Market Talk

Double dip. The infamous Seinfeld phrase has taken on a whole new meaning when discussing the economy’s latest prospects.

The latest stock-market swoon has folks concerned that the recovering economy may now be “double-dipping” back into recession. It’s still too early to tell whether this is the case, but recent economic data point to the economy expanding at a much slower rate than previously anticipated.

Of course, a “double dip” may not be possible, considering the Great Recession still hasn’t officially come to an end, at least according to the National Bureau of Economic Research. Robert Hall, chairman of NBER’s economic dating cycle committee, sheds some light on declaring double dips, in an interview with the AP.

In Hall’s view, a double dip is akin to a continuous recession that’s punctuated by a period of growth, then followed by a further decline in the economy.

The NBER doesn’t define a double dip any more specifically than that, says Hall, an economics professor at Stanford University.

In econo-speak, Hall explains: “The idea — hypothetical because it has yet to happen — is that activity might rise for a period, but not far enough to complete a cycle, then fall again, and finally rise above its original level, only then completing the cycle.”

But that hasn’t stopped bloggers and economists from weighing in on the double-dip debate.

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Abbondanza!

Worries about Greece and additional evidence of a troubled labor market hampered stocks this morning. The Dow fell as much as 53, on the heels of yesterday’s 72-point decline, suggesting profit-taking was setting in after this recent run-up.

And just as quickly as we started to digest the declines, stocks reversed course and now sit comfortably in positive territory. Strong same-store sales as well as optimism about the beginning of earnings season are being cited for the turnaround.

Hmm, weren’t those catalysts present early this morning? And unless I’m missing something, Greece’s problems haven’t been solved in a few hours and the weak labor market is, well, still weak.

Perhaps investors are merely ignoring external factors, while following a specific playbook. Buying the morning dips as well as going all-in on Friday afternoons in anticipation of Monday rallies has been the recipe for success in recent months, the Pragmatic Capitalist points out. And that’s exactly what’s taking place today.

“Apparently, the stock market has turned into an easy game,” Pragmatic Capitalist says. “Whether that is comforting or the absolute most frightening thing in the world is beyond my realm of knowledge, but history has proven that when one strategy or mindset starts to dominate it always breaks down in horrific fashion.”

Dow reversed earlier losses and was recently up 50.

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Joshua Brown over at The Reformed Broker issues the call to arms:

There is absolutely no reason to believe that the government can lead us out of our current fiscal and monetary predicament, let alone restore the depth and diversity of the labor markets.  The only hope we truly have is that the innovation and determination Americans are famous for begins to emerge from the abandoned entrepreneurial class.

The men and women who, against all odds, start businesses and pursue new enterprises in this environment are the people who will be hiring and spending to take us out of it.  Finding solutions to problems in a profitable manner is how American entrepreneurs will win again.

This is what I was getting at when I said the only solutions were time and open markets, although I clumsily left out the most important ingredient: a spirited American citizenry. Brown does a much better job of getting at the heart of it:

The solutions to health care, disease prevention and control, pollution, border and port security and energy austerity will never originate in the bowels of the Capitol Hill bureaucracy.  Rather, they will come from visionary and nimble businesspeople who are given the space and capital to solve them.

There is a great deal of work to be done for the world to truly grow into the young new century, and there is no population I’d rather bet on to accomplish this work than the Americans.

That entrepreneurial spirit is desperately needed today. While our representatives in Washington and state houses across the nation dither, the nation falls deeper into disrepair and dysfunction. The NY Times’ Bob Herbert wrote from a conference in California that was focused on the state of the nation’s physical plant. If you’ve ever rode, for example, the Cross Bronx Expressway, you’ve got an idea where this one’s going.

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