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90% Chance For the US Recession to Begin During 2014Q2-2015Q1

Q: Have Bernanke, Krugman and Yellen predicted any recession, in their career, before it happened?

A. N-O-NO.

Q: Have Bernanke, Krugman and Yellen predicted recoveries before they happened?

A: YES, always.

Q: Do they predict that recovery would continue for years, at least the next three years, with a growth above 2%?

A: All the time.

Q: Does Wall Street ever predict that an earnings decline of 35-90% could happen within the next two years?

A: Never.

Q: Does it happen?

A: Yes, with a fair amount or regularity (pl. see the attached graph).

Any honest person would call such behavior purposely misleading and fraudulent, no? They remain oblivious to the business cycle despite its permanence. Economists and Wall Street commit "periodic," or cyclical fraud, very predictably.

Q: Who have the best record at predicting recessions?

A: Financial markets, most notably, commodities, the Scam Market and the US Treasury markets, e.g., the yield-curve inversion.

I have developed a methodology of characterizing the business cycle using two financial market indicators, S&P500 and US Treasury bond futures. Based on the attached graph I am predicting that a US recession is very likely, close to 90% chance, to begin during 2014Q2-2015Q1 with most likely date being September 2014. This should coincide with earnings declines during 2015-16. I also expect the coming recession to be much more severe than the last one and S&P 500 to make a new low.

S&P500 Real Earnings 1979-2014

Ratio of S&P500 to Long Bond Futures 1997-2014

Enjoy the Super Bowl! The next one would most likely be played during a recession. Go Broncos!!

 

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