What are some of the signs in terms of economics / financial markets that you think are giving us indications that another recession will come?
Also in what time frame?
What are some of the signs in terms of economics / financial markets that you think are giving us indications that another recession will come?
- Nice bumper sticker slogan. Too bad no republican administration or GOP congressional majority since the 70s has ever managed to not spend like drunken sailors. They cut taxes, spent like crazy, and get into conflicts. Rinse and repeat. Leave such a crater in the deficits that when Democrats take over, they can then magically act like conservatives and hyperventilate about deficits and obstruct needed tax hikes and protest how government doesn’t work. It’s the Jude Wanniski strategy. Been followed religiously since Reagan.
By your definition I’m a conservative, but I wouldn’t touch the GOP with a 10 foot pole right now. It’s a party of phony conservatives.Jun 19 5
- Yeah well you can’t caricature every conservative with the same brush. There are several libertarians who support GOP due to lack of choice and the luny left. Spending on walls and infrastructure and wars should be free of government too. Let those who want a wall contribute funds to a designated set of reputable builders to go build that wall. And infrastructure. Pay to use infrastructure instead of taxes to the scum government. I’d much rather pay the company that builds roads through something like fastrak rather than give a penny to the idiots in Washington to burn.
- So you’re saying you want to privatize infrastructure? Gee...imagine how that could go wrong.
I think we’re being a bit delusional to expect low taxes and great infrastructure at the same time. But I get the frustration with government pissing away our money. But the solution isn’t privatization.Jun 20 2
- ^ it is. All the problems with privatization come from cronyism with government. Every single one. The big corps get involved with politics and sell the resulting regulation mess to the masses as a good fix (while in turn guaranteeing their monopoly position in carefully carved out market). As an example True privatization and limited handicapped government would mean NO bail out money to banks after 2008, survival of fitter banks carrying gold or currency reserves, big banks losing credibility and going bust (and the people who backed them losing out too). The entire ”too big to fail” narrative was nothing but a marketing campaign to instigate fear into the masses and sell the concept of a government bailout to top banks. In a true meritocratic capitalism, you don’t get bail out. You lose and go out of business while a better business takes over your customers. Enforcing THAT should be the role of government. Not collecting increasingly more taxes and running bureaucracy in every part of the economy.
https://youtu.be/nFe9N0BX8mMJun 21 2
- Yeah. Bear and Stern's is no more. So is Lehman Brothers. We needed a few more Banks to fail at that time. We would not have been in an over leveraged situation that we are in today if more banks were allowed to die. Wells Fargo had more scandals after 2008. I'm sure that right now Banks have even more skeletons in their closet after having contributed to record corporate debt. Who is going to bail them out now? Hopefully not my tax dollars.Jun 21 2
- EVIO Labs / Other anon1212more@opc123 great post. My thoughts exactly student and healthcare debt is driving the wedge between have and have nots. And yes, US has been spending decades protecting fossil fuel interests. When 20-30 years from now that will lose all relevance. It ties into the global warming argument too. I humans find a way to correct imbalances even if it takes a long time. We’ve begun reforesting Europe, we reversed ozone depletion, we corrected the industrial revolution smog, we cleaned up polluted rivers, and I think we will slow global warming.
That said, the US as superpower will also go away. As a nation we’ve gotten complacent. While we still have great entrepreneurs, Asia will dominate the next century. I saw that clearly at the Beijing olympics opening ceremony. They are a force of population and driveJun 23 2
- New / IT OPC123moreFrom the Trump thread since it was such a cluster...
The next recession is on the way and deliverable in two major markets: oil and gas industries and the various overpriced industries Americans subscribe to (education, Healthcare being the big ones)
Oil and gas: the Chinese government has for many decades, been focusing its efforts toward ensuring control of the African continent and other regions with high levels of rare earth minerals mines (lithium, nickel, cadmium, etc) while the US Military Industrial Complex, lacking vision, has placed all its bets on oil and gas...
China, now in control of nearly 100% of the supply chain and 100% of the manufacturing of lithium batteries for its own fleets is converting at a VERY low cost and high rate to battery powered vehicles to reduce both emissions and dependence on foreign oil. By 2020 they will no long import any US Oil and only a small amount from Russia and opec. (with no fear of pressure)
As this demand is decreased the American oil and gas companies are going to fill the pinch fastest and hardest. Our gas prices are going way down, way fast but it's going to shock many refineries into closing.. Oil and gas will become impossible to be a sustainable living. (and i know that sounds crazy, but these cycles happen frequently in the industry, just not to this scale).
The cost of education and health care is just eventually going to break so many of us that it causes mini recessions and if we don't repair it now we're fkd.
Long story short: we've invested in the wrong wars. We killed the wrong brown people for the wrong crap in the ground and the other empire got it right so the game is probably over because we will be reliant now upon China for so much of our needs that the position of rattling the cage won't be an option whatsoever.
And this recession is one that we can say is easily 75 years or more in the making.Jun 23 0
- @opc193 A lot of your observations are meaningful. It is true that China has been a lot more resourceful than the US and that the US squandered a lot of it's opportunities. The period from the collapse of the Soviet Union till about 2025 can be characterized as the time of true US global dominance. US could have really solidified it's long term future if it had recognized this position and the opportunity that comes with it. Fareed Zakaria has a nice summary of this stance: https://www.foreignaffairs.com/articles/2019-06-11/self-destruction-american-power
But I think that you are going too far in saying that the US will be reliant on China. US needs to reinvigorate it's tech industry and invest more in AI and related autonomous technologies that will help it compete with billions of people in the world. It cannot be dominant without that kind of non-linear technologies built into the economy. I believe that the US is woken up to the need for such a direction. It really depends on the execution going forward. That execution path includes a STEM focused education and rebuilding all the industries in a technology-focused way. Time will tell if that will really happen.Jun 24 1
- Inverted yield curve for a substantial time period actually causes the recession.
When the interest on a two year loan is higher than a ten year loan, less ten year loans are made which reduces investment and capex.
As these effects work their way through the economy, demand starts declining, eventually leading to a recession.
Is there a recession in the near future? Yes. Can anyone predict the timing with accuracy? No. Will people keep trying to predict? YesJun 17 9
- Wrong. Borrowers prefer free money 😀, who wouldn't?
But the borrowers don't decide the interest they pay, the lenders do. And why would you give a ten year loan when a two-year loan pays your more interest and there is less duration risk?
If your still disagree, would you be so kind as to lend me some money?
- Long term rates are closely following 10y treasuries, which is down, making longer term loans cheaper. There are plenty of willing lenders to lend at long term rates, as shown by ok strength of the housing market. Of course lenders need longer term rates to be higher for better NIM, but they don't stop lending, as long as they make money.
- Google come2daddyProblem of correct prediction is everyone knows and takes corrective actions. This delays the recession.
Recession is technically 2 back to back quarters of negative GDP growth. But this is post facto.
To predict , yield curve is one of the most consistent indicator. This is difference of rate of interest for short term vs long term borrowings.
Business Sentiment is another indicator. There are many institutions which run periodic sentiment check. This can predict recession before it happens.
Job market conditions. Every job market boom is followed by a recession. Once everyone is hired and hiring becomes costly/very hard, businesses start to shrink.
Apart from these, large banks and governments build recession models in an attempt to predict . Here is one example from New York fed: https://www.newyorkfed.org/medialibrary/media/research/capital_markets/Prob_Rec.pdf
If it was only up to the markets without government intervening, recession would have long come. But Fed bank cutting rates is delaying the inevitable.
- Snapchat snapper1No one knows. People who guess right make a shitload of money and don't tell anybody else
- Google __human__That's not completely true.
People who guess right have an incentive to tell after they're fully into their position, since sharing their reasoning could help the bubble deflate earlier and get their positioned closed sooner, and holding big shorts for a long time is expensive.Jun 17 23
- Google ugHc25I created a machine learning model using TensorFlow to predict such an event based on the last 50 years of stock market performance and financial data. Each time I run it it comes back with 403 (April 3?) It just won't tell me the year.
- Microsoft Robot2Agreed!
Low interest and corporate buy backs are still there. Once interest rates go up, the cooperations will start sell off, cut backs and lay offs will follow. So as long as the federal reserve plays ball, recession will be delayed.
Truthfully, this is not how capitalism should work. This is more of a socialist economy and was Obama Project...When government regulates markets.
- I think there's something to be said about the fact that Keynesian economics can sort of find a way for surplus production to be used and achieve gains through scale and stability. However it's a very dangerous tool since everyone has the short term incentive to just keep borrowing and printing money.
The fed kept QE and low rates too long, and the federal government used up all its budget for potential stimulus, so now our economy is highly unstable.Jun 17 5
- Reagans economy was also Keynesian. Spent an insane amount of money pumping up the Cold War machine, which was an economic stimulus.
It faded like many Keynesian efforts, with additional tax hikes and massive debt.
Keynesian works better when money is spent in areas that have a ROI, like world class infrastructure and education, or NASA. Don’t discount all the tech born out of the space race that led to lots of commercial innovation.
Governments are better ran like Amazon, specifically investing in growth, than short term tax cuts that fizzle out eventually and leave behind a boat load of debt.
Or just stay out of market manipulation entirely. But I’m sure no sane person wanted the feds to let the last recession just play itself out. We’d be fucked.Jun 17 8
- Micro Focus foolmeoneIf California remains part of the United States we will see a recession.
- I think we have been in uncharted territory for awhile. The fed is willing to use dramatic levers to manipulate the economy, historically low interest rates are the new norm, and there seems to be consensus that the national debt can grow much higher and no one cares. so it’s very hard to say what will happen in the next few years.
- Services are 70% of the economy. If you were to factor in all economic activity that has minimal linkage to China, it would probably be 85%+. The net effect of a China trade war is more expensive plastic shit, and consumption of that will simply fall and people will adapt more sustainable lifestyles. The trade war is not that big of a deal for us, and it may even be a good thing for the environment.
- The problem is the economy is very sensitive to rate increases since it's so leveraged from loose monetary policy, and the inflation rate without a rate increase is already at 2% target. 0.5%-1% is the projection for inflation for 25% tariffs on all Chinese goods, that could make the fed finally push us over the edge.
By the way, there is a big services surplus to China.
- Tariff driven inflation is a one time hit and then diminishes as supply chains adjust, so I think the Fed would take that into account. It will be interesting to see if The wealthy Chinese stop visiting and sending their kids to school here. Probably will be impacted to a degree, but doesn’t seem likely to stop unless tensions really ratchet up.
- Chinese tourism and students are decreasing, but I think that has a much more localized impact (namely on universities and big city retail).
I'm not sure how the fed thinks about these things. The research reports I read suggest the full tariff impact will continue for over a year. So if inflation is slightly higher than the target for a few quarters, it's possible the fed won't do anything.
What's certain is that corporate earnings are going to tank. I'm short stocks, and I hope I made the right call. The tariffs don't have enough impact on the Chinese economy either to force a deal, so I think escalation is inevitable.
- I've heard many people say over the years that raised rates will trigger a recession because too many companies have bad debt and are dependent on cheap financing.
There's a clear catalyst for higher rates now, which is the trade war, as it can speed up inflation substantially.
- Shorting in this environment is high risk due to geopolitical climate. Economic slowdown is a slow process and yet markets will have a fomo rally if trade issues are resolved.
Personally im long as i think the election will force trump to get a deal done so that he can start polling better. This is coupled with the feds cutting rates which delays the slowdown due to global trade reduction.
- The last one was caused by high interest rates on mortgage backed securities. The next will be caused by high interest rates on credit card backed securities. So when you see a hike in interest rates on bonds, and other packaged securities, that is a red flag. It is so luring to investors. Don’t buy mortgage backed, credit card backed or any form of packaged securities. Save your money in the bank and make low interest instead of pursuing high interest securities. TMoney has a 4% interest rate on your check account . At least they are a FDIC bank, I’d rather make the 4% interest than risk it on clumsy securities
- Apple public2.These are good investments for emergency account not for the bulk of your actual long term investing. There are other safer investments such as mutual funds and indexes that has much higher rates. Sure, eventually the market always goes down and no one can predict it but it always goes up too, so just continue playing the game until you need the money.
- Tableau pvDk82Orion makes you do deposits and use the card 8 times per month. That's obnoxious, what if I travel abroad use it only 7 times? Do you lose status for a year? I'd gladly take 3% and no bullshit, just take my money and go make more money like every other bank. Synchrony does this but only at 2.4%
- The real question is what does the fed do when the recession hits? Going back to quantitative easing or 0 interest won't solve the problem as them doing that caused this problem. So you'll have inflation building up from all the spending in the last decade + recession = stagflation.
- I think sort of, the dollar can crash and still be widely used as a medium of international exchange, but investors in US debt will get burned very badly, and future growth will be dead for many years since investment will slow. Especially with the political situation.
- The debt servicing capacity of the US government is a constant percentage of the economy. Inflation gets rid of the current outstanding debt in exchange for more debt later in real terms. The current deficit and national debt are wildly unsustainable, it will take quite a big drop in the dollar to fix. Certainly double digit percentages.
- Printing money does not couse inflation by itself. Try to deeply understand M*v=P*Q. Just pumping up M (monetary base) will not cause increase in P price (or Q neither) if velocity slows down. What we experienced during this brilliant QT move is that the super extra big surplus in M highly differentiated places (sectors, regions etc) with high Q (economical throughput) and low Q where the v (velocity of money exchange) was already quite high, thus it created a significant price pressure (and you can choose your poision from the dry startup investment to the nba teams through real-estate or simple cleaning services) everywhere else the v went down, and they experience some economical growth but it is supressed compared to the overall cost or investment from the fed. This feeds the huge acquisition trends, startup beanbag culture, etc... And just think about how insane is that the fed prints out the money thay eventually pumps up real estate prices through a chineese investor in paris in an environment where yields are lower than amortization (so the properties are empty), or there are countries who went bankrupt 6 times in the last 50 years and their 8-9% bonds are auctioned with 100% success...crazy times we live in.
- fyi fed is just opening for rate cut today. this bull could drag on even longer.
with all the debts and deficit the next crash could be really bad.
- The fed messed up a bit but average people don’t understand so it’s possible we get a rally on lower interest rates. The market could go up to stupid levels enticing you lot to stay in and/or go in bigger. This speculative rally will end badly as they all do. I think the data on inverted yield curves is 70% of the time recession follows... but 18 months on average post the inversion. Check out the dot com bubble for example... market exploded after the yield curve inverted but we know what happened later.
Regardless, the fed got hawkish and with QT and slowly raising rates to historically weak levels still we saw how quick things started to puke. Now they know so they ended QT and are backing off rates but smart money sees where we are at now.
Trade wars are a side show. All that really matters is the fed.
- I fully agree. They overpumped the monetary base. Throuput weighted inflation measures please, and it would be obvious in their brilliant inflation targeting framework. Now they desperatley try to find a way to get rid of the access, and they fail miserably as the modern money making mechanism that assumes that the trees grows to the sky and it does not have good recipie to remove the access. As it will try to survive it may do immense damage.
- the fed DID NOT "mess up". I hear these people talking like that and it drives me crazy. The fed behaves like Dr. Frankenstein, trying to keep the economy alive FAR LONGER than it should when the death of a natural economic cycle is long overdue. Think of the economy like a woman's period. If you try to deny it with super absorbent tampons, the woman goes into toxic shock and sometimes dies (1929). This is how the fed is trying to manage the economy right now - with super absorbent interest rates. It's natural to have a sharp recession every 3-4 years. When a heart beats regularly (not fractally, which is its normal behavior) for 3 months chance of death is 400%. Well, the fed is trying to make the economy beat regularly for 10 years, chance of economic death is now 400%.
- Capital One 94xzFYI, we have financial analysts working to predict these things at C1. They have been predicting a recession for years based off of similar indicators from previous recessions (defaulting on loans for example). After hearing about the said looming recession for years, my guess is they don’t know any better than most folks. So no one really knows.
- New WaVi51Flat to inverse yield curve.
Fed doing 180 on interest hikes and now expecting rate cuts. ECB and Japan soon to follow.
10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity is near negative. When it returns back positive from negative territory, then recession for sure.
Unemployement is "too low" below "natural" 4%. Fed wants unemployment to rise. Labor is getting uppity over capital and can't have that.
Shiller PE ratio for the S&P 500 has been elevated for a long time at historical highs (100+years)
War preparations and excuses by deep stateS. China and Russia need tricks to stimulate the economy too
Feds own recession probabilities are near point of no return (>5 soon)
What they don't want you to know...is what's different this time.....4trillions of QE unwinding.
- The current unemployment ratio is Clinton Bullsh*t. I use the employment population ratio, 25-54 (you should be done with school and not retired in this age range), to prevent the white government scientists from excluding all those stubbornly unemployed minorities (Blacks, Hispanics) from the unemployment numbers. The employment population ratio is good (79%+), but not excellent. We are doing almost as well as 1989, 2000, 2008. Don't believe the headlines about unemployment because reporters don't have any financial sense and just repeat the government propaganda.
https://fred.stlouisfed.org/series/LNS12300060Jun 28 1
- Deloitte peblWe will have to watch out for Fed's monthly/ quarterly interest rate indicators - if we see it being reduced ...sure shot recession's around the corner. As this indicates growth tapering off and to spur monetary activity ( money circulation ) fed cuts rates. This is simple sign..but if your problem is unemployment or stagnating wages - you have a lot more to worry in this service driven economy friend
- Microsoft oroC00It is not primarily raising or cutting rated that affects post 2009 economy, which mostly was propelled by various forms of QE. It is so called “normalization” or withdrawal of direct stimulus that chokes markets which have been diverted from investment into real economy and went all into speculation, chasing short term returns. Recent market troubles started in 2015 when Fed stopped buying assets, while letting maturing debt expire, thus reducing their balance sheet and reducing money supply. Raising interest rates added even more pressure later, and the only reason markets went into overdrive post elections is because of Trump tax cuts leading to repatriation of capital. This capital went mostly into buybacks which kept stocks rising for a while. Now that tax cut impact is dwindling, further stimulus is needed for market and this is why fed is doing the cut again, as well as planning to start repurchasing expiring assets in the fall. This is all about keeping the markets stable until next election, nobody gives shit about economy or recessions. Real economy is dead until all toxic malinvestments have been cleared from the system and debt reduced. But right now as long as markets keep going up everyone is happy, so keep blowing the bubbles and BTFD
- Btw 100% of the time in history the fed cut rates with unemployment below 4% we’ve had a recession after
- This is a troll message, a normal economy has a recession every 3-4y, they used to be short and sweet but the Fed has been "Playing GOD with the economy" since 1990 and have made them all LONG AND HORRIBLE. Anyway, 100% of the time after interest rates reach 3%, reach 5%, reach 7%, we've had a recession is a useless statement, if you want to make an always true financial prediction, predict an event, or a time, but NEVER both.Jun 28 1
- New QFyl35Some metrics I haven’t seen mentioned. I like to watch order of durable goods orders Including and excluding huge things like airplane orders. I also like to watch business inventories. If businesses are ordering lots of durable goods then there is high confidence in business across most industries. If inventories are shrinking unintentionally then means demand was higher than expected. If inventories stack up unexpectedly then that is an sign of recession. It’s not a perfect metric though because sometimes companies stock up on inventory intentionally to prepare for higher demand. So you have to look at the context.
- 1. Slow down in earnings growth
2. Increased financing costs
3. Slowdown/downturn in business capital investment/inventory spending
4. Falling retail sales
5. Reduction in the number of open jobs
6. Rising unemployment rate/shrinking labor force
7. Falling home sales/rising price cuts on homes on sale
8. Auto/credit card default rates
- The top predictors of market crashes (not recessions) are:
10y - 2y treasuring spread going negative::
Some people use 10y - 3mo and here we graph recessions vs. spreads:
market breadth declining (new highs from fewer and fewer 'big' stocks)
Dow transportation indexes declining (also dry ships index)
Hindenburg omens (google it)
- 10 year bond yields going down,
Fed decreasing rates ,
Gold going up while oil prices going downhill,
Housing property prices still/ down
Important thing is.: There’s a recession for the unemployed now.
If you’re employed during a recession, you don’t have a problem you just have sth to worry until recession is over.
- ViaSat okeb30Probably more fun to guess what the biggest factor in the next big crash will be.
Outlandish IPOs in tech are probably up there.
Too much student loan debt could pile up as more indebted young people reach new milestones in life and find themselves poorer than their parents at the same age.
I hear auto loans are pretty nuts. But probably not a big enough component of debt to cause major harm.
Escalating trade war could be a factor, but I doubt it would be a prime cause.
- Amazon yurmomMany indicators are already here, and the economy would already be in recession if weren't for all the interventions like tax cuts and the fed cowing to trumps demands to not raise interest rates. The yield curve is inversed,global growth has slowed and we are teetering on deflation.
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- New / Consultant KwJU70Pension fund liabilities is 7 trillion dollars, that is close to 33% of GDP.