Michael Pento Says Double-Dip Recession Is Now Guaranteed

Tyler Durden's picture

As usual, Pento's TV appearance are about as contained and demure as Alan Greenspan on Ambien: "[Bernanke's statement that the economic recovery is intact] guarantees that we are going to have a double dip recession, because his track record is 100% accurate, but it is 100% accurate in the wrong direction. I look at markets and I look at economics, and since this whole rebound was derived by artifical means, why would I ever believe that we are not going into double dip recession. Should I listen to Ben Bernanke or should I listen to the price of oil which contracted from $85 to $72 a barrell in few weeks, should I listen to the 10 Year that went from 4% to 3.2% in a few weeks, should I listen to Doctor Copper that went from $3.50 a pound to $2.77 a pound: where would I want to put my allegiance with, markets or Ben Bernanke. We need to sell assets, and we need to allow the deleveraging process to consummate. We are going in a wrong direction and that's the double dip recession is virtually assured. 2008 taught us very clearly that decoupling is a dodo bird's philosophy. The US is headed down. You'll see home starts, permits, sales plummet in the next few months, that's going to add more supply to the housing market, that's going to put bank assets under duress, that's going to put their capital under duress, and that's going to help bring us into a double dip recession." Pento's asset allocation advice: high levels of cash, hide in the short-end of the Treasury curve, and own gold, precious metals and high-paying dividend commodity stocks.

When the man speaks the truth and nothing but the truth, there is little to add.

h/t Adam

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painequalschange's picture

"high-paying dividend commodity stocks"

such as?

pigpen's picture

Sorry computer glitch. Only meant to post once.

Careless Whisper's picture

pento has perfected the "whatev" raised eyebrows, hands in the air. (@ 3;48)

Howard_Beale's picture

Yeah, he has that one down. Pento reflects what the collective at ZH already knows. The double dip is underway. Where is George Costanza when we need him to put on his best Bernanke impression and scream at someone about double dipping. Now THAT would be funny. Jason Alexander, you have been paged.

But back to being seriously serious, Pento's thesis that we will suffer a severe market decline (guaranteed on that one), QE 2 will go into effect, and to load up on materials is a dicy prediction for me. I think there will be enough hedge fund failures forced to liquidate these commodities that we might get the opposite effect. Without China doing their storage game as they did in QE1, where will the demand be to get away from fiat currencies? There may be no demand for materials at all. To believe that QE 2 will actually produce the same results as the first round of QE is iffy, at best. Where are the safe havens? I don't have the answer. I have gold, I have silver, and no debt. I worry constantly about what to do with what I have. I guess I fall not in stagflation as Pento does but in the all out depression camp. Writing really helps one figure out where they stand at times.

So while I agree with Pento that we are on the next leg down, not so sure about his idea where to put your money when the S&P is at 850. Since I am short the market in fiat dollars, and am not a currency trader, and I know I am not alone here, the thought that commodities will be the things to own when China has already stockpiled what they need for now and many years forward seems to be last year's trade.

Open to all comments on this. My gut is that QE 2 will not be met with the same reception as QE 1. Stagflation, depression, hyperinflation. The same discussion we have had on this blog since I joined last July. I guess we will have to wait and see. Because I sure don't have the answers and don't trust anyone else with what I have but myself.

Mr Creosote's picture

While I don't have the answers, I think you're ahead of the pack by having some PM and no debt.  I'm more concerned about deflation than inflation presently. In which case, I'm comfortable with a larger cash position and a conservative portfolio with a strong dividend yield.

RockyRacoon's picture

QE-2 will come.  Or, it's in the process of it as we speak.  It won't be called QE-2, or anything else.  Congress will have no input.  Did Congress vote on AIG?  The Fed doesn't want an audit!  Now we know why.  Not only would the common folk burn down half of DC, but Congress would tar and feather Bernanke.  QE-2 will be (is) a quiet operation.  We should be looking for those back-door signs, not an obvious move to liquefy that can take criticism.

Pondmaster's picture

Howard -


I have the same concerns as you . Where is a safe place ?!?!? Like Fox Mulder , I trust no-one . Top o list - Our Gov't , next on list , Big Banks (TBTF) , next corporate America , next MSM , and lastly myself . I am trying to preserve what wealth I have for my families . My wife leans to spend spend spend  (aka capital improvements ), if dollar is heading north (hyperinflation). I do see selective inflation ahead , especially in the areas that CPI excludes , foodstuffs and energy (aka Climate Bill that will destroy us ) . Thats why I frequent ZH , to find ideas to assimilate .   

WaterWings's picture

Marriage, yes. For some an asset. Others, a liability.

total nonsense's picture

Very well said, I think you are exactly right that there will be nowhere safe to hide. I have owned gold on and off here but my fear is the same as yours that when it all breaks down everything will get smoked. Hmmm smoked ( maybe weed is the place to be) haha...But i think in this situation that cash is king and that is where you should be. Sitting on that cash will come in very handy when the market gets crushed and you will be able to pick through some great companies and stocks. I would say GOLD but i am a little up in the air about the deflation/inflation idea.

Spitzer's picture

BP, 10% yield not good enough ?

Howard_Beale's picture

Chapter 11 is good enough for me.

jeff montanye's picture

ge's yield was rich until it wasn't.  these aren't contracts.  they are policy choices.

Spitzer's picture

GE was into financial services.

Sudden Debt's picture

Air! It seems everybody is using it!

Cognitive Dissonance's picture

It looks like the video Tyler is talking about is the second one. The first one has pretty Margaret in red. Both total about 9 minutes. Both worth watching. Michael Pento doesn't suffer fools very well, even pretty ones in red dresses.

Howard_Beale's picture


You can continue to eat and drink as you read this. I can't top my Special Olympics earlier post--been saving that baby for months since I want more categories other than blind hurdles and quad long ski jumping in my never to be published but always politically incorrect Youtube animated farce of the truly "Special" Olympics.

In my post above I have commented about the nearly one year I have been around here and the Stag vs Hyper vs Depression debate we have always had. No one knows the answer and we are all preparing as best we can. I think this all falls into your work and I just wanted to thank you for it.

Cognitive Dissonance's picture

Thank you, both for you humor and your kind words.

The last 2 Chapters begin to pull everything together and I do talk about where we go from here. But some people might be disappointed because it means change and personal responsibility and not someone else doing the hard work. And of course it all begins within.  

The thing is that this will come, it will happen, people will become more responsible for themselves and their governance. The question is how much pain do we wish to endure until we make the decision to stop the pain.

FEDbuster's picture

Oil and gas MLP's like Linn Energy (LINE) current yield about 10%.

Bay Trader's picture

check out TOT. 4th largest megaoil by market cap, dividend yield currently at 6.88%, p/e below 10. the world will not stop using oil anytime soon and that near 7% dividend is a nice cushion

Dr. Dre's picture

sorry for delay in answering this question - the login approval thing took some time.  

Canadian Oil Sands baby...

check out Claymore Canadian Royalty Trust ETF -- but rather than buy that just buy components directly..  Also a great resource is this site -- independent energy analyst who posts on web for free +30 days after publication.  http://mcdep.com/

Here is what is "solid" about these stocks:

* High, High dividends 8-11%

* this gives (somewhat) of a floor on the equity pricing should we have deflationary bout and oil goes south

* on the other hand Canadian Oil sands (which most of these are) have a high marginal cost of production (btw 60-80/BBL) so when prices go over that (and I say when, not if), you are highly levered to oil price gains...


somewhat limited downside, strong upside potential and phat dividends -- you are paid to wait.  About 80% of my equities are in these guys...  good luck 


ps. wait for energy pullbacks -- Support for WTI is $65 and Resistance around $85 -- if we get a big crashola a la eliott wave jolt in 4Q as some are saying -- okay oil will be below $65-- maybe mid $50-s but load up the boat baby -- it will triple by 2013-2014 if not sooner...



Sabremesh's picture

If you ask that question six more times, the Good Lord will provide you with an answer.

blindfaith's picture

"they know not what they do" sums it up.  Maybe the 'good lord' is out of hearing distance, yea...thats gotta be it.  Or else 'he' is tired of hearing the same old crap.

deadparrot's picture

Hate? If he hates anything, it's BB.

nwskii's picture

since you asked 7 times no answer is needed

Sabremesh's picture

Some people will believe anything. Sorry, I was joking - there is no God.

Blues Traveler's picture

sabremesh, God is dead...God "sabermesh is dead"

Pladizow's picture

Marc Faber, Jim Rogers, Peter Schiff, Gerald Celente and many more, could not have said it better.

In a year or two from now, will Ben testify to the fact that no one could have seen the double dip coming?

Conrad Murray's picture

We need to all throw down on a Hollywood costume/make-up artist.  Get someone from the ZH crew all fancied up like one of the Congrescreeps and have him or her sit in on one of those hearings and get the shit flying.

The Rock's picture

but of course!!

Congress:  So you do know where the economy is heading?

Ben: It wouldn't be inaccurate to assume that I couldn't exactly not say that it is or isn't almost partially incorrect. Oh, on the contrary. I'm possibly more or less not definitely rejecting the idea that in no way with any amount of uncertainty that I undeniably do or do not know where the economy shouldn't probably be, if that indeed wasn't where it isn't. Even if the economy wasn't at where I knew it was, that'd mean I'd really have to know where it wasn't.

sushi's picture

A new paradigm sums it up succinctly.

StychoKiller's picture

Alexander Haig:  "I decisioned the necessification of the resignatory action/option due to the dangerosity of the trendflowing of foreign policy away from our originatious careful coursing towards consistensivity, purposity, steadfastnitude, and above all clarity."

Woosirsir's picture

I guess I know what you are saying ....

Conrad Murray's picture

A solid and succinct explanation.  Nice clip.

Monkey Craig's picture

anyone else having difficulty loading this video?