do, at the next temblor. You have to think that the Fed will Do Something to forestall a big market crash. Sure, it will be something that will take assets from the smallholder, and shift them to the Wall Street bulwarks. And, yes, the Wall Street clowns (sorry to those with coulrophobia: I think I had to mention clowns here).

    And the longer that XIRPs and NIRPs have continued, the more likely it is that whatever intervention the Fed next undertakes, will progress from heroic intervention to life-support of a brain-dead patient.

    ( the use of “heroic” above, in the sense of “grand or grandiose in scale or intention”)

    After the last 12 years of CB actions, it is hard to imagine the Fed administering extreme unction to the market.
    What will they do next ?……Weekend with Bernie ?

    And, yes, let’s remind ourselves that the length of time that bad design stands up to Gravity is borrowed time .


    It’s always worth looking at Advisor Perspectives, for which Wolf provides a link. They have calculated for some years now that the market is very much overvalued.

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