Warning sign of coming downturn

For those who are the least bit interested in these sorts of things, here is a graph of real personal consumption versus payroll employment, both year-over-year.

As you can see, employment lags consumption and the amount of the lag depends on the phase of the cycle.

When consumption peaks, employment peaks about 1 year later.

When consumption begins to pick up after a bottom, employment starts to rise about 6 months later.

If you examine the linked graph, it's for this reason that some of us think that employment has peaked for this cycle and will soon be turning down.

As for the stock market, it is at best a coincident indicator; it will tell you nothing about the real economy until it has already happened.

http://research.stlouisfed.org/fredgraph.png?g=5ln

Oil markets are dysfunctional

Excerpts from an essay at The Oil Drum:

This is a guest post by Chris Cook, former compliance and market supervision director of the International Petroleum Exchange.

All is not as it appears in the global oil markets, which have become entirely dysfunctional and no longer fit for its purpose, in my view. I believe that the market price is about to collapse as it did in 2008, and that this will mark the end of an era in which the market has been run by and on behalf of trading and financial intermediaries.

In this post I forecast the imminent death of the crude oil market and I identify the killers; the re-birth of the global market in crude oil in new form will be the subject of another post.

There is much more at the link...