Problems ahead for the economy
Just released. Business sales declined in January while inventories rose. The outcome is the inventory to sales ratio keeps rising (see above chart).
Business keeps adding to inventories in a dangerous way because rising inventory costs hinder profitability.
There is only one solution. Business needs to cut the growth of inventories and this can only be done by reducing production in an environment of weak sales.
This state of affairs is bad news for the economy and for profits. Commodities cannot rise in this environment.
The business cycle is alive and well in spite of the excessive interference of the Fed.
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Thank you for visiting this site.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Author, Profiting in Bull and Bear Markets
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