CHARTS OF THE WEEK: Unless 'This Time It's Different', There's Now Zero Chance Of A U.S. Double Dip

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chart of the day, probability of U.S. Recession predicted by Treasury Spread, april 2010

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  • The Overhang That Will Smother Any Housing Recovery
  • The Ultimate Rejection Of The Euro
  • Unless ‘This Time It’s Different’, There’s Now Zero Chance Of A U.S. Double Dip
  • Leading Indicators Around The World Rolling Over
  • No Green Shoots At All For The Long-Term Unemployed

The Overhang That Will Smother Any Housing Recovery

Housing continues to be a serious problem for the U.S. economy with a tremendous amount of unsold overhang remaining in the system.

This means that more than 7 million homes remain weighing down the market, due to bank's having repossessed them or the loans being in delinquency.

It's interesting to note, per this chart from Whitney Tilson's T2 Partners, this does not include new defaults, which are around 300,000 per month.

The Ultimate Rejection Of The Euro

Gold is making new highs in dollars, but its performance in euros is just breathtaking -- a straight line up in recent days. With its surge today and the euro's continuous fall, we're easily taking out all time highs, a clear symbol that with all the printing of euros in days ahead, folks are flocking to the comfort of gold.

Unless 'This Time It's Different', There's Now Zero Chance Of A U.S. Double Dip

Substantial research suggests that the difference between interest rates for 10-year and 3-month U.S. treasuries is a reliable leading indicator for the U.S. economy, so much so that the New York Federal Reserve even creates charts using this metric, boldly titled 'Probability of a U.S. Recession'.

Let's hope the the science holds, since according to the New York Fed's latest chart there's almost zero chance of a U.S. recession now. In April, the treasury-spread-based probability of recession collapsed to 0.04%.

We're not going to claim we're completely sold on this metric, but have to concede that historically it has worked and it's also hard to imagine why the U.S. would fall back into recession in the near-term given the rebound already in place. Things would have to start deteriorating first, and we haven't seen that yet. Should this time be different? That's not a rhetorical question. You can read the New York Fed's justification for this metric here and decide for yourself.

(Tip via Carpe Diem)

Leading Indicators Around The World Rolling Over

Something interesting to watch here. New data out from the OECD indicates that around the world, leading indicators are showing a big time deceleration.

These numbers include OECD (major developed countries), as well as the largest developing countries as well, so it's a comprehensive look at what's going on around the world.

We're still in growth, but there's a danger that the red hot 'v' may come to look more like a square root.

(via The Pragmatic Capitalist)

Why The Gold Bull Market Is Just Getting Started

In his latest note, David Rosenberg makes the case that the bull run can continue in part by comparing it to other bull runs.

As you can see below, gold's huge rally isn't anything compared to what other markets have seen. If you think there's a 'bubble' now, you're not even in the right ballpark, he argues.

His call is for $3,000 and argues that if gold were to reach its old 'price to world GDP peak' it could go to $5300.

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