In the period following recessions, the black line tends to be above the red line, which means GDP growth accelerates (drops on chart) relatively faster than jobless claims fall. This was true following the recessions beginning in 1990, 2001 and 2007.
Leading into theses recessions there was a period where the red line on average was noticeably above the black line, as the growth rate faltered before jobless claims started to increase, even allowing for the 5-month lead time.
A similar gap with the red line above the black line started a little over a year ago. In the prior two recessions, the gap started about two years before the recession. If the same pattern follows in this business cycle, the beginning of the recession would be less than a year away.
Like open-end and exchange-traded funds, closed-end funds are available in a wide variety of offerings. Stock funds, bond funds and balanced funds provide a full range of asset allocation options, and both foreign and domestic markets are represented. Regardless of the specific fund chosen, closed-end funds (unlike some open-end and ETF counterparts) are all actively managed. Investors choose to place their assets in closed-end funds in the hope that the fund managers will use their management skills to add alpha and deliver returns in excess of those that would be available via investing in an index product that tracked the portfolio's benchmark index.
However, investors need to be aware that while consumers will indeed have to continue to eat, drink and take their medicine, and therefore continue to buy the products of those companies, in a market decline investors do not have to continue to value the earnings of those companies as highly as during an exciting bull market. Furthermore, they do not.
A fair amount of attention has been paid in the past couple of weeks to the low market volatility that has evolve in certain markets.
But, these three situations…and more…I believe contribute to a feeling on the part of investors that they really don't know which way the economy is going to go and they are trying to stay sharp so that they can move in the appropriate direction when the time is right.