Fears of Recession?
Today's WTF headline comes to us via the WSJ: Investors Succumb to Fears of Recession.
Other than really dumb mofos, does anybody really think the fear of recession is just now impacting the markets?
WSJ Excerpt:
"Despite the historic proportions of a credit crisis that is reshaping the foundations of Wall Street, many stock investors until recently continued to hope that any recession, if it even came to that, might be shallow or brief. Now, investors are starting to worry that the stock market has simply been slow to react to problems that have been screaming at investors in the credit markets for months.
"I thought we might actually be able to skirt by without a recession," said Ernest Ankrim of Russell Investments in Tacoma, Wash. "Now I think we are in a recession right now and probably will be in a recession for two quarters and maybe three, maybe even four."
The spreading trouble in Europe undermines the hope that resilient foreign economies could help buoy the U.S.
Investors were startled at the financial crisis's sudden expansion within Europe, as governments there staged emergency interventions to help rescue banks in Germany and the Netherlands. Major stock indexes fell 7.9% in London and 9% in Paris, the largest percentage declines since 1987. Germany was down 7.1%.
Some small investors who had been hoping to ride out the storm have begun selling. That could mark the beginning of a process known as "capitulation," market lingo for the moment when a critical mass of investors give up on hopes of recouping losses, and instead sell. It is during capitulation that a selloff starts to run its course, and prices begin to feel for the bottom."
What? A recession is possible/probable?
What world do these people live in?
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UPDATE: October 7, 2008 9:21am
NYTimes has the same front page silliness:
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Source:
Investors Succumb to Fears of Recession
E.S. BROWNING and IANTHE JEANNE DUGAN
WSJ, OCTOBER 7, 2008
http://online.wsj.com/article/SB122333567578609541.html
Global Fears of a Recession Grow Stronger
MARK LANDLER
NYT, October 6, 2008
http://www.nytimes.com/2008/10/07/business/worldbusiness/07global.html
Tuesday, October 07, 2008 | 07:00 AM | Permalink
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Comments
Just as dumb as finance reporters (those at AP come to mind) who tell readers that this crisis appeared suddenly.
Posted by: Will Divide | Oct 7, 2008 7:15:04 AM
Capitulation, my arse! There is too much funky stuff going on behind the lines, which makes all the usual measures obsolete
Posted by: JustinTheSkeptic | Oct 7, 2008 7:16:05 AM
Barry, All three networks (all I get on rabbit ears) had long talks this am explaining that we may be entering a recession and how a recession works...
Main stream america moves at a different speed from the BP....
Keep up the good work...
Posted by: doug | Oct 7, 2008 7:31:21 AM
"Now I think we are in a recession right now and probably will be in a recession for two years and maybe three, maybe even four."
Must have been a typo in the WSJ
Posted by: EvilHenryPaulson | Oct 7, 2008 7:32:27 AM
It just adds to my belief that somebody has a wheel they spin for a reason as to why the market did 'x' today. No connection with reality, just out of the air.
Then you have Bush with his divorced comments. He was saying our econ r sound before McCain, and we would have a recession if we don't pass the bailout. Now it will just take 'a little time' for it to work.
Are our publick larnin?
Posted by: TulsaTime | Oct 7, 2008 7:33:30 AM
That's because there are a lot of f*cking morons that just focus on the traditional definition of recession - two straight quarters of negative GDP growth. Because things are just fine and dandy with our positive GDP growth, right everyone?
Posted by: WallStreetToughGuy.com | Oct 7, 2008 7:50:17 AM
Don Luskin probably does. Talk about idiots. You see his washington post article? It's guys like him that hurt CNBC's image.
Posted by: Owner Earnings | Oct 7, 2008 7:51:22 AM
"There is too much funky stuff going on behind the lines, which makes all the usual measures obsolete"
Posted by: JustinTheSkeptic | Oct 7, 2008 7:16:05 AM
JTS,
Don't you know it!
doug,
with this: "Main stream america moves at a different speed from the BP...."
you should ask BR to lower the drawbridge, and stop excluding TMS..
differently, TMS, with its unwavering Faith in the Flickering Box, is a slow, stagnant river heading toward the Waterfalls-- around the bend, just out of earshot..
Posted by: Mark E Hoffer | Oct 7, 2008 7:52:47 AM
@Will Divide,
The bottom will form when economists and headline writers no longer find bad news "surprising".
Posted by: Winston Munn | Oct 7, 2008 7:56:26 AM
The "financial" media cannot report that things are not positive for the economy. To do so will cause the public to re-think their spending pattern and this in turn causes business to contract and this turn causes.....well you get the idea. The game is always to keep the ball bouncing so that the average consumer can be distracted for as long as possible.
Just think if a financial advisor warned a client that their investments will not perform well in the next "x" months/years. The client will probably convert to cash and then ask the financial advisor "why am I paying you a fee for keeping my money in cash?". The financial advisor then loses an income stream, so no inherent interest in telling a client there's trouble ahead.
Having worked in the business for 25+ years the pressure to retain comapny assets is pervasive.
Posted by: grumpyoldvet | Oct 7, 2008 7:58:31 AM
I almost feel sorry for "Ernest Ankrim of Russell Investments in Tacoma, Wash". He gets one chance in his life to be quoted in the WSJ, and uses it to sound like a total idiot.
Posted by: E | Oct 7, 2008 8:05:37 AM
Actually here in Canada, people are smug. They still think it's an American problem and that we've been conservative up here.
My Mom just realized this past week that people have been using their house to buy vacations and more expensive cars. She thought they were doing this with their bonuses because the economy has been doing so well!
Our friends who came over for brunch a week ago are still convinced that we live in a better world than in the 1930s, where there are all kind of measures to protect us from a 2nd Great Depression.
People are still on the sidelines and buying stocks as they go down. Investors have not thrown in thre towel yet.
Posted by: D. | Oct 7, 2008 8:08:53 AM
People are conditioned by the Fed´pretenton that theyare bigger than the business cycle and government phoney numbers. I hope that this guy doesn´t run other people´s money.
Posted by: Katie | Oct 7, 2008 8:12:21 AM
All one has to do is watch CNBS for any length of time and watch the amount of time given to "bulls" vs "bears". Kudlow's show is a classic example...where is Ritholtz, Hardy, Battapaglia (well not so much Battapaglia). You'll see more of cheerleaders Bowyer, Luskin, and the idiot from Forbes. Gary Shilling is on frequently but he can be discounted as an old curmudgeon and ignored.
The early morning circle jerk with Kernan, Carl Q, and Quick has CEOs on. What does one expect from them?
And forget FBN, another clown act. Newspapers have downsized dramatically over the past several years and have gotten rid of their knowledgeable reporters and brought grad school kids who have poor skills and only want to get the next big job, so the incentive is to write bland articles without any depth. This way they don't piss anyone off and can move perhaps to TV and get the big bucks.
Posted by: grumpyoldvet | Oct 7, 2008 8:13:20 AM
You are a typical victim of the media before the elections propaganda. I do not blame you. We have not had a single quarter of negative growth yet, but 60% of Americans think we are in a depression. http://money.cnn.com/2008/10/06/news/economy/depression_poll/index.htm
[BR: Actually, you are repeating Phil Gramm's talking points. Negative GDP is not a measure of whether we are in a recession. Stop posting garbage]
Look at the facts first, before blindly repeating the media opinions.
Facts:
1. We have been having housing problems for almost two years. It has been a drag for the economy (subtracting 1-2% from GDP), yet the economy has been growing.
2. What you see today is a crisis of confidence (financial panic very similar to 1907 Bankers' Panic). The banks are sitting on $10 trillion but they afraid to lend. If it continues for long, we might see no growth or even negative growth in the economy, but if the confidence is restored, we will rebound fast. ("There's still a massive lack of confidence in this market and the more we talk about it, the more it becomes a self- fulfilling prophecy,'' said Jan Misch, a money-market trader in Stuttgart, Germany, at Landesbank Baden-Wuerttemberg.)
http://www.bloomberg.com/apps/news?pid=20601087&sid=a11_YtUZ_voA&
3. Coordinated among global central banks rate cuts re-inflation (note that a lot of this panic hysteria is coming from Europe) could restore the confidence and serve as a turning point. This is in addition to the Paulson $700 billion balloon angioplasty of the credit markets.
4. Even is we will slide into a recession for a few quarters (because of the problems in the credit markets continue), it does not mean that the markets will not move higher (the markets are forward looking and have already discounted a depression scenario. Therefore, anything less than a protracted depression will result in the markets moving higher).
~~~
BR: By every traditional metric tracked by the NBER, we are NOW in a recession. We have been since Q4 07, or Q1 08.
You can repeat nonsensical talking points all you want elsewhere, but here in a market related blog, we have no tolerance of money losing crap.
You are simply not qualified to speak on this subject.
Your nonsensical focus on "Confidence" over fundamental reality doesn't change the facts we have been in a mild recession for many months, one that in September turned much nastier.
Ordinarily, i would allow your clueless idiocy to be posted here, as it makes you look like a fool. But your disinformation campaign, combined with prior gay bashing comment (since deleted), is why you are no longer welcome here.
Piss off.
Posted by: Stefanie | Oct 7, 2008 8:29:10 AM
That's because there are a lot of f*cking morons that just focus on the traditional definition of recession - two straight quarters of negative GDP growth. Because things are just fine and dandy with our positive GDP growth, right everyone?
Posted by: WallStreetToughGuy.com
I know several guys who hew to that line religiously - in fact, they think the problems we are having are due to the media talking too much about them! These recession denialists are Right Wingnuts, every one of them.
Posted by: bibn | Oct 7, 2008 8:29:18 AM
Why the great fear of recession? We have had, and survived recessions before. They are healthy and necessary. All these antics to try to avoid recession have made this one ten times worse than it had to be. dmc
Posted by: dmc | Oct 7, 2008 8:33:00 AM
I agree with JustinTheSkeptic here; to assume there will be a 'normal' cycle in the market at this point will be a trap for a lot of people. They haven't recognized a normal market cycle to date and now they think they'll piggyback on one. Mistake.
Posted by: wally | Oct 7, 2008 8:37:23 AM
RIP the WSJ. As a mirror on Wall Street, it is fast-becoming the US magazine of the financial world.
Posted by: Albnyc | Oct 7, 2008 8:39:58 AM
Hey, I remember a February 2000 article from E. S. Browning about how Warren Buffett had totally missed the tech boom and was a has-been. I bought Berkshire Hathaway. E. S. Browning is for me a contrarian indicator. I have a theory that this is the name people at the WSJ put on articles that are too dumb to use their own byline on.
Posted by: W P Gardner | Oct 7, 2008 8:42:04 AM
"Now I think we are in a recession right now and probably will be in a recession for two quarters and maybe three, maybe even four."
Okay, another contrarian indicator/bottom call. The recession started q4 2007, so we are just getting out of it now.
Posted by: Comrade Darkness | Oct 7, 2008 8:54:57 AM
"Problems ... in the Credit markets for months"
Months? um years?
All by itself tht line tells you this person is making up happy talk soup to be served to ostriches who don't want their world view threatened.
Posted by: VoiceFromTheWilderness | Oct 7, 2008 8:55:15 AM
As I have mentioned before, the FT is way way better than the WSJ at this point in my opinion.
FWIW, I continue to have people asking me what to buy in this environment.
I keep telling them when they ask me what to sell instead, that's when I will give them something to buy! LOL
Posted by: Jay Weinstein | Oct 7, 2008 8:57:03 AM
The reality of the situation is finally impacting the markets. Until late last week, and yesterday as a confirmation signal, people believed that the financial situation was bad, but not ready to fall off of a cliff. The bailout vote was supposed to be the beginning and end of the problem. The recovery was supposed to occur next. The only question was how long it would take and how high it would initially recover to.
Losses for some of probably 20% to 45% of mutual fund and 401K values over the last 12 months make people really stop and think about where that next dollar is going. Not to mention that increasingly bad employment numbers. This does not even take into account that face that shorts will start banging the boards in a couple of days. Then, Lord, watch out.
As I said yesterday, this is the halfway point. Markets won't stop falling until two things occur:
1) The financial systems problems become old news that nobody needs to talk about anymore. This will not happen this week, or next. In fact, it looks like the bailout was only one more step as opposed to the fix-it. The Fed just can't stop giving away credit. What will they give away tomorrow?
2) The consumer gives off a current of optimism and the mall parking lots look more full, homes start moving, and retail starts to look interesting.
The consumer won't loosen up until gas prices return to early 2007 levels and stay there. And that won't happen until the regulators close up the ability for investors to treat oil as an asset class instead of as a commodity. As an asset class, prices rise when money enters the market. As a commodity, shorts and longs battle it out and prices reflect supply and demand at the user level. High oil prices, or oil prices that are reactive to market optimism and perform as an asset class imply a long and brutal recession.
Employment has to improve. Real wages need to improve. Exploitation in the form of oil prices needs to get put under control. People need to feel that the USA is under adult supervision instead of being raped and neglected by Republican crooks and idiots.
No, today is a good day to sell it all, take a tax loss that can be carried forward for a while, and plan to re-enter after the world looks stable again. A lot of good investments are down about 50% from reasonable highs and will easily recover 1/2 of that amount when the turnaround happens. I think that 2003 is a good model for the bottom of today.
Therefore, anyone who is trading now is a fool or a true psychic.
Posted by: dead hobo | Oct 7, 2008 8:58:21 AM
Quote, "What you see today is a crisis of confidence (financial panic very similar to 1907 Bankers' Panic)."
This is the second time lately someone has posted a comparison of 1907 to today's problems. I think that significantly understates the problem.
The recipe for the crisis today is more like this:
Bring 2 parts 1929 to a boil
Uncover and add 1 part Japan
Sprinkle a dash of 1907 to taste
Simmer 20 years, remove from heat, and serve with a side of bread line
Posted by: Winston Munn | Oct 7, 2008 8:59:59 AM
