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SallyGrowler

Credit Suisse: Here's Why A Double Dip Is Still Not In The Cards

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Credit Suisse is still in the weak economy, but stay long equities camp. They say the risk of a double dip is very low and history backs their claims. They note that no recession has occurred within the current type of environment:

"We note that each US recession since 1960 has been preceded by all the following factors:

  • A flat or inverted yield curve (10-year minus 3-month);
  • Positive real short-term rates (3-month minus core CPI);
  • Excess inventories of finished goods (inventory level above trend);
  • The growth rate of lead indicators falling to zero (based on the Conference Board index of leading indicators).
In particular, over the past 60 years, there has not been one recession in the US where the yield curve was steeper than 0.7% (compared to 2.8% currently), real short-term rates were lower than minus 0.3% (now -0.8%), inventories were more than 3% below trend (now 17% below) or the Conference Board index of leading indicators rose more than 1.6% on a 6m basis (now 3.9%) six months before the start of the recession.
That is to say: the preconditions for a double-dip in the US are not place."

 

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View PostWe've never had household debt per capita as high as it is today, either.

 

 

When I read the OP I said to myself: Many things are much different now; different from what they were during the previous U.S. recessions CS examined.

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View PostSeems the forcast of the economy changes by the week. Hopefully the general trend is still up when the jagged ups and downs are settled out over time.

 

 

Depends on who you follow as a forecaster.

 

I find it odd that CS (outta nowhere) would produce a pretty amateurish analysis of the current economic landscape.

 

Thought weewee needed a chuckle.

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View PostDepends on who you follow as a forecaster.

 

 

I find it odd that CS (outta nowhere) would produce a pretty amateurish analysis of the current economic landscape.

 

 

Thought weewee needed a chuckle.

 

Isnt that because the uniqueness of this recession makes forcasting it difficult to impossible?

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The truth is no one knows until things actually happen. My father works in banking and saw Greenspan speak at the economic club in New York for some get together and said the guy couldnt have looked any less certain about what he is talking about. All this is based on numbers and other stats and figures but the reality is that it is people who drive the economy and you can never really predict what people will do. The stock market is such a fragile thing and can fluctuate greatly on the most trivial things such as a wrong decimal place or missing 0. I am sure Bear Stearns and Lehman thought they were invincible thought they had everything patterned out and understood but guess what, just like fishing when you think you know everything and have it all down thats when something will happen to make you realize how much you dont know.

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View PostIsnt that because the uniqueness of this recession makes forcasting it difficult to impossible?

 

 

Rather than looking at the unique qualities, it is the stark economic data that prints the picture.

 

The forecasters seem to point in the same direction - we're screwed for at least few more years.

 

Whether it is a "double-dip" (whoopee doo) is moot.

 

I'll take a scoop of precaution with a double-dip and a cherry on top.

 

Buzzwords.

 

It's like Hifreq trading or "flash-crash". Easy to digest and utterly meaningless.

 

The media conjures up a picture - the analysts are charged with duty to either confirm or allay fears based on their interpretation of data.

 

While it feels good that CS says "no double-dip yet" it doesn't disqualify or mitigate existing economic data.

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View PostTerm "double dip" is meaningless, we are in a nasty recession that we will not climb out of anytime soon, plain and simple.

 

Thats just it, thats what you say, and what others say. But at the same time there are economists saying that we are recovering right now and things will continue to get better.

 

 

Both swear THEY are the right ones. Just makes me think no one really knows for sure what the hell is going on.

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View PostThats just it, thats what you say, and what others say. But at the same time there are economists saying that we are recovering right now and things will continue to get better.

 

 

Both swear THEY are the right ones. Just makes me think no one really knows for sure what the hell is going on.

 

Economists always disagree, nothing new there. The ones that saw this coming years in advance are the ones to give credence, the ones that didn't, well......

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