If you have watched the ticker tape, July’s trading action is signaling much less of a chance of a true double-dip recession than what was being telegraphed during the gloom days throughout June. Earnings season is so far off to a good start. Stocks are rising with bond yields. M&A is slowly coming back. Bond spreads have ceased widening out. In short, the double-dip recession is becoming a scenario that both the bond market and stock market are starting to throw out the window.
There are four solid fresh data points that argue against the notion of a real double-dip recession. First, we gave 15 safety nets that are out there showing it is time to rethink the double-dip recession. Secondly, Mike Tarsala over at Thomson Reuters has a quick and very detailed audio video showing that there have only really been 3 real double-dip recession scenarios in the last 160 years, with effectively none of the big catalysts in place today for a true double-dip recession.
Many of you will not want to hear this, but Jim Cramer has only helped to give a boost to the view on stocks. Cramer said this week that the notion of a double-dip had gone too far, and he said stocks have seen their lows for the year. This morning, the chief economist of The Conference Board showed that there are no signs of a “double dip” recession, although slower growth is expected for the rest of this year.
In the last eight trading days, the DJIA has risen almost 800 points from lows to highs today. We have also seen the 30-Year Long Bond yield go from under 3.85% up to 4.10% in the same period, at a time when corporate and sovereign debt markets are seeing more bond issuances.
Late 2010 and into 2011 might not be the greatest period compared to some economic recoveries of the past. To many it will still feel like recessionary trends are still there. For the economy as a whole, the notion of a real double-dip recession is looking less and less likely.
JON C. OGG