Gary Shilling Believes the Latest Rally is a "Head Fake"

By on May 19, 2009

Noted bear Gary Shilling, president of A. Gary Shilling & Co., says the recent improvement in economic activity was not a sign the worst has passed but a head fake that’s typical in most recessions. There have been positive quarters of GDP growth in 8 of 11 recessions since WW2, and the stock market rallied in sync, Shilling notes.

As for the current cycle, he says three trends have to emerge before it’ll be safe to declare the end of the downturn, despite the Fed’s efforts to flood the system with money:

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