Wall Street Journal had an article saying "beware on the double bottom"...as noted, Deustche Bank said commodities going down in April as did article on www.INO.com ...heres the deal...will be more massive hedge fund selling off in commodities this week and for the upcoming weeks which also send the retail commodity investor into panic sell off mode...prices of Gold will much lower, Oil will be much lower, Euro will sell off...10YR will sold off and the DOW/SP will be in total rebound mode coming through earnings and next FEd mtg with NO rate cut...thus signally US economy 'stabilizing' as they say...I honestly believe...we have seen the TOPS for Gold, Oil, Euro...market will head higher..ALSO...THE DOW JUST CLOSED OVER ITS 50 DAY MOVING AVERAGE...THIS IS A HUGE BULLISH INDICATOR FOR THE DOW...!!!.... **COMEX Gold $1,033.00 on March 16th...NEVER to be seen again! **NYMEX Crude Oil $111.80 on March 17th...NEVER to be seen again! **CME Globex Euro 1.5820 on March 17th...NEVER to be seen again! **Dollar Index 70.69 on March 17th...NEVER to be seen again! **CME Globex 10 Year Note 120.01 on March 17th...NEVER to be seen again! **DOW 11,000 to NEVER be seen again! **SP 500 1,200 to NEVER be seen again! ...I welcome any expert to prove this wrong...the BUBBLE has burst...for Gold, Oil, Euro, 10 Year Note...
I love The Economist's "Recession" Index, it tracks the % the "R" word comes up in media. So over the new years, a friend asked me this very question, my thought immediately, "since we are talking about it, then we are in a recession already". Now it depends on what "deep" means. It is clear that the credit market will still be unnerved for sometime. I believe that we are headed to a government bail out of the mortgage sector, whether we like it or not. History tend to repeat itself, so the "Credit Crisis of '07-'08" seems to be the "Savings & Loan Crisis of '89-'90", which cost the tax payers of $200B or so. Mr. Greenspan, back then, also seemed much more "human", not the "Maestro". Of cos, in classical recession fashion, the significant layoffs have only begun, and will only accelerate. Remember early 90s, ppl talking about "re-engineering"? We are going to go through that again. And the lack of economic growth will hurt commodity prices. As crazy as it might sound, I believe this is a "cyclical recession", just that the cycle is caused by 16 yrs of "safe" credit. Now, I also believe Bernanke is doing the right thing. New Deal, like it or not, bailed the US out of the Depression. And the "R"s are, Relief, Reform and Recovery. The first step is to Relief, only after the economy have stabilized, then Reform and Recovery. I believe that the low Fed target rate is causing inflation, just that the inflation is in USD linked currencies! Look at HKD, even just linked like RMB. At this point, I would almost look forward to any signs of inflation, since that means the monetary policy is have desired side effect. The worst thing, is US turn into Japan, with their almost 20 yrs of stagflation, and zero growth. For stocks, this is an interesting time. Keep in mind all the dot-com darlings, AOL, Sun, MSFT, were trading at almost a historical low in '90-'91. Like wise for REITs in 2001. Again, history tend to repeat itself.
My guess is you'll regret your wish to own dollars instead of real money within a year. I'm not talking about $1000 gold, here, I'm talking about $1500 or $2000 as the rest of the world scrambles to unload US dollars at least as fast as they come in. Do you really think they are THAT foolish to accept paper promises ad infinitum? The small money changers in Amsterdam won't exchange US dollars for Euros anymore because they are afraid to hold the dollars. Times they are a changing, but its really just a repeat of the late 60's/early 70's when gold went from $35 to $550 or so before the spike to $800. From $35 to $550 was as result of the US running deficits to pay for both Vietnam and The Great Society welfare programs. "Guns AND Butter" it was called, and it caused gold to rise 20 fold in dollar terms. Well, I hate to tell you, but its a lot worse this time. The debt is now $10 trillion on the books, and a $500 to $600 billion deficit is NORMAL in a GOOD year when you include the "off budget" spending. Just tell me WHO is going to PAY that $10 trillion of debt, in ADDITION to boomer retirement checks? Your US dollars are going to be "worth less", soon. Its inevitable because the deficits, both budget and trade, are structural. You get a little bounce, and that's ALL you get.
Its going into an IMAGINARY RECESSION. Its like a plague from Biblical times.. you better leave for Sudan or Sri Lanka and learn to bake cow dung patties for a living..
I voted "no recession" because that was the closest to what I expect, which is a mild recession. I could not vote for a serious recession or a mild depression since these are a lot more extreme than I expect. As far as the current downturn - it will be barely a recession, with say one quarter (either 1st or 2nd quarter of 2008) of about -0.1% growth. By some definitions, not a recession, but it will generally get the "recession" name. I then expect improving economic news and rising stock prices (5-10%) for the rest of 2008. I would expect another recession, possibly a bit more severe (like 1991?) in either 2009 or early 2010 as effects of consumer debt and credit problems continue. I don't expect any big crash, depression, etc., but on the other hand I don't expect to see any roaring bull markets (in stocks) for the next 5 years or so. There is some pain to endure, but it will be spread out over a long enough time that any one time will not be too severe.
Yes we have entered an IMAGINARY RECESSION. We cannot substantiate that with facts and figures but our emotions and negativity is abundant and clear. We are also deluded and depressed to great extent.