Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Global Business Cycle Bottoms But Economic Recovery Remains Mixed

Economics / Economic Recovery Feb 12, 2010 - 03:10 AM GMT

By: Donald_W_Dony


Best Financial Markets Analysis ArticleGlobal data continues to reinforce the idea that the world business cycle has bottomed and that growth is starting to advance. Economic numbers stress that after six quarters of steady contraction, a floor appears to have formed in mid-2009. Most global economies have felt expansion for the last six months. But this increase is not well divided. Domestic developed nations have emerged from the depths at a considerably slower pace than many Asian nations. The USA has been dwarfed by the new Asian economies of China and India. This trend, going into 2010 and 2011, will likely reshape the trading patterns of the world from west to east.

The United States (Chart 1) still remains the largest economy in the world and represents about 23% of the total. Expansion of its gross domestic product (GDP) was at a mire 0.10% during the last quarter. This meager results, however, did pull the economy into the plus numbers for the first time in over a year. With inflation adjusted to 2.6%, the likelihood of growth above 1.0% in Q1 seems promising. Unemployment numbers appear to have peaked. The slow and bumpy road to recovery is beginning.

A similar picture is unfolding for America's principal trading partner. After seven quarters of contraction, Canada's economic bottomed with the rest of the world in mid-2009 (Chart 2). Now with two quarters of steady growth under its belt (4th GDP numbers show 1.2%), current data points to a continued recovery in 2010. Canada represents just 2.26% of the world's economy.

In the other block of developed nations (Eurozone), the economic data persistently displays weakness. Though the bottom in GDP contraction developed in mid-2009, the road upward has been extremely painful and slow. 3rd and 4th quarter numbers are still in the red (-4.0% and -3.1%) and debt concerns with many members weighs heavily and remains disruptive to future growth.

In contrast to the often sluggish return to positive expansion for development nations, Asian economies are setting the bar very high. China's economy (now number two ahead of Japan) suffered eight quarters of contraction (Chart 3) but bottomed ahead of the global average and has printed three quarters of robust growth. GDP numbers show a return to double-digits. First quarter estimates are equally as high.

As the world's biggest democracy, India's progressive growth has been equally impressive with China. After only four quarters of financial slowdown, this economy has rebounded sharply (Chart 4). Expansion for the third quarter was 7.9% and 5.7% for the fourth. The outlook for the rest of 2010 seems equally strong and bright. The average posted growth rate since 1997 for India has been an impressive 7%, well above the world norm.

Bottom line: Latest data continues to support the picture of a world economy that has reached a floor and starting to expand. Renewed growth appears to be established with most economies now displaying positive numbers. Domestic and developed nations, which once ruled the domain of growth have sifted into second place behind the higher GDP nations of China and India. These patterns do not short-term. They can be expected to persist into this new business cycle.

Investment approach: Strong top performing economies normally have the best performing stock indexes. The once dominant S&P 500 has remained in a bear market for the past decade. GDP growth for the USA has been pinned under 3% whereas emerging nations have doubled or tripled those numbers. Investors can capture the expected growth of Asian stock markets through exchange traded funds. Suggested ETFs in CDN are Claymore's BRIC (CBQ), iShares China Index Fund-XCH, iShares S&P India Index Fund-XID. In US$, FTSE China-FXI and iPath India-INP are noteworthy.

More research can be found in the February newsletter. Go to and click on member login for the full report.

Your comments are always welcomed.

By Donald W. Dony, FCSI, MFTA

COPYRIGHT © 2010 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present.  He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.   

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms.  He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

Donald W. Dony Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules