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.
- 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.
- 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.