Double Dip Recession on the Way?

The Double Dippers got a shot of B12 last week right into the puffed out vein in their foreheads.

Even the bulls gotta admit, their case has begun to look better based on this week’s nasty surprise on consumer delinquencies from Capital One ($COF) as well as the continuing jobless claims number.

Charts and Coffee is reminding us that:

• The IBD 100 has fallen about 3.5% since the beginning of the year and is trading below its 50-day moving average.

• Half the 100 stocks in the IBD 100 Index are under their 50-day moving averages (as of Friday).

Elsewhere, Morgan Stanley’s Stephen Roach was talking double dip with Marc Faber on CNBC, The Pragmatic Capitalist has the video here.

The most comprehensive summation of the bearish economic case can be found on the Dow Jones Market Talk blog via Paul Vigna‘s discussion about how in the early 30′s, they thought the worst was over too.  Vigna quotes a recent McKinsey piece on deleveraging:

“Deleveraging episodes are painful, lasting six to seven years on average and reducing the ratio of debt to GDP by 25 percent.  GDP typically contracts during the first several years and then recovers. If history is a guide, many years of debt reduction are expected in specific sectors of some of the world’s largest economies, and this process will exert a significant drag on GDP growth.”

We’ll see if tomorrow is another Merger/ Mutual Fund Monday or if there will be a continuation of last week’s 400 point Dow sell-off.

Oh yeah, I should mention that the Bank of China just got clearance for a 20% secondary sale of common stock, equating to roughly $30 billion worth at today’s valuations. CORRECTED: 40 Billion Yuan worth (roughly $6 billion USD) – thx to Patty Edwards.  Yuck.