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’2012 – the year of the double dip
Festive cheer seems to be in short supply at Capital Economics:
– We don’t have high hopes for 2012. In fact, we continue to think that the UK will re-enter recession. Output could already be contracting and is likely to continue to fall throughout most of next year.
Deutsche’s Reid on shorter business cycles
It must be nearly Christmas, for the last Deutsche Bank Early Morning Reid of 2011 was today.
Luckily, strategist Jim Reid and his team left us with a note on their thoughts for what the new year will hold,
Not even in Japan…
Whatever is decided at the Save the Euro summit, it seems certain the eurozone is heading into recession.
But not just any recession, this will be a protracted one reckons Citigroup.
Our economists believe the sovereign debt and banking crises are causing a renewed recession in the Euro Area.
DPS vs. EPS
Dividends or earnings? Where should equity investors put their hope if Europe slides into a recession?
The former will likely outperform the latter, according to Morgan Stanley analyst Ronan Carr. He gives four reasons for this:
The translated Troika
11 October 2011 – Statement by the European Commission, the ECB and IMF on the Fifth Review Mission to Greece
Staff teams from the European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF) have concluded their fifth review mission to Greece to discuss recent economic developments.
Crunch de crédit
Credit:
Crunch:
Both charts from the ECB’s latest lending survey of banks. Clear signs, we’d argue, that funding pressures did spike over the third quarter, and critically, to the extent that these pressures also pushed banks to choke off corporate credit — alongside signs of a deteriorating economy.
The crisis that was always coming
This looks a bit like how 2012 will turn out, doesn’t it?
European countries are at present locked into a severe recession. As things stand, particularly as the economies of the USA and Japan are also faltering,
A US recession indicator
Interesting chart from Ruslan Bikbov at BofA Merrill Lynch.
As you see the yield curve has proved to be a very powerful recession indicator. So why is Bikbov drawing our attention to it now when the 2s5s curve is 74bps – 29 bps above its long term average?
The answer runs as follows.
Her Majesty’s SME CLOs?
It’s like putting your foot on the accelerator but because the transmission mechanism isn’t working properly, the car wheels don’t respond.
Actually George, that might be because the car is on fire,
The European recession of 2011/12
Yup, it really has come to this. Rather than debating if there will be a recession in Europe, economists are now trying to figure what it will look like and how long it will last.
RBS has already given us its view,
Recession and rate cuts: RBS call ‘em in Europe
Here it is in full, from Jacques Cailloux and team at RBS:
Despite some early signs of a slightly firmer Q3 GDP (our GDP Tracker is at 0.2% q/q vs 0.1% q/q last month) on account of strong German industrial production (boosted by favourable working day effects),
Increasing Macroeconomic Fright
Title of the IMF’s World Economic Outlook, September 2010:
Recovery, Risk & Rebalancing
The title of the September 2011 edition (just out at pixel time)…
Slowing Growth, Rising Risks
It’s generally
Does junk predict a funk?
Or: do wide high yield spreads over US Treasuries predict a recession?
We ask because this is an interpretation we’ve seen a fair bit in the media over the last few weeks.
And if true, it’s especially alarming since on Tuesday the BofA Merrill Lynch High Yield Master II Index,
Crisis! We’ve got new words for the crisis
Sometimes, existing words just don’t cut it and you have to come up with some new ones. Or get your readers to do it for you.
In the current economic climate FT Alphaville has been running out of imaginative ways to convey a sense of imminent destruction.
“Dangerously close to recession” — earnings edition
Or, earnings recession risk, and still not getting it in equities.
Interesting spot from Morgan Stanley’s European equities analysts, following the bank’s major downgrade of global growth forecasts and its belief that Europe in particular is “dangerously close”
Staring recession in the face
The 6 per cent Kospi drop overnight was a warning…
And a look via Reuters at Europe’s biggest fallers at pixel time shows plenty of blue-chips getting smashed. Financials were bearing the brunt too with Italian banks suspended limit down this morning already.
The BBB recovery
An early morning helping of doom and gloom, courtesy of Morgan Stanley, which has cut its global growth forecast for 2011-12 by a full percentage point.
The bank – one of the more bearish houses on the Street – reckons the US and Europe are dangerously close to recession because of fiscal tightening and policy blunders,
From 1896 to 2011, in UK borrowing costs [updated]
The 10-year gilt yield fell under 2.4 per cent early on Thursday:
It was 2.37 per cent at pixel time.
So we’re not just well under the twentieth-century record low (1946, when yields fell to 2.5 per cent).
Kaputt
And now you know the German for “stall speed”.
Headline changed to better reflect the effects of a slowdown in a major export economy on global growth… (see also Hong Kong’s reversion into recession in the second quarter as an indication of troubles facing world exports.
‘Flash crash’ facts
Via JPMorgan:
Bank of England: “substantial downward risks”
Or to put it another way, the Bank’s fan charts are fanning out so much it’s ridiculous.
Here are two, via the Bank of England’s latest Inflation Report:
First on GDP (getting a bit negative there…):
Edwards says this has nothing to do with that downgrade
Thought the current turmoil was down to the downgrade of US debt? Wrong!
According to Societe Generale’s uber bear, Albert Edwards, this has absolutely nothing to do with S&P, the White House, Tea Party etc.
Official: FTSE 100 in bear market
Low on Tuesday at pixel time of 4855.35 = off 20 per cent from the FTSE 100′s February 2011 high of 6091.33:
MSCI All-World not far off a bear market either. This sucker’s going planetary. Update (0938 UK time):
Car falls down mineshaft…
…Europe gets convulsed by full-on growth scare. Note all the car-makers and miners in Europe’s biggest fallers in Monday’s sell-off:
Both the CRB and (as Reuters columnist John Kemp notes) GSCI commodities indices are flat in 2011.
Meltdown [updated -- to rollercoaster]
Nine days of stocks falling. Nasdaq — like the S&P 500 — is now negative for the year. Situation in crude also ugly and the 10-year Treasury yield is advancing down to 2.5 per cent:
Update — Nasdaq is back in positive territory at pixel time (the FTSE Eurofirst 300 closed down 2 per cent though.) WTI crude’s hugging $92.
Stall speed
FT blogger (and Markets Live contributor) Gavyn Davies recently raised the question of whether the growth rate of the US economy had dropped below stall-speed and was heading back to recession.
He concluded it wasn’t,
On the brink of a British double-dip
Dramatic, we know. But the ONS has confirmed the economy grew only 0.5 per cent in 2011′s first quarter after its 0.5 per cent fall in 2010′s last three months, and technically…
…That’s also already confirming a double-dip in GDP in absolute terms over the period,
Japan’s ‘temporary’ recession?
The news from Japan on Thursday reinforced some of the worst fears about the state of the economy, but not everyone is gloomy — far from it — although the latest growth figures are truly horrible.
As the FT reports:
Oily shadows of 2008
What do over $100 per barrel oil prices really mean for the global economy?
According to Stephen King, chief economist at HSBC, the situation doesn’t bode well for the recovery at all.
His Friday research piece beings: