Last week, we received some classic guffaws when we responded to whether or not the recession has ended with this: “We’re not convinced, but even if it is statistically over, the depression is ongoing”.
We were reprimanded by former Fed Governor Mishkin for breeding “fear”. The eyes were rolling among the Squawk Box crew and we were told to tell that to Mr. Market, who has rallied more than 60% from the March lows (“artificial” lows, we were told off camera). After all, Mr. Market is so adept at calling the economy – like the peak in late 2007, literally weeks ahead of what the polite economics crowd dubs “The Great Recession”; or how adept Mr. Market was in calling the 2001 tech wreck; or the three failed attempts at predicting recovery over the past two years. Mr. Market’s ability at calling the economy, is shall we say, a tad spotty.
In fact, even with the massive amount of stimulus in modern history, all the economy could do was muster up a 2.8% annualized growth rate in Q3. If that number stands, it will go down as just about the poorest bounce off a recessionary environment on record. History, by the way, shows that 80% of the time, the opening quarter of the recovery ends up being a pretty good predictor over the extent of the economic pickup we see in the year that follows. So, that near 5% GDP growth backdrop being projected by Mr. Market right now looks to be more than just a tad dubious.