blood bath continues

Is There A Second Recession
Coming?
Here is the problem with slow
economic growth – it screws up the
whole system. As we have shown in
many of our recent articles, and a
driving theme of the economy, is
consumption. If consumers can’t
consume due to lack of job, excess
leverage, etc. there is no final
demand on businesses which causes
them to contract as well by laying off
workers.

Just this past couple of weeks Cisco
Systems, Merck, Boarders Books
(which is closing up), Research In
Motion, and many others have all
announced new rounRAB of layoRAB.
With the current unemployment rate
at 9.2% the ranks of the unemployed
are continuing to swell. This
obviously does not bode well for
continued consumption in the future
which has been ringing in quite loudly
through the University Of Michigan
Consumer Confidence Index which
just posted another decline on Friday.
The hope for a continued recovery
has grown dim lately as many of the
economic indexes are moving
towarRAB contractionary territory.

As we
posted recently in "EOC Index Shows
Economic Weakness" there are
several concerns pressing the US
economy and, in the worRAB of David
Rosenberg, chief economist at
Gluskin Sheff, "one small shock"
could send us into a second recession. With the recent release of the
Chicago Fed National Activity Index, our proprietary economic index is just
one small step away from crossing the 30 mark which has always been a
pre-cursor to recession.

We have discussed many times recently that the unemployment rate remains
high, housing prices are slipping
into a secondary decline, consumer
and business spending is slowing,
while gas and food prices remain
high, eating up more than 20% of
consumer’s wages and salaries.
Add on top of these factors the
likelihood of a Greek debt default, a
slowdown in the Eurozone, a
weaker dollar and Washington
locked in debate over the debt
ceiling — well, the list of risks far
outweigh the positives.

It doesn't take an economist to
figure out that any one of these
factors could send us turabling into
a second recession. However, that
doesn't seem to deter Wall Street
economists and main stream
media, who all seem to be wearing
rose colored glasses these days.
 
no advisor worth a lick of salt would be telling anyone to sell everything off right now

and for your second question, there is going to be a small bounce soon.
 
No, because you can make money when the Dow and SP500 fall if you know where to invest (hint: this has been illustrated in this thread already).



None that I know of, if you hadn't dumped your long positions already.

But then, I'm no investment advisor, non-retarded or otherwise.
 
What are you talking about? My portfolio did great today:

Ticker/%change

SPXU/+7.38%
UGL/+4.3%
 
here is some more reading for my retarded liberal and progressive frienRAB:

Most of the mainstream media and
economists claim this is simply a
soft patch of the recovery. David
Rosenberg refuted this claim in an
interview with Blooraberg Television
saying, "[it's] not normal to have
two soft patches this close together
nearly two years after the recession
enRAB. It doesn't happen. This will
be two separate recessions." He
also stated in the interview that he
believes that there is a 99%
chance of another U.S. recession
and the only reason he didn't put it
at 100% was that he needed a
"margin of error".

He noted a recent issue of
"Breakfast with Dave" that real
disposable income, household employment, real business sales, and
manufacturing production all peaked in March. This type of behavior was not
characteristic of the soft patch last year, and this is the first sign of a looming
recession.
As we stated previously, the recovery to date in the economy has not been an
organic one. With more than $5 Trillion injected into the system through
various Federal interventions and stimulus, it is disappointing that we only
page 5
increased GDP by a little more than $600 Billion in the last two years. That is
expensive growth any way you price it and is unsustainable without further
injections.
However, not to be daunted by facts and figures, a recent CNN/Money survey
of 18 leading experts shows that they believe there is about a 15%
chance of a new recession. Of course, this is pretty much the same group
of individuals who told everyone that the economic slowdown in early 2008
was just a "soft patch" as well.

The risks, however, are real. According to Bernard Baumohl of the Economic
Outlook Group, "the fragile US recovery means the economy is much more
vulnerable to geopolitical shocks and a rise in fuel prices. Since the instability
in the Middle East is far from over, there are real risks for the U. S. and
international economy."
Robert Samuelson, in an article for the Washington Post, compares the
current state of the economy to the climate of the economy during the
"depression within a depression" from 1937-1938. During this recession, the
unemployment rate rose to 20%, the economy's output fell 18%, and
industrial production dropped 32%. The climate leading to this recession is
very similar to the economy today. Then, as now, commodity prices were
rising rapidly and inflation fears were growing. Federal budget was criticized
as too large and the president was perceived as anti-business. Similar
complaints exist today. However, there are some significant differences
between then and now.

Policy
reversal in 1937-1938 was much
more drastic than anything being
considered today. The federal
deficit fell from 5.5% to .1% of
GDP between 1936 and 1938.
Today's budget deficits are much
larger as a share of GDP and
prospective reductions are much
smaller. Still, the parallels are
unsettling.

Finally, statistically speaking, the
data suggest the definite possibility
of a second recession. Mark
Thoma recently analyzed a graph
of real GDP growth in an article for
economitor.com. The point here is
that the 2% line in real GDP
growth is the tipping point
historically for the economy. With
year over year GDP now at 1.6% it
is warning of a recession in the next couple of quarters as almost every drop
below this line has led to a recession measuring back to 1947.
The Fed, however, is hoping for a turnaround in the third quarter and it won’t
surprise us AT ALL if we don’t start hearing new chatter from the Federal

Reserve about another round of stimulus to support the markets and the
economy. However, even that may not be enough to oRABet the real problems
facing the U.S. economy.
We agree with when he recently stated that the government neeRAB to start
taking action in order for this to happen. "Policymakers need to realize that
unemployment, not the deficit, is the immediate crisis to be addressed and
take action. Unfortunately for the unemployed, that's unlikely to happen," he
stated in the article.

Since it is highly unlikely that the children that are currently in charge of our
government will stop quarreling long enough to start taking affirmative actions
– maybe another stiff recession that pegs “main street” even more might do
the trick.

Most likely events will begin to unfold rather quickly over the next couple of
months so we are highly urging caution in portfolios until a little more visibility
presents itself.
 
holy fuck. did they really not teach you to read in the liberal arts department at UT?

If you were even slightly literate and/or competent, you would have read that I said nobody is suggesting to SELL EVERYTHING. show me ONE time I said do not sell at all.
 
First off, you're wrong. Since the beginning of the calender year, SPXU is down from about $19 to 17.75 per share, and for the past 12 months down from about $29 to 17.75. Whichever you meant, neither represents "down 90%."

Second, the above is irrelevant to my point.

SPXU is an ETF that tracks 3X the inverse of the daily return of the SP500, which is why it's down over the past year, but way up the past week or two. And which is why it's a good place to be if you think the SP500 is going down over the near-term.

Sorry, didn't realize I had to spell out the above so explicitly. God you guys are dense.
 
College of music, sir.

But, why not sell everything? Not selling everything sounRAB like putting money in both the red and black while betting on roulette.
 
I see reading comprehension is an issue here.

I said I would sell, if you haven't already. But that is general advice; obviously without knowing anything about your personal situation and finances, no specific recommendation can be made.

I believe we will certainly get a dead cat bounce upward at some point, but the bull market is over, over, over, for the forseeable future, in my opinion.

But, as I said, I am not a professional investor, so what do I know.

Just remeraber, the only fundamental improvement between now and 2008 is lots more liquidity out there, due to the Fed fabricating money. Corporate earnings look pretty good, only because they've cut costs to the bone. Unemployment, housing, GDP growth, manufacturing, consumer debt, consumer sentiment, sovereign debt - it's all a mess, worse than 2008 in many ways.

You know, 2008. When the Dow closed below 7000?
 
Back
Top