Recovery or Dead Cat Bounce?

[MR.]

1) I could be wrong here... but I believe a major cause was the tightening of money supply by the government then. That caused a contraction in the economy that spiralled into a severe recession or depression. This probably explains why currently QE is being chosen to combat the slowdown. In most economists' eyes, deflation is a scourge much harder to control than inflation, at this point, QE seems to have done its job with most distraught economies reporting some sort of bottom and are expecting smallish growth by next year.

Is this good enough to remove the argument that the global economy is heading towards a depression?

Sounds plausible and probably correct.

Wonder how many times governments inflate their own money supplies trying to keep things ticking along while disadvantaging savers. At what point does it turn to that "dead cat"? Guess, when governments tighten their belts?

Heard the other day that we are now looking at the "square root" symbol, not the V,W,L or U ..... anyway

This thread is just going to keep on re-appearing!

 

[haunting]

From Bloomberg last night...

Quarterly profits at the 495 companies in the S&P 500 that have reported results since April 7 dropped 32 percent on average, according to Bloomberg data. Analysts expect annual earnings in the measure to decline 15 percent before rebounding 22 percent in 2010, estimates compiled by Bloomberg show.

** the 15% annual earning decline expectation seems credible whilst the 22% rebound expected in 2010 is a big "?" - there don't seem to be any data to support that estimate.

‘Deflationary Bias’

The income and spending data “reflects a deflationary bias in the economy,” said Kevin Caron, a Florham Park, New Jersey- based money manager at Stifel Nicolaus & Co. “Why pay 18 times earnings for an economy with a deflationary burden on its shoulders?”

** if this is the prevalent money man's thinking and if they were to act on this, the markets over are likely be put under selling pressure until they become "cheap" again (fat trimming of 20% off the 40% gain sounds reasonable to me). In any case, it's a good time to go for a summer break, everything works out just fine for them... and why not?

 

[Aussiejeff]

Sounds plausible and probably correct.

Wonder how many times governments inflate their own money supplies trying to keep things ticking along while disadvantaging savers. At what point does it turn to that "dead cat"? Guess, when governments tighten their belts?

Heard the other day that we are now looking at the "square root" symbol, not the V,W,L or U ..... anyway

This thread is just going to keep on re-appearing!

In that case, the "infinity" symbol might be more appropriate!

 

[RayG]

In that case, the "infinity" symbol might be more appropriate!

LOL, actually since we are talking debt, we should be taking the square root of a negative number, and that is.....

Maybe it's Schroedinger's cat?

Regards
Ray

 

[Buckeroo]

My thoughts are on the letter 'O' - can't help thinking we will be revisiting 2008 again sometime soon.

Heck, with Governments around the world openly encouraging people to borrow & spend, its great for business in the short term, but the end game will come - wish I knew exactly when, I'd make a fortune.

Cheers

 

[Gordon Gekko]

Cash Best as Record Correlation Coefficient Hints Herd Collapse

The so-called correlation coefficient that measures how closely markets rise and fall together has reached the highest levels ever, according to data compiled by Bloomberg.

Now, options traders are paying more to protect against a drop in the S&P 500 versus the cost to wager on gains than at any time since September, when the collapse of New York-based Lehman Brothers Holdings Inc. froze financial markets.



http://www.bloomberg.com/apps/news?pid=20601057&sid=aaeSiksLwotY

Looking forward to the next 3-6 months

Best

G

 

[gfresh]

Damn pesky increase in profit guidance from one of our retailers... JBH did so recently too.. HVN sales have also marginally increased in the last 9 months

http://business.theage.com.au/business/djs-stock-soars-on-guidance-boost-20090630-d2yw.html

That came shortly after the company announced conditions had improved in May and June, after a flat performance in April, and that it was now trading ahead of the same months in 2008 on a total and like-for-like sales basis.

It now sees net profit for the second half of fiscal 2009 rising by 20 per cent 30 per cent on the same period last year, compared to earlier guidance of growth of zero to five per cent.

 

[Uncle Festivus]

Damn pesky increase in profit guidance from one of our retailers... JBH did so recently too.. HVN sales have also marginally increased in the last 9 months

http://business.theage.com.au/business/djs-stock-soars-on-guidance-boost-20090630-d2yw.html

For the year to date, David Jones stock is returning 49.4 per cent against the overall market at 8.7 per cent.
JB Hi-Fi's total return this year is 60.1 per cent and Harvey Norman's return is 27.7 per cent -- all standout performances.

JBH shorted. Keep the stimulis coming Kev...

This week’s report from the US Federal Reserve suggested that deflation was no longer a significant risk, while a new forecast from the Organisation for Economic Co-operation and Development also suggested that the risk of deflation had been averted.

But then, pesky reality......again!

Eurozone annual inflation has turned negative for the first time, complicating the job of the European Central Bank as draws a line under emergency measures to tackle continental Europe’s recession.
Consumer prices in the 16-country eurozone were 0.1 per cent lower in June than the same month a year before, according to Eurostat, the European Union’s statistical office.

 

[MACCA350]

Thought I'd check that bear chart again to see how we're looking:

What do you think?

cheers

 

[Garpal Gumnut]

DCB

gg

 

[cutz]

First time all in experience with an all out panic type bear market and subsequent whooper of a rally, just feels that clear sky has come too quick, the panic is all but forgotten, don't know what to think.

GG what do you mean by DCB ?

 

[marknz88]

DCB = Dead Cat Bounce

its amazing how we are at the top pivot point, just like the oil crisis was....now do we keep going up or do we track the oil crisis down? Thats the $6million dollar question

 

[cutz]

DCB = Dead Cat Bounce

LOL,

Another derrr moment.

 

[Nick Radge]

Interesting macc355. I'm not disputing you but I will throw a broader historical view at you:

Since the late 1800's there have been 255 recessions. 164 of these have lasted 1-year and just 32 have lasted more than 2-years. In other words 66% of recessions have lasted less than 2-years and 70% last less than 1-year.

The speed of the decline has no impact on duration of the contraction.

Since WWII contractions finish a lot quicker than prior WWII.

No argument that this is somewhat more extreme than the normal and no argument that we can't get a double dip.

Nick
(enjoying the rally whilst it lasts)

 

[Real1ty]

DCB

gg

lol, how long have you been questioning this rally now? Hope you haven't been out of it, that would be painful.

How are some of your calls going?

BHP - $13.00, MQG - Under $1.00 (That is not a typo)

You would have been an excellent contrarian indicator

 

[Gundini]

Nick
(enjoying the rally whilst it lasts)

I hate the rally, I 've been a bear (Polar) for the winter.

Really peeeeeed off I sort of missed this rally

Even bought some Japan ETF's to stem the bordom...

 

[Buckeroo]

I hate the rally, I 've been a bear (Polar) for the winter.

Really peeeeeed off I sort of missed this rally

Even bought some Japan ETF's to stem the bordom...

I'm a little the same, but am dabbling & making a little money...just be ready to pull out at a moments notice.

The recovery is so far, very similar to the 1920's depression DCB - traditionally September & October are the months when stocks decline, so we will probably know if this is a fair dink rally or not very soon.

My opinion, I think its going to tank hard so still holding mostly defensive investments.

Cheers

 

[LeeTV]

I hate the rally, I 've been a bear (Polar) for the winter.

Really peeeeeed off I sort of missed this rally

Even bought some Japan ETF's to stem the bordom...

Loving the rally, though I fear we may see a retrace in the not to distant future. This time I won't get caught napping!

 

[MrBurns]

The recovery is so far, very similar to the 1920's depression DCB -

I was thinking the same thing but there has to be a reason for it to tank and I cant think of what can go wrong that hasn't gone wrong already, unless China stops buying our stuff.

 

[So_Cynical]

How are some of your calls going?

BHP - $13.00, MQG - Under $1.00 (That is not a typo)

To GG;s credit he got the bottom for SUN spot on...in the SUN thread somewhere, if memory serves.