Double Dip Countdown: "9"

The Double Dip Countdown ticks down as the ECRI leading indicators have dipped even lower into negative territory, falling from -3.7 last week to -5.7. This is only the second negative reading and it will take a sustained drop to signal a recession, but the previously dismissive tone of the director of ECRI, Lakshman Achuthan, is showing heightened concern: "We're definitely rolling over."  The -10 level is considered conclusive of a coming recession.

 

Global industrial production is up but continues to roll over. China (yellow line) is flat, Japan (red line) soared from a deep drop but is now clearly turning down, the Eurozone (dark line) still looks like it is improving, and the US (blue line) is rolling over and approaching zero to negative growth. Production is still positive, but a few more ticks and the US will be negative.

 

China is saying it will allow the RMB to float a bit, which might spark a stock move early this week - futures are up strongly on the announcement - but then they announced no change as of Monday. This might just be a bit of posturing before the G20 meeting, but it is interpreted as a vote of confidence in the global recovery despite the warning signs of a turn down coming. In any event, Chinese increase in exchange rates coming on top of labor unrest and higher wages further confirms my post of several weeks ago that the era of cheap labor is ending in China. The Chinese are likely to move slowly, but looking beyond any vote of confidence, this will put another damper on global production.

A good discussion of the implications of this move is here. Marginal exporters may suffer or go under - as I have discussed previously, many of them run on 2% margins, extremely tight - but a stronger RMB makes imports cheaper. Watch the AUD tomorrow - it might pop due to expectations of increased raw ,material exports to China.

Comments

[RT]

Watch out bears, could see a buying panic break out here

[Roger's bearoine addict sidekick]

Yo,

Anyone got some bearoine they can spare?

I gotta score another fix real soon man.

OK OK, like my last fix? Like it gave a bad trip man!

Almost went toe up man —that ain't funny man I need some of the good stuff.

And like if you guys could also spare some for my friend Roger?

Like y'know I might be able to revive him cuz he's like real comatose right now. He's like turning blue and green and startin' to smell bad.

Thanks for helping out man...

[Account Deleted]

US markets analysis before opening bell
http://niftychartsandpatterns.blogspot.com/2010/06/yuvan-move-may-give-gap-up-for-wall.html

[David]

So ... I should be looking at India now that China may be less comptetitive?

[Taos Eddy]

GRRRRR!

This June 11 cover nailed the exact low so far.

[Stone]

Direct, sustained monetization wouldn't surprise me a bit at this point.

Agri-producing land, profitable small businesses, and gold are about the only three places I can see as a safe place for one's wealth over the next twenty years. The equity, bond, and futures markets are for chumps at this point.

[da bear]

Stone,

You are on the money! Running a micro business, family-style small business, or internet-based quasi-racket is the way to go. Prechter talks about putting money into gold and raw land at the next low. So those will be the INVESTMENTS. All other things, the paper stuff, will be for SPECULATION only. And it's probably always been that way...

To the markets: The DOW had a very nice gap up today, now it is leveling out. Perhaps we get a pull-back here. Either 'c' of 2 is about over, or iii of 2 is about over. Perhaps. but let's see about the rest of the day.

Any thoughts?

da bear

[RT]

Mamma B wrote: Best guess, quick burst Monday morning then correction

Mamma nails the short term once again...shes on a hot streak

http://images.dailyradar.com/media/uploads/showhype/story_large/2009/02/21/jillian_beyor_image_8.jpg

[da bear]

The gap up high today was 10,594. I was looking for 10,666. Yelnick was looking for 10,529. So we could be due for a correction.

DOW needs a bounce right here.

da bear

[David]

"Direct, sustained monetization wouldn't surprise me a bit at this point.

Agri-producing land, profitable small businesses, and gold are about the only three places I can see as a safe place for one's wealth over the next twenty years. The equity, bond, and futures markets are for chumps at this point."

Stone, wouldn't bonds do well in this environment? I figure that growth would be slow and deflation more a threat than inflation.

[Account Deleted]

Dow jones hour chart with bull flag formed on friday
http://niftychartsandpatterns.blogspot.com/2010/06/dow-jones-bullish-flag.html

[da bear]

Chartanalyst,

So is that good for the stock market going forward, or bad for the stock market?

da bear

[Mamma Boom Boom]

Thanks RT, I wondered if it fell on deaf ears.

[Bird]

I think all 5 of us reading this can agree that you are the best Mamma. The best ever.

This doesn't mean you are not a whore, which is an even more enviable profession. You got it, you sell it, you still got it.

[da bear]

A good conclusion for wave 2 would be a small wave iv or a wave 'd' down then a final burst higher to finish 2. Then the 3 of 3 begins.

The weakness in gold and mining stocks is disconcerting.

da bear

[da bear]

Looks like 'c' of 2 is over. Now we either get a wave iv or a wave d down before a final burst higher or this rally is over.

I would think that the 10,300-10,400 on the DOW needs to hold. Don't wanna see an overlap.

Gold is weak too. Down to $1,233 or so. I don't think that gold can go below $1,221.

da bear

[Mr. Panic]

It's over!!!

[RT]

Correction is over.

It's time to summon the Rally Monkey....

http://www.youtube.com/watch?v=AD34n6XeWXg&feature=related

[Account Deleted]

Dow jones analysis after closing bell
http://niftychartsandpatterns.blogspot.com/2010/06/dow-jones-analysis-after-closing-bell_22.html

[Libra]

Mamma B wrote: Best guess, quick burst Monday morning then correction

Mamma nails the short term once again...shes on a hot streak

http://images.dailyradar.com/media/uploads/showhype/story_large/2009/02/21/jillian_beyor_image_8.jpg

Posted by: RT | Monday, June 21, 2010 at 09:13 AM

WELL, LET"S NOT OBJECTIFY HER —she's not Jillian Beyor.

BESIDES, IF MAMMY LOOKED LIKE THAT SHE WOULDN'T BE MESSING WITH MARKET CALLING.

LET'S BE MORE REALISTIC AND SHOW SOMETHING CLOSER TO THE ACTUAL PRESENT REALITY:

http://www.tvscoop.tv/Picture%2B7.jpg

A GOOD CALL IS A GOOD CALL NO MATTER WHAT YOU LOOK LIKE RIGHT?