Is a global depression really priced in already?

Specterx said:
Terms like "depression" are too vague to be useful - and on top of that they're emotionally loaded, especially with fearful connotations, thus using them is an obstacle to rational analysis.

The market is pricing in a sharp drop in activity during Q2 (like 25-30% annualized) followed by a rapid rebound during Q3 and Q4, leaving overall GDP slightly down on the year but well-placed to return to trend. Some sectors (eg cruise lines) may be crippled, many others will leverage the opportunity to cut costs, increase efficiency, and rationalize businesses which may have become flabby, bloated and complacent during the long expansion.

The main risk to this view is that things don't return to normal in Q3, further impairing cashflows, shifting many more businesses into the danger zone where collapse is a possibility, and above all creating fear / reducing confidence to kick off another leg down in stocks (and commodities etc).
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Are there any data indicators to follow that can provide an early warning to the possibility of things not returning to normal in Q3?
 
Specterx said:
Terms like "depression" are too vague to be useful - and on top of that they're emotionally loaded, especially with fearful connotations, thus using them is an obstacle to rational analysis.

The market is pricing in a sharp drop in activity during Q2 (like 25-30% annualized) followed by a rapid rebound during Q3 and Q4, leaving overall GDP slightly down on the year but well-placed to return to trend. Some sectors (eg cruise lines) may be crippled, many others will leverage the opportunity to cut costs, increase efficiency, and rationalize businesses which may have become flabby, bloated and complacent during the long expansion.

The main risk to this view is that things don't return to normal in Q3, further impairing cashflows, shifting many more businesses into the danger zone where collapse is a possibility, and above all creating fear / reducing confidence to kick off another leg down in stocks (and commodities etc).
More...
yea...a "U" or "L" recovery is much more likely...
 
S2007S said:
Told you they will not let the economy go into a depression and not even a tiny small recession
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It is obvious the economy is going into recession for at least 2 quarters. They cant do anything to stop it.

The only question is how long and how deep the recession will be.
 
varaamo said:
Are there any data indicators to follow that can provide an early warning to the possibility of things not returning to normal in Q3?
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follow the 10 year Note !! a sustained and consistent rally into midyear / the fall will indicate a more likely "V" shaped recovery
 
varaamo said:
Are there any data indicators to follow that can provide an early warning to the possibility of things not returning to normal in Q3?
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Every money manager in the world is asking the same question. Pretty much any relevant data is going to be instantly priced in, so you may as well monitor market prices.
 
tbone44 said:
small caps outperforming the wider indexes would be an early indicator as well...
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yup...but the market can be inefficient short term...studies have shown this...some information is discounted quickly...some the market digests over time...

Short Term the market is not a wise, all-knowing processor of information and seer of the future…

Short term, the market is an idiot.

Mark Hulbert – June 2009
 
tbone44 said:
small caps outperforming the wider indexes would be an early indicator as well...
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Specterx said:
Every money manager in the world is asking the same question. Pretty much any relevant data is going to be instantly priced in, so you may as well monitor market prices.
More...
yup...but the market can be inefficient short term...studies have shown this...some information is discounted quickly...some the market digests over time...

Short Term the market is not a wise, all-knowing processor of information and seer of the future…

Short term, the market is an idiot.

Mark Hulbert – June 2009
 
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