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Saturday, June 26, 2010
The Economist - 26 June 2010
The Economist is a global weekly magazine written for those who share an uncommon interest in being well and broadly informed. Each issue explores the close links between domestic and international issues, business, politics, finance, current affairs, science, technology and the arts.In addition to regular weekly content, Special Reports are published approximately 20 times a year, spotlighting a specific country, industry, or hot-button topic. The Technology Quarterly, published 4 times a year, highlights and analyzes new technologies that will change the world we live in.
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ECRI Leading Economic Index Plunges At -6.9% Rate, Back To December 2007 Levels When Recession Officially Started
It's getting close: the fabled -10% annualized change (see David Rosenberg) which guarantees a recession is now just 3.1% away, which at this rate of collapse will be breached in two weeks. The ECRI is now at December 2007 levels, the time when the last recession officially started. The index dropped from an annualized revised -5.8% (previously -5.7%) to -6.9%. As a reminder, from Rosie, "It is one thing to slip to or fractionally below the zero line, but a -3.5% reading has only sent off two head-fakes in the past, while accurately foreshadowing seven recessions — with a three month lag. Keep your eye on the -10 threshold, for at that level, the economy has gone into recession … only 100% of the time (42 years of data)." We are practically there. (more)
The Many Faces Of Gold
Who isn't talking about gold these days? Maybe that's more the appropriate question than not. Of course dial the clock back seven to ten years and serious discussions of gold set against the context of the macro credit cycle, monetary and fiscal policy, etc. were almost strictly confined to the bearish underground. Certainly we are in the underground no more. Well above ground and gaining more widespread recognition by the day as many of the former bearish underground rationales for accumulating and holding gold are now coming true right before our eyes and clearly entering mainstream debate, if not conviction. It's time for a quick little review, but what we hope to accomplish in this discussion is twofold. We want to have what we believe is very much an unconventional look at gold that we really have not seen in this conceptual format anywhere else. As you know, charts of gold relative to the major global currencies are a dime a dozen. We don't want to waste your time as you can find them anywhere and everywhere across the net. Gold is breaking out really against all global currencies. That's not new news. The Dow and S&P expressed in terms of gold, etc. Pretty conventional stuff in terms of more mainstream commentary and analysis. We're going to have a look at gold relative to what we believe are important historic economic markers of the real economy itself. And it just so happens that this little view of life dovetails into the second purpose we have in presenting this review. We know you've seen a number of pundits predict $2,000 gold, $3,000 gold and even perhaps a moon shot to $5,000 gold and beyond. (more)
5 housing and financial stories showing profound weakness in the economy
Unfortunately the storyline regarding housing is all too predictable. For California, once the vice grips tightened around the option ARM and Alt-A universe in 2007 and 2008, the housing market in the state collapsed like a piñata in the subsequent years. Now, all the mainstream analysts are “shocked” that new home sales have fallen into the abyss. Thing are so bad, that new home sales on a seasonally adjusted basis fell to a record low level and Census data goes back to 1963. When we chart this as you will see, this is a historic fall. Yet this is all expected. The removal of the federal tax credit and pent up demand moved forward caused a bear market bounce for housing. All it took was one month worth of data to crush the entire idea that the housing market was somehow supporting itself. (more)
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