Show Me the Recovery

I stand accused of being a pessimist. If that means I must accept inconclusive data as a sign of recovery – then I am a pessimist.

Do I think a recovery is coming? I think we are close to an economic bottom for our recession. A recovery to me means a return to the growth line of the past. I do not believe this will happen.

But it does not matter what I think. I have seen things in this Great Recession which I have thought were impossible – and I believe tomorrow holds more impossible events. I will continue to evaluate the data calling a spade a spade.

It came as a surprise that the President of the Kansas City Federal Reserve Thomas Hoenig pretty much sees the “recovery” as I do. Some excerpts from a 03 June 2009 speech.

In estimating the effect on consumption growth if the annual savings rate steadily increased from zero toward 8 percent between now and the end of 2013, the article [an article by Martin Barnes – managing editor of The Bank Credit Analyst – published in May 2009] suggests that consumer spending would grow at an average rate of only 1.3 percent per year. This would be a significant reduction of consumption growth, the slowest since the 1930's. There can be little doubt that such a growth rate would have a significant adjustment effect, even if only temporary, not only on the U.S., but also on the rest of the world.

Starting from where we are today, it is clear that interest rates must rise. As the economy recovers, even at a modest pace, resource demands will begin to increase. At this point, the current level of monetary accommodation will need to be withdrawn to avoid introducing inflationary impulses. Also, with the almost certain adjustments that need to occur in consumption, savings and the rebalancing of imports and exports, I expect there would be additional pressure for interest rates to rise steadily over time. To the extent that these adjustments will require considerable time to complete, unemployment levels, for example, may decline more slowly than anyone wants. If such a set of events occurs, then I also suspect there will be considerable pressure on the central bank to “help out” in easing this adjustment process by keeping interest rates low for an extended period. This happens because people often confuse the establishment of low interest rates – and therefore the creation of money – with the creation of wealth. Sadly, through history, it has been shown repeatedly that excessive reliance on monetary policy as a means to avoid fundamental economic policy choices leads to high inflation and an actual worsening of an economy's long term performance.

The Federal Reserve System over the past nearly two years has more than doubled its balance sheet as it has provided liquidity and monetary stimulus to the U.S. and world economy. In doing so, it has served to staunch the financial and economic panic. But it now must turn to the matter of carefully removing this stimulus at the very time that consumers, businesses and the government will need to fund pent-up demand for goods and service and to meet committed obligations. There is little doubt that such a “coincidence” of needs will place upward pressure on interest rates. Central banks will have little choice but to allow these increases to occur or risk the consequence of higher inflation, perhaps significantly higher. As I said, this process of removing past monetary accommodation will be resisted. However, in contemplating this process and the pain of adjustment, I often emphasize that inflation is the least fair, most regressive and most corrosive tax we can impose on ourselves. It is particularly harsh for low to moderate income citizens.

The bottom line is that we really do not understand what will happen next. Historical economic theories are inoperative in the face of unprecedented economic intervention.

Economic data must be critically analyzed to establish where we are headed not spun to project where we wish we were headed. To date, there is no coincident data which supports a recovery.

Pessimism is warranted as most punters believe we have a lock on recovery.

Additional Economic Events from This Past Week

Import prices increased for the third consecutive month in May 2009 rising 1.3% due entirely to a 8.3% increase in petroleum prices. Export prices rose 0.6% in May with the main contributor being a jump in soybean prices.

Advanced May 2009 Retail and Food sales numbers showed a gain of 0.5% over April but down almost 10% YoY. If you remove gasoline (fuel prices rising) and car sales (heavy discounts) the numbers were unchanged from the previous month. According to Bank of Tokyo – Mitsubishi UFG:

Consumer spending seems to be hanging on by a thread in the second quarter and at least some of the boost in May likely came from the receipt of stimulus checks. But those checks are a one-time payout that disappear come June, which means real consumer spending will likely post a decline of as much as -0.5 percent in the second quarter compared to an increase of +1.5 percent in Q1.

The Treasury reported the 2009 budget deficit to date is $991 billion with the May 2009 deficit $190 billion.

The Federal Reserve has published 1Q 2009 Flow of Funds Accounts. The following summary table showing the change in debt caught my eye. Debt is contracting except at government level. Private sector net worth is at 2004 levels and is still declining (page 124 of this report).

Most of us have heard about Ron Paul's House Resolution 1207 to audit the Federal Reserve, and the Fed's intransigence to the point of hiring a high powered public relations person and the issuing of a new report, entitled Federal Reserve Credit and Liquidity Programs and the Balance Sheet to forestall attempts for an audit.

The Federal Reserve prepares this report as part of its efforts to enhance transparency in connection with its various programs to foster market liquidity and financial stability and to ensure appropriate accountability to the Congress and the public concerning policy actions taken to address the financial crisis.

This report does not even come close to transparency. My tax return was 48 pages, and this report was 24 pages – completely unauditable and loaded with nice graphs and tables without backup.

The Federal Reserve's June 2009 Biege Book (current economic conditions) pretty much reads like last month – close to an economic bottom but no cigar yet. This is a subjective analysis of the market, but as hard data follows several months later – this serves as an early warning flag of changes. As there is really no change in the tone of the commentary, the recession appears to be continuing. The headline summary:

• Manufacturing activity declined or remained at a low level across most Districts.
• Demand for nonfinancial services contracted across Districts reporting on this segment.
• Retail spending remained soft as consumers focused on purchasing less expensive necessities and shied away from buying luxury goods.
• New car purchases remained depressed, with several Districts indicating that tight credit conditions were hampering auto sales.
• Travel and tourism activity also declined.
• A number of Districts reported an uptick in home sales, and many said that new home construction appeared to have stabilized at very low levels.
• Vacancy rates for commercial properties were rising in many parts of the country, while developers are finding financing for new commercial projects increasingly difficult to obtain.
• Most Districts reported that overall lending activity was stable or weak, but with mixed results across loan categories. Credit conditions remained stringent or tightened further.
• Energy activity continued to weaken across most Districts, and demand for natural resources remained depressed. Planting and growing conditions varied across Districts as did agricultural input costs.
• Labor market conditions continued to be weak across the country, with wages generally remaining flat or falling. Two Districts also mentioned employers’ plans to scale back employee benefit programs. The Atlanta, Chicago, and St. Louis Districts reported that some state and local governments faced hiring freezes or outright job cuts. While manufacturing employment levels remained low, some Districts saw signs that job losses may be moderating.
• With few exceptions, Districts reported that prices at all stages of production were generally flat or falling. The notable exception to the downward pressure on prices was the widely-reported increase in oil prices.

The trade deficit widened slightly in April 2009, with both exports and imports falling. With commodity and energy prices rising in May, the trade deficit will rise in May.

Wholesale trade – sales (down -0.4% MoM / -19.5% YoY) and inventories (down -1.4% MoM / -6.2% YoY) – continued to fall in April 2009. There is a green shoot here in that there is a definite trend in getting the inventory to sales ratios to pre-recessionary levels. However, it will take several years to get inventories in order in this sector. The consolidated March 2009 total business (manufacturing, retail, and wholesalers) shows the same result with both sales and inventories down – with inventories more down than sales.

Economists Barry Eichengreen and Kevin O'Rourke, as part of a broader study comparing our current Great Recession with the Great Depression offered the following charts.

My opinion is that the economic data does not support at this time a depression doomsday scenario. Data in most cases is no longer in free fall, and a significant amount of data indicates a bottoming process. Eichengreen and O'Rourke summarized their study:

The world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30. The good news, of course, is that the policy response is very different. The question now is whether that policy response will work.

The Conference Board April 2009 Employment Trends Index declined. Even though April employment data has been sliced and diced a month ago, this index's value is that it tries to identify underlying trends. The Conference Board's Senior Economist Gad Levanon take on the data:

The outlook for employment is much less negative than in prior months, but still it is not likely that employment growth will resume before the final quarter of the year. In April, the Employment Trends Index recorded its smallest decline since June 2008, and three of its eight components actually showed an improvement.

Mortgage applications are hitting the wall. The four week moving average of mortgage loan application volume decreased 8.7% (after dropping the same amount last week) and increased 14% compared with the same week one year earlier. The refinance share of mortgage activity decreased slightly to 60% of applications. This is not good news as the trend line on mortgages still is down – and that means the volumes of homes being sold is not rising regardless of any pundits assertions. The average interest rate for 30-year fixed-rate mortgages increased over 30 basis points this week to 5.57%.

The 4 week moving average of initial unemployment claims improved slightly to 621,750. It is too early to say that the ever-so-slightly improvement in the unemployment claims is a trend.

Filing for Bankruptcy: Aviza Technology (AVZA), MagnaChip Semiconductor, Crescent Resources Bank failures this week: none.

Economic Forecasts Published This Past Week

The WLI from ECRI is continuing to show improvement in economic conditions six months from now. In their statement last Friday, they said:

With WLI growth rising to its best reading in a year and a half – namely, since the recession began – economic recovery prospects are brightening rapidly.

Every six months, the oldest survey of economists (Livingston Survey) is issued. The June 2009 survey results of the median value of the 32 economic forecasters:

Disclosures: long MMFs, PYEMX, EWZ, TBT, PGJ, EWY, DBC, EWA, EWC, EWT, PIN, Physical Gold

Comments

[fran:]

YOU ARE CORRECT--

we can't know what we don't know. if it were otherwise--

YOU WOULDN'T BE WRITING AND I WOULDN'T BE READING ARTICLES FOUND IN SA.

Jun 15 09:59 AM

[Old Trader:]

Bloomberg TV had an interesting interview with the CEO of Union Pacific that aired over the weekend. At the very start of the segment, he said that their traffic seems to have hit a trough, but he sees absolutely no sign of any upturn. Given that rail traffic is considered a leading indicator for the economy, that certainly doesn't bode well.

Jun 15 10:26 AM

[John Lounsbury:]

Steve - - -

First, I want to apologize. I posted an Instablog this morning that referenced the Eichengreen and O'Rourke research paper and neglected to notice that you had already referenced them here. I will put a comment on the Instablog to cite the reference.

Secondly, while I referred to a Financial Times article that cited the E & O work and referred to that article as "doom and gloom", the tone of your article is more balanced - what I would call "assessment and reality".

I found the comprehensive nature of this article to be one of the best overviews of the current economy and ourlook that I have read. For those of us who try to research and report of various economic and investment issues, you have provided some good data to support further work, while giving your own thorough analysis.

Thanks.

Jun 15 10:26 AM

[Mono:]

great read

to expand on JL- "assessment and reality" to a T. in all honesty i have read many of your pieces and almost think you a glass half full man. you report on the economic positives in the news- factual basis- and never let negative biased in

much appreciated

Jun 15 10:40 AM

[Mad Hedge F...:]

Have the markets gotten ahead of themselves? Is there an arbitrage here? Despite the connection with the previous administration, I think that a “W” shaped recovery is looking more plausible every day. I look forward to your erudite comments.

Jun 15 10:50 AM

[thiazole:]

" A recovery to me means a return to the growth line of the past. I do not believe this will happen."

Well, there lies the difference. Most people consider a recovery as the point where GDP is no longer contracting. Those of us who have been chanting that we are getting close to a recovery are saying that the economy will stop contracting soon, not that we'll resume robust growth or that everything will be hunky dory soon. Things were hunky dory after the last recession until at LEAST 2003 and probably 2004 or 2005. That doesn't mean we were in recession for 4 years. We entered the recovery in late 2001.

Jun 15 11:09 AM

[John Lounsbury:]

thiazole - - -

You make a very good point about "bottoms" and "recoveries". A bottom is a necessary condition for a recovery, but not a sufficient condition. There is no assurance that when GDP change reaches zero that it must turn positive. A period of more than one quarter at or near zero GDP change can happen. Some think that is a risk in the current economy.

All that being said, the author provides a graph of the ECRI leading and concurrent economic indicators. The coincidence indicator is still falling (blue line). Somewhere close to the bottom of the recession (end of contraction), this blue line must become flat. For a "V shaped" recovery, the "flat" might be a single point, with subsequent upward movement. In the current situation, a "V" might not be the shape of recovery, but a few are looking for it. I call them the cheerleaders. A less ideal path for this economic cycle is likely, in my opinion.

Finally, I'll repeat something I said elsewhere: "It is appropriate that the line for the ECRI coincidence indicator is blue because that is the color of my face resulting from holding my breath waiting for the line to flatten to zero slope."

Jun 15 01:02 PM

[carey_jim:]

In America, if you're not an optimist then, almost by definition, you are a pessimist. I think this is a result of our advertisement culture and the need we all face to sell ourselves to employers and, sometimes, even to each other.

So if you don't put a positive spin on yourself, your product and the economy, it is assumed that you must be a first cousin of Doctor Doom.

In Europe, as often as not, when they have a photograph taken they simply look into the camera. They don't need to smile to make everyone think that they are happy. They are whatever they are, at any given moment, and if you don't like it it's your problem.

Keeping telling us the truth as you see it and don't be defensive about it. We have enough corporate advertisers. We don't need any more.

Jun 15 01:16 PM

[thiazole:]

Their coincident indicator has been a VERY good indicator of real time economic growth throughout its history, but you have to consider that its latest data point was April. Even the most bullish among us don't believe that April was the bottom. I think they will be updating their coincident indicator index soon to include May. Even then, when I look back to actual coincident indicator index data for other recessions, the turn often "just happens". There was no warning the month before. As a result, the nose dive from April to May might still be in a nose dive and yet we could see an upturn in June.


On Jun 15 01:02 PM John Lounsbury wrote:

> thiazole - - -
>
> You make a very good point about "bottoms" and "recoveries". A bottom
> is a necessary condition for a recovery, but not a sufficient condition.
> There is no assurance that when GDP change reaches zero that it must
> turn positive. A period of more than one quarter at or near zero
> GDP change can happen. Some think that is a risk in the current economy.
>
>
> All that being said, the author provides a graph of the ECRI leading
> and concurrent economic indicators. The coincidence indicator is
> still falling (blue line). Somewhere close to the bottom of the recession
> (end of contraction), this blue line must become flat. For a "V shaped"
> recovery, the "flat" might be a single point, with subsequent upward
> movement. In the current situation, a "V" might not be the shape
> of recovery, but a few are looking for it. I call them the cheerleaders.
> A less ideal path for this economic cycle is likely, in my opinion.
>
>
> Finally, I'll repeat something I said elsewhere: "It is appropriate
> that the line for the ECRI coincidence indicator is blue because
> that is the color of my face resulting from holding my breath waiting
> for the line to flatten to zero slope."

Jun 15 01:26 PM

[thiazole:]

Sorry, I meant "the data from April to May might still be in a nosedive".

On Jun 15 01:26 PM thiazole wrote:


> As a result, the nose dive from April to
> May might still be in a nose dive and yet we could see an upturn
> in June.

Jun 15 01:28 PM

[bebido:]

Another great article by Hansen. Keep up the good work.

Jun 15 01:33 PM

[ain't no fo...:]

I believe that most analysts, as well as "pundits", media and individual investors, are trapped by our own limited and rather myopic views of the economic world at large. This is a natural human state, and not a necessarily negative one, at least not usually. As individuals, we tend to make projections based on what we have personally observed and experienced, and have therefore experientially come to believe, and act on, what we see as certain inviolable rules based on our relatively short-term personal life experience within the markets - most of us have been around them for what, a maximum of 25-30 years? Some longer, obviously, but many more for a shorter period I would venture. I don't think most of us are really capable of taking a century-long perspective (or even longer) except in the most limited, cursory way... if we didn't live it, perhaps we can't as effectively extract the important facts and lessons from it, except in a more distant and disembodied way.

It may therefore follow that most of us participating in the markets today have become psychologically biased toward the bullish side, because that is all we have ever really lived through for 25 years - the secular bull market that existed and shaped our professional thoughts and our personal lifestyles from 1982 to 2007 (or 2000, depending on your personal view). All cyclical bear trends were quickly beaten back by the predominant bull trend, recessions prior to this one were short, relatively painless for the middle class (and certainly the uber class), with the pain limited primarily to the blue collar/ manufacturing employment sector (and we partially solved that exposure by sending many of those jobs to overseas markets!), and eventually the relentless march of the bull onward and upward resumed as it always had.

But, despite the somewhat deeper 2000-2003 bear market, and now this current Great Recession as Steve Hansen so aptly calls it, which is hitting across ALL income stratas, and all countries, our bullish mentality has become so ingrained over three decades that we have once again become predisposed to believe that ALL bear interruptions, even this one, will revert to the bullish historical trend very soon... "what was, will always be".

To me that demonstrates a somewhat flawed and egotistical logic, and I disagree with it on a number of technical, fundamental and intellectual levels. If life, and the markets, were only just so simple and predictable!

But even if I WERE to believe that history will just continue repeating itself, there is still the black swan event to be considered, which can render ALL predictive assumptions worthless, as we have seen quite convincingly over the past 18 months, and which could possibly be raising its head again in any number of ways.

In other words, the money in my opinion gets made by thinking outside of the box, and the great majority of market participants and observers, myself included, are inclined to be so tethered to our own comfortable and highly personalized world and life experience that we have become incapable of, and perhaps fearful of, making any sort of leap of logic that would take us out of our comfortable, familiar container.

And so, for us "What was, will always be".

I don't think Mister Market would necessarily agree with us on that.

Jun 15 02:52 PM

[R. Greg Osmond:]

A pessimist both are we. I can't help but think there is another shoe to fall just around the corner. The time of year is not traditionally good for the stock market. The rally ran into June this year but the well trafficked mantra "sell in May and go away" is probably going to be true again this year. We need to get through Sept/Oct to really see what the first Obama year is going to shape up like. I am sitting pretty much in cash except for a little speculative Nova Gold and an upstart oil and gas technology company WEE.v.

Real estate in Newfoundland has been a great investment through this economic downturn as it turns out. Glad I am holding a chunk of that. Check out my blog for more info.
Thanks Steve for your insightful posts.

Jun 15 03:44 PM

[mikesa69:]

I wonder if that Livingston Survey looked any different last year. For that matter, I bet it'll look pretty much the same next year as well. All the numbers just magically get much better by 2010. Talk about kicking the can...

Are these CNBC economists?

Jun 15 04:10 PM

[thiazole:]

The 70s were part of a seculur bear market, but buying in the middle of recessions was still profitable. In fact, I'd say the peak of 1973 to the bottom in 1982 may have been worse than any other 9 year period in the US including the Great Depression when you figure the losses do to inflation and the fact that the stock market still fell during that period.

Every 34 years we have a 17 year secular bear market and the market trades mostly sideways during that 17 years. But it still has dips and peaks, and if you buy the dips and sell the peaks, you'll make money. In the 65-82 bear market, the Dow traded in a range from about 600 to 1050, and during this bear market the range has been 6500-14,000. In 1965, the Dow was around 800 and in 1982 it was around 800. In 1999, the Dow was closing in on 10,000 and I suspect in 2016 it could also be around 10,000.

If you bought stocks when the Dow was closer to 600 in the 70s, you made money. If you bought close to 1050, you lost money. This market now isn't that much different.
We AREN'T going to have another Great Depression and we WILL recover from this recession, but the economy will perform like a turd for the next several years and we'll have at least 1 more recession if not 2 between now and 2016 and the stock market will only be attractive in the middle of those recessions.


On Jun 15 02:52 PM wpdragon wrote:

> I believe that most analysts, as well as "pundits", media and individual
> investors, are trapped by our own limited and rather myopic views
> of the economic world at large. This is a natural human state, and
> not a necessarily negative one, at least not usually. As individuals,
> we tend to make projections based on what we have personally observed
> and experienced, and have therefore experientially come to believe,
> and act on, what we see as certain inviolable rules based on our
> relatively short-term personal life experience within the markets
> - most of us have been around them for what, a maximum of 25-30 years?
> Some longer, obviously, but many more for a shorter period I would
> venture. I don't think most of us are really capable of taking a
> century-long perspective (or even longer) except in the most limited,
> cursory way... if we didn't live it, perhaps we can't as effectively
> extract the important facts and lessons from it, except in a more
> distant and disembodied way.
>
> It may therefore follow that most of us participating in the markets
> today have become psychologically biased toward the bullish side,
> because that is all we have ever really lived through for 25 years
> - the secular bull market that existed and shaped our professional
> thoughts and our personal lifestyles from 1982 to 2007 (or 2000,
> depending on your personal view). All cyclical bear trends were quickly
> beaten back by the predominant bull trend, recessions prior to this
> one were short, relatively painless for the middle class (and certainly
> the uber class), with the pain limited primarily to the blue collar/
> manufacturing employment sector (and we partially solved that exposure
> by sending many of those jobs to overseas markets!), and eventually
> the relentless march of the bull onward and upward resumed as it
> always had.
>
> But, despite the somewhat deeper 2000-2003 bear market, and now this
> current Great Recession as Steve Hansen so aptly calls it, which
> is hitting across ALL income stratas, and all countries, our bullish
> mentality has become so ingrained over three decades that we have
> once again become predisposed to believe that ALL bear interruptions,
> even this one, will revert to the bullish historical trend very soon...
> "what was, will always be".
>
> To me that demonstrates a somewhat flawed and egotistical logic,
> and I disagree with it on a number of technical, fundamental and
> intellectual levels. If life, and the markets, were only just so
> simple and predictable!
>
> But even if I WERE to believe that history will just continue repeating
> itself, there is still the black swan event to be considered, which
> can render ALL predictive assumptions worthless, as we have seen
> quite convincingly over the past 18 months, and which could possibly
> be raising its head again in any number of ways.
>
> In other words, the money in my opinion gets made by thinking outside
> of the box, and the great majority of market participants and observers,
> myself included, are inclined to be so tethered to our own comfortable
> and highly personalized world and life experience that we have become
> incapable of, and perhaps fearful of, making any sort of leap of
> logic that would take us out of our comfortable, familiar container.
>
>
> And so, for us "What was, will always be".
>
> I don't think Mister Market would necessarily agree with us on that.

Jun 15 04:58 PM

[Steven Hansen:]

re·cov·er·y
n. pl. re·cov·er·ies
1. The act, process, duration, or an instance of recovering.
2. A return to a normal condition.
3. Something gained or restored in recovering.
4. The act of obtaining usable substances from unusable sources.

the political economists have perverted the definition of recovery to simply meaning not falling - this is the point of the article to continue to sensitize us to the meaning of the word..

although i agree equities appear to be overpriced based on the economy, i do not confuse the two thinking they play with the same set of rules.

Jun 15 07:43 PM

[Fighting Yoda:]

"consumer spending would grow at an average rate of only 1.3 percent per year. " - I don't know where this growth can possibly come from - with unemployment and consumer deleveraging -consumption should/would decrease. Consumers are actually increasing savings - additional reduction in consumption.

Lot of green shoots and other forecasts come from the very set of people who have got nothing ever right. How many analyst saw this downturn - most did not see anything even after the writing was on the wall- the credit crunch started in August '07 - markets peaked in Oct 31'07. So these analysts never could see anything - they had the exact same bullish thesis then as now.

The Fed - these fools never saw anything coming - "no problem, small problem, sub-prime only problem, no recession, shallow recession, recovery in second half of '08 - suddenly major recession - biggest crisis since Depression". All these people have a vested interest in making bullish forecasts - that is what is the Wall Street business model - they want your money for their bonuses and Hampton homes, and yachts.

I don't buy into any bullish forecasts - the excesses of the last decade will take considerably longer to clean up, mean while housing and unemployment would keep pushing the economy downwards. It is a downwards sloping L.

Jun 15 10:23 PM

[theblindtib...:]

You comment :The bottom line is that we really do not understand what will happen next. Historical economic theories are inoperative in the face of unprecedented economic intervention

I think this nails it. It reminds of the old adage "No battle plan survives first contact with the enemy". We are in uncharted waters here. The level of government intervention, the forfeiture of our children's future with an unheralded increase in debt, the rise of financial shell games as a percentage of GDP, the withering influence of unprovable shibboleths like "systemic risk" on prudent judgement, have all created a PR and pundits pantomime. No need to send in the clowns. They are running the show.

Jun 16 03:11 AM

[thiazole:]

Perhaps an economic recovery should be defined they same way the naked word recovery is, but this just isn't the case and it causes confusion to use the term to mean something it doesn't.

www.investorwords.com/...

recovery
Definition: A period in a business cycle following a recession, during which the GDP rises.


On Jun 15 07:43 PM Steven Hansen wrote:

> re·cov·er·y
> n. pl. re·cov·er·ies
> 1. The act, process, duration, or an instance of recovering.
> 2. A return to a normal condition.
> 3. Something gained or restored in recovering.
> 4. The act of obtaining usable substances from unusable sources.
>
>
> the political economists have perverted the definition of recovery
> to simply meaning not falling - this is the point of the article
> to continue to sensitize us to the meaning of the word..
>
> although i agree equities appear to be overpriced based on the economy,
> i do not confuse the two thinking they play with the same set of
> rules.

Jun 16 11:31 AM

[Donald Ingram:]

Spot on! And funny too!
Once the downturn starts in earnest - everyone will know. As far as last Winter and this late Spring drop is concerned, you ain't seen nuttin yet! This current bear market rally will continue mainly sideways until sometime this Fall when the trap door will open. The markets will zoom down right on past the March lows. The subsequent bounce will create a "last gasp" rally post Christmas into next Spring before the market totally capitulates at Dow 1450.


On Jun 16 03:11 AM theblindtibetan wrote:

> You comment :The bottom line is that we really do not understand
> what will happen next. Historical economic theories are inoperative
> in the face of unprecedented economic intervention
>
> I think this nails it. It reminds of the old adage "No battle plan
> survives first contact with the enemy". We are in uncharted waters
> here. The level of government intervention, the forfeiture of our
> children's future with an unheralded increase in debt, the rise of
> financial shell games as a percentage of GDP, the withering influence
> of unprovable shibboleths like "systemic risk" on prudent judgement,
> have all created a PR and pundits pantomime. No need to send in the
> clowns. They are running the show.

Jun 18 12:03 AM

[H. T. Love:]

Ditto in the ports. They are reporting very low levels of container (used for inport/export activities) traffic. This supoports the reported drops in import/export volumes that we've seen.

HardToLove


On Jun 15 10:26 AM Old Trader wrote:

> Bloomberg TV had an interesting interview with the CEO of Union Pacific
> that aired over the weekend. At the very start of the segment, he
> said that their traffic seems to have hit a trough, but he sees absolutely
> no sign of any upturn. Given that rail traffic is considered a leading
> indicator for the economy, that certainly doesn't bode well.

Jul 03 10:50 AM