maccabean
Short

The relationship between the unemployment rate and stock market

INDEX:SPX   S&P 500 Index
A few notes about this chart.
The orange line is the unemployment rate.
Black resistance lines are at the top.

1. There seems to be two drops of the unemployment rate before the market falls. This could be due to expectations in interest rate increases.
2. Assuming the unemployment rate falls another two times, the market will drop off sometime in may/june/july
3. You can't see it in the chart, but this unemployment looks historically to be very low and approaching full employment .
4. At the end of the last term of a president, the unemployment rate increases.
5. Once the unemployment rises, the stock market will (obviously) drop. One the stock market drops, unemployment will rise (one of the two). I tend to believe the latter will happen first.
6. Once the stock market drops, and unemployment start to increase, the fed should lower interest rates again. However this time, it can't because it can't lower it much further, this means that the next market fall and unemployment rate will be much larger and possibly may lead to a depression..... ie. sorry, America, you're screwed.
maccabean
8 months ago
I should mention that 2017 will be the year that America realises it's in big trouble. Unemployment may stabilise for the rest of the year. Interest rates may indeed rise another two times, but that's the maximum.
+1 Reply
laksili1
8 months ago
good detailed clarification
thaks
Reply
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