Anecdotal Evidence of Economic Weakness

There is no number to convey what I have perceived in the last couple of months but the signal nevertheless seems too strong to ignore.  I take my daughter to Tae Kwon Do near downtown Chicago two or three days a week from further north on the Interstate.  I do this after school so it is about 4:30 or so.  The height of rush hour.  IDOT has helpfully placed signs that indicate how long it takes to get to the Loop from between Irving Park Rd and Addison.  Back in 2007 and even in 2008, this sign at this time of day might say 26 minutes or even 30 minutes to the Circle as they call it.

These days I have seen it as low as 8 minutes and regularly under 20 minutes.  Instead of bumping along at 5-15 MPH, I am hitting 70 and rarely under 20.  This has been going on now for some months.  Which indicates to me that there are very many fewer cars and trucks on the road into Downtown Chicago.  This further implies then that there is less shipping being done and fewer people going to or going home from work.  So when I see blow hards talking about a V-shaped recovery in the economy and how we will see 1300 in the S&P 500 this year, I have to scratch my head.  I told my father in November 2007 he should go to cash.  I also told him in November 2009 that he should go to cash because the S&P would stall somewhere between 1150 and 1200.  It barely hit 1150, but it was around 1150 for about a week, ample opportunity to lighten a portfolio.  I wrote him on Feb 18th to say that the recent bounce up from near 1040 to 1110 was another opportunity to get out.  I expect that this year we will be testing lows from last year as there is a new wave of Mortgage resets and foreclosures to come over the next 2 years.

Look at the chart below from T2 Partners via Amherst Securities.  Note how the market climbed as we were in the trough.  We are now climbing the hill.  The market is not going higher.

mortgagePayShock

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