RSSRecession’s Almost Over? Wouldn’t be a Shocker
By Chip Hanlon | April 02, 2008 | 1:35 PM | 3 Comments
I'm glad to see CNBC this morning covering the Trim Tabs report regarding where this economy stands at the moment. They're picking up a story that I believe was first reported over at MarketWatch by Mark Hulbert, one which stands as the most compelling article of the year thus far, in my opinion. In it, Hulbert discussed a report from the investment research firm Trim Tabs, which had some things to say about the economy that most investors would find surprising: first, that the economy has been in recession for six months now and second, that it might be about over. If you haven't seen it yet, be sure to click the link above and read that article.
Really, what Trim Tabs is suggesting shouldn't be a big surprise.
Whenever the government finally gets around to recognizing a recession, it always does so in retrospect and the stock market has usually already moved higher in anticipation of economic recovery.
Now, perhaps all the Fed's recent moves are going to come to nothing and we're going to witness economic collapse and the end of American Empire, as some predict. More likely, however, is that the Fed will be able to spur some sort of renewed economic activity in other parts of the economy, regardless of the unsound underpinnings of that growth (based on yet more debt and credit creation rather than savings). If so, then the stock market is already starting to price in such an outcome.
This goes to why I have focused so often on sentiment in my podcasts this year, because it is reflective of peoples' fears based on what they know has already taken place, versus a stock market which looks forward.
It also explains why our Chief Technical Strategist here, Bruce Zaro, has written with such a bullish bias since mid-January. Read his January 23rd article titled, "Evidence that the Bounce is Nearby," and the things he has written since to see how one's focus should be on finding forward-looking indicators while dismissing backward-looking ones such as unemployment reports and "official" pronouncements of recession.
Now, we're not predicting a rip-roaring economy from here even if Trim Tabs is right (their argument squares, though, with what we've seen in an important leading group we cover and advise on which is economically sensitive, shippers... fundamental strength in dry bulk, tanker and container markets continues apace), nor do we believe all credit market issues have been put to bed for good.
We are, however, inclined to believe that a stronger-than-expected market rally is already underway, one which could run for at least a few weeks to a few months.
*Click here to check out my podcast, Market Neutral
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Comments (3) | Related Topics » Fundamentals | Shipping | Technical Analysis
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