DEUTSCHE BANK: Don't Worry This Year Is NOT Last Year

bears different choose


To investors scared that we’ll see another economic slump this spring as we did last year: don’t be, Deutsche Bank economist Joe LaVorgna writes in a note out late yesterday.Unlike last year, there have been few exogenous shocks to knock investors back into a risk-off mentality—in particular, there’s no disaster in Japan—and U.S. economic data has not looked this healthy in a long time.

That leads LaVorgna to reiterate his bullish view for the economy, 

Low and falling claims tell us the labour market is getting better—this should elevate the demand for housing as it has in every previous economic expansion. Remember that last year claims rose sharply in April, up to an intra-year peak of 478k for the week ending April 29. This was due to the massive global manufacturing supply disruptions associated with the Japanese earthquake/tsunami. Recall, too, that the April 2011 spike in claims preceded very soft May payrolls, which were up just 54k. If claims remain near 350k, payroll gains well in excess of 200k per month should continue. One final point is worth making: Unseasonably warm weather has depressed spending on utilities and natural gas and has probably hurt other seasonal purchases such as apparel. Thus we do not want to overstate the alleged stimulus of warm weather.

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