Right now, the conventional wisdom seems to be that the United States is looking at a “U-shaped” recession and recovery. Output declined gently in the third quarter, is dropping sharply now and will continue dropping sharply in the first and possibly the second quarter of the New Year, finally bottoming out and beginning a slow recovery thereafter.
Feel like getting angry? Treasury publishes latest debt/deficit details… But Fed now encouraged to intervene more… latest data show historic inflation drop… How to invest accordingly? Burritt on near-term trading, Grantham on the long haul… Byron King explains why $40 oil is “worst of both worlds”… Bill Jenkins explains the dollar’s recent downturn… Plus, the Dububble expands… refrigerated beaches on UAE shores…
U.S. stocks futures fell this morning despite yesterday’s barnstormer rally and heavy hints of a further rate cut by the Fed. “S&P 500 futures dropped 21 points to 917.70 and Nasdaq 100 futures fell 32.5 points to 1,275.50. Dow industrial futures dropped 200 points to 8,889.00,” according to MarketWatch.
Editor’s Note: Are we returning to ’70s-style stagflation. Bill Bonner thinks we may be — a return to a lethal combination of high inflation and deflation of asset prices. But Sovereign Society Investment Director Eric Roseman says what we are seeing this time around is “inverse stagflation” — a mix of soaring commodity prices with deflating housing prices and bank credit.
High oil prices, a steep drop in consumer confidence, declining home values and a weak dollar conspired to drive the Dow Jones Industrial Average to its lowest point in two years, and made for the benchmark index’s worst June since the Great Depression.
The Dow lost 4.2% last week and closed at 11,346.51 – its lowest level since September 2006. All totaled, the Dow plunged 9.5% in June – its worst mid-year performance since the 18% drop in the 1930s.
Down 20% from its Oct. 9 high of 14,165, the Dow officially entered into a bear market.
The US recession (sorry, Mr President: ‘downturn’) is just beginning, according to JPMorgan Chase boss James Dimon.
According to a report in The Huffington Post blog, Dimon said at a conference in New York: “Even if the capital markets crisis resolves, it does not mean that this country will not go into a bad recession. The recession just started.”
“We don’t know if it’s going to be mild or severe,” he continued. “We’re thinking there’s a third of a chance that it’s going to be pretty bad … closer to the 1982 recession than the very mild recessions we had in 2001 and 1990.”
The People’s Republic of China: When Asia expert Keith Fitz-Gerald first returned to this country a week ago, he was overwhelmed by a single impression.
The end of the “superboom” in asset prices has finally arrived, says billionaire investor George Soros.
According to a report in The Daily Telegraph, “Speaking on a BBC documentary, Mr Soros said that at the heart of the financial crisis was the culmination of a 60-year-old boom in leverage, the result of which will be a far deeper downturn than many expect.”
A new government report shows home building tumbled in February for a record 24th straight month.
The Commerce Department reported shows that construction activity dropped 0.3% in February, while residential construction dropped by 0.9%.
According to AP, “residential activity has fallen every month since March 2006, a record period of declines that underscored the severe downturn that is going on in housing.”
