Metaphorically speaking, Bob Brinker has thrown down the gauntlet, challenging recession-bears to a showdown at the No-Bear Corral.
Bob Brinker's no-recession weapon of choice
October 16th, Bob said: "My personal opinion is that some of those private forecasters out there that are so convinced that we are going into a recession which is historically defined as two consecutive quarters of negative Gross Domestic Product, I think they are going to be proven wrong. That is my prediction....I believe those forecasts will prove to be false...Therefore, those who are making investment decisions based on what I regard as that bogus forecast, I think they are going to regret it. And they might regret it mightily, if they don't already."Laksman Achuthan chooses an "Ugly Forecast That's Been Right Before"
Economic Cycle Research Institute’s Lakshman Achuthan said that the economy is "tipping into recession." Excerpts from Business Cycle:
Mr. Achuthan, on the other hand, says that the gross domestic product rate is likely to go negative by the first quarter of 2012, if not sooner. He told me last week that he couldn’t tell exactly when the recession would start — or whether it had already begun. The institute made its recession call only after an array of economic indicators showed a “pronounced, pervasive and persistent” downturn consistent with a recession, he says. By contrast, in the summer of 2010, when some market bears interpreted the decline in one of the institute’s indexes as a signal that a recession was in the offing, the institute said the pattern pointed not to recession, but only to weakness.So there you have it. Bob Brinker is saying that the recession-bears are going to regret their stance. Lakshman is saying a recession is inevitable, and we're already "tipping into it."
Now, he says, the pattern is clear.
This time, Mr. Achuthan says, a host of leading and coincident indexes — those that suggest activity down the road, and those that measure current movements —are all pointing strongly toward recession.
The institute’s U.S. Leading Diffusion Index, for example, has dipped into territory that, with only one exception, would have signaled the recessions of the last 60 years. The single exception was in a short-lived downturn in 1966-7.
In addition, its U.S. Coincident Index has moved into territory that would have signaled recessions over those six decades, with three exceptions. Those were dips in September 2005, after Hurricane Katrina; in March 1993, after a huge storm on the east coast of North America, and in July 1952, after a steel strike. In none of those cases did the two indexes reach recession territory at the same time, as they have now, he says.
TAKEN as a whole, he says, these and other indicators are quite clear. “We’ve entered a vicious cycle, and it’s too late: a recession can’t be averted,” he says.
Unfortunately, this isn’t the end of the institute’s gloomy prognostications. What’s worse, he says, is that the business cycle appears to have become shorter than it was from the mid-80s until the start of the last recession, an era that has sometimes been called “the Great Moderation.”"
A long time Bob Brinker fan, pen-name Marc Ultra, agrees with ECRI this time and wrote:
"Lakshman and Bob in the Thunderdome. 2 men enter, one man leaves.
While technically there may be wiggle room because they're not defining a recession in exactly the same way, the battle lines are now clearly drawn, one will be correct and one will be wrong. Today Bob flat out said the ECRI ("the private forecaster out of NY") will be wrong and those (like me) who have acted on their call will regret if. It's possible Bob might even be using me as as part of his example since when he was using an alias he would respond to me at various times (including praise at times), so if he glances at this board occasionally he is aware that I have flipped from bull to bear due to the ECRI call but obviously a lot of people have made investment changes based on the CRI so the possible personal point would not be that relevant regardless."
To summarize Bob's latest forecasts
Bob's GDP forecast from last Sunday's show: "I expect we're going to see a positive number in the third quarter. I expect to see a positive GDP number in the third quarter. Remember in the second quarter we grew at an annual rate of 1.3%. Remember my forecast is 1 to 2% real GDP growth this year."
In
the September Marketimer, Bob raised his 2011 S&P 500 operating earnings estimate
to $95, up from $93.50 the month before and predicts slightly higher
earnings in 2012 with "sluggish" growth in the European Union.
Bob is still bullish on the stock market and has been forecasting the S&P 500 Index reach the "mid-1400s" for several months. As the recent 20% decline took place, Bob extended the time frame for that prediction from "this year" to "in 2012."
Some humor by birdbrain:
Some humor by birdbrain:
And in this corner wearing in-the-red trunks, publisher of Marketholder, looking for a comeback after being defeated by both Cassandra and Bad News Bear in 2008 and terribly pummeled by Nevada Property, from Lake Las Vegas, Bob Brinker."
Pay per view, anyone?