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Thread: Double-dip Recession?

  1. #1 Double-dip Recession? 
    JX
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    With stock traders jittery and the market teetering, are we on the verge of a double-dip recession or merely a market correction on the heels of the all-too-fast market recovery the last few months?

    On the one hand we have Paul Farrell publishing articles such as this a few days ago detailing the many landmines we are trying to navigate around:
    http://www.marketwatch.com/story/our...2?pagenumber=1

    On the other hand, Tim Geithner (Treasury Secretary) believes the risk of a double-dip recession is low:
    http://www.msnbc.msn.com/id/35281626...s_and_economy/

    I'm personally thinking we're seeing more of a market correction than teetering on the edge of collapse, but I agree with Geithner that recovery is going to be a long process.

    From a trader's perspective, many technical analysts have been warning the market is ripe for a correction. Thoughts?


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    Veracity Vigilante inow's Avatar
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    We're rather likely to see a dip mid-summer this year. At that time, the stimulus spending will have already reached it's maximum impact and will begin decreasing in amount. Further, manufacturing inventories will become a problem, as the spike of orders and manufacturing we saw in Q4FY09, Q1FY10, and which we will see as part of Q2 will essentially satisfy all demand from orders. We needed manufacturing the last several quarters, inventories are stocked, and manufacturing will see another downturn around July.

    Coupling that with the decrease in stimulus money, I see a recession as pretty likely. What I am not sure of is how significant it will be, but we will very likely see an downturn of some sort.


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    JX
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    Quote Originally Posted by inow
    We're rather likely to see a dip mid-summer this year. At that time, the stimulus spending will have already reached it's maximum impact and will begin decreasing in amount. Further, manufacturing inventories will become a problem, as the spike of orders and manufacturing we saw in Q4FY09, Q1FY10, and which we will see as part of Q2 will essentially satisfy all demand from orders. We needed manufacturing the last several quarters, inventories are stocked, and manufacturing will see another downturn around July.

    Coupling that with the decrease in stimulus money, I see a recession as pretty likely. What I am not sure of is how significant it will be, but we will very likely see an downturn of some sort.
    I see what you're saying about the summer decline, however, seeing as how this is pretty commonly discussed, surely this information is already been processed by and is now built into the market?
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    Veracity Vigilante inow's Avatar
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    That depends on who you ask, I suppose.

    Here's one perspective:
    http://krugman.blogs.nytimes.com/200...e-dip-warning/
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  6. #5  
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    Quote Originally Posted by inow
    That depends on who you ask, I suppose.

    Here's one perspective:
    http://krugman.blogs.nytimes.com/200...e-dip-warning/
    Very interesting, I'll have to keep an eye out for Paul Krugman's stuff.
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    Jacques; Most our major US Stocks values are based on the World economy, with all DOW Stocks and most all S&P doing near to well over half there business off shore. Rumor has it, so I'm told, China has been inflating its projection and current GDP figures to maintain their markets value (has dropped 20% in past two weeks). Greek markets may default on their debt and Spain may not be far behind, unless bailed out by Germany/France, with the future of the Euro itself in question. The Euro, has been stable today settling around 1.37/US$ from its recent 1.50/US$ high.

    The European currency, the euro, is facing one of its biggest tests of its decade-old existence. The fiscal woes of euro zone member Greece are sparking fears in the financial markets that Athens will default on its debt - and concerns about other weak euro economies.

    Spain also faces potential social unrest over its austerity measures. And in Portugal, the parliament on Friday voted down the government's austerity plan.
    http://www1.voanews.com/english/news...-83662202.html

    The US industry, that are dependent on the US alone, not that many, have really done very little other than what's referred to as sympathy moves, in this cases higher, as the D&SP fluctuate with the World Markets. Toyota, is not helping matter either.

    Personally, I expect to see a trading range in the DOW, from 9500-11000, at least through the summer. Toward November and the US Elections, depending on expectations of results the markets will either dip or increase from this range. It's my opinion, anything indicating slowing or stopping the current Congressional Spending spree, will help the confidence in markets. Short of some unforeseen event, I certainly don't expect to see 6000 in the DOW again (Double dip)...
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    Veracity Vigilante inow's Avatar
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    Quote Originally Posted by Jacques.X
    Very interesting, I'll have to keep an eye out for Paul Krugman's stuff.
    He's an Economist at Princeton, and recently won the Nobel Prize. While a lot of right-wing nutters disagree with his political ideology, there's really no denying that he knows his shite and can't really be attacked on the substance of his analyses.


    Here's a link to the longer stories he writes for the NYTimes: http://topics.nytimes.com/top/opinio...man/index.html
    And here's a link to his blog: http://krugman.blogs.nytimes.com/
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    Quote Originally Posted by jackson33
    It's my opinion, anything indicating slowing or stopping the current Congressional Spending spree, will help the confidence in markets.
    See... Now my interpretation is a little different. My sense is that the market response has FAR less to do with what you call "the current Congressional spending spree," and almost everything to do with the lack of certainty... The sense that our political system is so incredibly volatile right now.

    It doesn't so much matter what decisions are made in Washington. What matters is that we know what those decisions are. With that knowledge in hand, businesses can respond accordingly and will have something relatively concrete on which to base their actions, choices, and plans. While the destination/target of federal spending has some impact on which sectors will do well in the market, I contend that what Congress spends money on is less important than businesses knowing what the rules of the game are going to be.

    Based on what I've read, what you here chalk up to spending... most well-informed observers seem to chalk up to the lack of certainty in the game itself. If they know the rules, they can adjust their strategy, but we don't know the rules because we have a bunch of booger eating feces throwers in office who prefer stagnation to governance, and suddenly 51 votes in the Senate is not enough to pass anything since everything faces filibuster... The Senate is simply broken, and that volatility and partisan nonsense is what truly impacts businesses and the market. If some real legislation would actually pass, then business could adapt and move forward with some degree of certainty, and make wiser investment and planning decisions... regardless of what that legislation is or how much we're paying for it. Sure... Congressional spending is a factor, but really a rather tiny one (at least as far as businesses are concerned, and how those concerns ultimately impact the market).

    Once we have clear legislation in place on things like bank regulations, health care, green energy commitments, etc... then business will evolve and adapt (exactly as businesses always do in a market system)... Business will be better off because they will know what rules are in place and can make smart decisions on investments, hiring practices, and strategy.

    It's the lack of certainty on those rules which impacts the market... Not so much the debt. Our debt may ultimately impact our government bonds and/or ability to borrow, but that simply hasn't happened yet and wouldn't really be a factor with the market as you suggest above (unless perhaps the debt is high enough to cause the value of the dollar to take a tumble against foreign currencies, but since they are facing debt issues of their own that seems somewhat unlikely). That's my two cents, anyway.


    Quote Originally Posted by jackson33
    Short of some unforeseen event, I certainly don't expect to see 6000 in the DOW again (Double dip)...
    I tend to watch the Nasdaq more myself... but I'm projecting a DOW at around 9300 in July/August. We'll see, I suppose.
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  10. #9  
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    You guys appear to focus a lot on the stock market. If the DOW goes up and people are being foreclosed by the thousands is that good or bad?
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  11. #10  
    Veracity Vigilante inow's Avatar
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    That would depend entirely on whom you ask. Good and bad are not objective characteristics, but subjective and relative to respondent.
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