The upcoming recession.

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Chilidog
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The upcoming recession.

#1

Post by Chilidog »

So the bond yield curve inverted.

Is the next economic crash upon us?
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Re: The upcoming recession.

#2

Post by maydijo »

If it is, we know who the White House will blame.

[spoil]Hint: Obama[/spoil]
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Chilidog
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Re: The upcoming recession.

#3

Post by Chilidog »

Chris Wallace, "The Dow lost 1100 points or 4.5%. The S&P 500 is now in the red for 2018. Question, how much of this is because of confusion over just what the U.S. and China have agreed to?"

Larry Kudlow, "I don't know. I will grant you that trade issues, China trade issues, haven't been all buttoned down yet."
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Re: The upcoming recession.

#4

Post by batguano »

How bad would an impeachment be for the economy?
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Re: The upcoming recession.

#5

Post by RoadScholar »

Who knows, it might actually help.
The bitterest truth is healthier than the sweetest lie.
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Re: The upcoming recession.

#6

Post by Whatever4 »

Market hates uncertainty. I bet impeachment = dive, conviction= rise
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Addie
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Re: The upcoming recession.

#7

Post by Addie »

The Guardian
IMF warns storm clouds are gathering for next financial crisis

David Lipton says world is unprepared for downturn and Fund needs more resources


The storm clouds of the next global financial crisis are gathering despite the world financial system being unprepared for the next downturn, the deputy head of the International Monetary Fund has warned.

David Lipton, the first deputy managing director of the IMF, said that “crisis prevention is incomplete” more than a decade on from the last meltdown in the global banking system.

“As we have put it, ‘fix the roof while the sun shines.’ But like many of you, I see storm clouds building, and fear the work on crisis prevention is incomplete.”

Lipton said individual nation states alone would lack the firepower to combat the next recession, while calling on governments to work together to tackle the issues that could spark another crash.

“We ought to be concerned about the potency of monetary policy,” he said of the ability of the US Federal Reserve and other central banks to cut interest rates to boost the economy in the event of another downturn, while also warning that high levels of government borrowing constrained their scope for cutting taxes and raising spending.
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Re: The upcoming recession.

#8

Post by ZekeB »

All I can say as an Old Retired Sage is: The faster it rises, the faster and harder it falls. Been there before, seen it before. Growth under President Obama was going along just fine and without inflation. This upcoming year is going to be very interesting.
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Chilidog
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Re: The upcoming recession.

#9

Post by Chilidog »

Interesting times.
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Re: The upcoming recession.

#10

Post by Addie »

CNBC
Yellen warns of another potential financial crisis: 'Gigantic holes in the system'

Former Federal Reserve Chair Janet Yellen told an audience in New York City Monday night that she fears there could be another financial crisis because banking regulators have seen their authority reduced to address panics and because of the current push to deregulate.

"I think things have improved, but then I think there are gigantic holes in the system," Yellen said in a discussion moderated by New York Times columnist Paul Krugman at CUNY. "The tools that are available to deal with emerging problems are not great in the United States."

Yellen cited leverage loans as an area of concern, something also mentioned by the current Fed leadership. She said regulators can only address such problems at individual banks not throughout the financial system. The former fed chair, now a scholar at the Brookings Institute, said there remains an agenda of unfinished regulation. "I'm not sure we're working on those things in the way we should, and then there remain holes, and then there's regulatory pushback. So I do worry that we could have another financial crisis.''

In the wake of the financial crisis, some agency regulatory powers were vastly expanded, but others, for example, the ability of the Fed to lend to an individual company in a crisis, were curtailed. Current Fed officials have pushed back against criticism that their reforms are making the system riskier, saying they making the system more efficient.
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Re: The upcoming recession.

#11

Post by kate520 »

Well of course there will be a recession. We just bought a new home, just like 2007. :swoon: :doh: :madguy:
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Re: The upcoming recession.

#12

Post by BigSkip »

Pretty much every day without a recession means you are a day closer to the next. Little chance we don't see one by 2020 as (imho) there is little chance everything can be balanced perfectly to avoid one. The bigger question will be how severity.
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Re: The upcoming recession.

#13

Post by RTH10260 »

BigSkip wrote: Thu Dec 13, 2018 12:39 am Pretty much every day without a recession means you are a day closer to the next. Little chance we don't see one by 2020 as (imho) there is little chance everything can be balanced perfectly to avoid one. The bigger question will be how severity.
Just in time for a Democrat administration to again move in for a rescue and recovery mission. :think:
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Re: The upcoming recession.

#14

Post by Addie »

Financial Times (pay wall)
US credit markets dry up as volatility rattles investors

US credit markets are grinding to a halt with fund managers refusing to bankroll buyouts and investors shunning high-yield bond sales as rising interest rates and market volatility weigh on sentiment.

Not a single company has borrowed money through the $1.2tn US high-yield corporate bond market this month. If that drought persists, it would be the first month since November 2008 that not a single high-yield bond priced in the market, according to data providers Informa and Dealogic.

In the leveraged loan market, two transactions were postponed last week after Barclays, Deutsche Bank, UBS and Wells Fargo failed to find buyers for the debt packages, a rarity in what has been one of the hottest corners of credit markets this year.

The deals could be the first of several transactions pulled from the market this year, bankers and investors said, as mutual funds and managers of collateralised loan obligations — one of the largest buyers of leveraged loans — wait out the uncertainty.
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Re: The upcoming recession.

#15

Post by Addie »

CNBC
Chance of recession rises to the highest level of the Trump presidency: CNBC Fed Survey

In a sharp change toward a darker outlook, respondents to the CNBC Fed Survey have boosted the chance of recession next year to the highest level of the Trump presidency, reduced their support for the president's handling of the economy and lowered their outlook for economic growth and Fed rate hikes — with some even flirting with the idea of a rate cut in 2019.

Still, many of the 43 respondents, who include economists, fund managers and strategists, also argued that the market has overdone it to the downside.

"The notion that downgraded growth prospects are driving the stock market sell-off is backwards," wrote Mike Englund, chief economist, Action Economics. "Stock price declines have driven the growth slowdown narrative, which thus far faces little confirming evidence from actual U.S. economic reports."

Still, the chance of recession in the next 12 months rose to 23 percent, the second straight increase, and up from 19 percent in the prior survey. That's higher than the 19 percent long run average for the 7-year-old survey and 9 points higher than the low of the Trump presidency.
Adding:
CNN: Alan Greenspan to investors: 'Run for cover'
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Re: The upcoming recession.

#16

Post by Addie »

WaPo
9 key countries are on the verge of recession, driving fears the U.S. could follow

Nine major economies around the world are in recession or on the verge of one, raising fears that a global economic slowdown could help tip the United States into an economic contraction as well.

The ugly stock market drop Wednesday began after bad news from two of the world’s largest economies. China reported the worst manufacturing output in 17 years, and Germany said that its economy actually shrank in the spring.

Many of the countries slowing down or in recession have a common problem: They are heavily dependent on selling goods overseas. And this is not a good time to have an export-driven economy. China’s slump and President Trump’s trade war are both undercutting with the global exchange of goods that had helped power the global economy for decades, and some of these countries are seeing sharp declines in exports.

In other nations, notably Argentina and Russia, long-standing problems at home are bubbling over at a moment when global investors are skittish and quick to bolt, which exacerbates trouble.

As the woes add up, there aren’t a lot of obvious rescue boats to help, which is why investors are fleeing to the usual safe havens: gold and government bonds.
Adding:
Associated Press: US recession fears stalk markets as stocks fall again

LONDON (AP) — Global stock markets fell sharply again Thursday after Wall Street endured its worst day of the year as recession fears in the U.S. and around the world escalated.
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Re: The upcoming recession.

#17

Post by Addie »

Cross-posting

WaPo
Trump, banking on strong economy to win reelection, frets over a possible downturn

Mounting signs of global economic distress this week have alarmed President Trump, who is worried that a downturn could imperil his reelection, even as administration officials acknowledge that they have not planned for a possible recession.

Trump is banking on a strong economy to win a second term in 2020, and in recent weeks he has impulsively lashed out at the Federal Reserve, pressured Treasury Secretary Steven Mnuchin to label China a “currency manipulator,” and unexpectedly delayed tariffs on Chinese imports out of fear they could depress holiday retail sales.

Yet despite gyrations in the U.S. stock market and economic slowdowns in other countries, officials in the White House, at the Treasury Department and throughout the administration are planning no new steps to attempt to stave off a recession. Rather, Trump’s economic advisers have been delivering the president upbeat assessments in which they argue that the domestic economy is stronger than many forecasters are making it out to be.

In turn, Trump has sought to use his Twitter pulpit to drown out negative indicators. On Thursday, he promoted the U.S. economy as “the Biggest, Strongest and Most Powerful Economy in the World,” and, citing growth in the retail sector, predicted that it would only get stronger. He also accused the news media of “doing everything they can to crash the economy because they think that will be bad for me and my re-election.”
Also:
WaPo: Trump has a dream team for mismanaging a recession
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Re: The upcoming recession.

#18

Post by Sterngard Friegen »

Trump better not falter on the Chinese sanctions now! After all, he is getting the best advice an author search on Amazon by his son-in-law can buy.
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Re: The upcoming recession.

#19

Post by Addie »

Market Watch
The trade war is already lost, Trump is doomed and this investment is about to go ‘ballistic,’ strategist says
‘This is going to be the inflationary recession, there’s no way out and it’s a political disaster for Trump because the recession is going to start before he finishes this term, which means he won’t have a second term.’
That’s Euro Pacific Capital’s Peter Schiff explaining to Fox Business following the Dow Jones Industrial Average’s DJIA, +1.20% nasty plunge on Wednesday how he sees this turbulent market ultimately playing out.

“The dollar DXY, +0.06% is going to go through the floor and it’s going to take the bond market with it and the next crisis, it’s not subprime mortgages, it’s going to be in the Treasury market,” he added.

Read: Stocks rise as bullish earnings, retail sales offset trade issues

In his latest podcast, Schiff detailed his outlook as to why he sees gold GC.1, -0.72% , which has already risen about 20%, rallying hard from here.

“This trade war is lost,” he said. “The only question is when do we surrender and how do we admit defeat. Again, I don’t think we’re going to get any kind of deal.”

With the mainstream buzzing with recession fears, Schiff points out that investors are calling for the Fed to cut rates and go back to quantitative easing. But, he warned, this won’t have the impact of prior QEs, where everybody makes money.

“Everybody is weakening their currency to create more inflation,” Schiff, a longtime gold bug, said. “Well, what’s going to happen? The world is going to drown in an ocean of inflation and gold is going ballistic.”
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Re: The upcoming recession.

#20

Post by Addie »

CNBC
New recession warning: The rich aren’t spending

The rich have cut their spending on everything from homes to jewelry, sparking fears of a trickle-down recession that starts at the top.

From real estate and retail stores to classic cars and art, the weakest segment of the American economy right now is the very top. While the middle class and broader consumer sections continue to spend, economists say the sudden pullback among the wealthy could cascade down to the rest of the economy and create a further drag on growth.

Luxury real estate is having its worst year since the financial crisis, with pricey markets like Manhattan seeing six straight quarters of sales declines. According to Redfin, sales of homes priced at $1.5 million or more fell 5% in the U.S. in the second quarter. Unsold mansions and penthouses are piling up across the country, especially in ritzy resort towns, with a nearly three-year supply of luxury listings in Aspen, Colorado, and the Hamptons in New York.

Retailers to the 1% are faring the worst, with famed Barney’s filing for bankruptcy and Nordstrom posting three consecutive quarterly declines in revenue. Meanwhile, Wal-Mart and Target, which cater to the everyday consumer, are reporting stronger-than-expected traffic and growth.

At this month’s massive Pebble Beach car auctions, known for smashing price records, the most expensive cars faltered on the auction block. Less than half of the cars offered for $1 million or more were able to sell. But cars priced at under $75,000 sold quickly — many for far more than their estimates.

In the first half of 2019, art auction sales were down for the first time in years. Sales at Sotheby’s dropped 10% and Christie’s auction sales were down 22% from a year ago.
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Re: The upcoming recession.

#21

Post by fierceredpanda »

Lies. The 1% aren't spending because they need capital gains to be indexed, which will miraculously unleash a wave of economic stimulus the likes of which the world has never seen. Anyone opposed to indexing capital gains (read: handing something like $100 billion to the very richest people in America over the next 10 years) is trying to cause the recession.

That's going to be the White House line.
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Addie
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Re: The upcoming recession.

#22

Post by Addie »

Economist
Parts of America may already be facing recession ...

Recessions are synchronised declines in economic activity; weak demand typically shows up in nearly every sector in an economy. But some parts of the economic landscape are more cyclical than others—that is, they have bigger booms and deeper slumps. Certain bits tend to crash in the earliest stages of a downturn whereas others weaken later. Every downturn is different. Those caused by a spike in oil prices, for example, progress through an economy in a different way from those precipitated by financial crises or tax increases.

But most recessions follow a cycle of tightening monetary policy, during which the Federal Reserve raises interest rates in order to prevent inflation from running too high. The first rumblings of downturns usually appear in areas in which growth depends heavily on the availability of affordable credit. Housing is often among the first sectors to wobble; as rates on mortgages go up, this chokes off new housing demand. In a paper published in 2007 Edward Leamer, an economist at the University of California, Los Angeles, declared simply that “housing is the business cycle”. Recent history agrees.

Residential investment in America began to drop two years before the start of the Great Recession, and employment in the industry peaked in April 2006. Conditions in housing markets were rather exceptional at the time. But in the downturn before that, typically associated with the implosion of the dotcom boom, housing also sounded an early alarm. Employment in residential construction peaked precisely a year before the start of the downturn. And now? Residential investment has been shrinking since the beginning of 2018. Employment in the housing sector has fallen since March.

Things may yet turn around. The Fed reduced its main interest rate in July and could cut again in September. If buyers respond quickly it could give builders and the economy a lift. But housing is not the only warning sign. Manufacturing activity also tends to falter before other parts of an economy. When interest-rate increases push up the value of the dollar, exporters’ competitiveness in foreign markets suffers. Durable goods like cars or appliances pile up when credit is costlier.

In the previous cycle, employment in durable-goods manufacturing peaked in June 2006, about a year and a half before the onset of recession. This year has been another brutal one for industry. An index of purchasing managers’ activity registered a decline in August. Since last December manufacturing output has fallen by 1.5%. Rather ominously, hours worked—considered to be a leading economic indicator—are declining. Some of this is linked to President Donald Trump’s trade wars, which have hurt manufacturers worldwide. But not all. Domestic vehicle sales have fallen in recent months, suggesting that Americans are getting more nervous about making big purchases.
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Chilidog
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Re: The upcoming recession.

#23

Post by Chilidog »

"The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet,"
How is that supposed to work exactly?

Is that something they taught at Wharton?
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Re: The upcoming recession.

#24

Post by pipistrelle »

Chilidog wrote: Wed Sep 11, 2019 8:37 am
"The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet,"
How is that supposed to work exactly?

Is that something they taught at Wharton?
Lenders pay you to take their money. Easy peasy.
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Chilidog
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Re: The upcoming recession.

#25

Post by Chilidog »

Sweden tried it once

https://news.yahoo.com/swedish-central- ... 25984.html#
Stockholm (AFP) - Sweden's central bank took its key interest rate further into negative territory Wednesday in a surprise move aimed at supporting a return to inflation.
Stagflation, anyone?
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