Hottest word in town: Green Shoots

The hottest word in town is green shoots. Some say green will soon turn into yellow and die in winter (brown). It has been a while I did not indulge my posting with a lot of charts, going to party with charts today. OECD Leading Indicator plunged into the steepest level that we have not seen since 1975. The average of Peak-Trough is about 23 months, however there were two periods that we have a long peak-trough cycle: Nov 1978 - Jul 1982 ( 44 months) and Nov 1988 - Nov 1992 (48 months). We could be lured into thinking this time may be the same, only half way to the trough. Not likely in my view, contraction in both periods we a lot shallower unlike this time, it was really a bungee jump. I will still leave a room of sharp rebound and we can get out from the recession this year.





Most of the people are still recovering from shocking data of steep plunged in Industrial Production Index data by looking at Jan and Feb '09. I can tell you it was indeed extremely scary if you are industrial sector. May be the pro can access to March and April 2009 data but based on my personal observations, it is getting a lot better right into May 2009.



If you look at this chart, up to 2001, you will find that East Asia economies tend to bottom out before OECD. However the pattern start to change after 2003, East Asia economies tend to bottom out later and peak later, as the chart suggest, BRIC was lending the support(decoupling). Looking at the chart, we are probably will go back to recoupling for a while after went through the shock last year. With BRIC recovering, it will get the global economy moving again.



Interestingly, China and Euro are showing signs of turning around.



May be people are getting nervous that stock markets are correcting thus feeling less confident again. If the stock markets were to correct by another 5 - 10 %, my view will remain unchanged. The US stock market is in the bottoming process and some market like Hong Kong already has begun to climb the wall of worries(speculative wave) now.

.......... to be continued.