Tuesday, October 20, 2015

Deutsche Bank: "This Is Not an Economy That Is About to Enter Recession"

It's a Fed manipulated boom, in a typical central bank created boom-bust cycle, but it is the boom phase.

Deutsche Bank's Torsten Sløk is absolutely correct when he says we are not about to enter a recession.  In the end, things will not work out well, but for now the biggest threat is accelerating price inflation, not a recession.

According to the Slok, and he is correct about this, there is now a significant "disconnect" between one narrative dominating financial markets, where some investors maintain that the U.S. economy is still too weak to allow the Federal Reserve to raise interest rates for the first time in almost a decade, and actual economic data.

Here's what he said:
In my view, there is a big disconnect between the current narrative in both equity and rates markets and the actual economic data. This economy is stronger than its reputation and for some reason many investors want to hold onto the 2009 story of “the economy is not good”. We are likely to reach full capacity over the coming 12 months and that is why Yellen, Fischer, and Dudley continue to talk about liftoff in 2015.

 A fair amount of Sløk's data comes from the University of Michigan’s preliminary consumer sentiment index, in which the bottom third of the income scale projected their pay over the next year will increase by the most in more than a decade. Nearly 50 percent of respondents also said they expect good times for the economy over the next five years, up from 41 percent in September. Thus, Sløk has one thing to say to people calling for a sharp downturn: 

Think about this statistic next time someone talks to you about the declining participation rate, the lack of wage growth, and QE4. This is not an economy that is about to enter recession.


(via Bloomberg)


  1. I love how this guy Slok, talks about this “statistic” as if it’s of some relevance of future economy output. By the way, this important “Sentiment” was very high in 2007, just before the economy was flushed down the toilet.

    Sorry, Slok…if I see, sluggish GDP, little to no real inflation, and par-time work increasing, I would hardly call that a booming economy. So…no rates increase in 2015.

    1. You need to subscribe to the EPJDailyAlert.

      RW has hard evidence we are in a boom phase.