This morning Lakshman Achuthan, Economic Cycle Research Institute, says at the end of October his leading indicator index is showing definitive evidence of a slow recovery but “no double dip recession any time soon.” Hopefully he is right. He notes that the leading indicator index followed a similar formation in 2003 when the economy weakened but did not go back into recession. It is noteworthy however that while the 2001 recession officially ended in 2001 according to NBER, the stock market went on to make a series of lower lows thereafter falling a further 36% before finding a final bottom in October 2002 followed by a nasty retest in February 2003. So even without a double dip in the economy ahead, we have reason for serious concern about the elevated level of current stock valuations at this point in our government funded “recovery”.
Cory’s Chart Corner
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