Is there a Double Dip on the Cards?

BarroMetrics Views: Is there a Double Dip on the Cards?

S-E Asia had a ‘phony recession’. Unlike the US and Europe, folks, for example, in Hong Kong and Singapore said:

“Recession, what recession?”

They should not get too comfortable. Black Swan Capital  made an interesting observation in its recent newsletter.

  1. We are told the US is in a V–shape recovery, partially because of the insatiable demand from China, Brazil etc – the emerging economies. But the International Energy Agency on Wednesday May 12 lowered its world oil demand forecast. Now if this turns out to be true, this would suggest that there is or will be an oversupply of Chinese goods. This will be a major problem for China and if China suffers…. well so much for a V-shape recovery.
  2. But(1) is merely a possibility since the argument is  based on a forecast which may or may not happen. Let’s turn to something that is fact: the Chinese economy is overheating and the Government has given clear signals that it is serious about tightening.  Rising interest rates will dampen Chinese demand; added to that we have Europe in turmoil,….. well so much for a V-shape recovery.

My view – we’ll see a double dip by the end the third quarter or early in the last quarter 2010. That’s just a forecast, let’s see how reality treats it.

10 thoughts on “Is there a Double Dip on the Cards?”

  1. Hi Ray,

    Do you think we are in for a correction in the base commodities copper and oil? copper seems to be holding up fairly well with this huge move in the dollar, oil appears to be selling off a bit more especially after the inventory build and the lower forecast for global demand by the IEA.

    Any insight into where things might be headed. Baltic Dry is still trending up? How should we read all this stuff.

    I don’t see copper breaking the $3 mark but oil looks like it may be headed closer to $70 range?

    Any other indicators we should be looking at?

    Thanks!

    RoboYak

  2. Hi Ray,

    Just wondering if the Black Swan Capital newsletter is one you’d recommend or use yourself (in the mix of information inputs you regularly consult when trading, eg; like ShadowStats, etc).

    Their website doesn’t really have any information on who they are or their background.

    Cheers. Paul.

  3. Hi Roboyak

    I don’t trade copper.

    As for oil, I am looking for a move to 70.00. Let’s see what it does when and if it gets there; let’s see what the bars look like at the support zone.

  4. Thanks Ray,

    The massive de-leveraging continues. The US dollar carry trade is being unwound at an excelerating rate. Oil bounced off 70.825 on friday. Do you think the momentum will resume next week, or is this just investors closing postions to be safe over the weekend?

    It looks like the next stop for oil could possibly be the $67.50 range if it breaks below $69.995.

    The dollar index looks like it is gunning for 90.

    Is the new carry trade borrowing euro’s to buy gold? I am assuming a double dip would take down commodotties with it also right?

  5. orrrr… does this mean the US is firing up the printing press again due to low inflation which means time to short the dollar and buy commodities?

  6. copper breakng $3 is a bad sign in my book. massive unwind continues. Will be interesting to see if copper can hole $2.85.

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