Hearing from a lot of bankers that the next recession is imminent. Pets.com from dot-com burst. Lehman from subprime crisis. Who's next?
Valuations of tech companies are just absolutely insane. Some are more justified than others, take it as you will. Due for a correction.
Pundits have been saying that since 2010. But the reality is that stock valuations are largely driven by demand and supply for stock. This in turn is largely caused by PR and products' "consumer drool effect." So as long as US tech products (and Teslas) remain globally considered "cool" and the major public companies remain profitable (as is almost guaranteed since they are all oligopolies or monopolies), tech stocks will safely remain irrationally valued, and won't directly cause recession. However, they could drop if there is a liquidity panic caused by other factors.
Agree, though. Growth stocks are trading at P/B values on part with the late 90s. They tend to be more tech companies. They will likely get crushed because they have much further to fall than retail, financials, and energy. Value companies are trading in line with long term valuations and could remain steady. During the tech busy, growth companies returned -30% while value returned +20% in a single year.
Elective gig-economy products, such as food delivery
Not banking. Banking was last recession so it’s anything but
Why? Subprime is back in full force and deregulation is happening.
Deregulation my ass. It’s been over regulated then a tiny bit of relief comes by. The amount of regulation is astonishing. Everything’s being watched. Banks de risked. I don’t see how anything similar to last recession may unfold under current conditions. The system is ready to withstand huge strains
Why not auto—as in electric vehicles taking over and vertical integration model like how Tesla try to copy apple’s own ecosystem. It might actually help Uber and ride sharing if robots drive most of them. This is due to cheaper overhead cost. It’s the way of the future.
How do you define taking over? It’s anything but takeover so far.
I meant it in the same way the IPod and IPhone has dominate part of the cell market—it is more than hardware but it enlist a generation of people into their other products like the App Store download. It’s the software that’s banking. Tesla is adopting the same model—they have their own lean manufacturing infrastructure that allows buyers to order online—then their own service warranty plan, their own battery. Notice there is no car dealerships and middleman. But everybody is focusing on the car (hardware) when there’s so much opportunity to develop apps and software products for the car. That doesn’t mean either/or—I am planning to buy a Tesla but I also will occasionally take Uber or ride share. Users can do both.
Why shared? That'll most likely grow as people participate more as drivers and those who did have vehicles can't afford them any longer
Market on millennial and gen z preferences show more favor towards sharing econ. We don’t like owning stuff—weirdly bc of clustering in high density cities make it impractical to own a car. I speak from experience living in DC metropolitan. It’s the “experience” that counts—u can bet millions are pouring into ad campaigns to grab our attention and wallets.
Right but doesn't that benefit shared riding?
Tech jobs, specifically in the research / experimental area.
Subprime auto loan market. Check out the credit scores of some of those loans. LTV ratios up to 135%... Sound familiar?
Yep some bad apples in this space
The sheer 5x between average car vs house price makes it much less of a threat. Will be surprising to see subprime auto loan repeat what happened in 2008.
Auto and real estate. Banking won't cause they are already preparing themselves, but doesn't mean there won't be layoffs.
Why real estate?
How do you expect people to pay for such inflated prices? Younger folks already prefer to lease than buy
I voted "Other." US corporate debt is off the charts, currently at an all time high relative to GDP (and in absolute terms). Corporate debt default rates are highest in the oil & gas and retail sectors. NOTE: this will only result in a recession if corporate debt interest rates are incorrectly priced or there is a sudden surge in defaults. Like the 2007 real estate crisis, the impact would ripple to financial institutions, causing some of them to fail (especially those with substantial corporate debt holdings). Then there would be less liquidity to fund corporate debt, resulting in layoffs and stock drops etc. Source: https://www.forbes.com/sites/mayrarodriguezvalladares/2019/07/25/u-s-corporate-debt-continues-to-rise-as-do-problem-leveraged-loans/#37f2ee5f3596 If I had to vote for one of the named options in the poll, it would be real estate. The US median home price to median income ratio is nearing an all time high, although current projections show that it would take at least 2 years to reach its 2005 peak, meaning that if it causes the next recession, that won't happen for another ~4 years. Even then, there would need to be a miscalculation of mortgage interest rates and/or a spike in mortgage defaults to spark the next recession. High default rates are fine if banks calculate interest rates correctly.
The economy is so interconnected that most things get hurt in a downturn. People will still prefer taking Ubers over taking taxis or public transit or not going out. Real estate will be hit hard in areas that don’t have a lot of jobs as people will chose a more affordable home rather than a mansion.