What is winning the upper hand forces of deflation or inflation? How do we track the two forces?
As proxy for deflation, delinquencies which lead bankruptcy and for inflation, Z.1 credit growth on the home page and M1 or currency growth.
Rate
of Change in Delinquency Rates...Updated Q2'09
|
* Rate of Change in
Delinquency Rates is an early indicator.
It must cross 0 before recovery |
|
* During 1990/91
recession, total rate peaked at 22% change. |
|
* During 2001
recession, total rate peaked at 24% change. |
By Category ROC-
|
Pecent Change in Delinquency Rates Yr/Yr |
||||||||||
|
Real estate loans |
Consumer loans |
Leases |
C&I loans |
Agricultural |
Total |
|||||
|
All |
Residential |
Commercial |
All |
Credit cards |
Other |
|
|
|
|
|
|
2009:02:00 |
96% |
98% |
90% |
36% |
38% |
31% |
55% |
115% |
94% |
93% |
No sign of recovery here…the Delinquency ROC must
cross 0 before recovery in stocks and economy.
Bankruptcies are interesting but are co-incident indicators and not listed here.
Only for risky short-term strategy…not recommended…just a test for paper trades.