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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Rahm's picture

August Suprise, Bitchez!

Colombian Gringo's picture

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

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.

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. 

oak's picture

After London Olympic.

idea_hamster's picture

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

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!

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.


bigwavedave's picture

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

Abitdodgie's picture

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

mrktwtch2's picture

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

bigkahuna's picture

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

XitSam's picture

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

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.

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.

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

Chump's picture

What happens in two days?

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!)

ONO47's picture

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

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?


midgetrannyporn's picture

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

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.

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. 

Rainman's picture

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

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.

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.

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. 

Shizzmoney's picture

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

JohnG's picture

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

earleflorida's picture

the eye of the anus, i presume dr john

txsilverbug's picture

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

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...

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.

Poetic injustice's picture

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

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.

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.

Spastica Rex's picture

And before that, depressions were called recessions. 

Like windmills in my mind.

francis_sawyer's picture

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

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.

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.

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.

midgetrannyporn's picture

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

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.

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.

asteroids's picture

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

francis_sawyer's picture

 "by the end of August"

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

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.