Weekend Reading
May 28th, 2007 by 
reality
A couple of interesting pieces this weekend. The NYT confirms what many have suspected about the distortions being introduced into the monthly employment statistics by the “birth-death” model. “Wait A Few Months Before You Believe The Numbers” says the NYT. John Mauldin’s weekly newsletter is meatier than usual and talks about the mortgage market. “Overexposed and Overrated“, says John.
“As of last week, the Market Climate for stocks remained characterized by unfavorable valuations, moderately favorable price trends, and a combination of overvalued, overbought, overbullish, rising-yield conditions that has historically produced not only returns below Treasury bills, on average, but deep, abrupt “panic†declines. As always, that’s not a forecast or an outcome that we need to rely upon – average returns below Treasury bills are sufficient reason to hedge our market exposure – but we certainly shouldn’t rule out such a panic.” - John Hussman.
The Big Picture shows some interesting data from the St. Louis Fed., which are consistent with an approaching recession.
Posted in Government, John Hussman, Real Estate, Stocks, The Economy | 
May 29th, 2007 at 5:31 am
Those St Louis Fed charts are very persuasive though we could still be in a mid-80s style slowdown. Though the rate of decline in the growth rate is sharper as it goes below zero. What I really don’t understand are all those “economists” out there saying there is no or little risk of recession.
May 29th, 2007 at 8:21 am
A growth recession? Possible, but I doubt it. I think the present credit bubble cannot withstand any significant adversity, so that even a growth recession will cause deleveraging.