Dow Close (Fri) 8,579.11 25.88 (-)
Dow Close (Fri Dec.12) 8,629.68 64.59 (+)
Dow Close (Fri Dec.5) 8,637.09 260.85 (+)
Fri-to-Fri Change = 50.57 (-)
FFC = 7.41 (-)
FFC (previous) = 191.91 (-)
VIX (Fri) 44.93 2.41 (-)
VIX (wk-avg) 52.614 3.561 (-)
VIX (wk-avg-prev) 56.175
Oil (Fri) $33.87
Oil (Last Fri) $46.28
Oil (FFC) $5.47 (-)
{re-cap}[Now we can being to correlate events on the two charts, and add a third indicator. The new chart posted here has two periods listed A and B. A is pre-Reaganomics and B is Reaganomics. It also as two points c and d; the Bush 2003 tax cuts and the start of the 2008 crash. There are two lines, one is the Dow and the other the 10 year Treasury note. Next, the difference between physics based modeling and economic based modeling; just the numbers matter, not the theory. Raw numbers and charting determine what's happening, not theory. In the Dow historical chart the result of Reaganomics, and subsequent tax policy, is very clear. We also see that Clinton's economic success was merely continuation of Reaganomics. When A is compared to B, which is socialism vs the free market (the Reagan adaption), we see that individual wealth creation is significantly greater than in A. In fact, in A, individual wealth was lost. We can use the 10 year Treasury line in comparison to point b, to understand the impact of increased taxation on inflation. From this we see in A, as taxation increases so does the 10 year Treasury (as compared to the obvious increase in the Dow at point b - the Bush tax cuts).]
[To Continue]
[g1- A] shows us what a long term recession looks like. While [g1 - B] shows us what the growth of personal wealth looks like. The reason being, pre [g1 - A] shows us a profile of the industrial age (defined by the large megolithic corporations that supported large unions). During this period, wealth was confined to a relative few. A study of the mutual fund industry shows it's birth in [g1 - B] and reflects a significant growth in personal wealth. When we look at the functions [Dow and the 10 year Treasury], we see the birth of the 10 year treasury in pre [g1 - A]. We also see the two functions converging just prior to the [g1 - A], and intersecting (as well as, inverting) during [g1 - A]. We, further see, that the trend in [g1 - A] continues until just about 1985 [g1 - B]. Given that the convergence behavior [g1 - A] occurs at recessions, this is now our profile of recession. Further, given the length of [g1 - A] we can now define a prolonged recession.
This allows us to move forward, and profile [g1 - B] economic conditions against [g1 - A]. The first feature that can be looked at is the Fed's policy of interest rate reductions to push back recessionary conditions. In [g1 - B] the Treasury function shows a step-wise decrease, as the Treasury function and the Dow function diverge. Further, in [g1 - B], we see the Bush tax cuts [g1 - B - point c] and the beginning of the current economic crisis [g1 - B - point c]. The profile of the crisis (although called a recession by economists) does not meet the profile of a recession - as defined by [g1 - A]. This is were we add in the VIX. The VIX is something that history could not have predicted, because it was a product of electronic trading and the pc. The birth of the VIX, in 1990, reflects the influence of computer trading on the market (as a whole).
[g2] is the historical chart of the VIX, and [g3] is an approximate. The goal of [g3] is to determine a general path that a curve (function) fits. If an approximate can be found, this means, on this curve, market conditions are normal. It's then the anomalies (the out of normal points) that can be looked at as of interest, or more specifically deviations from the normal - of which this economic crisis clearly is (the large jump in the VIX at the right side of [g2]). The peaks, which also appear to see deviations, oddly occur at administration changes. Thus, a deviation should have been expected during the 2008 transition. However, the scale of the deviation was not previously indicated.
[To Continue]
[g1- A] shows us what a long term recession looks like. While [g1 - B] shows us what the growth of personal wealth looks like. The reason being, pre [g1 - A] shows us a profile of the industrial age (defined by the large megolithic corporations that supported large unions). During this period, wealth was confined to a relative few. A study of the mutual fund industry shows it's birth in [g1 - B] and reflects a significant growth in personal wealth. When we look at the functions [Dow and the 10 year Treasury], we see the birth of the 10 year treasury in pre [g1 - A]. We also see the two functions converging just prior to the [g1 - A], and intersecting (as well as, inverting) during [g1 - A]. We, further see, that the trend in [g1 - A] continues until just about 1985 [g1 - B]. Given that the convergence behavior [g1 - A] occurs at recessions, this is now our profile of recession. Further, given the length of [g1 - A] we can now define a prolonged recession.
This allows us to move forward, and profile [g1 - B] economic conditions against [g1 - A]. The first feature that can be looked at is the Fed's policy of interest rate reductions to push back recessionary conditions. In [g1 - B] the Treasury function shows a step-wise decrease, as the Treasury function and the Dow function diverge. Further, in [g1 - B], we see the Bush tax cuts [g1 - B - point c] and the beginning of the current economic crisis [g1 - B - point c]. The profile of the crisis (although called a recession by economists) does not meet the profile of a recession - as defined by [g1 - A]. This is were we add in the VIX. The VIX is something that history could not have predicted, because it was a product of electronic trading and the pc. The birth of the VIX, in 1990, reflects the influence of computer trading on the market (as a whole).
[g2] is the historical chart of the VIX, and [g3] is an approximate. The goal of [g3] is to determine a general path that a curve (function) fits. If an approximate can be found, this means, on this curve, market conditions are normal. It's then the anomalies (the out of normal points) that can be looked at as of interest, or more specifically deviations from the normal - of which this economic crisis clearly is (the large jump in the VIX at the right side of [g2]). The peaks, which also appear to see deviations, oddly occur at administration changes. Thus, a deviation should have been expected during the 2008 transition. However, the scale of the deviation was not previously indicated.
Graphs
[1]
[2]
[3]
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