Low Volumy, With An 80% Probability Of A Double Dip

Tyler Durden's picture

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Mako's picture

You never really had growth, you had a slowdown of the decline which gave you good month over month or year over year stats.  Life is a series of cycles or waves, and waves within waves.  From April 09 to March 10, you had an upwave of a much bigger downwave.  

There is no double dip, it's will be a continuing of the larger cycle.

The only way you are going to have growth is if the system starts expanding.... ie credit growth which was $4.7T rate in 2007 and is now at a -$0.8T rate now.  Death spiral comes to mind.  The people that promote "The Secret" BS are going to have a rude ass awakening.

dryam's picture

I always appreciate your posts.  I don't know why so many people can't see that fractional reserve banking system is predicated on always needing to move forward, otherwise it crashes backwards very quickly.  It's hard to invision the ultimate collapse being held off too much longer even if there was a new megastimulus now.   

VK's picture

Hey Mako, we've been been in a double dip since the beginning of the year.


• The 2010 event has now gone on for nearly 150 days without forming a bottom. The 2006 event had already completely ended by the 110th day, while the much more severe 2008 event had at least formed a bottom by the 120th day. In contrast the downward slope of the 2010 event increased after passing the 140th day.  
• The 2010 event has now passed the 2006 event in terms of maximum level of contraction. In 2006 our 'Daily Growth Index' bottomed at a year-over-year contraction rate of -2.28% on August 25th. On June 10th, 2010 our 'Daily Growth Index' dropped below that level for the first time during the current slowdown.  
• The severity of contraction events is the product of the average negative 'growth' rate observed and the duration of the negative 'growth' period. This means that the two-dimensional 'area under the curve' is the best true indication of how much economic pain is associated with each event. In 2006 our 'Daily Growth Index' had a total of about 136 negative-percent-days of contraction over the 110 day event, and the BEA's measurement of the GDP dropped to a barely positive .1% growth for the third quarter of 2006. During the current 2010 contraction event we have already accumulated over 210 negative-percent-days of contraction during the first 148 days, a figure that is more that 50% greater than in 2006 and still growing. (To keep these figures in perspective, however, the 2008 event reached 794 negative-percent-days of contraction over 223 days. This means that the current slowdown, although already 2/3 the length of the 2008 event, has to this date inflicted only about a quarter of the damage to the economy as experienced in 2008.)  
• What is troubling to our eyes is that the shape of the current curve is clearly different from both the 2006 and 2008 events, which were similar except for scale. Put bluntly, our recent past experience with contraction events can offer no predictions as to where we are headed now. Something is structurally different this time.  
That said, what is different this time? As we have mentioned in previous posts, consumers are clearly more cautious/concerned about debt. And they have recently shown more interests in conventional banking products than at any time over the past year.

Hungry For Knowledge's picture

I see the same enormous negative velocity in the downward move of ECRI as Rosie does.  Ominous......

Previous moves down were subtle compared to this one.

Short something, anything when we get another bit of a rise from the markets......

Sudden Debt's picture

I'm glad you aren't the weather man Tyler!

I like to hear that the sun will shine, even when it won't :)

jtmo3's picture

And how can you have a double dip when you never really had an uptrend?

Leo Kolivakis's picture

Prepare for the summer meltup...you've been warned.

CoopDeluxe's picture

Leo, please stick with pensions since you do good work on that topic.  Otherwise, I hope your balls get stomped on, along with your religious devotion to being a bull.  We can only hope you have to eat your balls too so you shut the fuck up.

Sqworl's picture

Listen douche, we at ZH are offended by your post!


Leo is a respected member of this community!!!  I suggest your delete your post or apologize?  

CoopDeluxe's picture

Wow, I didn't know ZH got all touchy feely Sqworl.  I respect Leo for his pension posts and the pics he posts of hot ladies.  Other than that, he is combative, repetitive, and boring; I feel his bullish prognostications are hopium-induced drivel.  I didn't say I wanted Leo to eat another guy's balls, just his own so he finally shuts up.  Leo inserting his foot into his mouth is acceptable too when this market meets reality.  I wish no ill-will towards people, but Leo is utterly dogmatic and combative, so I don't feel bad about sending some jabs his way.

Group hug with Leo and Sqworl!  

Jeff Lebowski's picture

Leo is both respected and intelligent, and he succeeded in getting exactly the reaction he intended.

Rick64's picture

Does that cardboard cutout represent the fake bull market?

homersimpson's picture

Given the picture, are you going to clean up your bulls--t when everything is said and done?

Hephasteus's picture

Oh no hungry people are barbequeing your cow!!!

Rider's picture

That's the "Spanish Bull" by Osborne, this is an authentic oxymoron, are you being sarcastic Leo or is just the true bull in you is getting wild because of today's BENRON rally?

fiddler_on_the_roof's picture

I agree. My 401K is also positioned such.

But sometime before Dec 2010, I will get out.

Also captital Gains Tax going up by 5% from next year 2011 onwards

undermind's picture

Check out this youtube video of a NC congressman assaulting an innocent student in the streets of DC.   http://www.youtube.com/watch?v=v60oNUoHBYM





HarryWanger's picture

Starting to look like the good old days of last summer through EOY - market goes up everyday - 1,2,3%. Now that everything is ok, buy, buy, buy. 

Actually, I just went short AAPL, looked easy here. We'll see.

Kina's picture
Financial Times


Wall St higher on global growth hopes


Market Watch

U.S. stocks open higher on growth hopes


Seems these guys got sent the same script from the Fed.


But where the fuck are these hopes coming from? The new improved austerity drive of Europe? The slow down of China? The slow down in consumer spending? Residential and Commercial Real Estate nightmares?


Their headlines are just rubbish to add to the predestined stock market target set by the Fed for the day.


They emabarass themselves with this obvious nonsense and simply confirm they have no idea, or are too dishonest to give the truth.


What they should write is =Today's market will be whatever the Fed's manipulation targets.


Cursive's picture

Double dip?  But Yahoo Finance ran an AP story this morning about how pickup truck sales are doing great.  I mean, what's a better stat - M3 and credit expansion/contraction or pickup truck sales?  Nothing could go wrong as I know that Uncle Sugar and Benron got my back. (sarcasm off)

Leo Kolivakis's picture

More good news from my friends at the National Bank of Canada:

Despite all the uncertainty emanating from Europe, an important positive development is taking place in the U.S. banking sector. According to Federal Reserve data, commercial banks are starting to lend again for commercial & industrial (C&I) loans. C&I loans for the week of June 2 were up $3 billion from their early May level. As today’s Hot Chart shows, this is the first positive reading over a four-week period since the collapse of Lehman Brothers. Granted, one should not get too excited by one positive reading. Nonetheless, we have to start somewhere. If this trend continues, it means that small and medium businesses – which are very reliant on commercial banks for their financing needs – are about to start to make a significant contribution to US economic growth. 

homersimpson's picture

Since when did Helicopter Ben take over Leo's account? My Gawd - I haven't seen this much BS propaganda since Obama's Presidential campaign. What's next? The orange futures will skyrocket because three people on Wall Street were seen drinking OJ instead of Red Bull?

Leo Kolivakis's picture

Oh yeah, the numbers are all fake on the upside, only true on the downside. -)

Cursive's picture

Granted, one should not get too excited by one positive reading. Nonetheless, we have to start somewhere.

Leo, read your own posts.  And take it down a notch.  When you get an initial claims or NFP report correct, maybe you'll regain some credibility.  Until then, maybe sitting on your hands would be useful.

George the baby crusher's picture

Dito. That's a dito to Leo, thought it was a rather funny comment.  But that's just me, like a good laugh.

homersimpson's picture

So basically what you're implying is that your little morsel of upside data outweighs all the not-so-happy data out there. Selective blindness on your part, obviously.

mephisto's picture

Thanks Leo, good info. But:

-I'm not sure enough final customer demand is there for strong credit growth. This data may just be credit bottoming out

-There's still not the hiring levels that are indicative of real economic growth.

-Credit wont come cheap, not for a long time.

-Any US business with a significant international element is suffering lower growth ex-USA than they had foreseen.

-Every government is out of bullets if the economies roll over again.

I'd love to be able to buy this market, but I can't. The valuation levels dont look worth it to me yet, and from a risk/reward point of view it doesnt work for me. I still think we go much lower before this is over.

Assetman's picture

Wow Leo... thanks for that little tidbit.  I'm going all in now... on Chinese solars! ;)

ydderf1950's picture

how can you have a dbl dip if you have not come out of the first dip

Assetman's picture

Because you can dip lower than the first time around?

Neo-zero's picture


Absolutely!  Can't find it now someone wrote an article with the 30's chart side by side comparison to today, if you look at the 30's crash it mirror's current charts brief recovery as everyone sing's a chorus of "Happy Days Are Here Again" before reality rears its ugly head.  Remember they didn't call it the Great depression until many years in.




Mark Beck's picture

I guess I have a Problem in describing what is going on as a Double Dip. Because it implies, in a historical sense, that what we are experiencing, or will experience, has happended before. In economic terms it has never happend before. 

We are on the precipice of having to debase our currency in order to pay our bills. When this happends depends on the worlds capacity for sovereign debt.

The tax base can no longer support both state and federal costs.

We are not in recession, we are in restructure.

It is just a matter of how the restructuring will occur.

Mark Beck

Silversinner's picture

If you want to see the true picture of the stock markets,check out the dow/gold ratio and everything is very clear.

We have been in a bear market since 2000,hardly any bearmarket rally's there.Everytime the stockmarket plunges

they(central banks) just push the magic fiat add on button and stockmarkets start rising again.The stockmarket isn't

a great place to be for (long term) investers.Just look at the dividend yields(low) and P/E ratios(high).Hope to see

true free markets(again??)in my lifetime,nobody is more clever then the market.Let the markets decides the price of

money;interests rates ,instead of fools like Bernake or Trichet.The only thing they have done is the distruction of the

middle class.They think they are more clever then 7 billion people making trillions of transactions a year,how arrogant!!

note:my English(spelling)is not great,because I'am not from an English speeking country.I'am Dutch.

All in gold,silver,love and knowlege.

lawton's picture

I still say that 3Q GDP will go negative in the US. The final number anyway. They will probably report a positive .6% or so in the first release since the election will be only days away however...