Charts I’m Watching: Jun 17, 2014

Double dose of crummy economic news this morning: CPI that overshot estimates and housing starts/permits that didn’t.  Those of us of a certain age remember well the term “stagflation.”  It is used to describe the combination of low economic growth, high unemployment and high inflation.  While central banks have been warning of deflation for some time, anyone who buys gas or food would argue that their budgets have not been squeezed by lower prices.

The only thing missing from the stagflation equation has been a supply shock that caused a rapid increase in consumer prices.  Forty years ago, it came from the 1973 oil crisis.  Good thing we don’t have to worry about that.  Oh, wait…

2014-06-17 ES 5 0606

Some might remember this chart comparison of the DJIA in the 1970’s and the current pattern from a few months ago [see: Eye Candy for Bears.]

2014-03-14-SPX megaphone 65-74

The pattern on Mar 14:

2014-03-14-DJIA megaphone

Sure, it’s a little higher now (16,770.) The Butterfly Pattern was busted.  And, we have central banks that think nothing of pumping trillions into the “markets” to keep asset prices on the rise.  But, it sure gives one pause…

2014-06-17 DJI megaphone



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