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It's Official, the US is Back in Recession

Phoenix Capital Research's picture




 

 

As warned previously on these pages, the US is in a recession… again.

 

The latest ISM reading came in at 49. Any reading below 50 is considered recessionary. And an ISM of 49 is the worst in four years.

 

The Fed, as usual, is oblivious to this. Bernanke claims we’re going to see a 3% GDP growth in 2014. We haven’t seen annual GDP growth of 3% since Bernanke took office. And he and the Fed have been claiming that a recovery was just around the corner for five years now… that’s HALF a business cycle.

 

At this point we should ALREADY be in a massive economic expansion, not waiting on a recovery. And we certainly shouldn’t be seeing weak growth and higher costs, which is the worst possible combination: stagflation.

 

Indeed, Copper, the commodity with a PhD in economics, peaked two years ago implying that economic growth has been slowing ever since. This hardly gives any credence to Bernanke’s claims. If anything, it shows that the man is not paying any attention to obvious signs from the world that growth is slowing.

 

 

As I told Private Wealth Advisory subscribers over a month ago, if you remove the Fed’s phony inflation measure and measure GDP in nominal terms, it’s clear we’re already back in a recession:

 

 

And stocks are at all time highs? Buckle up, what’s coming is not going to be pretty.

 

For insights on how to prepare for a market correction, visit us at:

http://gainspainscapital.com/protect-your-portfolio/

 

Best Regards

Graham Summers

 

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Wed, 06/05/2013 - 06:21 | 3625612 CDNX fan
CDNX fan's picture

 

"As warned previously on these pages, the US is in a recession… again." You mean "as warned previously since 2009 at the crash lows" and have repeated every week, every post over four years as the S&P went up 150%. Thanks Graham.

 

Tue, 06/04/2013 - 23:44 | 3625380 Duude
Duude's picture

May be a little premature. There's still plenty of time to fix the books before the next report. 

Wed, 06/05/2013 - 03:04 | 3625550 auntiesocial
auntiesocial's picture

A manager at Goldman Sachs has this to tell.

Once upon a time in a village, a man announced to the villagers that he would buy monkeys for Rs 10. The villagers, seeing that there were many monkeys around, went out to the forest and started catching them.

The man bought thousands at Rs 10 and as supply started to diminish, the villagers stopped their effort.

He further announced that he would now buy at Rs 20. This renewed the efforts of the villagers and they started catching monkeys again.

Soon the supply diminished even further and people started going back to their farms. The offer rate increased to Rs 25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!

The man now announced that he would buy monkeys at Rs 50!

However, since he had to go to the city on some business, his assistant would now buy on behalf of him.

In the absence of the man, the assistant told the villagers, "Look at all these monkeys in the big cage that the man has collected. I will sell them to you at Rs 35 and when the man returns from the city, you can sell it to him for Rs 50."

The villagers squeezed up with all their savings and bought all the monkeys.

Then they never saw the man nor his assistant, only monkeys everywhere!

Welcome to 'Goldman Sachs'!

Tue, 06/04/2013 - 22:07 | 3625236 imbtween
imbtween's picture

heh, wait til it gets revised down a point.

Tue, 06/04/2013 - 21:37 | 3625157 uncle_vito
uncle_vito's picture

Long as POMO is running who cares what ISM or GDP reads.  Carry on.

Tue, 06/04/2013 - 21:04 | 3625076 wisehiney
wisehiney's picture

I once had a HUGE discrepancy in the amount of whiskey that I was drinking and how healthy I felt. It swiftly reconciled at sunrise.

Tue, 06/04/2013 - 18:23 | 3624736 andrewp111
andrewp111's picture

The market is NOT the economy. Nothing precludes the stock market rising in a recession.

Wed, 06/05/2013 - 06:27 | 3625615 egoist
egoist's picture
Tue, 06/04/2013 - 13:53 | 3624061 imapedestrian
imapedestrian's picture

I don't care what perspective Graham has. 

This headline is just a tad less annoying than one put out by CNBC that might read "It's Offical, The Economy Has Recovered!"

If I recall correctly, Graham has been real negative on the market and calling for crashes for about two years +.  If he was serious then his clients cannot be happy.  He must rely on fear and doom messages in order to convince them that underperformance is OK.

Every time I go to zerohedge and I see one of his posts, the importance of me returning in the future go down by about 5%.  

Tue, 06/04/2013 - 13:02 | 3623878 OneTinSoldier66
OneTinSoldier66's picture

There's probably only one person on ZH that thought an "economic" recovery would come out the end of a printing press when The Bernanke announced QE1...

 

MDB - MillionDollarBonus

 

Only one thing came out of QE though... the Bonus

Tue, 06/04/2013 - 21:48 | 3625183 Papasmurf
Papasmurf's picture

Only one thing came out of QE though... the Bonus

By design. 

Tue, 06/04/2013 - 12:59 | 3623861 Marc To Market
Marc To Market's picture

Ha.  US is in a recession because the ISM fell below 50, copper prices fell and if GDP is measured in nominal terms.  Don't want to confuse the stroy with the facts, but 1) ISM itself does not say that below 50 on mfg is a sign the entire economy is contracting.  So the tool here is being subjectively misused.  2) that copper prices fall is more a sign of demand from the Chinese economy than the US.  Here it is misunderstanding a tool.  3) That some measure of Q1 GDP that the author wants to massage says nothing about the future.  The author does not trust the US data yet takes what he wants to fit his arguement.  There is no objective measure of recession.  The NBER determines it and it is not two quarters of contracting economy. 

 

The rigor we demand from ideas we agree with is much less than the rigor we demand from ideas we don't agree with.   

Tue, 06/04/2013 - 18:23 | 3624733 FreeMktFisherMN
FreeMktFisherMN's picture

sorry but deflate all this phony 'growth' (borrowing and consuming) by the real rate at which prices are increasing (more like 8-14%+; inflation is heterogeneous in its effects across sectors) and it is contraction.

 

You'll have to do better than the phony CPI which is by what they deflate the 'growth'.

Tue, 06/04/2013 - 18:26 | 3624744 FreeMktFisherMN
FreeMktFisherMN's picture

real growing economies have savings and production; it's completely backwards here. The phony FIRE (finance, insurance, real estate, education) sectors are being propped up with cheap credit via the Fed, and instead of allowing the restructuring of the economy to occur under which factories would be being built more so than all the new homes in these bubblicious times, the Fed is just extending and pretending. The BLS is nothing but liars. STATISTicians' sleight of hand. 

Tue, 06/04/2013 - 12:03 | 3623691 vmromk
vmromk's picture

The U.S. is back in recession ???

How much did you say your subscription service costs ?

Tue, 06/04/2013 - 12:49 | 3623826 Lewshine
Lewshine's picture

Exactly, the US never got out of recession. However, the Fed was fairly successful in its hyper-influence of everything that says otherwise - Stooping the greater fools among us (vmromk). Ben used the masses, their money, their homes and jobs to paint the greatest one dimensional portrait of recovery that any generation has ever seen...ALL predicated on slight of hand. 

Tue, 06/04/2013 - 11:56 | 3623670 OpTwoMistic
OpTwoMistic's picture

If you did not spend the last year watching Dancing With the Stars, you knew this,

IMO don't think US got out of recession.  Ah,  whats next.

Tue, 06/04/2013 - 11:53 | 3623664 orangegeek
orangegeek's picture

Didn't know that the recession was over.

 

How about we try the word depression?  It's more suitable.

Tue, 06/04/2013 - 23:23 | 3625350 WTFUD
WTFUD's picture

@orangegeek
(sigh . . .sharp intake of breath) not the 'D' word.
Macbeth. . .oops. . .break a leg!. . aah

Tue, 06/04/2013 - 20:55 | 3625055 Buck Johnson
Buck Johnson's picture

Remember the definition of a Depression is a real bad recession that last more than 2 years.  I think we have been in a depression and continue to be in one.

Tue, 06/04/2013 - 12:01 | 3623688 PiratePawpaw
PiratePawpaw's picture

We're not supposed to use the "D" word. It's just a recession within a recession.

Think of it as an inverted bubble of growth. :)

Wed, 06/05/2013 - 02:21 | 3625530 Boris Alatovkrap
Boris Alatovkrap's picture

Boris is prefer "bifurcation", as in "bifurcation beyond all recognition".

Tue, 06/04/2013 - 11:08 | 3623540 autofixer
autofixer's picture

The US is NOT in recession until the sheeple are told so by the MSM.  Lalalalala!    http://www.youtube.com/watch?v=34ag4nkSh7Q

Tue, 06/04/2013 - 22:31 | 3625291 Ms. Erable
Ms. Erable's picture

The bleatings willl continue until morale declines.

Tue, 06/04/2013 - 22:24 | 3625272 Silveramada
Silveramada's picture

The chart of copper vs the chart of silver: we need to see divergence where silver is not just an industrial metal anymore, like copper, but money... like gold. And that will happen after a needed game changer:

The 800 LBS gorilla in the room is finally noticed...

http://zysites.com/silververitas/ 

Tue, 06/04/2013 - 12:00 | 3623681 Winston Churchill
Winston Churchill's picture

You can fol most of the people most of the time.

FEMA fodder.

Wed, 06/05/2013 - 02:19 | 3625528 Boris Alatovkrap
Boris Alatovkrap's picture

After large investment in process to remove polymer contaminant, maybe copper mining is not so good.

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