The Keystone Speculator's Philly Fed Recession Indicator; US Slipping Quickly into RECESSION; Philly Fed Prints Negative -4

Keystone posted this chart in early January highlighting four consecutive down readings in the Philly Fed data (four blue stars) which indicates that a recession is quickly approaching. The data popped last month to 17.0 but today prints an eye-opening -4; a negative number! That got everyone's attention. As previously mentioned, when the PMI data begins falling apart, it typically falls off a cliff.

The maroon-ish line is the 3-month moving average and it is down for four consecutive months and down 7 of the last 9 months. This is not good. The olive green line is the 4-mth MA and it is down for five consecutive months and down 7 of the last 9 months. As the Apollo crew exclaimed, "Houston, we have a problem."

The Philly Fed prints a negative -4. The Philly Fed has dropped for four consecutive months which is a recession indicator. The 3 and 4-mth MA's are now down for four consecutive months or more. The 3 stabs down through the 4 another bearish indication.

The Phily Fed peaked at 34.4 last May 10 months ago. A recession is likely approaching a lot faster than anyone realizes and will perhaps become obvious in Q2 and Q3 especially Q4. Interestingly, the universal consensus on Wall Street is that the recession will not begin until 2020 at the earliest and many say do not worry about recession until 2021. What do you think?

A recession signal occurs when four consecutive down numbers occur for the Phillky Fed as mentioned above. Another rule of thumb for the recession watch is using the 3-month MA (or the 4-month MA). Th e 3-mth MA is shown by the maroon line that prints a lower lower than in recent months. When the moving average turns negative, a recession is likely beginning to smack you in the face; the 3-mth MA is down to 7.4 and dropping like a rock and the 4-mth MA is down to 8.8. Hold on to your hat.

Note the trend in the Philly Fed since the peak at 34.4 in May; lower lows and lower highs. When the Philly Fed falls apart it is usually a very fast and sharp drop (which may be starting now). Most young folks (under 30 years old) have not experienced a recession before. All of the lives of young people will change forever when the recession hits. Many will lose their jobs and have no idea what will hit them. Old dudes, like Keystone, have lived through several recession periods over the decades. It will be tough times for a year or two.

If you are under 30 years old, or know someone, have them read, Clueless Millennials Must Prepare Financially, Mentally and Emotionally for the Coming Recession; A PSA (Public Service Announcement) for Millennials Explaining the Ugly Realities of Economic Recession.

When the 3-month MA (or 4-month MA) turns negative, the recession has begun or will within a few short months. Typically, a recession occurs every four to seven years but the Federal Reserve and other global central bankers, acting in collusion, have destroyed the expected business and economic cycles with their obscene Keynesian spending since March 2009. That is when former Fed Chairman Bernanke, the "Father of Easy Money," began QE1 to save the stock market and protect the wealthy privileged class in America that own large equity portfolios. The decade-long central banker largess, that created the nonstop record highs in stocks year after year, may end abruptly.

The game continues as long as everyone maintains confidence in the Federal Reserve and other global central bankers. If confidence is lost in the Fed, all is lost.

Looking back at prior recessions, there was a bad one in the early 1980's, then a milder recession in the early 1990's. The 1990's were aided by the huge technology boom and the advent and common use of the personal computer. This technology revolution pushed any recession to the side until the dotcom bubble burst in March 2000.

In the early 2000's, former Fed Chairman Greenspan pumped the stock market higher to save and reward his wealthy friends by lowering rates. This created the housing boom which went bust in 2007-2008 and created the 2008-2009 financial crisis. Fed Chairs Bernanke, Yellen and now Powell kept the stock market party going off the 2009 bottom into the September 2018 top with their money-printing and dovish talk.

The stock market peaked in 1980 dropping into a very nasty recession during 1980-1983. The stock market peaked in the summer of 1990 as the recession began and was already in progress. The Philly Fed 3-mth MA went negative months before. Stocks peaked in March 2000 with the recession during 2001-2002. The 3-mth MA crossed negative at the start of 2001. October 2007 was the peak in the stock market ahead of the Great Recession during 2008-2009. The Philly Fed 3-mth MA crossed negative in mid to late 2008.

In 2011-2012, the 3-mth MA went negative but Bernanke saved the day when he announced 'QE Infinity' again saving and protecting the wealthy class that own large stock portfolios. Such is America's crony capitalism system; land of the have's and have not's.

In late 2015, the Philly Fed 3-mth MA again slips negative. The stock market peaked in May 2015; you long time followers of Keystone remember him calling the exact top in the stock market back then. However, as always, the Fed and other global central bankers stepped in to save the day in early 2016 (the Tweezer Bottom on the candlestick charts) and stocks rally into the September 2018 top.

The stock market typically peaks ahead of when the Philly Fed 3-mth MA slips negative which occurs coincidentally or a couple-few months ahead of when recession begins. Thus, the stock market peaked in September-October 2018 so a few months forward places markets in the February-April time frame.

The Philly Fed 3 and 4-mth MA's are below 10 and dropping fast. Remember, when the Philly Fed collapses, it typically occurs very sharp and quick. The recession is likely approaching far faster than anyone realizes.

The 3-mth MA may turn negative as early as 1 to 3 months out (March-May). The recession may be here as early as Q2 and probably, surely, in Q3 this year. This is fascinating since most every Wall Street analyst says a recession is out of the question this year. Boy, they all will be surprised, as well as their clients.

The Wall Street Einstein's say talk of a recession is preposterous; they say anyone who spouts such nonsense is a delusional madman. These are all the same analysts and money managers that were clueless that the stock market was topping in September/October.

Well, when some of you are called into the boss's office over the coming months, and he drop-kicks you across the parking lot into the dumpster, rest assured the recession is underway. Stocks and the economy will head south rapidly and America will be in a malaise for a year or two, say now through 2020.

Watch the Philly Fed closely. Pay attention to the next Philly Fed release on Thursday, 3/21/19. Housing Starts are released on Tuesday, 2/26/19, and are an extremely important data point for the stock market. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.