Recession

Ambrose Evans-Pritchard is outstanding in his expose on Europe's increasingly more evident deflationist cul-de-sac, and the ever more obvious L-shaped "recovery" facing Europe. While it has taken fans of the euro currency a mere two short months to not just diametrically change their exposure vis-a-vis the "long" currency of choice, but to allow speculators to build record euro short positions, the question of how America (and China by virtue of its dollar peg) will deal with euro currency that has no choice but to go lower, becomes an increasingly thorny issue. And to further confound deficit worries, recent overtures by the Fed in the form a discount rate hike make it all too obvious that the bond market will likely soon demand a much more substantial "pound of flesh" to fund America's burgeoning deficit. In this context, the threat of increasing rates, coupled with a euro that could reach $1.25 according to Morgan Stanley, and hit a low of $1.10 according to Albert Edwards, makes the policy prospects before the Federal Reserve so much more daunting.

Goldman's distinctly feminine A. Joseph Cohen is out with the latest prognostication. Punxsutawney Abbey must have not seen her shadow yet again, resulting in a call for 6 more decades of Dow at 36,000, or in this case S&P hitting 1,300 by the end of the year. The fact that blind monkey, with a penchant for dart (and/or feces) throwing have had a more successful track record than AJC is irrelevant, yet disturbing . To wit: On a CNBC appearance in March 2008, she predicted S&P 500 at 1550 by end 2008, In an August 10, 2007 appearance on CNBC the Oracle of nothing predicted the S&P 500 would rally to 1,600 by December; In December 2007 A. Joseph predicted the S&P 500 index would reach 1,675 in 2008 (the S&P 500 traded to less than half, or 741.02, in November 2008).

The one index that just refused to correlate to the market, and the UMichigan Index, and the Confidence Board, was released today, and once again hit a 2010 low of -49. The index has been in a -48 to -49 range for the past five weeks. The primary reason for this week's drop was due to a 6 point decline in the personal finance component, from -6 to -12, the lowest reading since December 6, with not much change in the other two readings: National Economy and Buying Conditions. It is somewhat confounding that this index persistently "refuses" to go up with all the other self-reinforcing confidence indices out there.Maybe this is the reason: from the report "Eighty-eight percent think that the economy, despite what economists say to the contrary, is still in a recession."

Goldman is known for changing its estimates within 24 hours of an NFP number. Today, there is no change, and it stays at -25,000, coupled with an estimation of the unemployment rate at 10.1%. Additionally, some bearish observations on the US economy via Goldman uber economist Jan Hatzius, who is now convinced this is a U- and not a V-shaped recession, follow.

The doctor recommended daily Fed reading/hilarity generating allowance presented for your late day pleasure.

No dramatic photos, but the statistics are dramatic ...

Typical of a post-bubble credit collapse, I see the range of outcomes in the financial markets and the economy to be extremely wide. But one conclusion I think we can agree on in this light is the need to maintain defensive strategies and minimize volatility and downside risks as well as to focus on where the secular fundamentals are positive such as in fixed-income and in equity sectors that lever off the commodity sector, under the proviso that the “experts” are correct on this particular forecast — that China and India remain the global growth leaders. - David Rosenberg

They're TALKING a good game, but talk is cheap...

This is a reposting of part on of an article I published on my blog in October of 2007, over two years ago. Enjoy!

Anyone advocating for war to help our economy is mistaken.

Zero Hedge, in collaboration with David Rosenberg, Chief Economist & Strategist, Gluskin Sheff + Associates, Inc., is pleased to release the attached analysis "The End Of The End Of The Recession"

And I thought the Sanford letters were going to be the funniest thing posted here this afternoon. Oops...

The San Fran Fed continues to voice a dissenting tone from the Ben Bernanke Inflation Party Line. Authors Weidner and Williams try to reconcile the lack of major deflationary pressure borne by significant unemployment. Their conclusion: the output gap is the likely variable, and could potentially be less then estimated by the CBO.

Or so the government says... even with minimal background knowledge, it's not too much of a reach to call BS.