Sunday, August 14, 2011

This is not 2008...'s a potential continuation of the events started in 2008 as the system continues to be sick and is seizing up again. Maybe the resolution is closer than we all think. With that said, some questions I am asking myself as we inch closer to fall:

1. Has the U.S entered a new recession?
a. Did oil over $115 or gas over $4.00/gallon get us there?
b. Was it the sovereign crisis in Europe that pushed us over the edge?

2. What effects will the "proposed" austerity in the U.S. have on global growth?
a. After a brief respite, has Washington D.C swung back to the epicenter of the crisis?

3. How much will recessions in the U.S and Eurozone effect demand for Chinese goods and in-turn Chinese accumulation for global assets (namely USD and UST's)?

4. If we have indeed entered a new recession or on the verge of one, can the U.S afford it?
a. Running approximate budget deficits of 8% of GDP (down from 11% in 2008) can the U.S step up and pump fiscal stimulus for the 3rd time in 12-years?
b. What happens if they can't?

I maybe early on this trade, but I think the gold/bond futures is the chart that will give us clues on the level stress in the system: