David Rosenberg on Tech Ticker yesterday

Economist David Rosenberg discussed growth prospects with Aaron Task:

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8 Responses to David Rosenberg on Tech Ticker yesterday

  1. Anonymous says:

    I would agree with him it is a modern day depression. Only because then they didn't have a welfare program and other social safety nets like we have now. Also it's true that we probably haven't really emerged from the recession which makes talk of a double dip meaningless.

  2. Anonymous says:

    The 67% is probably over 70% now. But just like he said: It doesn't matter if technically they called it recession or major slowdown, but seems like depression.

  3. Anonymous says:

    A few months ago the forecasts were for the economy to grow 4% in the 2nd quarter, which would have been an improvement over the 1st quarter. A month or so ago, as indications became clear that the economy was slowing sooner and faster than had been expected, the consensus forecast was revised down to 3% growth. And in the last week or two, as economic reports worsened further, the consensus forecast was revised down again, to just 2.5% growth. And the growth even missed that sharply lowered forecast.
    So, the trend of the steady downward revisions of the Q2 forecasts; 4%, 3%, 2.5%, and then the report at 2.4%, confirms that the economy is slowing even faster than economists are able to revise their expectations downward.
    The actual report numbers also show the trend, 5.6% in the December quarter, a now revised 3.7% in the March quarter, and now 2.4% in the June quarter.
    And all along, the forecasts, not only from economists but from the Fed, have been that although the economy was originally expected to have improved to 4% growth in the 2nd quarter, it would slow in the second half of the year.
    That the 2nd quarter did not show an improvement over the 1st quarter, as originally expected, and forecasts had to be lowered so significantly during the quarter, and still the growth came in lower, does not bode well for the extent of the expected second half slowdown.
    Wall Street will be pushing the idea that Q2 growth only missed the consensus forecast by a fraction. But I believe the downward trend of the actual reports so far this year, and even more importantly how the Q2 forecasts had to be revised lower so rapidly as the quarter progressed, is the real story from the numbers.

  4. Anonymous says:

    Economic Cycle Research Institute's Weekly Leading Index, which has been on a downward trend since the end of April, is at a 49-week low. Its annualized growth rate of negative 9.8 per cent is perilously close to a 10 per cent decline, which the pessimists note has always been accompanied by a recession.
    Noted bear David Rosenberg of Gluskin Sheff + Associates Inc., who has made that point, says that after controlling for volatility, “our models say that ECRI is now saying two out of three chance for a double dip.”
    The WLI, as ECRI calls it, has therefore become the new whipping boy for the bulls. The Wall Street Journal last week quoted a British economist as saying the WLI is “very sensitive to financial indicators … leaving it vulnerable to feedback loops from the markets.”
    At Bank of Montreal, Senior Economist Michael Gregory, in a recent article called The Double-Talk in Double-Dip Speculation, said the Conference Board’s composite leading-indicator index points to continued expansion, and the WLI has only “25 per cent accuracy” since it’s been in negative territory 12 times, but on only three occasions did recession follow.
    Lakshman Achuthan, managing director of ECRI, says the criticism has gone too far. The claim that the WLI is dominated by financial-market factors is “factually false.” (ECRI does not disclose the specific pieces of its indicators, but Mr. Achuthan describes the sweep as “housing to money to inventories to confidence.”)
    Also, he notes, it’s not a simple positive-to-negative swing that forecasts a recession, making the BMO analysis oversimplified, he says. ECRI is looking for “pronounced, pervasive and persistent” changes in the WLI.
    That being said, Mr. Achuthan isn’t necessarily siding with the bears. “They’ve latched onto the index as the greatest thing since sliced bread because it converges with their views – it’s gone down quite sharply,” he said. “It’s a very good leading indicator, but it’s not the Holy Grail of economic forecasting.”
    Mr. Achuthan isn’t calling a recession yet, at least. He notes that while indeed, all negative 10 per cent readings have been coincident with a recession, there are two examples in older, unpublished monthly data where that did not come true, in 1951 and 1966. For now, he says, the data indicates slowdown, not recession.

  5. Anonymous says:

    It should be okay to invest in bonds right now as long the Fed holds interest rates at record low levels near zero for “an extended period of time” as they say they will, and particularly if the stock market has another leg to go on the downside (keeping the appeal of safe havens alive). But investors probably need to be aware of the potential that it is a bond bubble, and be prepared to bail out early when rates and yields begin rising, or if the stock market bottoms and begins a new leg up. With so much money in bonds and bond funds, the exit doors will be crowded when the time comes.

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