Posts Tagged ‘double dip recession’

John Williams: Hyperinflation and Double-Dip Recession Ahead

Interview with An interview with Karen Roche of The Gold Report

Economic recovery? What economic recovery? Contrary to popular media reports, government economic reporting specialist and ShadowStats Editor John Williams reads between the government-economic-data lines. "The U.S. is really in the worst condition of any major economy or country in the world," he says. In this exclusive interview with The Gold Report, John concludes the nation is in the midst of a multiple-dip recession and headed for hyperinflation.

John Williams: Hyperinflation and Double-Dip Recession Ahead

The Gold Report: Standard & Poor’s (S&P) has given a warning to the U.S. government that it may downgrade its rating by 2013 if nothing is done to address the debt and deficit. What’s the real impact of this announcement?

John Williams: S&P is noting the U.S. government’s long-range fiscal problems. Generally, you’ll find that the accounting for unfunded liabilities for Social Security, Medicare and other programs on a net-present-value (NPV) basis indicates total federal debt and obligations of about $75 trillion. That’s 15 times the gross domestic product (GDP). The debt and obligations are increasing at a pace of about $5 trillion a year, which is neither sustainable nor containable. If the U.S. was a corporation on a parallel basis, it would be headed into bankruptcy rather quickly. 

There’s good reason for fear about the debt, but it would be a tremendous shock if either S&P or Moody’s Investor Service actually downgraded the U.S. sovereign-debt rating. The AAA rating on U.S. Treasuries is the benchmark for AAA, the highest rating, meaning the lowest risk of default. With U.S. Treasuries denominated in U.S. dollars and the benchmark AAA security, how can you downgrade your benchmark security? That’s a very awkward situation for rating agencies. As long as the U.S. dollar retains its reserve currency status and is able to issue debt in U.S. dollars, you’ll continue to see a triple-A rating for U.S. Treasuries. Having the U.S. Treasuries denominated in U.S. dollars means the government always can print the money it needs to pay off the securities, which means no default. 

TGR: With the U.S. Treasury rated AAA, everything else is rated against that. But what if another AAA-rated entity is about to default?

JW: That’s the problem that rating agencies will have if they start playing around with the U.S. rating. But there’s virtually…
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Consumer Metrics Institute Growth Index

Consumer Metrics Institute Growth Index 

Courtesy of Doug Short; with data from Rick Davis at CMI

Note from dshort: The index data is now updated through August 24. The current Growth Index contraction continues.


 
For the past several months, the Consumer Metrics Institute’s Daily Growth Index has been one of the most interesting data series I follow, and I recommend bookmarking the Institute’s website. Their page of frequently asked questions is an excellent introduction to the service.

The charts below focus on the ‘Trailing Quarter’ Growth Index, which is computed as a 91-day moving average for the year-over-year growth/contraction of the Weighted Composite Index, an index that tracks near real-time consumer behavior in a wide range of consumption categories. The Growth Index is a calculated metric that smooths the volatility and gives a better sense of expansions and contractions in consumption.

The 91-day period is useful for comparison with key quarterly metrics such as GDP. Since the consumer accounts for over two-thirds of the US economy, one would expect that a well-crafted index of consumer behavior would serve as a leading indicator. As the chart suggests, during the five-year history of the index, it has generally lived up to that expectation. Actually, the chart understates the degree to which the Growth Index leads GDP. Why? Because the advance estimates for GDP are released a month after the end of the quarter in question, so the Growth Index lead time has been substantial.

Has the Growth Index also served as a leading indicator of the stock market? The next chart is an overlay of the index and the S&P 500. The Growth Index clearly peaked before the market in 2007 and bottomed in late August of 2008, over six months before the market low in March 2009.

The most recent peak in the Growth Index was around the first of September, 2009, almost eight months before the interim high in the S&P 500 on April 23rd. Since its peak, the Growth Index has declined dramatically and is now deep into contraction territory.

It’s important to remember that the Growth Index is a moving average of year-over-year expansion/contraction whereas the market is a continuous record of value. Even so, the pattern is remarkable. The question is whether the latest dip…
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The Straight Scoop

The Straight Scoop

Courtesy of Michael Panzner at Financial Armageddon 

Red backhoe scooper

You’ve heard what the clueless analysts, disingenuous policymakers, conflicted Wall Street paper-pushers, and corporate cheerleaders have had to say about the so-called recovery. Now listen to what one of the world’s largest private companies — which presumbaly means they don’t have to worry too much about "managing" expectations or convincing the masses to believe in financial fairytales — has to say about where things stand:

"Cargill Sounds Warning of a Slow Recovery" (Financial Times)

Cargill, the world’s largest agricultural commodities trader, on Tuesday warned that the global economic recovery had yet to gain traction as it reported a second straight decline in annual profit.

As economists debate the merits of government intervention to avoid a double-dip recession, the company said the economic outlook was uncertain.

“More uncertainty lies ahead, for the world has yet to transition from a policy-stimulated upturn to a structurally sustained recovery,” Cargill said in its annual report. “Europe’s debt crisis and China’s monetary tightening are moving markets. Governments have made promises that their economies cannot fulfil. Regulations are changing in unpredictable ways.”

The Minnesota-based company has a unique vantage on global economic trends, trading commodities from corn to oil to salt with employees in 66 countries. 


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David Tice Says Double-Dip Recession ‘In the Cards’ for U.S.

David Tice Says Double-Dip Recession ‘In the Cards’ for U.S.

Courtesy of Edward Harrison at Credit Writedowns 

David Tice, chief portfolio strategist for bear markets at Federated Investors Inc, talks about the outlook for the U.S. economy. He sees a double dip coming and argues against stimulus to prevent it, saying policy makers shouldn’t act as “Good Time Charlie” preventing the deleveraging of U.S. households. 


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We’re In A One-and-a-half Dip Recession

We’re In A One-and-a-half Dip Recession

Courtesy of Robert Reich 

We’re not in a double-dip recession yet. We’re in a one and a half dip recession.

Consumer confidence is down. Retail sales are down. Home sales are down. Permits for single-family starts are down. The average work week is down. The only things not down are inventories – unsold stuff is piling up in warehouses and inventories of unsold homes are rising – and defaults on loans.

The 1.5 dip recession should be causing alarm bells to ring all over official Washington. It should cause deficit hawks to stop squawking about future debt, blue-dog Democrats to stop acting like Republicans, and mainstream Democrats to get some backbone.

The 1.5 dip recession should cause the President to demand a large-scale national jobs program including a new WPA that gets millions of Americans back to work even if government has to pay their wages directly. Included would be zero-interest loans to strapped states and locales, so they didn’t have to cut vital services and raise taxes. They could repay when the economy picked up and revenues came in. The national jobs program would also include a one-year payroll tax holiday on the first $20,000 of income.

The President should stop talking and acting on anything else – not the deficit, not energy, not the environment, not immigration, not implementing the health care law, not education. He should make the whole upcoming mid-term election a national referendum on putting Americans back to work, and his jobs bill. Are you for it or against it?

But none of this is happening. The hawks and blue dogs are still commanding the attention. Herbert Hoover’s ghost seems to have captured the nation’s capital. We’re back to 1932 (or 1937) and the prevailing sentiment is government can’t and mustn’t do anything but aim to reduce the deficit, even though the economy is going down.

It looks like there’ll be an extension of unemployment benefits. (If it weren’t for the human suffering involved, I wish the Republicans had been forced to filibuster that bill all summer and show the nation just how much they care about people without jobs.) But the fiscal stimulus resulting from this will be tiny. Jobless benefits are humane but they alone don’t get jobs back.

And what about the Fed? It’s the last game in town. The 1.5 dip recession should…
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NY Fed’s Dudley: Double Dip Unlikely

NY Fed’s Dudley: Double Dip Unlikely

Courtesy of Jr. Deputy Accountant 

I smell a Bernanke endorsement deal…

I’m sick of hearing this from every two bit central banker with nothing better to do but assure us everything is under control. Of course there will be no double dip, we never got undipped from the last one. Duh.

Business Week
:

Federal Reserve Bank of New York President William Dudley said the U.S. economic expansion may slow this quarter, while a relapse into recession is unlikely.

“Growth in the third quarter may turn out to be a bit less than we saw in the first half of the year, though we think there is only a slight risk of a double dip,” Dudley said today at a press briefing on the regional economy at the New York Fed.

Gee, that sounds slightly less Armageddon-ish than Bernanke’s statements yesterday, who has been dosing Bill’s coffee with Prozac?

Anyway, what’s the reason Dudley gives for not expecting a double dip? Easy money and data that shows credit conditions are easing. Well that’s awesome, let’s wait and see what sort of impact financial reform and the Fed’s new credit card rules have on credit and get back to that issue when we’ve got more data.

More BW:

The risk of the economy slipping into a second recession is low in part because monetary policy is “quite stimulative,” Dudley said in response to questions from reporters at the briefing. The nation also doesn’t face “excesses in terms of inventories” and “highly cyclical” industries such as housing and auto sales are “already at very depressed levels,” he said.

Dudley also said he’s “optimistic” about avoiding a double dip because the Fed’s senior loan officers survey has shown credit conditions are easing.

The U.S. expansion over the past year has been less robust than prior recoveries, with a “sluggish recovery in employment,” Dudley said.

I’m shocked that a supposed economic genius would actually say stimulative monetary policy can keep this thing afloat in case we get with a second wave of economic disaster – did no one inform him that the Fed is out of arrows and standing out there all limp and useless with nothing left to shoot?

Guess not. 


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ECRI Plunges At 9.8% Rate, Double Dip Recession Virtually Assured

ECRI Plunges At 9.8% Rate, Double Dip Recession Virtually Assured 

Courtesy of Tyler Durden at Zero Hedge 

The ECRI Leading Economic Index just dropped to a fresh reading of 120.6 (flat from a previously revised 121.5 as the Columbia profs scramble to create at least a neutral inflection point): this is now a -9.8 drop, and based on empirical evidence presented previously by David Rosenberg, and also confirming all the macro economic data seen in the past two months, virtually assures that the US economy is now fully in a double dip recession scenario. "It is one thing to slip to or fractionally below the zero line, but a -3.5% reading has only sent off two head-fakes in the past, while accurately foreshadowing seven recessions — with a three month lag. Keep your eye on the -10 threshold, for at that level, the economy has gone into recession … only 100% of the time (42 years of data)." We are there.

Complete collapse in the long-term chart:

 


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‘Double-Dips Are Not as Infrequent as You Might Think’

‘Double-Dips Are Not as Infrequent as You Might Think’

Courtesy of Michael Panzner at Financial Armageddon 

Morgan Stanley’s Stephen Roach is the featured guest on the Wall Street Journal’s Big Interview, and unlike many of his peers, he relies on facts rather than fantasy in formulating his economic outlook. Given what you and I already know about the reality on the ground, it’s no surprise to find that Mr. Roach is less than sanguine about where things stand:

WSJ: You’ve been warning of a disappointing U.S. recovery, so I’d like to ask you right off the bat: Just how likely do you see the prospects of a double-dip kind of event?

Roach: I give it a higher probability than most — maybe 40% at some point over the next year. We have a weak recovery, weak labor market, weak consumer purchasing power, and a consumer — 70% of the economy — that is still massively overextended in terms of debt; unprepared in terms of savings; and unable to rely to rely on property and credit bubbles to support consumption. So, if you have a disappointing consumer and any kind of an unexpected shock, you can go down again.

Here is the full interview:

 


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It’s More Than Just Birth-Death

It’s More Than Just Birth-Death 

a road sign saying career change ahead

Courtesy of John Mauldin at Thoughts From The Frontline 

Just how dynamic is the US job market? If I told you we created over 4 million jobs in April, would you believe me? I had a long conversation with Mohamed El-Erian of PIMCO yesterday. He is openly speculating that employment may no longer be just a lagging indicator but may also be predictive. It is an interesting insight, which we will explore as we take a very deep look at US employment. And I answer a few questions about my thought that there is a 60% chance for a recession in 2011, and why there is a 40% chance we won’t. What could change those numbers? We explore that and more, while I suffer from the injustice that LeBron will play with Wade and Bosh. Where’s a nonproliferation treaty when you need it?

First a quick commercial note. I want to let Conversations subscribers know that we will post on Monday a Conversation I recently did with Rick Rule and Marin Katusa. Rick is a decades-long friend and maybe the smartest and most successful resource investor I know of. Katusa writes a resource letter for Casey Research and is wicked smart on energy. This is a very good piece that you don’t want to miss, as Katusa identifies what he thinks are some of the really great new energy plays.

It’s More Than Just Birth/Death 

Last week, I wrote about the Birth/Death Adjustment in the Bureau of Labor Statistics monthly employment numbers. Jeff Miller took me to task in his blog for not noting that the B/D numbers are not seasonally adjusted (which I know) and a few other items. I did some research on his work on employment numbers and came away with a few new thoughts that I think are worth sharing. Miller (a former professor and a nice guy) and I spent several hours on the phone talking about the BLS data and what he sees as an unusual divergence in the data, which I agree is far more interesting than the B/D Assessment.

To get to the interesting part, I am going to risk boring you with a few wonkish background paragraphs. First, let’s look at the basic process of how the BLS does its survey. Basically, the BLS tries to count every job in…
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Recession 2010?

Recession 2010?

Courtesy of Michael Snyder at The Economic Collapse

If you watch any mainstream news program these days, it is almost a certainty that someone will mention the word "recession" before a half hour passes.  In fact, it seems like almost everyone is either predicting that we are going into a recession, or they are warning of the need to avoid a recession or they are proclaiming that we are still in a recession.  So will the U.S. economy once again be in recession in 2010?  When you consider all the signs that are pointing that way, the evidence is compelling.  The truth is that there is bad economic news wherever you turn.  There is bad news in the housing industry.  There is bad news in the financial markets.  There is bad news in the banking system.  There is bad news coming out of Europe.  There are even signs that the bubble in China may be about to burst.  Plus, the economic impact of the Gulf of Mexico oil spill could end up being the straw (or the gigantic concrete slab) that really breaks the camel’s back.  So there are certainly a lot of pieces of news that "gloom and doom" economists can hang their hats on these days.  There is a very dark mood in world financial markets right now, and it seems like almost everyone is waiting for the other shoe to drop.  But does all of this really mean that we are looking at the start of another recession before the end of 2010?   

The truth is that nobody really knows.  Things certainly look very ominous out there.  The dark clouds are gathering and the economic winds are starting to blow in a bad direction.  The following are 24 pieces of evidence that do seem to indicate that very difficult economic times are imminent….

-U.S. Treasury yields have dropped to stunning new lows.  So why are they so low?  Well, it is because so many investors are anticipating that we are headed into a deflationary period.  In fact, many economists are warning that the fact that Treasury yields are so low is
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Kimble Charting Solutions

Crude Oil About To Drop 50% And Take Stocks With It? (Updated)

Courtesy of Chris Kimble

Crude Oil created its second top back in October of 2018 at (1) and then it proceeded to decline nearly 50%!

What did the S&P do while Crude declined 50%, it fell nearly 20% in less than 90-days!

The above chart was shared on 1//8/2000, suggesting that Crude Oil looked to be creating a “Double Top” at (3) and stocks should get hit hard again!

Below is an update of the Crude Oil Chart from above-

...



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Insider Scoop

A Peek Into The Markets: US Stock Futures Plunge Amid Coronavirus Fears

Courtesy of Benzinga

Pre-open movers

U.S. stock futures traded lower in early pre-market trade. South Korea confirmed 256 new coronavirus cases on Thursday, while China reported an additional 327 new cases. Data on U.S. international trade in goods for January, wholesale inventories for January and consumer spending for January will be released at 8:30 a.m. ET. The Chicago PMI for February is scheduled for release at 9:45 a.m. ET, while the University of Michigan's consumer sentime...



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Zero Hedge

Coronavirus Paralyzes Global Credit Market As New Issuance Crashes To Zero

Courtesy of ZeroHedge View original post here.

In the early days, when virtually nobody paid attention to the coronavirus pandemic which China was doing everything in its power to cover up, markets were not only predictably ignoring the potential global plague - after all central banks can always print more money, or is that antibodies - but until last week, were hitting all time highs. All that changed when it became apparent that for all its data manipulation, China was simply unable to reboot its economy as hundreds of millions of workers refused to believe the government had the viral plague under control, starting...



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Phil's Favorites

The PhilStockWorld.com Weekly Webinar - 02-26-2020

 

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here.

Major Topics:

00:02:13 - Indices | S&P 500
00:10:09 - COVID-19 & The Market
00:12:30 - John Hopkins Virus Chart
00:17:00 - DJIA
00:18:22 - INQ | Futures
00:19:23 - STP
00:20:06 - LTP
00:24:46 - GOLD
00:25:45 - Money Talk Portfolio | Butterfly Portfolio
00:27:20 - IMAX
00:30:01 - Checking on the Markets
00:30:54 - Money Talk Portfolio
00:31:00 - Butterfly Portfolio
00:31:08 - Future is Now Portfolio
00:31:12 - Dividend Portfolio...



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Biotech & Health

Could coronavirus really trigger a recession?

 

Could coronavirus really trigger a recession?

Coronavirus seems to be on a collision course with the US economy and its 12-year bull market. AP Photo/Ng Han Guan

Courtesy of Michael Walden, North Carolina State University

Fears are growing that the new coronavirus will infect the U.S. economy.

A major U.S. stock market index posted its biggest two-day drop on record, erasing all the gains from the previous two months; ...



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The Technical Traders

SPY Breaks Below Fibonacci Bearish Trigger Level

Courtesy of Technical Traders

Our research team wanted to share this chart with our friends and followers.  This dramatic breakdown in price over the past 4+ days has resulted in a very clear bearish trigger which was confirmed by our Adaptive Fibonacci Price Modeling system.  We believe this downside move will target the $251 level on the SPY over the next few weeks and months.

Some recent headline articles worth reading:

On January 23, 2020, we ...



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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Chart School

Oil cycle leads the stock cycle

Courtesy of Read the Ticker

Sure correlation is not causation, but this chart should be known by you.

We all know the world economy was waiting for a pin to prick the 'everything bubble', but no one had any idea of what the pin would look like.

Hence this is why the story of the black swan is so relevant.






There is massive debt behind the record high stock markets, there so much debt the political will required to allow central banks to print trillions to cover losses will likely effect elections. The point is printing money to cover billions is unlikely to upset anyone, however printing trillions will. In 2007 it was billions, in 202X it ...

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Members' Corner

Threats to democracy: oligarchy, feudalism, dictatorship

 

Threats to democracy: oligarchy, feudalism, dictatorship

Courtesy of David Brin, Contrary Brin Blog 

Fascinating and important to consider, since it is probably one of the reasons why the world aristocracy is pulling its all-out putsch right now… “Trillions will be inherited over the coming decades, further widening the wealth gap,” reports the Los Angeles Times. The beneficiaries aren’t all that young themselves. From 1989 to 2016, U.S. households inherited more than $8.5 trillion. Over that time, the average age of recipients rose by a decade to 51. More ...



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Digital Currencies

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

 

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

‘We have you surrounded!’ Wit Olszewski

Courtesy of Gavin Brown, Manchester Metropolitan University and Richard Whittle, Manchester Metropolitan University

When bitcoin was trading at the dizzying heights of almost US$2...



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ValueWalk

What US companies are saying about coronavirus impact

By Aman Jain. Originally published at ValueWalk.

With the coronavirus outbreak coinciding with the U.S. earnings seasons, it is only normal to expect companies to talk about this deadly virus in their earnings conference calls. In fact, many major U.S. companies not only talked about coronavirus, but also warned about its potential impact on their financial numbers.

Q4 2019 hedge fund letters, conferences and more

Coronavirus impact: many US companies unclear

According to ...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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