Zeev> Mr. McTeer called that durable good
collapse an "outlier" too. Funny you should use the same term. I don't think it was an outlier, as much as McTeer is "out lying" and a propagandist for the new economy. This was the same SOB that went out and told everyone to hold hands and buy a SUV and everything would be ok. It used to be the FED stole the punch bowl, today they serve it in 16oz cups. That durable good drop was pretty broad, and the info tech and telecoms lead the decline. Info tech down 10%, telecom 40%. I read the details and was shocked. The next leg upward was supposed to be business but with low capacity utilization I guess we can forget about that. I would say based on that and the fact we have high energy prices, a falling money supply caused by evaporating consumer credit liquidity, first signs of the housing sector weakening, and a dollar that is dropping hard and heavy, that the double dip recession has in fact already started. As most know, I think the policy decisions made since 98 have pretty much been wrong, its been about pain avoidance but right now all the novicane is gone. We have exhausted the tax cuts, interest rate cuts, global stimulia, etc...no more tricks left in the bag. Now its time to take the cure, the natural cure of boom and bust. I believe once we face up to it, and make the necessary adjustments, we can come out the better for it and the future can once again be bright.
As such, I think you are right to think your scenario may need update on Monday, and possibly beyond, and would advise keeping an eye on the VIX, I think it might be ready to reverse upward, the trend seems ready to change, and as you have wisely noted before the level of the VIX isn't as important as its trend.
Thanks for hosting this board, its the best.
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