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Deutsche Bank Hides The Hopium: "The Next Recession Should Start By The End Of August"

Tyler Durden's picture


If there is one bank report that Obama wishes is absolutely wrong it is the following note from Deutsche Bank's Jim Reid (definitely not part of the bank's laughable Trinity Of Perma Bull consisting of Bianco, Chadha and, of course, La Vorgna) who, looking at the timing of business cycles, makes the following ominous, for both the economy and Obama's reelection chances, prediction: "If this US cycle is of completely average length as seen using the last 158 years of history (33 cycles) then the next recession should start by the end of August." The only saving grace for the president: since the advent of centrally-planned markets, nothing is as it used to be, and the business cycle no longer exists ("JP Morgan Finds Obama, And US Central Planning, Has Broken The Economic "Virtuous Cycle""). Still, maybe, this is the one last trace of free capital markets that the Fed has (so far) been unable to totally destroy. We are confident it will get right on it.

From DB:

Our shorter business cycle theory (or return to normal length ones at least) first discussed two years ago was based around what we saw as a future lack of policy flexibility from the monetary and fiscal side. It feels like Europe has proved us right but that the US has the ability to disprove the universal nature of our theory. If this US cycle is of completely average length as seen using the last 158 years of history (33 cycles) then the next recession should start by the end of August. The average expansion has been 39 months over the period. One way the US can disprove us over the next 6-12 months is if they find a way of maintaining what are record peace time budget deficits thus showing that they retain fiscal flexibility where virtual every other country has had this reduced. Perhaps much depends on the election, the next budget ceiling point and crucially the Fiscal cliff debate.

Of course, just to confirm that every major bank is both schizophrenic and covers all bases at the same time, a member of the abovementioned trinity of Perma Bull came out literally at the same time as Reid with the following piece of "analysis":

MAPI, our US macro data surprise index, last week hit the bottom of its 2 standard deviation band. This has typically characterized the end of data disappointment cycles. Economic forecasts which were slow to come down have been downgraded sharply. The typical pattern from here would be for fewer negative surprises and then positive ones. The risk to our view is that the joint decline in the US, Europe and EM for the first time since 2009 has  crossregion multiplier impacts that result in a deeper data disappointment cycle.

The world may be ending, but at least we are all laughing, all the way.

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Tue, 06/26/2012 - 10:50 | 2561519 Rahm
Rahm's picture

August Suprise, Bitchez!

Tue, 06/26/2012 - 10:55 | 2561548 Colombian Gringo
Colombian Gringo's picture

Translation: God forbid that the Banksters summer vacations are affected by the mess they created.

Tue, 06/26/2012 - 11:10 | 2561619 CPL
CPL's picture

It actually starts in two days, but since the complete collapse happens during the quarter and is only reported at the end of the quarter.


Please keep that in mind when banks spout this drivel.  Quarterly reporting still counts, in Deutsche bank's terms, the recession starts at the end of Q2.  For all of us though it will start on Thursday.

Tue, 06/26/2012 - 11:55 | 2561840 Marginal Call
Marginal Call's picture

Don't worry.  Europe closed a half hour ago, and everybody is going to lunch.  We're gonna ramp this fucker up. 

Tue, 06/26/2012 - 11:05 | 2561590 oak
oak's picture

After London Olympic.

Tue, 06/26/2012 - 11:06 | 2561595 idea_hamster
idea_hamster's picture

I wonder how this fits in with September/election-year banking crises?

Tue, 06/26/2012 - 11:26 | 2561708 Caviar Emptor
Caviar Emptor's picture

But in a centrally planned economy can we really have a recession? Any monetary pump, inventory channel-stuffing stunt, fiscal stim grunt, or accounting rules lump and we end up with 0.001% growth. Fixed!

Tue, 06/26/2012 - 14:28 | 2562356 MarsInScorpio
MarsInScorpio's picture

Once again, the world shows how ZH leads the pack. No sooner do I finish reading about the September Syndrome of banking crisis genesis, than I read about the predicted recession within The Second Great Depression in which we now live.


But I really have to ask, "When will people stop lying about being in The Second Great Depression instead of acting as though we go from one disconnected recession to another?"


A depression is the umbrella that covers all the series of recessions - what we are now experiencing. We are in The Second Great Depression, and this upcoming recession is merely another of those that will occur under that umbrella.


Tue, 06/26/2012 - 10:51 | 2561521 bigwavedave
bigwavedave's picture

Great. Lets put Mitt 'The Banker" Romney in charge

Tue, 06/26/2012 - 11:29 | 2561717 Caviar Emptor
Caviar Emptor's picture

Mittens will save us!

Tue, 06/26/2012 - 13:14 | 2562144 Abitdodgie
Abitdodgie's picture

America is not very "free" if you can only vote for one of two people.

Tue, 06/26/2012 - 10:52 | 2561524 mrktwtch2
mrktwtch2's picture

if it gets bam bam out of office ..im all for it..

Tue, 06/26/2012 - 11:06 | 2561594 bigkahuna
bigkahuna's picture

2 party system. bam bam is going to be in office whether he is reelected or not.

Tue, 06/26/2012 - 12:31 | 2562014 XitSam
XitSam's picture

Bush will be elected to his 4th term no matter who people vote for.

Tue, 06/26/2012 - 11:34 | 2561743 CPL
CPL's picture

You honestly think a president or a government has the power to stop this situation?


Smarten up.  This is not a movie.  There is no happy ending.  The villians always escape and nice people will be destroyed.  This is what happens when the math is completely correct.  There is no "mistake" or anything to point blame at.


The system is built to collapse in on itself.  Failure was always a guarentee, not an option.  Ponzi schemes always fail.  Paper money always fail.  Banks always fail.


Always, not some times, always.  It is the fatal flaw in all fractional reserve currencies.

Tue, 06/26/2012 - 11:36 | 2561756 CPL
CPL's picture

To those in the intelligence community or any government attached role to any country with a central bank.


This is the end of you getting a paycheck and any of those "benefits" you were promised.  In two days they will be gone forever.  All of it.  Please be aware to take note of where you are when the "news" hits your department.


tick tock tick tock.

Tue, 06/26/2012 - 11:47 | 2561805 knightowl77
knightowl77's picture

I hope that you are correct...

However I have heard this way too many times in the past to think this time is the "actual" event

Tue, 06/26/2012 - 11:57 | 2561850 Chump
Chump's picture

What happens in two days?

Tue, 06/26/2012 - 12:38 | 2562044 Totentänzerlied
Totentänzerlied's picture

1 week to live, 3 days to save the euro, 2 minutes to midnight (The hands that threaten doom! 2 minutes to midnight! To kill the unborn in the womb!)

Tue, 06/26/2012 - 13:29 | 2562190 bigkahuna
bigkahuna's picture

Oh damn...Iron Maiden!?

Tue, 06/26/2012 - 14:21 | 2562341 ONO47
ONO47's picture

You forgot,  "Run to the Hills" and, of course, "The Number of the Beast"

Tue, 06/26/2012 - 10:52 | 2561529 Abner Doon
Abner Doon's picture

If former New York Fed Chairman and Goldman Sach's alumni Stephen Friedman knew about secret loans to Goldman in 2008 and 2009, how did he not buy GS with unknown information?



Tue, 06/26/2012 - 10:52 | 2561530 midgetrannyporn
midgetrannyporn's picture

JPM, the biggest fascist of them all, is complaining about the death of free markets?

Tue, 06/26/2012 - 12:00 | 2561866 Poetic injustice
Poetic injustice's picture

That's corporate policy. As companyface, you care about saving trees while your subordinates dump toxic waste into rivers and open polluting factories in third world countries.

Tue, 06/26/2012 - 12:47 | 2562067 Shizzmoney
Shizzmoney's picture

sftrue on that one. 

Save paper and plastic at the US office to look "green", yet your vendors are dumping lead and dangerous resin plastics into mud and river.  Donate money to breast cancer research, while you use the pink branding to pinkwash products you sell to make 100x's more money than you donated.  Give loans to community projects like BOA does to make neat commericals out of it, yet take all of your deposits of your customers onto the Fed's balance sheet as collateral for your toxic debt.

Bullish on bullshit. 

Tue, 06/26/2012 - 10:54 | 2561536 Rainman
Rainman's picture

Rather than the next recession beginning, it's more like the rent-a-recovery program is ending.

Tue, 06/26/2012 - 11:10 | 2561618 Stock Tips Inve...
Stock Tips Investment's picture

I agree. I think it is very likely to be so. The problem is that the market, usually "discounts" these events several months earlier. Therefore, it is I think is very important to follow the movements and the tendency of Wall Street. Otherwise, Cundo we realize what is happening, it's too late to take remedial measures.

Tue, 06/26/2012 - 10:55 | 2561542 Temporalist
Temporalist's picture

But house prices "only" fell 1.9%.  Everything must be awesomer than when the recession ended 3 years ago.  The only way things will get better is if Obama and Mitt could be genetically spliced into one super president that also kills vampires.

Tue, 06/26/2012 - 10:59 | 2561562 mayhem_korner
mayhem_korner's picture



+1 "awesomer"

Tue, 06/26/2012 - 11:02 | 2561574 GolfHatesMe
GolfHatesMe's picture

You're not supposed to look at that.  Prices were up from March to April by 1.3%.  Pretty soon we will see that prices were up from 11:00 EST to 1:30PM EST on some mild Sunday. 

Tue, 06/26/2012 - 11:52 | 2561824 Shizzmoney
Shizzmoney's picture

Look at it this way: Housing prices are off from their lows of the year.

Tue, 06/26/2012 - 10:57 | 2561550 JohnG
JohnG's picture

Recession my ass.  This is a full blown depression, and anal-cysts just turn a blind eye.

Tue, 06/26/2012 - 14:19 | 2562333 earleflorida
earleflorida's picture

the eye of the anus, i presume dr john

Tue, 06/26/2012 - 10:57 | 2561551 txsilverbug
txsilverbug's picture

How can we enter a new recession when we never left the last one?

Tue, 06/26/2012 - 10:58 | 2561559 mayhem_korner
mayhem_korner's picture

How can we enter a new recession when we never left the last one?


I think that's the 2012 version of the Riddle of the Sphynx...

Tue, 06/26/2012 - 11:46 | 2561802 dirtbagger
dirtbagger's picture

You have that right Silver Bug.  How can the author use statistical analysis when there has been so much manipulation of the economy from the Fed?   He should start his article with the preface " all things being equal...."  the economy will tank in August.

Tue, 06/26/2012 - 12:02 | 2561873 Poetic injustice
Poetic injustice's picture

To get out of recession, we turned 360 degrees. There.

Tue, 06/26/2012 - 11:00 | 2561553 mayhem_korner
mayhem_korner's picture



Yes, the last 158 years of history is a relevant for what lies ahead.  They've really outdone themselves this time in terms of robust statistical analysis.

Forecasting is an arbitrary means of buttressing some other decision or view.  I say spare us the "analytics" (/sarc) and just spout off unabashed - it's more entertaining.

Tue, 06/26/2012 - 10:58 | 2561555 Chupacabra-322
Chupacabra-322's picture

Recession?  We're in a Goddam Depression.  By the way, after the Great Depression ended the Global Elite decided to change the word from Depression to Recession.  That way, it conditions the Sheep to interpret the deep shit we're in as not so bad.  Recession just sounds better.  Better to be fucked with vasaline than without.

Tue, 06/26/2012 - 11:02 | 2561571 Spastica Rex
Spastica Rex's picture

And before that, depressions were called recessions. 

Like windmills in my mind.


Tue, 06/26/2012 - 11:29 | 2561715 francis_sawyer
francis_sawyer's picture

No, the next and all future recessions will be called "Obamacare"...

Tue, 06/26/2012 - 15:31 | 2562578 El Oregonian
El Oregonian's picture

Better yet, The crew at CNBC would rather you used "Soft Patch" that way it sounds like something you have to clean off your shoe.

Tue, 06/26/2012 - 10:58 | 2561557 Bam_Man
Bam_Man's picture

According to ECRI, we are already in "the next recession" and have been for several months.

Just more useless sell-side drivel from Deutsche Bank.

Tue, 06/26/2012 - 10:59 | 2561561 BBullionaire
BBullionaire's picture

US cycle is of completely average length as seen using the last 158 years of history

There aint no average anymore. The Central planners fixed that. Thus far.

Tue, 06/26/2012 - 11:00 | 2561568 midgetrannyporn
midgetrannyporn's picture

agreud. pricing fixing in stocks and bonds has permanently remedied all problems. /sarc

Tue, 06/26/2012 - 11:00 | 2561565 ebworthen
ebworthen's picture

Cue Joe La Bologna on CNBC saying that the Euro crisis will be solved and he can see European green shoots and mustard seeds; time to buy, buy, buy.

Tue, 06/26/2012 - 11:04 | 2561578 Temporalist
Temporalist's picture

But of course the markets look poised to only go up for the next 10 decades; there's never been a better time to buy again.

Tue, 06/26/2012 - 11:00 | 2561566 asteroids
asteroids's picture

Wouldn't it be neat if interest rates started to rise to reflect "risk" in August.

Tue, 06/26/2012 - 11:00 | 2561567 francis_sawyer
francis_sawyer's picture

 "by the end of August"

Jesus Tapdancing Christ, even the Mayans gave more specific timeframes than that...

Tue, 06/26/2012 - 11:01 | 2561572 SheepDog-One
SheepDog-One's picture

The real funny part is anyone still believes the people have any choice in the matter of who is president.

BTW....what 'recession'? Depression papered over for 3 years with funny money.

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