Buffett: No Short Recession

Buffett:

• We are not in a freefall, not in a recovery either.
• This has affected the consumers very differently.
• 11% of unemployment will not surprise Buffett.
• We will come out of this, big time.
• No short recession, no shallow recession.
• A 2nd stimulus might be needed.
• TARP was not done in the "sophisticated way".
• Not talking to Obama very often.
• Buffett follows the freight-train index very closely, and that's something rather worrisome to him.

Our comments:

• We are sticking to the "big picture" [1] that we have been citing here for a long time and the thought we published earlier this year [2].
• Official unemployment figures must not be trusted. We urge readers who are interested in the real figures to refer to John Williams' [3] work. However, we would like to stress that it's a bad way to time the market using any of these figures.
• Looks like a 2nd stimulus is needed huh? Well, print Ben, print!

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References:

1. Scheduled Post #4
2. No Turn Around This Year
3. True Unemployment Rate Already at 20%

Related posts:

• George Soros on Financial Crisis, Commodities, China
• What Worse Than Expected?

True Unemployment Rate Already at 20%

Anthony Mirhaydari, Jul 06 2009 [1]:

Really, how hard is it to find a job? Was June's horrid numbers, in which 467,000 people lost their jobs compared to 345,000 in May, a one-time fluke? Or does it mean that all those Wall Street economists who believe the economic recovery is starting are dead wrong?

Not to scare you, but the situation is actually worse than it seems. Over the years, the government has changed the way it counts the unemployed. An example of this is the criticized Birth-Death Model which was added in 2000. The model is designed to account for the birth and death of businesses and the resultant lag in survey data. Unfortunately, the model doesn't work that well during economic contractions (like we have now) and consistently overstates the number of jobs being created each month.

John Williams of Shadow Government Statistics [2] specializes in removing these questionable tweaks to the government's statistical data to better align current numbers with the methodology used to gather historical data. After reviewing the data, Williams believes that "the June jobs loss likely exceeded 700,000." David Rosenberg of Gluskin Sheff notes that the fall in the number of hours worked in June (to a record low of 33 per week) is equivalent to a loss of more than 800,000 jobs.

...

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References:

1. True unemployment rate already at 20%
2. Shadow Goverment Statistics

Related posts:

• What Worse Than Expected?
• Dow Down 366.94 Points
• Scheduled Post #4
• No Turn Around This Year
• Williams: Hyperinflation
• Williams: Shadow Government Statistics
• To Zoe_H
• Why I Want to Abolish the Fed too!

Imminent Fluctuation in FX, Part II

BP, EC, and SF opened gap down at 11 pm GMT.

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Related posts:

1. Imminent Fluctuation in FX
2. China Argues to Replace USD

What Worse Than Expected?

19 October, 2007 [1]:

2 July, 2009 [2]:

US job losses worse than expected

The unemployment rate is creeping towards 10%

The number of jobs lost in the US last month came in at 467,000, which was much more than had been expected. The jobless rate rose to 9.5%, from 9.4% in May. The non-farm payrolls number would usually be released on a Friday, but has been announced a day early because US markets will be closed on Friday.

The reality has only just begun to unfold, which we had warned almost 2 years ago.

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References:

1. Dow Down 366.94 Points
2. US job losses worse than expected

Related posts:

• Scheduled Post #4
• No Turn Around This Year

Crude Oil

Hedge removed at 72.00 in pre-market electronic trading. Price now 72.4.

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Related posts:

• Imminent Fluctuation in FX
• Lots of "Bull-isssh" Talks on Wall Street
• Crude Oil

China Argues to Replace USD

Right after we published our last post, namely Imminent Fluctuation in FX, China argues to replace US Dollar [2].

China's central bank has reiterated its call for a new reserve currency to replace the US dollar.

The report from the People's Bank of China (PBOC) said a "super-sovereign" currency should take its place.

Central bank chief Zhou Xiaochuan has loudly led calls for the dollar to be replaced during the financial crisis.

The bank report called for more regulation of the countries that issue currencies that underpin the global financial system.

"An international monetary system dominated by a single sovereign currency has intensified the concentration of risk and the spread of the crisis," the Chinese central bank said.

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References:

1. Imminent Fluctuation in FX
2. China argues to replace US dollar

Imminent Fluctuation in FX

Soon after we hedged our position in Crude [1, 2], the black gold had been traded down to approximately 66 and now is back above 70 in pre-market electronic trading. Its resilience prompted us to consider the possibility of an imminent fluctuation in the FX markets. Also, the Yen seems preparing to head higher, which we have no exposure to at this moment in time. In addition, the yield curve has been rising all the way from the short end to the long end over the past months -- bond traders are beginning to price in the inflation expectation that we have been citing here [3, 4]. Therefore, we are prepared to remove the hedge we placed on Crude, should the market force us to. Will report here if we do.

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References:

1. Lots of "Bull-isssh" Talks on Wall Street
2. Crude Oil
3. Scheduled Post #4
4. bhc on Inflation

Boon vs Robert Prechter, Part VII

As economists are still arguing the possibility of an inevitable inflationary outcome following the massive bailouts and money printing by the irresponsible central banks, one that we at bhc investment have been predicting for a long time, you would have noticed that our posts in relation to Gold have been reduced significantly -- we prefer to stop singing our song when the others are. We have no idea if Prechter [1, 2] has changed his view on Gold, our official position remains unchanged.

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References:

1. Elliott Wave International
2. Gold is Still Money

Related posts:

• bhc on Inflation
• No Turn Around This Year
• Gold: Revisited
• Dow Down 366.94 Points
• Boon vs Robert Prechter
• Boon vs Robert Prechter, Part II
• Boon vs Robert Prechter, Part III
• Boon vs Robert Prechter, Part IV
• Boon vs Robert Prechter, Part V
• Boon vs Robert Prechter, Part VI