Post by unlawflcombatnt on Dec 7, 2007 4:40:25 GMT -6
from Seeking Alpha:
Recession Already Here: Merrill Lynch
"While most of the market fusses about whether the odds of a recession hitting the U.S. economy are 30%, 40% or 50%, Merrill Lynch (MER) isn’t wasting much time with that. That’s because the firm’s North American economist David Rosenberg is convinced the hard landing has already arrived.
And why does he think the consumer recession is here?
Last Wednesday, the Beige Book showed that seven of 12 U.S. Federal Reserve districts reported slower growth, up from five in October, four in September, two in July, and zero in June and April, he told clients in a note.
The Beige Book also contained some derivative of the word “weak” or “slow” 132 times – the highest level since January 2003 when the economy was on the verge of returning back into recession.
Mr. Rosenberg says another indication that a recession is looming is how much easing is needed from the Fed. He says it is clear that the Fed “is going to have to do way more than 75 basis points, and when it has been forced to go beyond that in the past, recessions almost always followed suit.”
Among the other factors on his top 10 list of reasons a recession may have arrived is weakness in the Chicago National Activity index, plunging new home sales and falling home prices, declining corporate profits, momentum being lost in the labour market, plunging consumer confidence, weaker spending trends, and finally, GDP that is expected to grow only 0.4% in the 4th quarter....
Mr. Rosenberg said,
We did some sector work and found that if we are anywhere close to being on the mark, then the areas of the market with the greatest downside risk next year from an earnings surprise standpoint are consumer discretionary, financials and tech. In contrast, the areas where we see the least downside risk (or the greatest safety) would be in telecom, health care, and utilities"
Recession Already Here: Merrill Lynch
"While most of the market fusses about whether the odds of a recession hitting the U.S. economy are 30%, 40% or 50%, Merrill Lynch (MER) isn’t wasting much time with that. That’s because the firm’s North American economist David Rosenberg is convinced the hard landing has already arrived.
And why does he think the consumer recession is here?
Last Wednesday, the Beige Book showed that seven of 12 U.S. Federal Reserve districts reported slower growth, up from five in October, four in September, two in July, and zero in June and April, he told clients in a note.
The Beige Book also contained some derivative of the word “weak” or “slow” 132 times – the highest level since January 2003 when the economy was on the verge of returning back into recession.
Mr. Rosenberg says another indication that a recession is looming is how much easing is needed from the Fed. He says it is clear that the Fed “is going to have to do way more than 75 basis points, and when it has been forced to go beyond that in the past, recessions almost always followed suit.”
Among the other factors on his top 10 list of reasons a recession may have arrived is weakness in the Chicago National Activity index, plunging new home sales and falling home prices, declining corporate profits, momentum being lost in the labour market, plunging consumer confidence, weaker spending trends, and finally, GDP that is expected to grow only 0.4% in the 4th quarter....
Mr. Rosenberg said,
We did some sector work and found that if we are anywhere close to being on the mark, then the areas of the market with the greatest downside risk next year from an earnings surprise standpoint are consumer discretionary, financials and tech. In contrast, the areas where we see the least downside risk (or the greatest safety) would be in telecom, health care, and utilities"