The Week's Economic Reports

Following is a summary of last week's economic reports. Though equity markets were the more important story by a wide margin, for the first time in weeks, a very mixed set of economic data was reported, the most significant development being the much-anticipated downward revision of fourth quarter GDP from 3.5 percent to 2.2 percent. For the week, the S&P 500 Index fell 4.4 percent to 1,387 and the yield of the 10-year U.S. Treasury note fell 16 basis points to 4.52 percent.


Durable Goods Orders: Orders for durable goods fell 7.8 percent in January, far more than expected, after posting gains during the prior two months. This report has become exceptionally volatile over the last two years, swinging wildly from month to month, mostly due to the civilian aircraft component that fell 60.3 percent in this report after rising 31.3 percent in December.

Excluding the transportation category, durable goods orders fell 3.1 percent for the month and new orders for non-defense capital goods excluding aircraft, a barometer of future investment, fell 6 percent posting the first year-over-year decline in three years. On a year-over-year basis, new orders are up 2.1 percent, significantly below the yearly increases near 10 percent during most of 2005 and 2006. This is a clear indication of a slowing manufacturing sector and soft demand.

Existing Home Sales: Sales of existing homes rebounded in January, up 3 percent to an annualized rate of 6.46 million, the highest level in seven months. All parts of the country saw increased sales, the West (up 5.6 percent) and the Midwest (up 4.8 percent) posting the strongest gains. Inventory was unchanged at a 6.6 month supply, still high by historical measures, but down from a recent high of 7.3 months in November.

The median home price fell for the sixth consecutive month, down 5.0 percent from December to $210,600, the lowest level in two years. Unusually warm weather helped to increase the sales volume, but high inventory, skittish buyers, and a rapidly changing mortgage lending environment are beginning to put significant downward pressure on prices and this impact is expected to continue into the spring.

Consumer Confidence: The Conference Board's measure of consumer confidence rose from 110.2 in January to 112.5 in February, the highest level in five and a half years. Inflation expectations eased slightly and a marginal improvement was seen in the future expectations index while the bulk of the monthly increase came from the present situation index.

This measure of the consumers' outlook is completely at odds with the Reuters/University of Michigan Consumer Sentiment report released later in the week where a five-month low was reached with current levels registering below the average of the last few years. It makes you wonder which one is more accurate and the overall value of polls such as these if they can be so wildly divergent

Gross Domestic Product: Real GDP for the fourth quarter was revised sharply downward from an annualized rate of 3.5 percent to 2.2 percent. This is the second of three readings for economic growth in the closing quarter of 2006 - the final tally will be available at the end of March. Since the changes to inventory investment have been known for weeks, this revision was widely anticipated and fell in line with expectations just above the 2.1 percent rate of growth for the third quarter.

Downward revisions were also seen for business fixed investment, software spending, and government spending. On a year-over-year basis, growth for 2006 now totals 3.1 percent, up slightly from the year-over-year growth of 3.0 percent posted in the third quarter.

Since the advance estimate last month, the Personal Consumption Expenditures (PCE) deflator rose from an annualized rate of 1.5 percent to 1.7 percent, while the core PCE deflator (excluding food and energy) fell from an annualized rate of 2.1 percent to 1.9 percent. The PCE is the Federal Reserve's preferred measure of inflation. On a year-over-year basis, the overall PCE deflator now stands at 2.5 percent while the core rate posted a 2.2 percent annual gain, both still above the comfort levels of those at the Fed.

New Home Sales: Sales of newly constructed homes fell sharply in January, down almost 17 percent from December to less than one million units, marking a new four-year low. Sales declined in all regions with greater weakness seen in the West where sales fell back to 1995 levels. Recall that new homes make up less than 20 percent of overall home sales, but they are generally a leading indictor for both sales volume and home prices.

Inventory climbed to 6.8 months from 5.7 months in December, consistent with the sharp declines in both housing starts and building permits seen just a few weeks ago. Since record-high cancellations are not included in the inventory numbers, the supply of unsold homes is actually much worse than the official statistics. The median price of a new single family home fell to $239,800 in January, a 2.1 percent decline from year ago levels. Further price declines are likely, given a host of factors working against the housing market at the present time.

Chicago PMI: The Chicago Purchasing Managers' Index fell from 48.8 in January to 47.9 in February, further confirmation of a slowing in business activity in the Midwest (readings below 50 indicate contraction while levels above 50 indicate expansion). Declines were led by new orders, backlog orders, and higher inventories.

ISM Manufacturing Index: The Institute for Supply Managements' index, the broadest measure of manufacturing activity in the nation, surprised to the upside in February posting a 52.3 reading after a January mark of 49.3. As in the Chicago PMI above, readings above and below 50 indicate expansion and contraction.

The increase was driven by new orders and backlog order and the rebound follows a contraction in two of the three previous months. Readings near 60 were common in 2004 while the mid-50s was the norm during 2005 and the first half of 2006. Since last summer, there has been a steady decline to the 50 level with the February reading the best showing in five months.

Personal Income and Spending: Personal income rose sharply in January, up 1.0 percent after an increase of 0.5 percent in December, partially reflecting bonuses paid and the exercise of stock options that generally occur at this time of year. Consumption rose at a rate of 0.5 percent after a 0.7 percent increase in December, also exceeding expectations. The savings rate remained negative at -1.2 percent, improving from last months level of -1.4 percent.

Construction Spending: Construction spending fell more than expected in January, down 0.8 percent after a decline of 0.4 percent in December. Residential construction fell 1.8 percent, adding to the gloom that has overtaken the housing market in recent months.

Consumer Sentiment: In contrast with the all-time high in the Conference Board's Consumer Confidence measure on Tuesday, the Reuters/University of Michigan Consumer Sentiment index fell from a mid-month reading of 93.3 to 91.3. Both current conditions and future expectations fell, while inflation expectations were unchanged. In recent years, the outlook of consumers has been influenced more by gasoline prices than anything else. With gasoline prices now rising, along with continuing troubles in housing, new volatility in equity markets, and early signs of weakness in employment (consistently higher weekly jobless claims), look for confidence to fade in next month's report.

Summary: This was very much a mixed week for economic reports. Economic growth was revised downward, but this was widely expected. Sales of existing homes rose while new home sales fell sharply, with price declines evident in both reports. Two readings on consumer confidence showed very different results and a Chicago area report on business activity was opposite the broader, ISM manufacturing index. The underlying volatility belied the poor fundamentals for the decline in durable goods while both income and spending were healthy. It has been many weeks since the mixture of good and bad reports has been this even.

The Week Ahead

Most people will be watching equity markets next week, but there are some very important economic reports due and heading the list will be the employment report on Friday. Since initial jobless claims have been rising over the last month or so, this report will be scrutinized for signs of weakness in the labor market. Also on tap are reports on productivity and factory orders on Tuesday, the Fed's Beige Book and consumer credit on Wednesday, and international trade on Friday.

Chart courtesy of Northern Trust.

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What a Difference a Week Makes

Well, it's all over but for the cryin' - at least until Monday. What the last eight weeks giveth has now been taken away.

The Dow fell over four percent, the Nasdaq dropped almost six percent, and the Shanghai composite index, the one that started it all on Tuesday, fell seven percent on the week. The model portfolio at Iacono Research fell a whopping 6.2 percent for the week, but remains in positive territory for the year (barely).

The CRB Index declined only 1.4 percent and crude oil and gasoline actually rose. There was a study done some time ago by Absolute Return Partners showing that commodities outperform equities early in recessions - while stocks and bonds lose money, commodities continue to gain until late in the recession, at which time the relationship reverses. Something to keep in mind.

Oil sure didn't show too many signs of weakness over the last five days.


Oil stocks fell about five percent along with broad equity markets. The commodity price and the price of related shares move together much of the time, but not always.


There's no need to be quiet anymore for fear of spooking gold buyers. They've been spooked pretty good this week. Mark Hulbert's Gold Newsletter Sentiment Index (HGNSI), tracking bullishness among the short-term gold timing newsletters, fell from 75 percent to 57 percent in the last two weeks. Down $42 on the week, gold did not function very well as a safe haven, though it is still up almost one percent for the year.


Gold mining stocks were absolutely awful falling five percent at the open on Tuesday and losing 11 percent on the week. Some would call this a buying opportunity - readers sometimes object when that characterization is offered here after a week such as this.


And the dollar fell below 84 on the U.S. Dollar Index, largely a result of the Yen rising. The dollar didn't offer much of a safe haven for currency traders this week, though dollar denominated debt in the form of U.S. Treasuries surely did.

The ten-year note rose 3.5 percent moving the yield from 4.68 percent all the way down to 4.51 percent, a new low for the year after climbing to almost 4.9 percent in January.

It was very odd on Tuesday when, after all the early action in Asia and in New York, gold closed down only a couple dollars when trading stopped on the COMEX at 1:30 PM EST. Shortly thereafter, in New York Access trading, prices fell more than $20.

Treasuries and unleaded gasoline were the only winners for the week.

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Maalox Markets

When nearly all asset classes move (down) together, leaving little place to hide other than long-dated U.S. debt and crude oil, you know that something is not quite right.

The week is not yet complete but much damage has already been done to equity markets around the world with shares for smaller, more adventurous companies faring the worst.

Oil stocks (^XOI) and gold (AMEX: GLD) have followed the Dow down 3 percent so far on the week, gold mining stocks (AMEX: GDX) have fallen by twice that amount, while the price of crude oil (AMEX: USO) has risen.


Continuing objections to Iran's nuclear development program and shrinking fuel inventory levels are surely lending support to the oil price at this point, but oil is right there with U.S. Treasuries as the "safe haven" du jour as gold is beaten back.

The 12 percent price increase for the metal over the last seven weeks makes it less attractive than it would otherwise be and its growing acceptance as an investment class causes it to move with other investment classes in the global economy. The Wall Street Journal commented the other day that individuals should have no more than five or ten percent of their portfolio in gold - that's actually quite a bit if you think about it.

In the scheme of things, equity markets were clearly due for a pullback along with most other asset classes in this over-liquified investment world. Broad equity markets have had a ball since last summer when the Federal Reserve stopped raising interest rates and they were certainly due for a correction of more than one percent.

Now it's a question of what happens next - don't look for a definitive answer today.


In the current issue of The Economist, there are a few thoughts to share:

A fall of 8.8% in China's main stockmarket index on February 27th rumbled around the world, clobbering share prices just about everywhere. And when American traders looked at the news about their own economy—companies' weak orders for durable goods, worries about “subprime” mortgages, and Alan Greenspan, no less, musing about the possibility of recession—they took fright.
...
No one yet knows whether this week's shudders mark a pause before prices glide serenely upwards again or the start of a proper tumble.
...
One sign that things are slowing down came in the form of those disappointing orders for durable goods, which fell by 7.8% in January, far more than expected even after stripping out surprisingly poor demand for aircraft.
...
A second and perhaps bigger source of concern is the housing market. The commonest view runs something like this. Yes, the housing market has slowed. Yes, the fall in residential investment has whacked the GDP figures, but the market seems to be settling down again. And consumer spending has gone along merrily. Just look at the fourth-quarter accounts: consumption was strong enough to explain the whole of the addition to GDP and more. This week the Conference Board's measure of consumer confidence hit a five-year high. So there is probably nothing to worry about.

Well, perhaps. The stock of existing homes, relative to monthly demand, remains high and the backlog of new homes is rising. The housing glut is likely to weigh on prices and on building—and hence on the economy—for a while. It is hard to believe that consumer spending will be unaffected, once homeowners realise that their houses are no longer doing their saving for them simply by going up in price. At the risky, subprime end of the mortgage market, there are already signs of distress: defaults and foreclosures have been soaring.
...
In any case, an American slowdown is only to be expected. The markets (and perhaps Mr Bernanke) may have cursed Mr Greenspan for mentioning recession. In fact, he spoke a lot of sense. He did not say recession was likely. He merely noted the truth: that corporate America's profit margins “have begun to stabilise”, a sign that the economic cycle is entering its later stages. The cycle, in other words, has not been abolished.

If this week has served as a reminder of that, so much the better. So much the better, too, if it has made investors stop and ask whether, at the returns on offer, it is wise to run after emerging-market shares, virtually any sort of corporate bond and the privilege of insuring lenders against the risk that goodness knows who will default on a loan. And if not? Then the next slip on the tightrope could be much nastier.

The economic reports took on a decidedly negative tone about two weeks ago, perhaps foreshadowing the events this week in equity markets. Further, this morning's University of Michigan Consumer Sentiment report was down sharply, coming in a bit below the average of the last few years - squarely at odds with the Conference Board's measure.

It is shaping up to be another very interesting year in the investment world - keep the Maalox handy.

Full Disclosure: No position in GLD, GDX, or USO.

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Hummers! In Venezuela!

So I stopped at Costco on the way home to pick up a few odds and ends. I used my final paycheck to buy a big screen TV, an iPod, and this cool little thing that clips onto your ear and makes people think that you're important.

Just kidding.

I did stop at Costco, but about the most exciting thing that wound up in my cart was oatmeal and balsamic vinegar (not to be consumed together).

Translation Please

Now, what follows is no joke.

I don't know what to make of it but nothing you'll hear from me in the rest of this post is being written tongue-in-cheek.

There's been a lot of traffic in the last couple days looking at the original Hummer story (now fifteen months old) from this website and earlier today, this email arrived (I hope Enrique doesn't mind):

Hi,

Did u know that a private Channel in VENEZUELA (RCTV Channel 2 - public television ), a "journalist" (I'm not sure to call her that way.. well..) use the Hummer's pix to gave a FALSE NEWS IN MY COUNTRY ?? (VENEZUELA).. i'M SURE.. WITHOUT YOUR PERMISSION, THEY "changed" the pics.. sayin' that's the H2 are in a Military queters in my country??.. put one thing here.. another there.. etc.. If you wanna see it.. look here.. http://www.aporrea.org/oposicion/n91279.html

A free translation of the text in the web site, as follow :

"In a RCTV's program today, "la Bicha" (the reporter "nickname"...) at last losted the credibility and trust that the said they got.. they make like a "true" a montage, bad done, where they say that the are showing a rows of hommer outside "Fuerte Tiuna""

Can any Spanish speakers out there translate some portion of this video and post it in the comments section?


The picture above is one of the original Hummer photos and the video clip goes on for a total of about seven minutes and there are more Hummer photos shown from a scrapbook.

Really bizarre.

I'm dying to know what they're saying.

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Goodbye Teradyne

After more than seven years, today is my last day at Teradyne, Inc. (NYSE: TER), a major manufacturer of test equipment for the semiconductor industry.

I'd like to thank all the great people I've worked with over the years and I wish you all the best of luck in the future.

Since joining the company in January of 2000, time spent here has been mostly enjoyable - writing software for a world-class semiconductor test platform has had more than its share of excitement and challenges.

I can't say that the last year or two have been as enjoyable as some of the earlier ones. Maybe it was because I was distracted by other interests.

Maybe too it was because "perpetual fire drill" is no way to live and there's been a steady stream of talented engineers out the front door. Despite assurances heard by employees, the attrition rate doesn't look normal to me.

Yes, I know things are changing - good luck with that.

I really can't complain - Teradyne has been pretty good to me. I'm just tired of software and tired of Southern California - it's time to move on.

No, Not Alan Greenspan

Retirement in 2007 had been planned for many years. Sometime early last year I started counting down the days. I think the countdown started after we were shown a presentation from Broadcom (NYSE: BRCM) about how we software engineers need to be more productive. This would enable Broadcom to be more productive and the bottom line for both companies would swell and some of the profits would trickle down and the stock price would go up and we'd all live happily ever after.

With more irony than could be appreciated at the time, Alan Greenspan's picture was on the opening and closing slides and at first I was waiting for everyone to say, "Surprise!", but it never came.

Everyone was so serious.

Alan Greenspan's mug was there alongside a quote extolling the virtues of increased productivity and how we could play a larger role. That's when I started crossing off days on a calendar.

It seems that, along with many other engineers, I've been just a little cog in a big wheel that has contributed to the great borrow-and-spend consumption binge that characterizes our era. Being more productive to enable more businesses to profit from the manufacturing and sale of more consumer electronics that most people don't really need and have to borrow money to pay for, well, this just doesn't sound as good as it did a couple years ago.

And if I'd learned that Teradyne equipment tested chips that go into those ridiculous BlueTooth ear dongles that people wear like they're on the set of a Star Trek movie, I may have been long gone by now.

Stock Options, Stock Purchase, Stock Grants, Stock Buybacks

Coming from a mostly staid aerospace company in 1999, I was at first taken aback by all the stock trading that went on in cubicles up and down the aisles of the engineering department. That changed rather quickly as 2000 drew to a close.

Not surprisingly, the stock options I received when joining the company expired worthless, however, there were a few other opportunities to profit in company stock during my stay. But not too many.

A big part of the reason why my wife and I are able to retire now is shown in the chart below. The natural resource sector is the new bull market, though I continue to be surprised at how few people realize this. It's been going on for five years now and shows little sign of slowing down, though the ride can get pretty bumpy from time to time.


The stock purchase plan was pretty good at Teradyne in 2003, but aside from that, it's been many disappointing years in a row. I can't believe some people got laid off a few years back and had never sold any of their stock - rode it all the way up and all the way back down.

Technology is so last century.

No More SoCal, No More Software

We will be leaving the crowded environs of Southern California this spring, not likely to return soon or often. I can't imagine what driving on these freeways will be like in five or ten years - so many angry young drivers that seem to get more reckless every year. The young men in big pickup trucks are sure to get angrier as their career prospects dim along with the housing industry.

We'll be settling in an area where a quick mid-day break might result in a view such as this, rather than the sights and sounds of the 101 freeway with cars buzzing by at 80 miles an hour.

We'll be renting for a year. There's no hurry to buy any real estate anywhere in California this year.

My software programming career officially ends today. I'd complain about having to train Rammohan, Rajasekar, and Vijayakannan last year, but I'm mostly over that now.

That last thousand lines of code I wrote might require a little attention in the year ahead. I can't say that it received my undivided attention as this day drew closer, but it should be pretty good.

I learned a little more about maps (yes, Wikipedia has an entry for this too) and the multi-headed PinInfo hydra. I'm proud to say that I completed my entire career at Teradyne without having to understand what upside-down inheritance is. At yesterday's going-away luncheon, word came that I'm better off for it.

Anyway, this missive has gone on far too long already. I have to make that drive in one last time to do an "exit interview" and then it's official.

Goodbye Teradyne.

Full Disclosure: No position in TER or BRCM at time of writing.

[Note: If you work at Teradyne and this is the first time that you've heard of your now-former co-worker's other interests, be sure to check out my investment website IaconoResearch.com and inquire about a special subscription rate for Teradyne employees.]

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Because Inflation is "Forever"

The title of this post is not something you're likely to hear from the U.S. Postal Regulatory Commission as their rationale for a bold new approach aimed at stopping the torrent of demand for one and two cent stamps each time they hike postal rates.

But that's the reality.

From the Associated Press comes this report of a radical new proposal for handling future postal rate increases.

Postal regulators back 'forever' stamp

Say goodbye to those pesky 1- and 2-cent stamps that used to clutter up desks and purses every time the price of mailing a letter went up.

A new "forever" stamp — good for mailing a letter no matter how much rates rise — was recommended Monday by the independent Postal Regulatory Commission. The panel also called for a 2-cent increase in first-class rates to 41 cents, a penny less than the post office had sought.

In addition, the changes would sharply scale back the price of heavier letters.

"Adoption of this proposal is good for the Postal Service, postal customers and our postal system," commission chairman Dan G. Blair said at a briefing.

A forever stamp would not carry a denomination, but would sell for whatever the first-class rate was at the time.

For example, if the 41-cent rate takes effect, forever stamps would sell for 41 cents. If rates later climbed to 45 cents or more, the price of the forever stamp would also go up at the counter or machine, but those purchased before the change would still be valid to mail a letter.

If the forever stamp ever sees the light of day, get ready for a real, unambiguous indicator of "inflation expectations" from the American public.

The various data collectors who calculate inflation expectations may be able to stop asking people whether they think consumer prices will rise 3.2 percent or 4.1 percent or 2.6 percent in the year ahead and just watch the Postal Service printing presses as they struggle to keep up with demand for the new stamp where mailers can lock in current postal rates - forever.

Courtesy of the autoDogmatic blog comes this story of postal rates and inflation rates with the accompanying chart to better describe the situation. It seems that postal rates are rising much more rapidly than the government's Consumer Price Index.

What could that possibly imply?

Some of you may have the same quandary faced here - the supply of 37 cent stamps with an accompanying store of 2 cent stamps has not yet been worked off after the last rate increase to 39 cents. If rates increase to 41 cents, then the 2 cent stamps will disappear twice as fast.

Please don't raise first class rates by 3 cents!

Consumers could see the rate increase as early as May (the third in five years), however, the forever stamp requires the approval by the U.S. Postal Service board.

They should also check with Ben Bernanke over at the Federal Reserve and maybe even the Bureau of Labor Statistics where they tally the CPI.

Just like the U.S. Mint, offering $700 gold coins with a face value of $50, the postal service appears to be undoing the hard work of the Federal Reserve in establishing "inflation expectations" far different than those that exist in the real world.

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Jim Rogers and Chinese Taxi Drivers

Travis Bickle: You talkin' to me? Are you talkin' to me? You talkin' to me? Then who the hell else are you talking to... you talking to me? Well I'm the only one here.

It's hard to imagine a Chinese taxi driver saying that, but anything's possible when margin requirements suddenly change and then the market corrects.

Yesterday, commodities and China uber-bull Jim Rogers was interviewed by Bloomberg. Here are a few of the more interesting parts:

Bloomberg: What exactly was your take on the price action yesterday in China?

Rogers: Well, as I said to you earlier in the month, a little bit of a mania was developing in China. I guess I said I was not selling, but I certainly wasn't buying because the government is getting anxious about what's going on and it was out of control. Taxi drivers were borrowing money to buy stocks, shop assistants were doing the same thing. That's never a time to buy, that's a time of overheating.

Bloomberg: Was it irrational exuberance on mainland China?

Rogers: It was worse than irrational exuberance. It was a mania, it was a bubble. And it still could turn into a bubble. I don't want to sell China because it's got a great future, but if it keeps going up the way it's been going up, I'll have to sell.

Bloomberg: I think there was a lot of confusion about what the Chinese government did, limiting the ability of taxi drivers to be able to buy stocks on borrowed money. How big of an impact do you think this might have on the overall equity market?

Rogers: Well, if you look at the Chinese stock market, it's gone straight up. It's nearly tripled in the last 18 months and that's never good for a market, even though it had been going down a few years before that. And the government said, "Hey, we're not going to let people ..." We have margin requirements in the U.S. - you're not supposed to buy shares on your credit card, so it's the same thing we have here. There's nothing unusual about it and once you take that extra money out of a market that's been going straight up, it's going to have an effect. The government also raised reserve requirements for the banks - they have to put more money aside so they cannot lend so much. They're trying to cool off an overheated economy and certainly an overheated stock market.

On the Chinese economy, commodities, the U.S. stock market, recessions, and the market prognostications by Alan Greenspan.

Bloomberg: If the government is concerned about curbing investment, does it make you question any of your own assumptions about Chinese growth and its impact on some of the other markets, like the commodity market?

Rogers: No, none whatsoever. We're talking about the stock market, we're not talking about the economy. Even if the Chinese economy's growth slows down by half, then it would still be growing at five percent a year. Most countries in the world would give anything to grow at five percent a year. And if it grows at five percent a year, that's a lot more rubber tires, that's a lot more eggs that somebody has to produce.

Bloomberg: Why do you think then that the fallout from what is a very illiquid market, pretty small in terms of market cap, stock market decline hurt so many emerging market economies and even commodity markets?

Rogers: No, no. I don't think that the markets went down because of what happened in China. As you've pointed out, China's a very isolated market. Foreigners cannot invest in China and do not invest in China. The (U.S.) market is going down because it's time for it to go down. We're probably in a recession in the U.S., if not we will be before long. I know housing is in worse than a recession. I know that automobile manufacturing is in worse than a recession. I know that there's an inverted yield curve. I know margin debt is at an all time high. I mean there are lots of reasons why it's time for the market to go down. Whenever you have a market decline it usually starts with a marginal country or a marginal sector. That's just the way markets work.

Bloomberg: So basically, with what the Chinese government said about slowing down or curbing some investment, you don't see any decline in appetite for raw materials?

Rogers: It could slow down. The rate of growth could slow down certainly. And if the U.S. is in a recession or goes into a recession, that's going to have an effect, but on the other hand, you've got three billion people in Asia who are continuing to expand and, as I've said, suppose their growth rate gets cut in half, that's still the growth rate. But we always have corrections in every market. You know that.

Bloomberg: And I think what really hasn't really gotten enough attention was something that was said to Hong Kong two days ago by former Federal Reserve Chairman Alan Greenspan, saying the U.S. economy could, anything could happen I guess, end this year in a recession. You've said the same thing yourself. You've said this could exacerbate that.

Rogers: Well, I expect there to be a recession. Greenspan didn't say anything. He said "could". Well, the sun "could" not come up tomorrow too. Greenspan never says anything specific. But I'm telling you we will be in a recession sometime this year and that's going to have an effect. But that's not a very radical statement - we've had recessions every four to seven years since the beginning of the republic, we're overdue for one.

Now, it's clear. There will be NO recession this year. The confluence of contrary indicators in the form of predictions from both Alan Greenspan and Jim Rogers makes this a near certainty (never listen to Jim Rogers when it comes to the economy or short-selling - never listen to Alan Greenspan about anything).

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