The “R” Word – Recession

Mish from gives us four reasons why you may hear the word “Recession” a bit more often over the coming months

Industrial Output – Falls Sharply in January

Its lowest levels since Hurricane Katrina rattled the Gulf Coast in September of 05.

“The sector is in recession,” wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics, noting that output fell 1.7% annualized in the fourth quarter and is heading for a decline in this quarter as well.

Capital Flows – December sees $11 billion net capital outflow

For those of you who are familiar with the unrelenting deficites that the United States must account for,a are also aware that as long as money and investment continue to flow in from forein nations – buying bonds and US Goods – the credit “floats”. But when this inflow declines – as it did in January – there is valid reason for concern.

Mish criticizes:

“The article reported ‘A Wall Street Journal report that China is considering shifting some of its $1 trillion in foreign reserves into riskier assets, such as corporate bonds, stocks and even commodities.’

“Just what are they thinking? Sorry, that’s the wrong question. Here’s the right question: Are they thinking at all? There’s nothing quite like a rush into riskier assets such as corporate bonds and stocks headed smack into a recession when those asset classes have not seen any kind of significant decline for four years. Didn’t Japan try that once or twice too? The Bank of England sold gold after it fell from 800 to 250. This is simply what central banks do all the time, whether they are thinking about anything or not.”

Weekly Claims – Jobless claims jump 44,000 to 357,000

Blaming it of course on the weather seems to be the statement of defense these days. (I wonder if the price of oil also has anything to do with the weather?).

As corporations and large businesses cut jobs by the thousands, many are finding out that Job security may actually be worse than Social Security.

Factory ISM – Factory gauges point different directions

NY jumps, Philly falls. Mish says “The Fed has never in history hiked with a negative ISM reading.”

It would seem that a recession of some measure is in the cards. When it will strike and how long and harsh it will be is left to be discovered.


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2 Responses to “”

  1. Richard Says:

    FYI – you canget free access to the Wall Street Journal with a Netpass from:

    I just read that in a blog and thought it was a great tip!

  2. Admin Says:

    Thanks richard.

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