Recession

Countries in Recession (updated)

15 comments Written on May 17th, 2009 by
Categories: Crisis2008, Recession
Updated 17 May 09: Added Israel.

Updated 15 May 09: Added France.

Updated 19 Feb 09: Added Taiwan

Updated 23 Jan 09: Added Britain.

Updated 1 Dec 08: NBER Says officially, the US went into recession from December 2007.

Officially, at least:

Asia (Report Date, Country, GDP Growth):

Europe/Americas : Will keep this page updated.

Analysts Getting It Wrong, And No Recovery?

6 comments Written on April 11th, 2009 by
Categories: Recession, Recovery
John Mauldin's latest, Is this Recovery that we see? brings up some interesting points about where we are and if this really is a recovery. A particularly hilarious point in there was how analyst estimates were so way off it's amazing they even get paid. (Wait, they probably got bonuses. The current fad is to reward the incompentant).

The last number below is the actual figure. The rest were "estimates".

At this point I'd also like to mention that a truckload of people had said the Sensex EPS estimate for year ending March 2009 was "between 955 and 1050". (Read: The Sensational Sensex EPS Story, Jul 6 2006)

Right now, just before any Sensex company has announced results, the BSE India page shows the Sensex at 10,804 and P/E as 15.13. That makes the current Sensex trailing EPS (Jan 08 to Dec 08) equal to 714.

Unless some spectacular results come and take the EPS up 35% in the last quarter, we are likely to see our own analysts get their face full of mud, and therefore, collect hefty bonuses.

That apart, the US recovery looks like a sham. With 80K foreclosures a month, and a large number of foreclosures not even in the market, housing prices will take a long time to recover. Plus, Mauldin notes further inventory bump-ups because of the huge number of Option ARM resets in 2010. If you look at this crisis as a one-way bet on housing prices - that means it will only end when the folks who took the bets go down, or prices recover substantially. The latter will take years, probably a decade; and the US doesn't want the former to happen.

Lastly, read Zero Hedge's article on how this "rally" is likely an harbinger of tough times; the big liquidity providers seem to be out of the market, and are "deleveraging" - and the rally itself seems to be based on low volume overnight trades rather than market moves itself. Must keep a close eye on how this pans out.

Photos of the Recession

Comments Off Written on March 19th, 2009 by
Categories: Recession
A fantastic photo set of the recession, worldwide. A photo of Kiev, Ukraine struck me:

Minus the snow, this could be Gurgaon or Navi Mumbai. The recession is here, just the photos aren't there. Yet.

Roubini predicts a bleak 2009

1 Comment » Written on January 10th, 2009 by
Categories: Recession, Roubini
Roubini: 2009 will be very very bleak:
So how far are we into this recession that has already lasted longer than the previous two (the 1990 and 2001 recessions lasted eight months each)? I believe the U.S. economy is only half way through a recession that will be the longest and most severe in the post-war period. U.S. gross domestic product will continue to contract throughout 2009 for a cumulative output loss of 5% and a recession that will last close to two years.

...

The wealth losses for households related to the fall in home prices are roughly $4 trillion so far, and are clearly bound to increase further as home prices continue to fall--eventually reaching the $6-8 trillion range (compatible with a 30-40% fall in home prices peak to trough). With a negative wealth effect of 6 cents on the dollar, the reduction in personal consumption could amount to a whopping $500 billion. And negative wealth effect from fall in equity prices--on the wake of a bleak 2009 for corporate profits--will also contribute to the contraction in personal consumption by an estimated $100 billion (compatible with a 25% contraction in the stock markets).

...

I see [housing] starts falling another 20% from current levels and believe that home prices will not bottom out until the middle of 2010.

...

Layoffs are bound to continue thereafter as cost-cutting gains pace with the beginning of the (sluggish) recovery period in early 2010. Even as consumer demand might show some signs of recovery, firms, as in the past, will begin by hiring only part-time and temporary workers initially. The unemployment rate might peak at close to 9% in Q1 2010, almost two years after the recession began. However, the hiring freeze across industries that began in late 2007 will continue at least until 2010, causing discouraged workers to leave the work force and containing the extent of the spike in the unemployment rate.

...

Back in February 2008, I warned that the credit losses of this financial crisis would amount to at least $1 trillion and most likely closer to $2 trillion. As of mid-November 2008, the threshold of $1 trillion in global financial write-downs was finally reached. Given that national house prices are expected to drop another 20%, we expect credit losses of $1.6 trillion.

...

I see meaningful downside risks to stock prices as bad macro news--worse than expected--continues to dominate in 2009. Using the S&P 500 as the benchmark, earnings per share will stay in the $50 to $60 range--and earnings will fall further. If--and it is not unusual during recessions--the price-to-earnings ratio falls in the 12 to 14 range, we could see another 25% slide in stock prices.

Very bleak indeed.

World Recession Is Here

5 comments Written on November 22nd, 2008 by
Categories: Crisis2008, Recession
From Stratfor's Geopolitical Diary (Subscribe only)
The world, at least by our reckoning, is now officially in recession.

The downturn has three strands. In the United States, the subprime housing collapse triggered a liquidity crisis. In Europe, the American liquidity crisis triggered a much broader and deeper banking crisis. And in Japan — and the rest of East Asia — the enervated demand in the United States and Europe is now triggering an export crisis. Three very different but interlinked recessions have now formed something that the world has not seen since 1975: simultaneous recessions throughout the developed world.

Other data certainly confirm the prognosis. Shipping rates on major container ships have, by some reports, fallen 98 percent (demand for shipping mirrors demand for Asian exports). The 13-week U.S. Treasury bill now bears a 0.005 percent payout — technically not zero, but considered effectively zero by most reporting methods — indicating that everyone is shifting holdings into the lowest-risk assets. And a spare glance at 401k accounts or their equivalents will inform anyone who has been in a coma for the past few weeks that the markets — American, European or otherwise — have been pummeled.

The bottom line is that the global economy is in a situation where countries are going to start cracking. Iceland, actually, has cracked already — but with only 330,000 inhabitants, it conceivably could have gone down in flames without being a harbinger of things to come in the rest of the world.

The news in general is a lot worse than I have expected, and a lot earlier than expected. This is going to be a deep, dark recession. The next ten years are going to be extremely tough. For India too. I think it's time to tighten up and ride it - and it will take a long long time. If we are lucky, in India, we'll see only a three to five year downturn.