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ECRI Index Continues To Plunge, Drops By 2.2 To -5.7, And Just 4.3 Away From "Guaranteed" Double Dip Territory
The ECRI weekly leading index is continuing its accelerating dive, and is now well into negative territory, hitting -5.7 for the past week: a 2.2 decline from the prior week. Here is why, as David Rosenberg, this is a critical indicator, and why we may have just 4.3 more points to go before the critical -10 threshold: "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)." At this rate of decline -10 will be taken out in the first week of July.
And some more recent observations on ECRI from Rosie:
Suffice it to say, when the ECRI was drifting lower in 2007, it got to -3.5%, where are we are now, in November and unbeknownst to the consensus at the time that a recession was only one month away. Remember that the economics community did not call for recession until after Lehman collapsed — nine months after it started; and go back to 2001, and the consensus did not call for recession until after 9/11 and again the economy had been in recession for a good six months).
Updated ECRI:
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Ain't looking good here.
WHEEEEEEE!
so does this mean buy?
lol
Sorry Deep, I have to correct you : STRONG buy opportunity. Who cares about economic indicators, if CEO´s of all global industries are reporting strong sales gains and there is absolute no sign of any dip in end demand...
Sorry, MrTrader, but I have to correct you slightly as well... 'CONVICTION BUY' !!!!
Conviction Buy on Gold, Guns and ammo...
and FOOD STUFFs and SEEDs
It WILL bounce......come executive order or central bank decree
Interesting that the ECRI boys are talking down their own metric. I wonder what the markets will look like at about 3:40 ET.
Sorry, I am ignorant here but are the LIs and ECRIs not similar measures ? If yes, what could explain the disparity in results ?
Have heard Lakshman defend "against" the double-dip a few months ago on yahoo tech talk.
They must not have seen the CNBC.com headline yesterday that said "Leading Indicators Soar In May".
Wasnt' Leo just last week pointing to the ECRI as "proof" that a double-dip recession (i.e., a deepening of the ongoing depression) was absolutely not going to happen?
Oh Leo, where are you? Leo, what say you now?
Canadians.... Always talking smack about the US economy.
Lashman doesn't want to appear to be crying "wolf" as he would be scalded in the MSM if he, for example, says "RECESSION IS HERE" and the S&P moves up 25 points. He's playing cool as he doesn't want to lose credibility should markets go sideways for weeks/months. Of course, in about 2 weeks he'll need to change his tune to avoid losing credibilty to the " -10% growth crowd=recession" crowd like us.
Look I am bearish but I also look closely at this chart technically. This week has a Demark Sequential exhaustion signal. The last signal occured 11/21/08
A question I have never seen addressed is how is the ECRI WLI affected by QE? Haven't the rules changed in the last few years?
Shhhh. Don't wake the comatose patients. A bearish looking chart means doomsday plain and simple.
My guess is that it will look like it did from March 2009 onward. What we're seeing, though, is that government interventions progressively cut themeselves in half each time they're used.....probably won't get a 14 month next time QE is used. I'm short for now, but not counting on S&P 400 in a straight line - more like a 3-5 year process. Very dangerous. Japan's Nikkei has been a series of 20-30% gains and declines for 22 years, off it's 40000 point peak.
second time around it will have no impact all besides the stock market where they intervene on a daily basis anyways;)))the economy will hit the rocks in the second half of the year for sure.
Free fall.
I always figured we would double dip. But, the pace in which its happening is even surprising to me. Many figures released over the past week show the level of deterioration is accelerating. And keep in mind that many states begin FY11 budgets July 1. So, the state worker implosion is about to leap into the picture. Its no wonder Obama demanded an immediate $50 billion infusion to the states this past weekend.
With the Senate voting down extending emergency unemployment benefits earlier this week, there looks to be very little political appetite for more stimulus. So, rather than another $300-500 billion stimulus and a $2 trillion QE 2.0, we'll probably just get a $3 trillion QE 2.0. Of course that doesn't really help the SEIU ... er I mean the states. And that's where the real action will be this fall.
The emerging markets can't help. The BDI has been down these past three weeks and heading into the crapper!
The problem here with the WLI is that trends can change on a dime. We could get to a -7.5 reading... and it might stabilize right there.
With that being said, the data clearly suggest a significant slowdown in the pipeline. I cannot image that earnings estimates can come close to holding up in such an environment.
But if you want to believe the fundamentals are strong... just wait until Leo's next update. ;)
Let's not forget: yes, the index moved down 2.2 percentage POINTS, but in going from -3.7% to -5.7%, the GROWTH RATE change is really 2/3.7 = -54% drop from last week. That, my ZH'ers, is a steep negative slope......
Actual index readings dropped 0.5 POINTS, from 123 to 122.5, which is a -0.4% decline in the actual index.
So...buy AAPL?
That always seems to be the solution these days. Hell, if AAPL weren't scorching higher every day, who knows where the SPX would be right now.
YUP AAPL is backbone of world economy...buy buy buy - everyone needs another gadget to keep em busy while waiting in the unemployment line.
more of those damned pesty growthy greenshoots...our robust economy with all of those millions of jobs one of the zh commentators kept mewing about in january is starting to turn this place into a circus....
Time to "Hide out in Gold" as CNBC loves to say. As opposed to sticking your head in the sand, I guess.
It woulbe interesting to see a chart of this indicator against the S&P.
There have been charts in posts on ZH. Have to search the archives of ZH but I seem to remember ECRI leads S&P by 3 to 6 months.
Boy, that's fucking nasty.
Nice to see an "indicator" that actually portrays what it feels like out here in Real America not FantasyLand.
S&p would be back to summer '09 lvls are at least vs. 10 yr and ECRI.....homie stocks already are nearing.
If it weren't for ZH, I would never see this number reported anywhere. Why is it not mentioned along with, for example, yesterday's Leading Indicators number which every business news agency worships?
N
F
S
Pretty simple, because it is bad news.
We are living in a scientific dictatorship, which gets closer to Orwell's 1984 by the day.
Exactly. This news doesn't fit the template. The current template in use is "Everything is good, so Buy!" The other template is "It's Bush's fault."
The templates are mutually exclusive, at least in the "1984" media.
Leading Economic Indicators = produced by government.
ECRI = produced by independent company to assist money managers actually earn money.
That's why.
Short. Succinct. Exact.
Me likey.
It was mentioned all the time on CNBS when it made its bottom in late 2008. Now that it has turned over, not so much.
A lot of big wigs use it. The guy over at Financial Sense Newshour- Jim Paplova went to cash when it started tom head down a couple of weeks ago.
Did we really have a mini-recovery? Or was that a large dead cat bounce, propelled upward by government stimulus? Is this not just a continuation of November 2008? Or going back to 2001 and the Greenspan interruption of market correction? So many questions - so little time! Help?
+1000
Please, don't tell Blackrock. I want to see those cunts get caught on the wrong side of a bear market again. I'll never get tired of it.
Especially the dumbass Bob Doll. What a fucking dope he is.
Harry,
Kudlow has been talking about it atleast. Now you know why we were all frustrated with your mkt call awhile back as I thought you were reading stuff from wrong sources. Further all you should read this......and wonder why............http://cbs4.com/local/internet.freedom.regulation.2.1757643.html
Sure would hate to be caught in a long position if that switch were flipped. Tough to get out with no internet.
What is ludicrous is the idea of a "double-dip" recession. For all I can see, we never got out of the first one.
'Double dip recession' will be avoided, instead directly plunge into Greatest Depression.
Double dip....Cope or Grizz?
True that. Just a brief fiat crack main line high, but it has already worn off, and now the piper must be paid
The first leg up was really a climb from the bottom of hell up the leg of a stunted midget.
No offense meant or implied to people of diminutive stature. I was referring to a cartoon midget. Yeah That's it. A Fricking Cartoon
7/15 folks, 7/15.. When the 50B union bailout fails, and it will, 1/2 a mill SEIU will be just like the 15 mill folks out of work, and all hell is gonnna break loose... Food and bullits, with 15 year old scotch to sooth the pain
The Zero Hedge Info is covering up the most recent data on the graph, rendering said graph, useless. Using Firefox.
I'm using Firefox, with Adblock Plus:
https://addons.mozilla.org/en-US/firefox/addon/1865/
Works fine.
Yeah, that is always the case for me too --- most graphs and charts here are cut off on the righthand side by the box that is entitled "The Zero Hedge Team". Come on, webmaster, fix this already!
Hold down your Ctrl key & "+" key makes everything larger & "-" key makes everything smaller.
ALT-F4 ftw
Wow I was looking for what you were talking about and couln't see it. Using opera 10.53 so went to take a look in firefox 3.6.3 and it's clear then went to look in old IE 6 and it's clear, and slow.
Hmmmmmm
use google chrome waaaaaay faster than any other browser
Double crap dip coming, until that extend and pretend daily and pump the junk parabolic!
http://ftalphaville.ft.com/blog/2010/06/18/265766/the-mirror-crackd/
"Keynesianism has not died because some alternative economic doctrine has triumphed. It has died for lack of funding."
Rosie why not leave the interpretation of the index to the guy who manages it
Discussing WLI DeclineYahoo Finance
June 18, 2010
- ECRI's Lakshman Achuthan talks with Yahoo's Tech Ticker about the recent movements in ECRI's Weekly Leading Index of U.S. economic growth.
http://www.businesscycle.com/news/press/1862/
It doesn't look like a big or little "V" to me, it looks like a check mark.
Now that the Waldorf ad has moved next to the graph it shows up fine.
Down another 4.3, which it will due to housing, and once we go to -10 plus for several weeks it is OVER. This fall will turn out to be the proof that the equity markets are no longer forward looking predictors but instead the casino and manipulated toy for the banksters. If we get to the -10 reading or worse for a sustained period, I think we see a retest of the lows and confirmation of the 20 year S&P 500 double top. That's a retest of the lows between 400-428i that is.
EURO bullish signals I warned of during the past few weeks - has resulted in the recent rally and the daily chart remains bullish.
The DOW/SP500 counter trend rally suggested on June 13 continues, however ...
http://stockmarket618.wordpress.com/about
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