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One of the silliest
cases I have seen to date regarding the alleged recovery comes from James
Altucher, president of Formula Capital.
Altucher Says It's Not a 'V',
It's Even Better, Look for New Highs by 2012
Partial Transcript
Aaron Task: Joining me now is James Altucher who says, not only is the
recovery not over, and not only is it a "V Shaped Revovery, it's
checkmark shaped recovery. James you are wildly optimistic on the US economy right now?
James Altucher: I don't want to say "wildly" because that sounds
almost insane, and everyone is going to comment on these message boards that
I'm completely whacko. At the same time if you look at all the data, go to
the federal reserve website and look at every single chart of economic data,
nonfarm payrolls, retail sales, inventories, it's all a "V" or a
checkmark. ... The Debate is over. It's already been a "V" the
question is "Does it continue?" I think it does.
Completely Whacko
Yes James, you are completely whacko. I did go to the Fed website as you
suggested and here are some charts to consider.
Civilian Unemployment
In terms of civilian employment there was a fast checkmark in the 70's 80's
and 90's but there is no sign of a "V" now, let alone a checkmark.
Auto Sales
Auto sales are now back to where they were in early 1980. This is the most
miserable auto sector recovery ever in terms of actual numbers. Moreover, the
data worse than it looks if one factors in population growth.
Looking for a checkmark? If you hold up the chart and look in a mirror you
might see a nice one now, but the real one from 1980 vanishes.
Total Consumer Credit
With consumer credit, there is no "V" nor checkmark, nor any
recognizable improvement, rather an unprecedented plunge dating all the way
back to 1940.
Total Bank Credit
Total bank credit has had a recovery of sorts off an unprecedented plunge.
However it is not anything one should properly call a "V".
Housing Starts
Housing starts is one of the few genuinely leading indicators. 1990 and 2000
certainly had "V" shaped recoveries. However the chart clearly
shows it it preposterous to call the current blip a "V" shaped
recovery. Housing starts are still below every trough all the way back to
1960.
Moreover, it has taken repeat $8,000 tax credits to even get that little
blip.
As with auto sales, the proper way of viewing this is on a population
adjusted basis (not shown), which would make that miserable chart look far
worse.
Sick Mortgage Market
Finally, Fannie, Freddie, and the FHA now account for 90% of mortgage market.
Please see FHA Volume is Sign of
‘Very Sick System’ for details.
Recovery? Please be serious. We have had a recovery in financial assets
reflecting a $trillion thrown at anything that would move, and those anemic
charts are all we have to show for it.
So where does Altucher get his checkmark theory?
This chart will show how.
Housing Starts Percent Change From Year Ago
There's your checkmark. Please compare to the previous chart.
If you believe that constitutes a checkmark recovery (or even a "V"
shaped recovery), then you are only fooling yourself.
Mish's Global Economic Trend Analysis
Thoughts on the
great inflation/deflation/stagflation debate as well as discussions on gold,
silver, currencies, interest rates, and policy decisions that affect the
global markets.
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