Posts Tagged ‘Depression’

Double Dippin’

Even Schiller is openly stating that the ‘short term’ downside risk remains.

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Welcome to the top of the ride … all downhill from here.

There is an adage in the market that says,

“Sell in May and walk away.”

Well, there are many leading indicators that are now pointing DOWN, way down.

From the Treasury Market Inflation Forecast to the Economic Cycle Research Institute’s (ECRI) Long Leading Index of global industrial growth, these indicators are showing that the “W” of recovery is more likely.

Given that the US housing market has not rebounded as was once hoped, that the QE and QEII have only resulted in a short term bull rally in the stock market and a temporary easing of short term bond rates and not the much touted employment that the bankers and others from Wall Street and DC were promising was ‘on the way’.  Indeed employment numbers are stalled, much like the sense one has in a roller coaster car just as you reach the top of the first ‘hill’ after being released from the lift chains.  We have had a drop and a ‘scare’ now the real ride begins.

Richard Russell, 86-year old author of the Dow Theory Letters commented as follows on the deteriorating market breadth: “This is a bearish picture. The ‘soldiers’ are deserting even while the ‘generals’ continue to march forward. In a war, this would be a prelude to disaster. In the stock market, it may be the same.”

I agree with that sentiment and add in argument that the broader market place is going to go into a panic situation, this summer will be pleasant enough, like the roller coaster car moving gently along the top of the rail in a near flat grade.  By this autumn?  Well Kondratieff Winter will blow in for real with a storm to remember …

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S&P downgrade of US debt is more about next failure!

The S&P downgrade of the US debt is more about a pending failure or another ‘bailout’ than any shot at the stability of the US economy.

One Trillion dollars more may be needed to bail out the ‘too big to fail’ crowd in the next round.

Most interesting is the closeness of S&P to the situation and their understanding of the internal operations, given those factors these revelations are illuminating!

View the interview from the Real News:

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Balance Sheet Recession

What happens when all the businesses in an economy start to reduce debt loads using cashflow at the same time?

According to Richard Koo, this action -> response -> reaction is what the “Great Depression” was all about and that the same factors are at play right now…only this time on a global scale.

Below is an except of his address to the Institute for New Economic Thinking at King’s College, Cambridge. Koo is the world-renowned chief economist of Nomura Research Institute and the author of “The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession”.

For more information see the Institute for New Economic Thinking website.

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Double-Dip? Shiller says “Yes”

Robert Shiller originator of the case-shiller report, during an interview last year made the clear warning statement that the was real potential in the market for a further drop in housing prices and therefore a real potential for a ‘double-dip’ recession.

My own view is that a double-dip is coming and that the second ‘dip’ will feel more like a depression than a recession.

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Double Dip in May?

More Market Watch from Robin Griffiths, this time placing a time target on the watch time for “Double Dip”.

Ultimately the chart will look exactly like the one from 1933, only this time it will be a bigger value, same market percentages, just a bigger $$$ valuation.

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