I had to do a double take on this one:
"A recent survey of top Wall Street economists by The Wall Street Journal
revealed expectations that fourth quarter real GDP will rise at about a 1.5%
annual rate. The first quarter of next year is expected to come in at about 2%,
and to inch higher through the year. Steady, moderate growth in consumer
spending and strong exports are creating growth.There is no evidence of
recession.The weekly H.8 data from the Federal Reserve show that banks
are continuing to extend credit at a steady rate.
There is no evidence
of a broad credit crunch."–Dick Green, president of Briefing.com
(emphasis added)
How someone can read a collection of forecasts, and from that deduce a lack of evidence of potential recession is far beyond me. Its disingenuous beyond belief.
Go read the full piece, and come back to post a comment whether Mr. Green is correct or not. Consider this your open thread for the evening . . .
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(Hat tip Marketbeat)
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Source:
The Fears are Real
Dick Green
Briefing.com, 20-Nov-07 08:48 ET
http://www.briefing.com/GeneralContent/Active/PrintPage/PrintPage.aspx?PageId=3120
Green says nothing about a _potential_ recession. He is evidently talking about actual conditions as they currently prevail and is not saying anything controversial. There is no recession in our economy at this point. Potential recession risk exists but is beyond Green’s thesis.
Everything’s fine! Nothing to see here, folks! Move along, move along…Keep shopping…
I was stuck in a snow storm in Rush hour traffic, once (pre Doppler radar), and the Meteorologist was saying we’d be having a few flurries. It snowed close to 2 feet. Green is apparently the Market Analyst equivalent of that Meteoroligist.
Briefing.com=subscription service (and a poor one at that)
Negative views do not actually incite a mad rush to be a consumer of the content that it calls “news”. It’s no surprise to me that there is nothing other than the regular “it’s all good” sprinkled with some possibly “thought provoking” points.
Another Ostrich…
Ciao
MS
Well, then he should have made it his antithesis. In the end most everybody who gets in a position such as his has learned how to kiss ass, so really there should be no surprise here.
aren’t we in a recession already?
even better today is how the Fed didn’t see housing spilling over into the rest of the economy.
Peruvian marching powder they do…
Poor forecasting from economists is nothing new. From the NY Times earlier this year: “The Economist reported that in March 2001 — the month the last recession began — 95 percent of American economists believed that there wouldn’t be a recession. In February 2001, the 35 professional forecasters surveyed by the Federal Reserve Bank of Philadelphia collectively predicted growth at an annual rate of 2.2 percent for the second quarter of 2001 and 3.3 percent for the third quarter. It’s as if meteorologists stood outside as the storm clouds approached and informed television viewers that endless sunshine was ahead”.
I also saw another economist on NBR tonight explain that; “don’t pay attention to fuel and milk prices, inflation is low and contained”.
Makes me wonder exactly what these economists are good for…
The market’s great, man. Buy financials, quick, while they’re still at a discount. Heck, I’d love another rally, so I can find better value on long-term put options. Thus far, housing and financial puts this year have yielded quite the windfall: lower-level season tickets to the Nuggets, World Series Tickets, a mandolin, a twelve-string, and a solid savings account. I’d love to see Bear Stearns have another rally up to 125. Hey, did anyone hear that rumor about Warren Buffett buying Freddie Mac? Really, I swear it’s true! Rally! Rally! Rally!
I think it has to do with this article:
http://www.nytimes.com/2007/11/20/health/research/20deni.html?_r=2&oref=slogin&ref=science&pagewanted=all
Continued sluggish growth due to high energy prices and the housing recession. Or, as Barney Frank said recently when questioning Bernanke, “Below trend growth.”
But below trend growth does not equal recession. But isn’t this quite sustainable? The Fed doesn’t have to worry about inflation or unemployment right now.
Core inflation remains tame. Employment remains high. Wages are growing. The Fed will continue to cut rates.
No recession yet. But eventually one will show up.
Just guessing, but historically the first year of a new President has seen a few recessions and economic slowdowns.
the banks have tried telling us what their losses are, to no avail because no one believes them, and everyone is just waiting for their gross amounts of exposure to particular lines of non-creditworthy business, so we can make up our own minds what their future losses will be. same with talk of recession: Fed must stop giving us their “inflation-adjusted” forecasts. we need NOMINAL GDP now, because no one believes the Fed’s various inflation measures.
Just keep an eye on ACA Financial.
I wonder if it has anything to do with the time-delay and/or subsequent revisions WRT many key economic statistics: “Today” is really a couple months ago and even that isn’t very firm ground; to an economist anyway.
I have learned a great lesson from Mr. Green – the capital markets are not part of lending – the only ones who lend are banks – thus no credit crunch.
And as long as banks are lending, consumer spending will hold up, thus there will be no recession.
Brilliant analysis or wishful thinking?
I think I will place more trust in John Hussman, who doesn’t quote Yahoo finance headlines as proof but actually uses real historical data:
“[Even in recessions] Nominal consumer spending has, in fact, never experienced a year-over-year decline in post-war data, and real consumption is generally the most stable class of expenditures.”
An overreliance on consumer spending as a recession-avoidance-monitor is obviously overstated – the problems, as always, come with supply/demand imbalances.
This is why inventory growth has such potential to cause production slowdown in Q4 of 2007 and Q1 and Q2 of 2008 – perhaps longer.
It is the age-old problem – I built plasma T.V.s; they wanted food and gasoline.
I think Dick Green must be a NAR economist. What a clown.
I have 3 final words for Mr. Green …”SOLD TO YOU!”
He must be auditioning for the next Fed Chairman position.
Phil
He means there is no credit crunch for rich folks like him… which is mostly true.
80/20 mortgages for average folks…nonexistent. Gone and not coming back.
Credit card debt at 34% default rate? No problem.
Although not a current subscriber, I used to be and have followed briefing.com since about six months after the site first came out. I’ve disagreed with him more times than I can count, and events have almost always proved me wrong.
The full quote is far more balanced than the excerpt posted, here is the link:
http://www.briefing.com/Investor/Public/MarketSnapshot/PageOne.htm
How the consumer spends during the coming holiday season will tell everything.
Kieran said:
Heck, I’d love another rally, so I can find better value on long-term put options. Thus far, housing and financial puts this year have yielded quite the windfall: lower-level season tickets to the Nuggets, World Series Tickets, a mandolin, a twelve-string, and a solid savings account.
uh-oh, sounds like somebody is going to learn about la tristesse qui suit le succès sur la plupart des occasions.
Making profits is not the trick, keeping them is and I’ve been where you are now several times only to watch a 30% gain turn into a 10% loss by trying the same trick too many times in a row. There is a lot to be said for calling it a day while you are ahead instead of continuing to lean forward.
But do what you like and good luck.
==whipsaw==
The Key Market Question and Pre-Holiday Musings
Occasionally we take up a series of topics where we have a comment, but not a full-length article. As we head into the holiday period (including some travel and lighter posting) there are some topics that deserve special mention. The
Freedom is slavery.
Perhaps the relationship is not supply/ demand, but supply/ *ability to consume*.
As far as I can tell, there is always “demand” to consume. But, is there always an “ability” to consume?
My Father grew up during the Depression and it’s impact on his desire to accrue debt during his life was significant…
“Young man, first ask yourself whether you can do it yourself? If not, can you pay in cash? LASTLY, look at your options in the debt markets. Whatever you do, please son, don’t ever, EVER, look to the debt markets FIRST.”
Thanks Dad.
Briefing.com is a notorious Wall Street shill. The “no evidence of recession” comment is completely disingenuous for reasons explained by Ritholtz. Equally disingenuous is the invocation of H.8 data for the proposition that there is no credit crunch. H.8 says nothing about non-bank financial institutions, some of which are obviously important players in the credit markets (hedge funds, anyone?). Moreover, because it reports aggregate data, H.8 is silent as to whether important segments of the credit markets (e.g. CDO, CLO, LBO) are completely frozen. Finally, it certainly bears mention that during the most recent recession beginning in March 2000, H.8 didn’t register a downturn until after the contraction was well underway.
Where to Start and how to be brief – Oh I know! For those that have an interest in Bias, the only comment I have is Dunning-Kruger syndrome is evident.
I feel these quotes are extremely relevant:
“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
– Irving Fisher, Ph.D. in economics, Oct. 17, 1929
“I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.”
– Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929
I don’t get a double-take reaction out of Green’s remarks.
He’s hedged himself so well as to later be able to slip into capitulating to an actual recession (if we have one) without much apology.
What I would say to him is that on a given single day (yesterday) when the two primary GSEs that do conventional mortgage pool syndication in this country drop in value by approximately 25% (and in the pre-market maybe another few percent today), and Freddie says it needs to cut its dividend for capital conservation and also raise additional capital by issuing a large preferred offering, it’s hard to blame it all on f-e-a-r and not fundamentals.
– Unreasonable fear can be laughed off and arbitraged away. That’s like when irrationality creates a failure to recognize asset values undiscovered in the fog of fear. That’s Warren Boufee’s famous modus operandi… It’s like when you find a used pickup for sale in your neighborhood that’s priced $500 below the most reasonable low range value quoted in Blue Book and its quality and condition should yield the highest range price. One does not have to be fearful of value.
– On the other hand, fundamentals send you hunting for new capital and cutting your payout to shareholders. That’s like when you’ve priced your own used pickup for sale and priced it $500 h-i-g-h-e-r than the highest reasonable range price in Blue Book and maybe its condition should garner no more than the lowest price. Then, unfortunately you need a Pollyanna to come along and give you your asking price, one of the Pollyannas that Green would chastise for being fearful if they didn’t come forth and give it to you.
—
Here was Asia overnight, after the supposed Fed rumor collapsed:
http://finance.yahoo.com/intlindices?e=asia
Here’s Europa-Dopa, at least now (live quotes):
http://finance.yahoo.com/intlindices?e=europe
And, with futures where they are, and the 10-Y-T where it is:
http://finance.yahoo.com/q?s=%5ETNX
…you think the Fedinistas have any real choice?
I thought about you this morning… saw the funniest Southwest Airlines add. Guy lost a bet and had to wear a hotdog suit to a business meeting.
Cluck-Cluck, Ur pal, Clucklectic
Most economists can’t see a recession until it’s sitting on their face. The Economist reported in March 2001, when the last U.S. recession began, that 95% of American economists believed there would not be a recession. A month earlier, the 35 professional forecasters surveyed by the Federal Reserve Bank of Philadelphia predicted growth at an annual rate of 2.2% for 2Q 2001 and 3.3% for the third quarter. As Daniel Gross said in his March 4, 2007, column in the New York Times, “It’s as if meteorologists stood outside as the storm clouds approached and informed television viewers that endless sunshine was ahead.”
“Predicting Recessions”
http://boom2bust.com/2007/09/10/predicting-recessions/
“Making profits is not the trick, keeping them is and I’ve been where you are now several times only to watch a 30% gain turn into a 10% loss by trying the same trick too many times in a row. There is a lot to be said for calling it a day while you are ahead instead of continuing to lean forward.
But do what you like and good luck.
==whipsaw==”
– – – – – –
IMHO, you def’n need to book some profits as they come (like today for instance I will be reducing my shorts/puts by probably 5%). This is still a polarized market with enough liquidity and bulls out there wanting to get over the sub-prime issue and rally the market back up. Add to that the possibility of a fed cut and year-end holiday rally and it’s a sure recipe for choppy two way action which you can use to your advantage. Take profits as they come and keep plenty of cash available to add to positions/longer dated puts whenever the market rallies.
Good luck…
Re: previous comment in this string by Mack MacDaniel… he had a very smart father.
Too bad this “I want it all and I want it now + Tra la la la live for today” generation can’t fathom to take a page from Daddy MacDaniel.
As for the fine Mr. Green, he must be tokin on some very FINE GREEN….