Double Dip Recession or not?

[Denny]

Also, keep in mind, to have a recession you need two quarters of negative growth. We are still a good distance from that. Although it is possible that they could revise previous numbers slightly lower.

And they avoid this by reformulating those figures.

[slow99]

They're not cooked, rather reformulated to make it look "not so bad."

CPI only uses certain categories of consumer spending to calculate inflatio. Unemployment only uses those actively pulling unemployment benefits.

There are many different measurements of CPI and unemployment numbers. Everyone knows which ones to pay attention to.

[Denny]

There are many different measurements of CPI and unemployment numbers. Everyone knows which ones to pay attention to.

Help a cracka out here!

[Broncojohnny]

There are many different measurements of CPI and unemployment numbers. Everyone knows which ones to pay attention to.

Exactly, we've always paid attention to U3 more than anything else. Although U6 is much worse at around 16%. During the depression unemployment was around 30%.

For CPI, it irritates me that they pay attention to the number that ignores food and fuel. Most people's budgets are eaten up by both of those these days. If you think about excluding fuel, it makes some sense with the volatile nature of oil these days. With so much volatility the numbers would be junk.

[slow99]

Help a cracka out here!

U1, U2, U3, U4, U5, U6.

Everyone I've ever known professionally and academically places a strong emphasis on U4-U6. CPI you have core, headline, CPI U, CPI W.

[Denny]

Thanks, you two. I've got something to look into.

[Denny]

One more question (probably not just one more, LOL). Are big corporations still holding cash? If not, how are they spending/investing?

[slow99]

One more question (probably not just one more, LOL). Are big corporations still holding cash? If not, how are they spending/investing?

Yes, the latest data I saw was that corporations are flush with cash. The companies I focus on are tech, so that data could be skewed a bit. Share buybacks, dividends, M&A.

The big debate right now focuses on corporations that are flush with cash and have significant international operations. Ie, Cisco has $45 billion of cash on its balance sheet but the "real accessible" number is closer to $4.5 billion b/c the profits are held overseas. I know Microsoft has similar issues, just to name another. Corporations argue that they should have a tax holiday to incentivize them to repatriate that money and grow their businesses. The problem with that is that historically, these companies just use the damned money to pay bonuses when they get it, rather than invest in capex.

[Denny]

Interesting. No wonder PIMCO was calling for cash flush companies to invest in our severe government debt.

They are still boasting that US Treasuries are the safest investment. How true or full of shit are they? I know the "stock talk" we have on here is about as risky as it gets (especially after last week).

[Cannonball996]

double dip? no, or at least not yet, the economy is still growing though still very slow.

[Broncojohnny]

Interesting. No wonder PIMCO was calling for cash flush companies to invest in our severe government debt.

They are still boasting that US Treasuries are the safest investment. How true or full of shit are they? I know the "stock talk" we have on here is about as risky as it gets (especially after last week).

It isn't that our debt is risk free, it is that it is the best. We are the least shitty. That is why even after the downgrade our debt was selling like mad.

I'm telling you, there is no other place for money to go. Thus me saying the dollar is going nowhere, we got the only decent game in town. I'd be as worried as you if there was a competing currency that had the quality and volume available. There isn't. The other day I saw some guy on CNBC that said Chinese stocks were the new safe haven. I burst out laughing.

[Broncojohnny]

One more question (probably not just one more, LOL). Are big corporations still holding cash? If not, how are they spending/investing?

Last I heard, it was on the order of $2 trillion dollars.

All they can do is buy back shares (Coke has done this as well as a few others), pay an increased dividend or invest it short term. You won't see capital investing and new hiring until the environment if more certain. Which is another way of saying, until Obama is out on his ass.

[Denny]

It isn't that our debt is risk free, it is that it is the best. We are the least shitty. That is why even after the downgrade our debt was selling like mad.

I'm telling you, there is no other place for money to go. Thus me saying the dollar is going nowhere, we got the only decent game in town. I'd be as worried as you if there was a competing currency that had the quality and volume available. There isn't. The other day I saw some guy on CNBC that said Chinese stocks were the new safe haven. I burst out laughing.

Ya, Id call bullshit on that too. LOL

So do you think this wild week actually helped treasurys?

[slow99]

The other day I saw some guy on CNBC that said Chinese stocks were the new safe haven. I burst out laughing.

Lmao! The Chinese situation isn't pretty by a long shot. On top of that their business practices are fucking shady at best.

There are still 13 or 14 AAA rated sovereigns right now. The problem is that their depth combined doesn't make a dent in the liquidity required.

You have to be ahead of the markets when you're thinking about safe havens for money. Canada and Australia's fiscal situation, reserves, etc, look exactly like where you want to park money. The problem right now (other than their depth as Al mentioned) is that they're "commodity" currencies. Look at how badly they sold off the last couple weeks. Economic outlook globally looks good, commodities explode. First hint of a slowdown, they get absolutely crushed.

[Broncojohnny]

Ya, Id call bullshit on that too. LOL

So do you think this wild week actually helped treasurys?

It did in the sense that we could borrow for less for a while.

To me, it wasn't a help because I want to be painful for these assholes to borrow more. The problem arises from the fact that all kinds of loans derive their rates from treasurys, so if they go up then just about everything is going to go up to some degree. Although from what we see in commercial property lending, the life insurance companies are so desperate to invest (going back to the topic of how much money are they sitting on) that they'll reduce their spread over treasurys in order to get money invested.

In 2003 we borrow $28 million at 3.8% interest only for five years on some properties in New Jersey. That was the best rate we have ever managed to get. We are about to beat that record.