Five phases to the current down-cycle

Tuesday, July 08, 2008 | 09:15 AM

Interesting analysis via David Rosenberg of Merrill Lynch:

"There have been five phases to this current down-cycle – the first four are still in full swing, but it is the fifth that will very likely emerge as the most difficult stage of this economic downturn and bear market:

• The first wave was the end of the housing cycle when starts peaked and began to roll over in the first quarter of 2006.

• The second wave was the end of the home price bubble when the Case-Shiller index began to deflate in the first quarter of 2007.

• The third wave was the end of the credit cycle when the interbank market froze in August 2007.

• The fourth wave was the employment cycle, which peaked when payrolls did in December 2007, prompting the Fed to reluctantly embark on an aggressive policy easing course.

• The fifth wave will be the end of the consumer cycle and the beginning of what may well prove to be the most significant recession since the mid-1970s, and while delayed by the tax rebates, this phase seems to have commenced in June when U of M consumer sentiment collapsed to its lowest level in 28 years."

Rosenberg has been consistent in terms of warning about an economic slowdown over the past year, and dates the likely start of the recession to January 2008. Going forward, he is more concerned with Deflation than Inflation . . . 


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Source:
Five phases to the current down-cycle
David Rosenberg North American Economist 
Merrill Lynch, 07 July 2008
http://tinyurl.com/69s6hx

Tuesday, July 08, 2008 | 09:15 AM | Permalink | Comments (25) | TrackBack (1)
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» The five phases to 2008 down-cycle from Trends I'm Watching
Trend: Housing starts peaked in Q1 2006, starting the current down cycle; the end is not yet in sight. The Big Picture reports an analysis from David Rosenberg of Merrill Lynch – the five phases to this current down-cycle. Link: The Big Picture | Five ... [Read More]

Tracked on Jul 9, 2008 9:20:26 AM

Comments

... and while delayed by the tax rebates, this phase seems to have commenced in June when U of M consumer sentiment collapsed to its lowest level in 28 years."

Then why would the politicians ever stop the tax rebates? Nobody in the congress has demonstrated even the tiniest bit of fiscal responsibility or concern with the solvency of the US government in the long-term.

Didn't Obama even propose automatic stimulus checks triggered by consecutive declines in the payroll numbers?

Posted by: super-anon | Jul 8, 2008 9:29:45 AM

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