Skip to comments.Here's The Hot Recession Warning Chart That Everyone Is Passing Around
Posted on 10/26/2012 3:57:25 AM PDT by blam
Here's The Hot Recession Warning Chart That Everyone Is Passing Around
Oct. 26, 2012, 4:13 AM
A few weeks ago, we mentioned that Gluskin-Sheff economist David Rosenberg was worried about the sharp downturn in the year-over-year growth rate of the 3-month average of core CAPEX (capital expenditure) orders.
His interpretation: The fiscal cliff is already creating a lot of uncertainty, and could be pushing the US economy closer to recession.
Now everybody is talking about this fact and this chart.
In his latest note out, BTIG's Dan Greenhaus updates Rosenberg's chart with the latest data. It's still not pretty (though it actually ticked up a tad with the latest reading.
But the aforementioned decline in capital goods orders speaks to the larger concern for investors; the fact that a potential economic slowdown does not begin after the fiscal cliff is triggered but rather, as weve been saying for months, before. And if this isnt resolved, it might be too late before long.
In addition to Greenhaus, we see via Cullen Roche that Moody's has put out roughly the same chart as a warning:
Everyone is watching this measure, and wants to know: Is this just pre-fiscal cliff jitters that will snap back next year, or is this the start of something bad?
Either way: You've been warned.
(Excerpt) Read more at businessinsider.com ...
From Nomura, here's the general thinking about why markets are diving this morning everywhere:
It seems that the negative sentiment was sparked by news that IMF requires further austerity measures in Portugal, weaker earnings including Apple and Amazon and the S&P downgrade of Frances biggest banks. The agency cut three institutions including BNP Paribas (from AA- to A+) - and lowered its outlook on 12 others, including Credit Agricole and Societe Generale citing increased economic risks.
Note that S&P also cut its French GDP forecasts to close to zero in 2013-14 and revised its economic risk score on the sovereign from 2 to 3. This is similar to Nomuras house view.