USA: So Where Are We In the Cycle?
Summary
Readers know about The Economic Clock™. Below, we link it to Prof. Charles Kindleberger's marvellous cycle just to give all of us a better grip on where we are in the cycle - and when to buy back in.Topics Covered
- The Economic Time™ and Prof. Kindleberger's "Anatomy of a Typical Crisis"
- Where We Are in the Cycle
- How to save money off this
Background
1. The Economic Time™ and Prof. Kindleberger's "Anatomy of a Typical Crisis" (see his Manias, Panics and Crashes, Wiley, Third Edition, 1996, New York, p. 11 - 20)
Before suggesting where America is, let's first just draw the map for you. When telling The Economic Time™ we use the following initialisations:
- ESM: excess supply of money
- EDM: excess demand for money
- ESG: excess supply of goods
- EDG: excess demand for goods
We explained Kindleberger's phases in yesterday's Economic Time Update.
The Economic Clock™ Prof. Kindleberger's "Anatomy of a Typical Crisis"
1. ESM/ESG DISPLACEMENT: the economic outlook is improved.
2. ESM/EDG BOOM: bank credit expands strongly.
3. EDM/EDG DISTRESS: the smart money starts selling.
4. EDM/ESG PANIC: everyone bolts for the exits.
2. Where We Are in the Cycle
America was at stage 3 this February, when the first sell off occurred. Now America is at the start of stage four, typically the worst for stock markets. Initially, Asia will follow America into the vortex.
How to Save Money Off This Idea
We don't want to be clever and short: our talents are not in the shorting department!
This morning we sold all of our Economic Clock Funds as well as all stocks in our ETFs.
We have parked the funds in Euro interest bearing certificates and will wait until the dust has settled.
