Investment Line: Ice age bears say positive sell side is deceiving us

'One thing that will become clear as we go through the second half of this year and into 2011 is just how weak the underlying economic recovery has been. Real GDP growth of around 4% was hugely driven by the end of inventory liquidation and contrasts sharply with the paltry sub--2% rebound in final sales.

'Are we heading back into a recession? Well I certainly think so...check out the shockingly anemic cyclical recovery in nominal sales which is running below the pace normally seen at the depths of the recession, not in the buoyant early stages of recovery. No wonder we are seeing revenue warnings in this reporting round.

'This Ice Age descent into nominal deflation will become fully apparent as we move through the second half of this year and the cycle shows sharply.'