You Know A Double Dip Is Imminent When...

Tyler Durden's picture

With endless lies bombarding the average American from all sides seeking to instill a false sense of calm that all is good (but, but, the market is up, up, up and GM is IPOing today), it is wise to step back and consider the common sense signals that a double dip is if not here, then arriving on the next much delayed flight.

From the Churchill Financial Group:

The prospect of a recession redux in the US continues to unnerve global equity investors. While we're doubtful such an outcome is likely, we didn't want to leave our readers without appropriate guidance as OTL heads for its two-week August hiatus. So we've come up with a few tell-tale signs of a potential double-dip for your consideration.

But first, take a look at the indicators pointing to some kind of transition in the capital markets:

  • Very slow GDP growth, so helpful to bonds (see our Chart of the Week), has been toxic to public equities. Corporate debt is hotter than it's ever been, while the stock market (nicknamed "the bond market's idiot kid brother" in this week's Barron's), has lost most of its gains for the year.
  • The US high-yield market is poised to issue over $30 billion in new paper between now and the end of August; a time when bankers typically are kicking back in Kennebunkport.
  • The summer surge comes on top of year-to-date junk volume of $150 billion for 349 issuers. That's roughly double last year's comparable numbers of $80 billion and 190 issuers, putting us already ahead of 2009's full year record results.
  • The Fed's "ease-to-please" rate policy has helped investment grade issuers as well. By pushing out the forward curve, continued money loosening has produced some eccentric corporate bond outcomes. IBM (A+), for instance, just issued three-year notes at 1%. That's almost free money, after taking into account the little inflation that's out there.
  • But that's mezz pricing compared to J&J's (AAA) ten- and thirty-year bonds in the market. Those beauties, each $550 million, are price-talked at 43 and 68 bps, respectively, over comparable Treasuries. The all-in spreads are expected to be the lowest in history. In fact, Deutsche Bank reports that the ten lowest-yielding new US corporate issues ever have been sold in the past 14 months.

So are we headed for a downturn? Here are a few clues to watch out for.

You know we're headed for a double-dip when:

  • your parents start referring to 2009 as "the good old days."
  • your CFO starts making finger-quotes when he refers to "corporate earnings."
  • what you thought was your cable bill, turns out to be your 401k statement.
  • instead of giving away toasters your bank starts selling them.
  • your mortgage shows up on eBay.
  • your accountant starts making finger-quotes when he refers to your "net worth."
  • you buy $50 of GM stock, and are named to the board.
  • the family dog asks for a severance package.
  • your spouse starts making finger-quotes when referring to "our vacation."
  • your recently graduated son moves back into your house...with his roommate.
  • you start making finger-quotes when referring to your five-year old's "allowance."
  • your parents move to Greece.

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realtick's picture

- Starbucks changes its name to Starcents

- Zero Hedge changes its name to Less Than Zero Hedge

Pladizow's picture

When "Mad Money" with Jim Cramer changes its name to "Had Money" without Jim Cramer!

papaswamp's picture

+1 for both the avatar and 'Had Money'

AchtungAffen's picture

Foodruckers changes name to Buttfuckers.

 

Message brought to you by CostCo.

Rogerwilco's picture

Another sign is real estate agents offering sage advice like:

"in today's challenging market, sellers have to be willing to lower their price if they expect to get top dollar".

Vampyroteuthis infernalis's picture

Doublespeak at its best. Wouldn't more appropriate be "sellers have to be willing to lower their prices even for a dollar?" 

Gully Foyle's picture

Rogerwilco

Or;

"After three years of a sluggish economy and little action in the real estate market, Ken and I needed to rethink how we spend our days. Yes, we are still Realtors. We LOVE real estate! But, it's not the ONLY thing we love to do, and until the market improves, we need to find, as they say, 'other streams of revenue'."

Mitchman's picture

When you get an NSF notice from your bank you don't know if it's you or them...

doggings's picture

haha yea there was an email went round that said something like this

Dear bank manager I received a cheque back from you this morning that said "returned due to lack of clear funds" - did you mean me, or you?

t'is about right

 

 

redarrow's picture

The  minneapolis fed head comes out and says that the fed buying more government debt should not be viewed as the economy being worse than it is. Of course, the fed just buys when it feels like and randomly for no reason at all. Its its all warm and fuzzy.

Apostate's picture

You should feel warm and fuzzy, comrade.

The Fed is working together with the great people of Soviet Amerika to create a new era of infinite prosperity.

Buy GM. 

redarrow's picture

The cherry on the cake will be if they pull out of the IPO stating unfavorable market conditions as KKR did last week. 

Apostate's picture

Seeing as their entire market cap was created by THEFT, they're just waiting for more thieves to dump loot into the market.

Complete madness will be "favorable conditions" for the last rape of the economy.

Idiot Savant's picture

Nah, the ramps are ready and in place.

Segestan's picture

Non-representive tax payer control over Industry, finance and housing , unemployment through the roof, trillion dollar spending by a bankrupt liberal establishment, mass illegal immigration.... but hey let talk double dip crap...oh did I forget the GOM lies!!

tunaman4u2's picture

I love the POT buy out

AWESOME, food prices are going to go through the roof & POT is going to profit hugely on the backs of the masses

What a wonderful world we have. At least with XOM we can choose to ride a bike or walk. 

Screw this, I'm buying a huge field & growing crops... ear of corn $5 each. Economic recovery is here! 

LostWages's picture

When you get a pre-declined credit card application in the mail.

knukles's picture

Honestly awaiting a pre-approved credit card for my dog Gizmo. 

And come to think of it, maybe open an account on AOL with screen name Gizmo, do a few clicks here and there, link into some upscale advertising (Tiffany, etc.) and maybe, just maybe sombody will send a card and I can contact the WSJ for a front page, center column.

Oh, the caninity of it all....

Martha, get the popcorn out!

docj's picture

When "Recovery Summer" bleeds into "Recovery Fall" - or "Recovery Fail" - or something.

MichaelG's picture

Timothy Geithner starts using finger quotes when saying anything at all.

knukles's picture

Like referencing the size of his manliness or his credibility? 
Pick one, don't worry, be happy.

suldog's picture

When Geithner (or any other moron who has never written a paycheck, filed any of the half-zillion reports to the various overstaffed, incompetent, government bureacuracies [not including a tax return]) writes an Op-Ed about "the recovery".

F*ing morons.  It is staggering.

homersimpson's picture

...when in a bathroom you reach for the toilet paper only to realize you've ripped off some dollar bills.

Racer's picture

LOL

But they would probably ban their use because they will block the toilet... they won't be any good for wiping your .... either!

homersimpson's picture

Guests say it's colorful and stylish but it's rough on their sensitive spots.

ChopChop's picture

They are selling the 100 trillions ones on ebay, seriously about getting one as a daily reminder of how I have to prepare... for just a few bucks!

the not so mighty maximiza's picture

When the Winter of Winning is upon us.

 

JR's picture

Ahhhh, yes.  The winter of our dis-connect.

Misean's picture

The utility company is out installing coin op locks on your electric and water meters.

plocequ1's picture

Today's not that day. Rally on Gents.

knukles's picture

Oh hush, Turd.

You know its all coincidences.  Like the shots fired at the Turkish Embassy in Tel Aviv a few minutes ago. 

Come on baby, light my fire, gonna set the night on......

binomial's picture

... when oil goes to $100 and you don't care because you're not driving anywhere anyway.

hedgeless_horseman's picture

You know we are headed for a double dip when you see a bumper sticker that says:

"W" the Recovery.

Reductio ad Absurdum's picture

GM is IPOing. That must be why MTLQQ (stock for the former now bankrupt GM) has doubled over the last four days!

(Just a reminder: MTLQQ has almost no intrinsic value; worth about 0.02 so don't buy it thinking that it's the new GM.)

Gully Foyle's picture

I wish they would stop the Double Dip lie and name the beast for what it is DEPRESSION.

Leo Kolivakis's picture

No double dip, just ask Madonna who recently traveled to Mykonos. You all need a "holiday" from this this doomsayer stuff!

Gully Foyle's picture

Leo Kolivakis

Did they airbrush the shit out of that old skank or what?

Oh wait, I get it it's an analogy to the fucked up illusion of an economy.

Good job thinking outside the box.