Merril-Lynch: "Recession is Over"

[KGW]

Smile, Be Happy. . .


http://latimesblogs.latimes.com/mone...y-doubt-w.html

'Recession is over,' BofA Merrill Lynch tells investors

6:00 AM, July 15, 2009

Clients of Bank of America Merrill Lynch (yes, that mouthful is the brokerage's official name now) can't say the firm is waffling on its economic outlook.

"The recession is over" Merrill declared in a report Tuesday authored by Michael Hartnett, chief global equity strategist.

The brokerage’s famed horned mascot is snorting again: "We are bullish on global equities," Hartnett says in the report.

That might not sound like a surprising call for a major Wall Street player with securities to sell, but Merrill’s outlook on things in recent years had been extraordinarily dour (as it turned out, correctly so) under two of its long-time strategists: Richard Bernstein and David Rosenberg.

Bernstein, who was chief investment strategist, left in April; Rosenberg, the firm’s chief North American economist, quit in May.

Hartnett had been Merrill’s point man on emerging markets before becoming chief global equity strategist this spring.

His report on Tuesday says the economy has begun a "fragile recovery," but he sees the glass as half-full rather than half-empty: "This means fiscal, monetary and financial policies are likely to remain supportive of asset prices. For example, we forecast the Fed to keep the target [short-term] interest rate close to zero until 2011."

Investors sitting with loads of cash on the sidelines should be moving that money into stocks, Hartnett advises.

"An inflection point in the global economy should encourage investors to rebalance their portfolios to reduce cash and to look for opportunities to increase equity exposure while staying with high-quality bonds," he wrote.

His favorite investment themes include "growth" stocks in emerging markets and "value" stocks in developed markets; the largest U.S. export-oriented companies; "high-quality" technology firms; and investment-grade corporate bonds.

-- Tom Petruno

[goadam1]

Re: Merril-Lynch: "Recession is Over"

Hooraah! Yipee!

Happy Daze is here again.

[D-Mack]

Re: Merril-Lynch: "Recession is Over"

I bet they would still say the same even if the FDIC would seize them

[ViC78]

Re: Merril-Lynch: "Recession is Over"

More credible economists are also calling for an end to the recession.

Macroeconomic Advisers, the St. Louis-based consulting firm that compiles a monthly GDP index, reported to its clients Monday that while second-quarter GDP was tracking at negative 0.1 percent (recession), the third quarter was tracking at 2.4 percent growth. The folks at the Economic Cycles Research Institute agree enthusiastically. It's not because they've detected green pea shoots in Central Park. Rather, it's because we've seen the three P's, says Lakshman Achuthan, managing director at ECRI, which has been studying business cycles for decades and was one of the few outfits to call the last two recessions with any degree of accuracy.


The economic data that get the most play in the news—unemployment, retail sales—are coincident or lagging indicators and historically have not revealed much about directional changes in the economy. ECRI's proprietary methodology breaks down indicators into a long-leading index, a weekly leading index, and a short-leading index. "We watch for turning points in the leading indexes to anticipate turning points in the business cycle and the overall economy," says Achuthan. It's tough to recognize transitions objectively "because so often our hopes and fears can get in the way." To prevent exuberance and despair from clouding vision, ECRI looks for the three P's: a pronounced rise in the leading indicators; one that persists for at least three months; and one that's pervasive, meaning a majority of indicators are moving in the same direction.
The long-leading index—which goes back to the 1920s and doesn't include stock prices but does include measures related to credit, housing, productivity, and profits—hits bottom and starts to climb about six months before a recession ends. The weekly leading index calls directional shifts about three to four months in advance. And the short-leading index, which includes stock prices and jobless claims, is typically the last to turn up.
All three are now flashing green. According to Achuthan, the long-leading index growth rate has been recovering since November 2008, the weekly leading index has been recovering since last December, and the short-leading index growth rate bottomed in February 2009. In sequence, each turned up, "and by April the three Ps had all been satisfied.

http://www.newsweek.com/id/206631

[thunderdownunder]

Re: Merril-Lynch: "Recession is Over"

YES - just tell it to 3.2 million American home owners about to hit the park benches and grandmothers front stoop. Not forgetting the 8.3 million under water and climbing

http://www.bloomberg.com/apps/news?p...d=aHAbmgVoHjA4

They (the spin kings) should pull their collective heads out of their tax payer funded posteriors to smell and see the real pandemic eating its way through hard dollar assets. This was the start of it and until it's burnt out the fat lady refuses to sing.

[don]

Re: Merril-Lynch: "Recession is Over"

Their Recession is Over

July 17, 2009
JPMorgan Earnings Soar as It Finds Profit in Slump

By ERIC DASH

NEW YORK — Even as it weathers the worst economic downturn in decades, JPMorgan Chase on Thursday announced a $2.7 billion second-quarter profit from stellar trading and investment banking results.

The strong showing may put to rest some worries that the bank was allowed to pay back its $25 billion taxpayer investment too early, after it passed the Treasury Department’s stress test in May. But its quick resurgence in earnings, along with Goldman Sachs’s announcement of a $3.4 billion quarterly profit on Monday, is bound to raise fresh concerns about soaring pay levels and growing clout in Washington.

JPMorgan is emerging with renewed confidence, taking advantage of the financial crisis to vault ahead of longtime rivals in investment banking and grab market share in mortgages and retail banking. Jamie Dimon, the chief executive, has cemented his status as one of America’s most powerful and outspoken bankers. And after acquiring the retail bank Washington Mutual last fall, revenue from its new branches is starting to pad its earnings.

[Raz]

Re: Merril-Lynch: "Recession is Over"

Say what you will, but this guy is a national treasure.

You've heard of the "village idiot"? How about the official "National Idiot".

I cannot get the video to imbed but here's the url.

http://zerohedge.blogspot.com/2009/0...interlude.html

If one of you can imbed it for us please do so.

[don]

Re: Merril-Lynch: "Recession is Over"

Nothing new here to iTulipers but a good rebuttal to the banksters.

There's Nothing Left to Recover

What Economy?

By PAUL CRAIG ROBERTS
There is no economy left to recover. The US manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical “New Economy.”

The “New Economy” was based on services. Its artificial life was fed by the Federal Reserve’s artificially low interest rates, which produced a real estate bubble, and by “free market” financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.

The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans’ wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.
The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.

And now suddenly Americans can’t borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America’s consumer economy, approximately 70% of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities.

Meanwhile the US government’s budget deficit has jumped from $455 billion in 2008 to $2,000 billion this year, with another $2,000 billion on the books for 2010. And President Obama has intensified America’s expensive war of aggression in Afghanistan and initiated a new war in Pakistan.

There is no way for these deficits to be financed except by printing money or by further collapse in stock markets that would drive people out of equity into bonds.

The US government’s budget is 50% in the red. That means half of every dollar the federal government spends must be borrowed or printed. Because of the worldwide debacle caused by Wall Street’s financial gangsterism, the world needs its own money and hasn’t $2 trillion annually to lend to Washington.

As dollars are printed, the growing supply adds to the pressure on the dollar’s role as reserve currency. Already America’s largest creditor, China, is admonishing Washington to protect China’s investment in US debt and lobbying for a new reserve currency to replace the dollar before it collapses. According to various reports, China is spending down its holdings of US dollars by acquiring gold and stocks of raw materials and energy.

The price of one ounce gold coins is $1,000 despite efforts of the US government to hold down the gold price. How high will this price jump when the rest of the world decides that the bankruptcy of “the world’s only superpower” is at hand?

And what will happen to America’s ability to import not only oil, but also the manufactured goods on which it is import-dependent?

When the over-supplied US dollar loses the reserve currency role, the US will no longer be able to pay for its massive imports of real goods and services with pieces of paper. Overnight, shortages will appear and Americans will be poorer.

Nothing in Presidents Bush and Obama’s economic policy addresses the real issues. Instead, Goldman Sachs was bailed out, more than once. As Eliot Spitzer said, the banks made a “bloody fortune” with US aid.

It was not the millions of now homeless homeowners who were bailed out. It was not the scant remains of American manufacturing--General Motors and Chrysler--that were bailed out. It was the Wall Street Banks.

According to Bloomberg.com, Goldman Sachs’ current record earnings from their free or low cost capital supplied by broke American taxpayers has led the firm to decide to boost compensation and benefits by 33 percent. On an annual basis, this comes to compensation of $773,000 per employee.
This should tell even the most dimwitted patriot who “their” government represents.

The worst of the economic crisis has not yet hit. I don’t mean the rest of the real estate crisis that is waiting in the wings. Home prices will fall further when the foreclosed properties currently held off the market are dumped. Store and office closings are adversely impacting the ability of owners of shopping malls and office buildings to make their mortgage payments. Commercial real estate loans were also securitized and turned into derivatives.

The real crisis awaits us. It is the crisis of high unemployment, of stagnant and declining real wages confronted with rising prices from the printing of money to pay the government’s bills and from the dollar’s loss of exchange value. Suddenly, Wal-Mart prices will look like Nieman Marcus prices.

Retirees dependent on state pension systems, which cannot print money, might not be paid, or might be paid with IOUs. They will not even have depreciating money with which to try to pay their bills. Desperate tax authorities will squeeze the remaining life out of the middle class.

Nothing in Obama’s economic policy is directed at saving the US dollar as reserve currency or the livelihoods of the American people. Obama’s policy, like Bush’s before him, is keyed to the enrichment of Goldman Sachs and the armament industries.

Matt Taibbi describes Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentless jamming its blood funnel into anything that smells like money.” Look at the Goldman Sachs representatives in the Clinton, Bush and Obama administrations. This bankster firm controls the economic policy of the United States.

Little wonder that Goldman Sachs has record earnings while the rest of us grow poorer by the day.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration.