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10 Reasons Why A Double Dip May Happen

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http://finance.yahoo.com/news/Top-10-Reasons-For-a-etfguide-3232264726.html;_ylt=Alw6dD9LDfDwN7dE.PJS4SS7YWsA;_ylu=X3oDMTFhM2JlYW5kBHBvcwM4BHNlYwNzcGVjaWFsRmVhdHVyZXMEc2xrA3RvcDEwcmVhc29ucw--?x=0

1. The ECRI weekly leading indicators have dropped to minus 7.7%. There has been no case since its existence when a recession didn't take place if this indicator fell to minus 10%. This doesn't mean that it has to fall that low, a recession is still very likely if it even gets close. Falling below zero and staying in that range for any period of time also signals a recession. In the 2007, the recession began three months after this indicator turned negative.

2. Global shipping has experienced a collapse in the last six weeks. The Baltic Dry Shipping Index has fallen from 4209 on May 26th to 2018 in early July, a drop of over 50%. The BDI is now as low as it was in May 2009. Its high in 2008 was 11,793.

3. Interest rates on U.S. treasuries (NYSEArca: TLT - News) have been falling rapidly and this indicates a weakening economy. The yield on the two-year note even hit an all-time low recently, dropping below its rate during the Credit Crisis in late 2008 when the global economy was in freefall.

4. The stock market is turning down and the Dow Industrials (NYSEArca: DIA - News) and S&P 500 (NYSEArca: SPY - News) have both given bear market trading signals. The small cap Russell 2000 (NYSEArca: IWM - News) has already experienced a bear market loss. The stock market peaked only two months before the 2007 recession began.

5. U.S. Consumer (NYSEArca: XLY - News) confidence took a nosedive in June falling 10 points to 52.9. A reading of 90 or above indicates a healthy confidence level. Confidence hasn't gotten anywhere near that level during the recovery. Prior to the Credit Crisis, consumer spending was responsible for 72% of GDP. The consumer is the 800 pound gorilla that determines the fate of the economy.

6. The jobs picture hasn't improved and isn't likely to get better for a long time. Weekly unemployment claims were 454,00 this week. Anything around or above 400,000 indicates a recessionary environment. Claims have not even gotten that low at any point during the recovery. Surveys indicate that job offers for 2010 graduating students are few and far between. Long-term unemployment is far higher than it has been in any post-War recession.

7. Housing, the epicenter of the Credit Crisis, is getting worse. New Homes (NYSEArca: XHB) sales fell to an all-time low recently.

8. Government stimulus is declining and turning into retrenchment globally. The 2009 U.S. stimulus package's impact on the economy peaked this spring and spending will run out by the end of this year. It is highly unlikely a new stimulus package will appear in 2011. Government spending didn't just stimulate the recovery, government spending WAS the recovery. Without it, there will be a sharp drop in economic activity.

9. Taxes are increasing globally and higher taxes are a drag on economic growth. In the U.S., the Bush tax cuts expire at the end of the year. In the UK, capital gains are going up from 18% to 28% and the VAT is being raised from 17.5% to 20.0%. In Japan, there is a proposal to double the national sales tax from 5% to 10%. In the EU, countries are trying to outdo each other in imposing new and higher taxes.

10. The eurozone (NYSEArca: FXE - News) debt crisis is not yet resolved, but has been temporarily postponed. Greece could still default and problems are likely to continue in Portugal, Spain, Ireland and Italy. These can continue to negatively impact the global economy for a long time to come.

Disclosure: No positions

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10 Reasons Why A Double Dip May Happen

Apart from the stock market point which seems to have a volatile mind of its own, the other points seem reasonable indicators of a continued recession. Rather than a double dip, it looks to me like we are still in the first one with massive increases in government making GDP look better for a short while. Since recession seems to mean two successive quarters of GDP falls, governments can stop it whenever they want by just spending more. That doesn't really fix anything but can get GDP going positive for a time.

With government spending hitting the brakes, I can't see how a fall in GDP is avoidable.

I guess GDP is just a pointless measure for declaring a recession if it doesn't include changes in debt levels. I can make my income and expenditure grow by £10k using a credit card after a paycut but I will be less wealthy overall and in big trouble if I keep that up.

VMR.

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Apart from the stock market point which seems to have a volatile mind of its own, the other points seem reasonable indicators of a continued recession. Rather than a double dip, it looks to me like we are still in the first one with massive increases in government making GDP look better for a short while. Since recession seems to mean two successive quarters of GDP falls, governments can stop it whenever they want by just spending more. That doesn't really fix anything but can get GDP going positive for a time.

With government spending hitting the brakes, I can't see how a fall in GDP is avoidable.

I guess GDP is just a pointless measure for declaring a recession if it doesn't include changes in debt levels. I can make my income and expenditure grow by £10k using a credit card after a paycut but I will be less wealthy overall and in big trouble if I keep that up.

VMR.

This is what I’ve been saying all along the way. The recovery HASN'T been anything other than a government stimulated recovery in the hope that the psychological effect of coming out (on paper) brings confidence back to the market in order to stimulate an actual recovery. I don't think the latter is possible with a few mind games.

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Apart from the stock market point which seems to have a volatile mind of its own, the other points seem reasonable indicators of a continued recession. Rather than a double dip, it looks to me like we are still in the first one with massive increases in government making GDP look better for a short while. Since recession seems to mean two successive quarters of GDP falls, governments can stop it whenever they want by just spending more. That doesn't really fix anything but can get GDP going positive for a time.

With government spending hitting the brakes, I can't see how a fall in GDP is avoidable.

I guess GDP is just a pointless measure for declaring a recession if it doesn't include changes in debt levels. I can make my income and expenditure grow by £10k using a credit card after a paycut but I will be less wealthy overall and in big trouble if I keep that up.

VMR.

Maybe GDP figures should have goverment borrowing subtracted from them, so people can see what the REAL GDP growth is

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This is what I’ve been saying all along the way. The recovery HASN'T been anything other than a government stimulated recovery in the hope that the psychological effect of coming out (on paper) brings confidence back to the market in order to stimulate an actual recovery. I don't think the latter is possible with a few mind games.

IIRC the recovery, if that is what we can call it, began when Brown came to power in Number 11 and expanded the civil service and debt through HPI.

We have simply had a delusional period of prosperity while racking up massive debt that, so far, has not been repaid.

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http://finance.yahoo.com/news/Top-10-Reasons-For-a-etfguide-3232264726.html;_ylt=Alw6dD9LDfDwN7dE.PJS4SS7YWsA;_ylu=X3oDMTFhM2JlYW5kBHBvcwM4BHNlYwNzcGVjaWFsRmVhdHVyZXMEc2xrA3RvcDEwcmVhc29ucw--?x=0

1. The ECRI weekly leading indicators have dropped to minus 7.7%. There has been no case since its existence when a recession didn't take place if this indicator fell to minus 10%. This doesn't mean that it has to fall that low, a recession is still very likely if it even gets close. Falling below zero and staying in that range for any period of time also signals a recession. In the 2007, the recession began three months after this indicator turned negative.

So what do you think will happen if the 'monster QE' reported last week comes in to pay this autumn in the USA? Apparently they are planning up to $5 TRILLION.

Quite clearly the current stimulus packages have failed! Look at the cost of them!

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IIRC the recovery, if that is what we can call it, began when Brown came to power in Number 11 and expanded the civil service and debt through HPI.

We have simply had a delusional period of prosperity while racking up massive debt that, so far, has not been repaid.

I really do think you should use these words in your next birthday card to Gordon Brown. He's been rumbled! Mind you, I do recall folk becoming really shirty with me when I said this is how it would all end about 5 years ago. ( terrible cheshire cat grin )

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http://finance.yahoo.com/news/Top-10-Reasons-For-a-etfguide-3232264726.html;_ylt=Alw6dD9LDfDwN7dE.PJS4SS7YWsA;_ylu=X3oDMTFhM2JlYW5kBHBvcwM4BHNlYwNzcGVjaWFsRmVhdHVyZXMEc2xrA3RvcDEwcmVhc29ucw--?x=0

1. The ECRI weekly leading indicators have dropped to minus 7.7%. There has been no case since its existence when a recession didn't take place if this indicator fell to minus 10%. This doesn't mean that it has to fall that low, a recession is still very likely if it even gets close. Falling below zero and staying in that range for any period of time also signals a recession. In the 2007, the recession began three months after this indicator turned negative.

http://www.zerohedge.com/article/another-week-another-drop-ecri-index-another-bizarro-reason-chase-stocks-higher

The ECRI Leading Indicators just can't stop falling. From a revised annualized -7.6% drop last week, this week the index dropped to a fresh low of -8.3%. Should be sufficient for another major leg higher in stocks. Of course, the funniest thing is listening to the index creators describe how while the index was a perfect leading indicator on the way up, it is completely useless on the way down. With an attitude like that, one would almost think Columbia is part of the Ivy League, and status quo perpetuation is a prerequisite for not losing tenure. But yes, according to the index the probability of a recession is now about 90%; compare this number to that spewed forth by Goldman's Recession Prediction Eight Ball, which has the risk of a double dip at just about precisely 1.6%.

ECRI%207.9.jpg

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Between the housing sales in the US and the BDI, I think it's time to start transferring money from the bank to under the bed again and start investing in tinned food...

This time round is looking to be worse and governments are now talking austerity not bailout. Full steam ahead, straight into the Even Greater Depression.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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