Merril Lynch Report

Merrill Lynch reports to debunk five "myths"

In this report, (albeit written ages ago in terms of Investment Banking) few market economists set out to debunk few of the bullish myths that are floating around - hence taking, for ONCE, a bearish view on th emarket.

• First quarter GDP says no recession
  1st Q GDP came out positive, making a lot of people proclaim "recession is over!" Not true.
• Most of past recessions started with 1st batch (NBER ALWAYS adjusts data after-the-fact) of GDP numbers being positive
• NBER's four monitoring data i) Employment ii) Real pesronal income less transfer receipts, iii) industrial production, iv) real manufacturing and trade sales have all peaked in late 07, early 08.
• April Employment was benign
• Unemployment number was not down as much.
• But number of hours work performed was down - equivalent of 400 000 job cuts. Instead of cutting people off, they are reducing their hours.
• Number also improved in the Part Time Job sector.
• Fed is done and next move is hike
• pretty useless thing to look at but basically saying that Fed expects further trouble and that they can cut rates.
• But then, the Feds are apparently now worried about inflation. I guess they are scared shitless as well of what's going on in the market.
• Credit Crunch is over
• Anyone who claims this must have a real bull up their ass, so here are the evidences that ML gave.
• Fed's balance sheet is literally in the shitters.
• Investors are way too naive - thinking things are "way too connected to fail"
• Fed is accepting credit card ABS, student loans, whatever else it may be... it's not over.
• Housing is going to Stablize
• HA.
• inventory situation, new housing starts, mortgage application... pick your number - it's down.