Double-dip?

Equity markets are stronger again today, which prompts to pose the question ‘ ‘double-dip recession, what recession’? It is quite possible that equities have lost touch with reality but more likely equities are responding to the promise of more liquidity. This will explain why the gold price is so strong.

The other argument is that the recovery from the 2008 recession is still very much in place, despite the recent softening (unless there is a full-scale crisis PIIGS inspired crisis in the euro-zone. The OECD lead indicator and the JP Morgan Global PMI both suggest that the world economy is still slowing, resulting in cries for the Federal Reserve ‘to do something’! But some of the more immediate indicators are suggesting that the slowdown is past it worst as companies have readjusted their inventories downwards to match slightly slower than expected sales. Growth momentum in the developing world still seems to be intact despite tightening in China and India. Growth in the 4th quarter of 2010 should exceed our somewhat dismal expectations.