Recession 2020
People that get too involved in the Mueller Report and the latest polls often forget that the most important political indicator is the economy.
And the economy is due for a recession.
With the bull market now the longest in US history and the US economic expansion set to become the longest in history in July 2019, many investors have been fearful that a recession and bear market are “overdue”.While neither a bull market or expansion die of old age (according to a study by the San Fransisco Federal Reserve), the economic fundamentals have now deteriorated to the point that a recession does indeed look likely (75% to 90% probability) within the next nine to 16 months.
Last month half of all business economists predicted the U.S. economy will slip into recession by the end of next year.
Since then the bond market turned down.
The yield on theU.S. 10-year Treasury noteon Friday dipped below the yield on the 3-month paper. It was the first time since mid-2007 that the yield curve — which plots bond yields from shortest maturity to highest and is considered a barometer of economic sentiment — inverted.
...
The U.S. Treasury yield curve has inverted before each recession in the past 50 years and has only offered a false signal just once in that time, according to data from Reuters.
Unlike 2007, the next recession will probably not start in the U.S.
The economies of Canada, Britain, and Germany have stalled out. This is showing up in bond yields.
Yields in Australia and New Zealand dropped to record lows after a closely-watched part of the U.S. curve inverted on Friday as investors wager that the Federal Reserve will need to cut rates. Trading volumes in Treasury futures were double the norm during Asian trading, while Japan’s 10-year yields fell to the lowest since 2016.“Bond markets globally, along with dovish central banks, have been telling us a slowdown is on the way,” said Jeffrey Halley, senior market analyst at Oanda Corp. in Singapore. “Some parts of the world will be better equipped than others to handle this. The U.S. can at least cut rates and apply monetary tools, while things could be worse for Europe and Japan, where they cannot.”
The key here is the line "The U.S. can at least cut rates."
Europe and Japan, with already stalled economies, have nowhere to cut.
In the wake of an unexpectedly ultra-dovish shift by the Federal Reserve and weak European data, many investors are reassessing the outlook for growth. That’s sparking demand for safe-haven assets, which helped trigger an inversion of the U.S. yield curve on Friday -- a dynamic that itself is compounding market fears.
The bond rally sent a Bloomberg index tracking outstanding negative-yielding debt past $10 trillion on Friday. It edged up again on Monday, and is hovering at the highest level since September 2017.
Europe and Japan will have no monetary options to any downturn.
America isn't in a much better situation (with historically low rates).
Forget Russiagate. Forget the polls. Forget everything else.
When the economy turns south, and it will, all of the narrative and spin will go out the window.
The working class hasn't had a raise for the entire expansion. They are unlikely to tolerate the recession for long.
Because the working class didn't participate in the expansion, the most likely weak spot in the economy is in corporate bonds.
Comments
The recession has been overdue for two years
There are a lot of explanations of why it hasn't already happened:
First, it already happened (the Great Recession never ended)
Second, as long as the government(s) can print money to prop up capitalism it (they) can prop up capitalism. Note the similarity between the amount of money the Fed has printed since 2008 and the "growth" of the stock market. Wonder why there's been no inflation? Inflation only occurs where the money goes. Give the banks (and military contractors who just put their money in the banks, and the rich, who have nowhere else to put their money but the banks) and all they do is buy stocks and real estate - the price of bread can't budge.
I am not an economist, but in this case I think that might be an advantage. like economics, capitalism itself is nothing but a mutually agreed to mental construct. As long as it remains - or is believed to remain - internally consistent it will hold. In this case the consequences of admitting that capitalism is a failure are so frightening that the admission is intolerable. A depression started in 1905 when "someone asked for a real dollar". No one is asking for a real dollar - no one dares and no one has to.
On to Biden since 1973
Wait, what? When did this happen?
How long has there been a bull market? Does that even MEAN anything beyond Wall Street?
Why haven't Team Trump been screaming their bloody lungs out about this 24/7? After all, isn't that exactly what they'd do?
In the Land of the Blind, the One-Eyed Man is declared mentally ill for describing colors.
Yes Virginia, there is a Global Banking Conspiracy!
the bull market has been going on
for about a decade. On September 29, 2008, the DJIA closed at 10,365 On Jan 20, 2017 the Dow was 19,827. Today it closed at 25,658.
This doesn't mean a goddamn thing to 85% of Americans, in fact, the way it has happened is not good for pension funds and small investors, but it is a fact.
On to Biden since 1973
Another good one
We all know who'll pay no matter which party is in charge.
Wall St. Stock Trading Plunged 88.6 Percent in Q4
Pam Martens is back writing again at wallstreetonparade. "shocking" "bombshell" "something from Alice in Wonderland". LOL fuck if I know what's going on, except more citizens will be joining moi in the ditches of California soon. Welcome! ... and for the upcoming IPO lobbyist winners, well whoosh is also the sound a heavy blade makes as gravity does its thing through guillotine channels. reap what is sown
Anyone see Pelosi's presser on saving insurance company profits yesterday, omg she said "please clap" I am not kidding... "that's a line for applause", after quoting Dr. Martin Luther King Jr. a few times because of course. projectile kabuki
Federal Regulator: Wall Street Stock Trading Plunged 88.6 Percent in Q4
good luck
The investment guy on local TV news
Says don't worry about a recession at all...that guy from the hedge fund who says it's time to get out, ignore him, he didn't do well in 2016 and his fund is really small...
" In the beginning, the universe was created. This has made a lot of people very angry, and is generally considered to have been a bad move. -- Douglas Adams, The Hitch Hiker's Guide to the Galaxy "
DEFCON 2
I think you mean DEFCON 2, high alert, the most serious/dangerous level just before the actual event of major recession/depression or D-1. D-3 is just the mid-level state of moderate concern. The higher the number, the less the danger. In the Cuban Missile Crisis, the threat level was elevated to D-2.
And we can blame the coming downturn
...on the Prez. He has put the system of shoveling all profits to the elite on hyper drive. Tax cuts for the rich, reducing corporate thievery regulations and defunding programs that help the underserved.
It's also important to mention that this is the absolute best out capitalist system gets. Sustained GDP growth and increasing profits are the only goals in capitalism. The fact that most don't share in the growth is irrelevant.
Blame it on the Prez, . . .
. . . on most of Congress, on much of the judicial system, on out-of-control capitalists, and on a previous administration's conviction that inflating assets for the wealthy was the cure for the Great Recession. This baby has been long in coming but entirely inevitable when the only strengthening of the economy has been in the service of enabling the frothiest pillaging by the rich. There are fat tendrils weaving through this from the Reagan and Clinton administrations, too.
I detest Trump as much as anyone does, but his hand in a looming downturn was that of the guy who fertilizes the lawn, not those who planted it or chose what should be there.
You know how it will go
They'll blame it on us. We don't save enough, we don't spend enough, our skills are low value, we have too much debt, we want health care, social security is bankrupting the nation, the deficit is caused by social programs not the military spending. There's too many workers, not enough workers. Same old, same old.
A few high tech companies I know about through buddies
Companies recently went through a layoff season of decent amount of people, but below amounts which require public notification. Others have hiring freezes. I feel for the people laid off as most were older workers who will be thrown into "ageist" worker market, and soon to be a constricted job market.
I am now one of those people.
I won't mention who I work for until I am off of payroll, so after Friday. Yeah, thank God for my depression era grandmother hammering on me to save, save, save. I will be OK for a while, will have to look for work again but I'm really hoping NOT to have to go back to a big Corporation. This is only round 1 of layoffs from what I understand, the next ones are coming with at least 2 more rounds. My boss basically admitted that part of this is indeed pressure on the company ROI for all the investments they've made and we must pay off all that debt used for stock buybacks...
While I am scared it is a relief in many ways not to have to deal with it anymore.
Only a fool lets someone else tell him who his enemy is. Assata Shakur
Best wishes to you. Been there, and lucked out.
I was laid off in a drive to get rid of older employees and to increase margins by laying people off. Was at very edge and luckily got hired by a company that did not care about age. Stay strong.
Same boat
Guess I'm one of those people, too. After 35 years, my last day was not quite a month ago. My employer offered me one of those offers you couldn't refuse. I'm over 65, and my wife (a retired public school teacher) is 65 in three days, so we were able to quickly get on Medicare. Less than a week after my last day, the company filed for chapter 11 bankruptcy protection. Luckily all the checks from them had already cleared. Whew!
I grew up in a household with my Great Depression grandparents, so I understand about the lessons learned. We are fortunate that we have no debt and own our home. Both my wife and my health could be better, so that's a worry, but we're so much better off than some.
My employer failed to get financing on a $500 million bond. They'll probably carve up the company and sell the parts that are making money. We were an oil service company primarily, but were also involved in air ambulance work. What got them was the continued low price of oil and the fact that the banks have been taking a bath with the fracking companies. We were guilty by association, I guess.