Don’t Look Now, But We’ve Avoided a Global Depression (So Far)

We can say one definite thing about the human brain: the inertia can distort reality.

This morning we’re watching the apocalyptic bears get slaughtered (again) as key economic data continues to improve from the nadir of the economic crisis. Here are the headlines:

  • Germany and France helped EuroZone manufacturing hit a four month high.
  • UK Manufacturing PMI hit a 16 year high.
  • US ADP jobs came in up 93,000 versus 70,000 expected by Wall Street.
  • Cyber Monday sales topped $1 billion for the first time ever.
  • US Productivity is on the rise.

Obviously, this does not mean the world has eradicated deep problems like the sovereign debt crisis, the US unemployment situation, or the sketchy regulations for finance. However, as Barry Ritholtz noted in an excellent article, it’s time for the zombie bears to admit the recession is over:

After the flood, I started looking for the silver lining. We already had a massive crisis and collapse, so the worst of what came before was already reflected in equity prices and trader psychology.

Even after all this, these reflexive Bears refuse to flip. They will not admit the economy is getting better, albeit slowly. They insist the recession was a depression; they insist it never ended. These are the bears who cannot be killed. They will stay bearish, regardless of the data that all but insists otherwise.

In June, Derek and I were the first on YahooFinance Tech Ticker to say the bears were getting mired in their inability to recognize the economy is cyclical. We offered up our 6 Reasons Markets Won’t Crash. Let’s grade our list:

  1. BP (BP) will not tank the economy. Check.
  2. The Fed will dump liquidity into the economy for the foreseeable future. Check.
  3. The mid-term elections would make investors feel better. Check.
  4. CEO confidence will remain higher than the depth of the economic crisis. Check.
  5. Technology (QQQQ) would continue to drive innovation. Check.
  6. The consumer is not dead. Check.

Unlike bears who only see the bad, we see a Mixed Bag theme. So long as bears fight all positive developments, they will kindle more moves to the upside. We may one day have a depression, but it’s clearly not now.

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