David Tice Sees Double-Dip Recession Ahead, Watch Out (Video 7/30)

David Tice, Federated Investor's chief portfolio strategist for "bear markets" (his Prudent Bear Fund got bought out), was on Bloomberg TV on July 30 and believes a double dip recession is "in the cards". The Prudent Bear Fund hedges long exposure by shorting stocks. BEARX is back at summer 2008 levels, pre-financial crisis. The 50 day moving average is at 5.34 and the 200 day is at 5.36, so a long term directional decision is near for this mutual fund (trend reversal vs. continuation). Here's a summary of what D. Tice said plus chart.

Regarding U.S. Q2 GDP at 2.4% annual rate:
  • 1.4% was build up in inventory, without that it was 1%
  • 4.4% increase in Government spending
  • Residential construction was up 28% due to tax credits
  • Flat without those two factors, massive stimulus
  • Corporations are doing well because they cut back labor
  • Labor as a percentage of sales is at record low levels
  • Financial companies generating aggregate growth in corporate profits (mark-to-market suspension helped)
  • Indicators are worse: consumer confidence, retail sales, housing still at depressed levels
  • On fiscal stimulus: Economy needs to take the pain; Warren Harding cut spending/taxes back in 1920-1921 depression and got out quickly since we let economy take the pain
  • De-leveraging in private sector will continue as leverage bubble from 1982 ends, offset by public sector leveraging (sovereign debt crisis....)

See more posts on David Tice. Also, Michael Pento sees a sovereign debt crisis 3 years away and as of June, a double-dip recession. These views counteract the non-double-dip majority.