Greater Recession Coming??

[billy backstay]

This caught my eye, and I wonder if it's BS, or prescient foresight?

EDIT - In '84 we had double digit interest rates, and the world did not end. Lots of sellers simply held the mortgages when they sold their homes or rentals, no big deal.

Brace for 'violent' shocks that may reshape the global economy forever, warns top economist Mohamed El-Erian

www.msn.com

 

[Swimsailor]

If you warn about a recession long enough at some point you'll be right.

 

[billy backstay]

If you warn about a recession long enough at some point you'll be right.

So far this chicken little is the only so-called "expert" who says the sky is falling?

 

[Swimsailor]

So far this chicken little is the only so-called "expert" who says the sky is falling?

He's not. Which is kind of my point. Just last week I read "major recession coming in the next 2 years". So that means in 2 years economic conditions will be the same as they are now. It's like trying to link puffs on a race course based on the boats a mile ahead of you.

 

[Fakenews]

I watch him on CNBC. He’s a smart guy and he’s very good at explaining what happened and why but he’s not so successful a talking about the future. It’s not exactly a secret that keys to success are “optionality and nimbleness“. He doesn‘t do a good job in imagining the future and and certainly doesn’t provide investment insight on a micro level. He’s good to listen to as background info on markets and the economy but not much else imo.

 

[BeSafe]

Every macro investor fund from Oppenheimer to Goldman to Uncle Bob who watches youtube is predicting a 1H recession in 2023. Its going to happen because it HAS to happen. Every Fed tightening cycle ends in recession because the tightening cycle doesn't end until the recession happens... that's HOW they know when to stop. Its always trailing because they're acting on data expos facto. The fed funds rate follows the 2-year T-bill which is the bond market's expression of how much risk THEY are willing to accept to tie up money for various blocks of time. And right now, they're at 4.5%. The 10-year T-Bill tells you what the bond market thinks the relative inflation rate will be over time (and then they double it for safety) and they're betting on 3.7% right now (meaning they're betting on ~2% over time). That inversion, by definition, means the markets expect and are pricing in the downturn.

"Violent", in his context, doesn't necessarily mean bad - it means wild swings on a relative basis. The VIX is going to go nuts. Again, this isn't a hugely controversial statement. There will be wild swings on Dec 14th, for example, because the futures markets are already winding up for it - if the fed does 75 basis, it'll be down 500 points and if they do 50 basis it'll be up 500 points. That's not Nostradamus - that's just the math behind the coiled spring of the futures market. As it gets closer, some of that may unwind - just depends on the institutional traders and their hedges. The computers do their trades based on headlines faster than humans can hope to respond. That part is all pre-programmed.

Europe is in recession. German industrial fuel consumption - energy going into making things - took the largest drop in history over the last few months. That's because THEIR markets - primarily southern Europe and SE Asia, are feeling the bite of energy and food costs and if they don't have as much money to buy exported goods, then there's no reason to build them. That's one of the US large trading partners and so the US will feel that bite as well.

So yes, there will be a recession. In the US, it's liable to be pretty mild and very irregular. If you're one of the 60+ million that are food insecure, it's going to suck rocks. If you're an affluent boat owner with rental properties, its going to be barely an inconvenience. "Greater" is in the eyes of the sufferer.

 

[billy backstay]

He's not. Which is kind of my point. Just last week I read "major recession coming in the next 2 years". So that means in 2 years economic conditions will be the same as they are now. It's like trying to link puffs on a race course based on the boats a mile ahead of you.

Great analogy, I will definitely borrow that one!! So, who else is portending doom? I must have missed it.

 

[billy backstay]

Every macro investor fund from Oppenheimer to Goldman to Uncle Bob who watches youtube is predicting a 1H recession in 2023. Its going to happen because it HAS to happen. Every Fed tightening cycle ends in recession because the tightening cycle doesn't end until the recession happens... that's HOW they know when to stop. Its always trailing because they're acting on data expos facto. The fed funds rate follows the 2-year T-bill which is the bond market's expression of how much risk THEY are willing to accept to tie up money for various blocks of time. And right now, they're at 4.5%. The 10-year T-Bill tells you what the bond market thinks the relative inflation rate will be over time (and then they double it for safety) and they're betting on 3.7% right now (meaning they're betting on ~2% over time). That inversion, by definition, means the markets expect and are pricing in the downturn.

"Violent", in his context, doesn't necessarily mean bad - it means wild swings on a relative basis. The VIX is going to go nuts. Again, this isn't a hugely controversial statement. There will be wild swings on Dec 14th, for example, because the futures markets are already winding up for it - if the fed does 75 basis, it'll be down 500 points and if they do 50 basis it'll be up 500 points. That's not Nostradamus - that's just the math behind the coiled spring of the futures market. As it gets closer, some of that may unwind - just depends on the institutional traders and their hedges. The computers do their trades based on headlines faster than humans can hope to respond. That part is all pre-programmed.

Europe is in recession. German industrial fuel consumption - energy going into making things - took the largest drop in history over the last few months. That's because THEIR markets - primarily southern Europe and SE Asia, are feeling the bite of energy and food costs and if they don't have as much money to buy exported goods, then there's no reason to build them. That's one of the US large trading partners and so the US will feel that bite as well.

So yes, there will be a recession. In the US, it's liable to be pretty mild and very irregular. If you're one of the 60+ million that are food insecure, it's going to suck rocks. If you're an affluent boat owner with rental properties, its going to be barely an inconvenience. "Greater" is in the eyes of the sufferer.

Thanks for that, helps my pea brain to groc!!

 

[slug zitski]

The only way to reduce inflation is to reduce economic activity

unemployment will soon be 6 percent

 

[Fakenews]

Great analogy, I will definitely borrow that one!! So, who else is portending doom? I must have missed it.

The most popular doom caster is well Dr. Doom.

Nouriel Roubini, "Dr. Doom," Expects a Severe, Long and Ugly Recession - Bloomberg By Investing.com

Nouriel Roubini, "Dr. Doom," Expects a Severe, Long and Ugly Recession - Bloomberg

www.investing.com

 

[jerseyguy]

If you warn about a recession long enough at some point you'll be right.

The economist Paul Samuelson once said that the stock market picked 9 of the last 5 recessions.

 

[billy backstay]

The economist Paul Samuelson once said that the stock market picked 9 of the last 5 recessions.

I finally took a flyer on the stock market which I never do! Relatively small amount of IRA I can't touch for 6 years, and moved it from cash to a Fidelity Health companies Mutual that has been averaging over 10% for 10 years, so what could possibly go wrong?

 

[Olsonist]

Real estate prices seem to be falling while inflation is at 7.7%. There's the Ukraine war. China has 99 problems but not the Taiwan war. People have been predicting this recession for quite some time. One of these days they'll get it right.

 

[Swimsailor]

The only way to reduce inflation is to reduce economic activity

unemployment will soon be 6 percent

I agree with your first point. Currently however, higher prices have failed to reduce demand. Consumer spending is up even when adjusted for inflation. Gasoline demand continues to be strong, proving Americans really don't mind spending $100 to fill up their tanks. Sure, anecdotally Americans have cut back, but not according to the data. Politicians uses the anecdotes to scare people however.

As far as 6% unemployment, if that's your dire prediction, historically, that isn't that bad.

 

[boomer]

Look up inverted yield curve in the Bond Market. 98% of the time an inverted yield curve predicts a coming recession. We just had an inverted yield curve two months ago, predictably a recession will follow in 18-24 months. It happened under Trump in 2018, and he got a double whammy - the predicted recession, and the COVID recession, plus self induced economy woe's because of his economy busting tariffs - when you hurt your primary trade partner/s, you disastrously hurt your own trade - every economist worth there salt, knows this. Trump's head economist, Gary Cohn, told Trump this and said if Trump enacted tariffs he'd resign - he resigned. The following yearly trade deficits, were record setting or rather record busting - and farmer suicides went up like a rocket.

A recession would be a good thing right now, giving us a correction in the markets, of course causing Americans to tighten their belts, but we general come out of a recession in a year and half a stronger of more viable economy.

My biggest worry was the Repugs causing internal strife in this country. However Americans vote answers that worry - they want a democracy, they believe in our constitution - as we see the momentous shift of the pendulum gaining momentum as it swings back.

Inverted Yield Curve: Definition, What It Can Tell Investors, and Examples

 

[slug zitski]

I agree with your first point. Currently however, higher prices have failed to reduce demand. Consumer spending is up even when adjusted for inflation. Gasoline demand continues to be strong, proving Americans really don't mind spending $100 to fill up their tanks. Sure, anecdotally Americans have cut back, but not according to the data. Politicians uses the anecdotes to scare people however.

As far as 6% unemployment, if that's your dire prediction, historically, that isn't that bad.

Americans and states have great piles of unspent stimulus money

 

[Gouvernail]

The market will crash whenever another Republican manages to get to the White House.
If we can keep them out, our investments should be safe

 

[Swimsailor]

Americans and states have great piles of unspent stimulus money

States do but if you think $1200 is piles of unspent money you're a bigger idiot than I thought. That money was spent long ago....

Americans’ personal savings have fallen off a cliff. Brace yourself for just how much they have declined.

Financial advisers offer their top tips for boosting savings as economic uncertainty increases.

www.marketwatch.com

Household debt soars at fastest pace in 15 years as credit card use surges, Fed report says

Households increased debt during the third quarter at the fastest pace in 15 years due to hefty increases in credit card usage and mortgage balances.

www.cnbc.com

Here I was giving you the benefit of the doubt for once then you go full Joker/Dog on us.

 

[Steam Flyer]

Americans and states have great piles of unspent stimulus money

States do but if you think $1200 is piles of unspent money you're a bigger idiot than I thought. That money was spent long ago.... ...

Here I was giving you the benefit of the doubt for once then you go full Joker/Dog on us.

Sluggo proved himself a loyal cheerleader for Team Fascist long ago. He'll repeat any lie that might help The Cause. He's got a man-crush on Putin, too.

 

[slug zitski]

Consumer bank deposits greater than before pandemic

Bank of America

Bloomberg - Are you a robot?