Sunday, September 13, 2009

Global "Green Shoot" Explosion


The MSCI World Stock Market Index continued its six-month rally and reached a new 11-month high on Friday of 1119.23, the highest close since October 3 last year. From the March low, world stocks have now risen by 62.5% (see chart above).

Yesterday's (Saturday) Wall Street Journal was full of stories about positive economic news here and around the world, here's a sample below. Pretty amazing for so much positive news of economic "green shoots" in just a single issue of the WSJ (the last story below was from Friday).

1. Brazil Exits Recession in 1.9% Lift. Brazil pulled itself out of recession in the second quarter with strong performances by its industrial and service sectors. Gross domestic product expanded 1.9% in the second quarter compared with the first period, the Brazilian Census Bureau, or IBGE, said Friday.

OECD Data Point to Broad Economic Recovery. There are increasingly strong indications that the world economy is on the path to recovery, with both the leading developed and the leading developing economies emerging from a downturn, according to figures released Friday by the OECD.

China Industrial Output Rises, Bank Lending Picks Up. The Chinese economy continued to recover in August, official data showed Friday, as the expansion in industry accelerated and bank lending picked up.

Economic Confidence Rebounds. Economists and consumers [in the U.S.] are feeling better about the economy a year after the most frightening moments of the financial crisis.

Volkswagen to Boost Production in China. Volkswagen AG said Friday it will invest $5.83 billion in increasing production and capacity in China by 2011 in a bid to keep pace with soaring demand.

"Fear Gauge" Is Showing Far Less of It. The stock market's "fear gauge" registered a 52-week low Friday, nearly a year after the market sank in the wake of Lehman Brothers' collapse. The Chicago Board Options Exchange's volatility index (VIX) hit as low as 22.5 before closing at 24.2, up 2.6% from Thursday.

FedEx Raises Outlook, Stokes Hopes for Recovery. FedEx raised its earnings expectations in a further sign that the global economy is stabilizing, citing a recovery in international markets. The package-delivery giant is a bellwether for economic activity.

Is the Recession Over? Wait Until 2010 for NBER’s Answer. The economy is pulling out of its downturn, but don’t expect an end-of-recession declaration anytime soon from the National Bureau of Economic Research. One member of its Business Cycle Dating Committee, Northwestern University economist Robert Gordon, said he believes June will mark the trough for the recession that started in December 2007 (MP: In that case, we are now in the third month of an economic expansion). But he expects the NBER’s recession-dating panel to wait six to eight more months before voting on an end date to ensure the economy doesn’t experience a double-dip recession.


At 9/13/2009 8:39 AM, Anonymous Jason O said...

I am not a conspiracy guy. But, I do find irony in the fact a friend working in the U.S. Office of Management and Budget was telling me about 2 weeks ago about the "green shoots" in the economy. Now, it is a print media topic.

The WSJ, I have always considered a more credible news source then many (i.e. the Huffington Post).

I appreciate this post. I look forward to watching this "green Shoot" biz develop.

At 9/13/2009 9:06 AM, Blogger Glenn Atias said...

So what really is so amazing about people taking money when it's given to them? All of those countries you mention are juicing the heck out of their economy with stimulus.

And in the case of the US, we're doing the whole thing on a credit card. Sticking future generations with the bill, all so we can gin up sales today. Yes, GDP will be positive in Q3. Proving that you'll sell a lot of cars if the government buys them for people. Coaxing people to destroy paid for working assets and exchange them for more debt. And doing it all off of borrowed money! The same bubblenomics that got us into this mess!

And you can sell a lot of houses if you give people an $8,000 tax credit on the down payment. More borrowed money on the next generation's head to gin up demand.

It's a gimmick my friend, it's a ponzi scheme. The market which you're crowing about, is not being driven by mutual finds, it's a liquidity bubble. Valuations are way too high, PEs > 100, there are no fundamentals to support these valuations. But trillions in TARP money is being laundered by the banks into the market through the back door. The market is yet another bubble.

You see green shoots, I see all the makings of a major depression. And in fact we're guaranteeing it's going to happen by not addressing any of the debt imbalance in the economy. All we've done is have the Fed print up and borrow a bunch of funny-money, and shell-game it over to the very crooks who got us into this mess. You can not flood the system with trillions of dollars of printed up money and not get a temporary bounce!

But all it does is set us up later for an even larger crash. It's ponzinomics, we're still doing it. This is not real economic activity you're seeing, it's a quick sugar high from our latest ponzi scheming.

At 9/14/2009 12:16 AM, Blogger sethstorm said...

The recovery begins when it happens in this country. Not when it is continually being undermined by these countries you list here.

It does not begin in any Third World nation such as China, India, Brazil, or similar that happily receive support from the few whom do their best to undermine the US.

At 9/14/2009 10:22 AM, Anonymous Anonymous said...

Glenn, some people just like to party and they killed so many brain cells with the previous parties they don't remember what dismally bad hangovers they had before.

Gin and juice are apt analogies.

At 9/14/2009 6:53 PM, Anonymous Anonymous said...


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