"By now only the cream of the naive, Kool-Aid intoxicated crop believes that
the US is not in either a deep recession, or, realistically, depression. For
anyone who may still be on the fence, here is David Rosenberg's latest letter
which will seal any doubts for good. It will also make it clear what the fair
value of the stock market is assuming QE3 fails, which it will, and the market
reverts to trading to fair value as predicated by bond spreads. To wit:
"If the Treasury market is correct in its implicit assumption of a
renewed contraction in the economy, then we could well be talking about
corporate earnings being closer to $75 in 2011 as opposed to the
current consensus view of over $110. In other words, we may wake up to find out
a year from now that whoever was buying the market today under an illusion of a
forward multiple of 10x was actually buying the market with a 15x multiple."
And since we are in the throes of a deep depression and a 10x multiple
is more than generous, applying that to $75 in S&P earnings, means that the
fair value of the S&P is... we'll leave that to our readers.
From Breakfast with Rosie, of Gluskin Sheff
We just came off the weakest recovery on record despite the massive amounts of stimulus that the U.S. government has delivered in so many ways. That the yield on the 10-year U.S. Treasury note is down to 2% already speaks volumes because the last time we were at these levels was back in December 2008 when the downturn was already 12 months old. A period like the one we have endured over the past six months when bank shares are down 30% and the 10- year note yield is down 130 basis points has never in the past foreshadowed anything very good coming down the pike. If market rates are at Japanese levels, or at 1930s levels, then it's time to start calling this for what it is: A modern day depression..."
at http://www.zerohedge.com/news/david-rosenberg-its-time-start-calling-what-it-modern-day-depression
From Breakfast with Rosie, of Gluskin Sheff
We just came off the weakest recovery on record despite the massive amounts of stimulus that the U.S. government has delivered in so many ways. That the yield on the 10-year U.S. Treasury note is down to 2% already speaks volumes because the last time we were at these levels was back in December 2008 when the downturn was already 12 months old. A period like the one we have endured over the past six months when bank shares are down 30% and the 10- year note yield is down 130 basis points has never in the past foreshadowed anything very good coming down the pike. If market rates are at Japanese levels, or at 1930s levels, then it's time to start calling this for what it is: A modern day depression..."
at http://www.zerohedge.com/news/david-rosenberg-its-time-start-calling-what-it-modern-day-depression