When we at bhc investment began to tell our readers that a US recession was inevitable back in September 2007 [1, 2, 3], that didn't make us popular. In fact, many were even laughing at us [12, 13].
Now it's official [4, 5, 6]. The US had acknowledged that its present recession started "officially" in December 2007 -- yeah right. However, we don't believe this now just more than a year old "official" recession is almost over -- this is different to what we said earlier, as shown in the figure above; recent evidence had allowed us to refine our thinking further. While financial markets may well be in the process of making a significant rally [4], we believe the Dow will end year 2009 below 8,000.
This recession has caused a great, great deal of deleveraging in financial markets worldwide. And we are not immune from it. Our investment thesis founded on the basis of an inflationary outcome [8, 9, 10], one that we believe is inevitable [11], is now being put to the ultimate test. Crude prices had seen big, big sell off, together with every other commodity you can think of, while we were away over the last 2 months. We are now looking like a complete idiot for holding on to our positions -- we are down right across the board, in everything we are still holding. Even the legendary Nouriel Boubini now believes the world is heading towards a deflationary outcome [15], similar to what Robert Prechter [14] believes in, in which case Gold will have topped out and heading for a multi-year decline. Our positions remain unchanged, and will continue be in deeper water should the deleveraging continue. We will provide more updates in the coming weeks, before we take our break for Christmas.
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References:
- I am not a Pessimist! Part II
- Marc Faber, the Guy Who Predicted the 97 Crisis
- US Recession
- It's official: Recession since Dec. '07
- U.S. recession began in December 2007, NBER says
- Recession in U.S. Started in December 2007, NBER Says (Update2)
- Tice was Right
- To Zoe_H
- Global Wealth Destruction
- Global Wealth Destruction, Part II
- Scheduled Post #4
- Scheduled Post #3
- Scheduled Post #5
- Prechter: Gold and Silver
- 2009 Recession Will Be Severe: 'There Is a Global Deflationary Risk,' Roubini Says
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