US coming into a Recession

Manufacturing is weakening
The most recent ISM Manufacturing Index report, released Monday, painted a sober picture for America's heartland.
Industrial commodities are falling
Many investors pay attention to oil and gold. But there are other commodities that are just as important because demand for them is linked closely to the health of the global economy. And they are tumbling.
Leading indicators leading to slowdown?
Every month, the Conference Board publishes its Leading Economic Index (LEI). The index ls closely watched because it incorporates 10 different and important gauges of the health of the economy, such as weekly jobless claims, manufacturing new orders, housing building permits, stock prices and consumer sentiment.
The most recent LEI figures could be viewed as a troubling sign.
https://www.cnn.com/2019/06/06/investing/economy-slowdown-recession-signs/index.html

Not to mention the US economy doesn't exist in a vacuum. Economies are slowing around the globe. Germany's economy is in contraction. Their yield curve is entirely negative. China is clearly slowing as are every industrial economy including our's.

The US isn’t the only major economy facing a possible recession
https://www.vox.com/2019/8/15/20806775/usa-recession-trade-war-china-uk-brazil-germany

Although bond yields in the US are skewed (artificially low) by intense demand around the world for any place to park money and get a positive return.......................
Amount of global debt with negative yields balloons to $15 trillion
https://www.cnbc.com/2019/08/07/biz...ebt-in-the-world-balloons-to-15-trillion.html

(making the recent inversion suspect as a sure sign of a coming recession) there is no question the natural course of the biz cycle suggests a recession is overdue. Arguably, the reason we haven't already had a recession is Don's budget busting tax cut that never would have passed a Repub controlled Congress with a Dem in the WH.

Ironically, while a recession is inevitable it is being hastened by the Tariff Man's tariffs. Those trade war's........they sure are easy to win (wink).

 

This is true I am a registered architect as well as an investor in addition to a couple other enterprises. While I maintain my licenses to practice, I'm retired except to consult. I see no slowdown in construction. We can usually project out 2 years. We are a global firm and one of the largest in the USA. Our economy may be slowing a bit but relative to central Europe and other markets we are still in good shape. Bond markets are acting weird and so are some mortgage indicators. It is not the same as what triggered the last big recession though. Record unemployment has many states far lower than the nation average of 3.7%, so yes, transports here are holding and what is left of manufacturing is doing well.

 

Despite numerous posts since my question, no answer from spiritgide. He has a penchant making false accusations he can't support.

He also avoids questions that are on point.

He is Trump supporter who prefers to talk about Democrats while avoiding Trump.

 

With reporters Trump has chosen who dare not challenge his many lies, Trump lied his way through another news conference today. This time it appeared he held it on an airport tarmac, not the White House lawn as he usually does. The usual background noise of propeller blades was present, drowning out reporters' questions. We can only assume what the question was based on Trump's shouted deceitful reply.

For example, once again Trump bragged about how his treasury was taking in billions of dollars, not daring to mention that is being paid by the American consumer. He told us how China is losing millions of jobs as manufacturing is moving out of China. He did not say where he got that information, mostly because he just made it up.

The complying reporters did not question his lies. They continued with their softball questions that allowed Trump to make short speeches.

Trump is scared to death of conducting a full-blown press conference in the White House press room with the entire White House press corps. Those reporters are not bashful about asking follow-up questions and revealing lies told by the President.

Which explains why Trump has held only two press conferences in 31 months. The last over a year ago, both were disasters for him, and he will not hold another. There hasn't been a press conference by his press secretary in months.

Trump has become the secret President.

 

Thanks to Trump's trade war with China, both economies are slowing. However, China's GDP growth is nearly three times that of the U.S.

GDP increased 2.1%, down from the first quarter’s 3.1% and the weakest increase since Q1 of 2017 when Trump took office.

https://www.cnbc.com/2019/07/26/us-gdp-second-quarter-2019.html

China's gross domestic product grew at 6.2% in the quarter ended June, the slowest quarterly growth rate since 1992 and down from 6.4% in the previous quarter.

https://www.cnn.com/2019/07/15/economy/china-gdp-growth/index.html

 

There was a bit of a Trump bump - but, "skyrocket" solely on the base of Trump was simply not the case.

I agree that the whole Trump/Market thing is mostly a political argument - and most certainly in the first few years of a Presidency. You then kind of shoot that argument in the foot by attributing market action to political infighting. While I don't disagree with some of your comments on the Dems - you attribute too much weight to these characteristics to the market.

Trumps economic activities have had some bright spots but in general it is a disaster in many other ways. We have had a President like this before - at least respect to the economic plan - Reaganomics - complete with massive increases to the deficit. Just like Reagan's spending led to bad things - so will Trumps fiscal irresponsibility. This is like putting nitrous oxide into an engine - short term gain for long term pain.. and we seem to be coming into the pain part.

Trumps trade war and in particular the sanctions are doing serious damage ...both short and long term damage to our future economic security. Trumps economic actions are mostly lipstick on a pig in that he has not addressed some of the systemic issues in relation to our massive healthcare and military spend.

Obama didn't either of course - nor Bush. It is just that Trump is no different in this respect.

 

With respect to your comments and the post you were responding to - Dow Theory suggests that there can not be a sustained rally in the Dow without a rally in the transports. This make sense - if things are moving things are good.

The Dow Jones Transport index - DJT - is not looking that great these days.



Looks like it is attempting a break below significant support at 10,000. If it can get back above this level in short order it would be good but if it fails and continues downward this is a negative technical signal - and a fairly ugly chart would get a whole lot uglier.

 

Compare 2 major transports besides air: Railroads and Container cargo shipping.

Maersk posts strong profits despite trade war worries
https://www.ft.com/content/86154374-bf2f-11e9-b350-db00d509634e

Why Shares of Union Pacific and CSX Headed in Different Directions After Earnings
https://www.fool.com/investing/2019/08/15/why-shares-of-union-pacific-and-csx-headed-in-diff.aspx

Shipping volume indicates much about how profitable shippers are. Another major factor is the cost of energy to ship goods.
Year over year either combination can determine the profitability of bulk carriers.

US Trade policy, specifically tariffs can affect shipping volume but it can also be used as an excuse for poor management decisions of shippers.
There is no doubt that global economic conditions appear to be slowing. No single economist can tell you all the reasons why. There are several factors to consider. Some factors may be completely unknown in advance. Railroad shipping can be affected for example by factors such as floods that can't be predicted.

Your chart for transports will be roughly the same as a chart for the S&P 500. Set the below chart for 3 years.
https://www.macrotrends.net/2488/sp500-10-year-daily-chart
The chart will represent almost a 23% increase in the S&P 500 since 2017. I remain cautiously optimistic through the end of the year provided markets don't repeat Q4 of 2018. Between now through the end of Sept. is what I watch for now.

 

Lucky you. Nothing like a good recession to help elect a democrat. I am offended by people who root for a recession.

 

You mentioned the yield curve, and I addressed the yield curve. Why are you now acting as if ignored something that you had said?

Now that you have brought up a couple new points, I will remind you that my first response in this thread was to point out the reality that there are literally over a thousand economic indicators, and that at any given time anyone from any point of view can cherry pick some of those indicators to tell whatever story that they want to tell. There WILL be a recession at some point in the relatively near future. Not necessarily BECAUSE of a trade war, Trumps insistence on a federal interest rate, or any other action of Trumps that you do not like; rather it will be because the inevitable reality of economic cycles is that there is always a recession looming and we are most certainly due. Whenever that time comes, you will undoubtedly say " I told you so", but in reality you weren't prescient even remotely. You were merely stating an economic inevitability that always exists, and you are simply dying to spin that economic inevitability into fodder for blaming on political moves that you personally do not like.

 

Obama's economy right?

 

I'd rather have the truth than a load of crap...

 

I have not heard of anything before 2020 being predicted for economic slowdown..

 

Of the 5 incumbent presidents who lost after their first term, all were impacted by economic doldrums.

The major problem with all 5 involved the unemployment situation. High unemployment to be exact.

If Trump maintains unemployment numbers at around 3.7 percent, the Dems have almost no chance.

The irony is that the Dems are so thirsty to gain power that they would be willing to trash the US economy in order to accomplish their desire to remove Trump.

 

Ok, so what is the truth? Is the truth that after endless negative reporting, the media have finally soured the optimism of the public? And if so, did they do it on purpose?

 

I have a policy of not listening to media reports and following the statistical data that is accumulated and processed. The bond market is falling below 2% for T Bill and in other areas the factors are showing a currency war developing with high debt in both consumer and farm sectors with increasing bankruptcies and a trucking industry that has been in a slowdown and closing businesses along with a manufacturing slump that created the trucking slump...

 

Gosh.. where to start. The T Bills are reflecting the current easing provided by.. the Fed. The currency war is China's reaction to the US trying to resolve their many human rights issues, and their current bullying in Hong Kong. High debt rations exist, in a small segment of consumers and an even smaller segment of farmers. Bankruptcies are indicative of poor personal planning, meaning harebrained ideas that didn't actually make money being removed from the economy and their associated drag. Trucking is booming and trucking fleets are replenishing, and will continue to do so through most of 2020 because US consumer demand is in fact also booming. Now, at some point, trucking companies will over supply because they always do. And when that happens, there won't be as many after the weaker companies find they can't operate on the glut transport fees they operate with. Manufacturing isn't actually slowing down, the growth of it is slowing down. Do you just never actually read anything? is that it?

 

So the increase in farms being auctioned and farmers going into bankruptcy and falling incomes for farmers causing the Don to hand out 16 billion to keep it from happening is all because farmers made poor choices and not the trade wars? You are a sycophant of immense proportion congratulations, you are evidently missed as a fiscal policy setter for the president......

 

LEI: https://www.conference-board.org/data/bcicountry.cfm?cid=1

For the first time during the Trump Admin the LEI went negative...a massive 0.3 percent

DOOM IS COMING!! hhhahahhah

The Left's been predicting this since Nov of 2016...just like the Russian hoax, it's been coming!

 

https://www.politifact.com/punditfa...oes-us-have-record-bankruptcies-farm-country/

"
We found that the farm bankruptcy rate is exceeding historical norms in the upper Midwest, which includes Heitkamp’s home state of North Dakota. But experts told us the term "farming country" has no official definition, making the national picture the most relevant measurement.

And nationally, the farm bankruptcy rate has been fairly steady, and in fact sits well below the highs of just a few years ago."

"
Court data compiled by the American Farm Bureau Federation, a trade group, found that chapter 12 filings nationwide actually fell by about 1 percent in 2018, and that the 2018 level was below the 10-year average.

"Bankruptcies are not at record levels," John Newton, the Farm Bureau’s chief economist, told PolitiFact.

Longer-term statistics concur.

Court data compiled by Dinterman and Ani Katchova of Ohio State found that chapter 12 filings were higher for several years after the Great Recession than they are now, and were higher still around 2003."

"
Heitkamp said, "We have record bankruptcies in farming country."

In her backyard, the upper Midwest, farm bankruptcies have indeed reached their highest level in at least a decade. But nationally, farm bankruptcies are holding steady, perhaps even falling slightly, and they sit below the levels seen as recently as 2009 to 2012.

We rate the statement Mostly False."


------Just another false narrative by the left. It ain't gonna fly...the reality....farm bankrupties are DOWN.

 

Politifact pfft...




Following several years of low farm income and rising debt levels, a review of Federal Deposit Insurance Corporation quarterly call report data reveals that the delinquency rates for commercial agricultural loans in both the real estate and non-real estate lending sectors are at a six-year high.

For the first quarter of 2019, 2.5 percent of commercial real estate loans in agriculture were more than 30 days past due, up from 2.1 percent in the prior quarter and above the historical average of 2.1 percent. Similarly, 2.3 percent of non-real estate loans in agriculture held by commercial lenders were more than 30 days past due, up from 1.5 percent in the prior quarter and above the historical average of 1.7 percent. The first quarter of 2013 was the last time delinquency rates were this high for commercial lenders. Figure 1 highlights the delinquency rate for both real estate and non-real estate loans held by commercial lenders.

While the delinquency rates are well below the levels experienced following the recession, they are above the historical average and trending in the wrong direction due to several years of poor farm income exasperated by extreme weather events and ongoing trade disruptions (USDA’s Early Look at 2019 Farm Income).
https://www.tsln.com/news/farm-loan-delinquencies-and-bankruptcies-are-rising/

 

Past performance is no indication of future returns .. and you can usually find some winners even in a down market - and we are not in a down market. An inverted yield curve does not always bring a recession but, every recession has been proceeded by an inverted yield curve. The last time the yield curve inverted the Dow went from 14,000 down to 6500 (2009 crash).

From a technical perspective - the chart of the Dow looks to have formed a massive top.


A double top is negative - and you can see the drop (likely in part due to the psychological effect) after the second top. After trying to break through the overhead resistance (draw a straight line across the first two tops) The index now appears on the verge of being pushed back a third time - this failure -although not yet complete - will make investors (and computer trading programs) nervous.

These are two factors to consider - and that are being considered - by serious investors. The computerized trading thing is a worry - these are triggered on the basis of say an index or individual stock breaking below a set point such as a moving average. This triggers selling which causes the index to break longer term (more conservative averages) which triggers more selling. There is a real possibility of this cascading effect these days.

Moving on - at least part of the this move up is on the back of massive Fed Credit card spending - (massive increase in the deficit). This is like putting nitrous oxide into an engine - short term gain for long term pain. Part of this deficit was due to increases spending but part was also due to the tax cuts. Rather than investing this money into increased production or productivity - this money was mostly spent on share buybacks. This artificially props up the markets - and is responsible for at least some of the past gains.

We are now entering the "pain phase". Valuations have been pushed up - and the nitro injection has run its course.

GDP -was also stimulated by the Nitro injection but that is over - The Atlanta Fed now has GDP growth at 1.9% and the future forecast is not bright.

The annual interest on our debt has spiked up. After running at around 420 Billion/yr since 2000 - it has now spiked up to above 500 Billion/yr. This is due to all the messing with the invisible hand that happened after the 2009 crash. This needs a separate post to explain but, the forecast deficit and debt picture looks extremely ugly.

The global economy is slowing - and has been for quite a while now.

One thing I have noticed in watching the markets over the years is that geopolitical events tend to happen - as if right on cue - at the same time as other internal forces are lining up.

Trump could not have picked a worse time to have a trade war - there is such a thing as the straw that breaks the camel's back - not saying this is it - but it doesn't help.

The biggest geopolitical nightmare that I have seen in recent history however is the way Trump has conducted the sanctions - going around using a big stick - the "Nuclear Option" to try and club our allies and other nations into submission. This is the threat of a nations banks being blocked out of the international system of payments.

In all my years I have never heard such strong language from our allies - France, Germany, Italy and so on. "You are Messing with our Sovereignty" - not said in private - but in Public. This is making it difficult for our corporations to do business internationally - and the damage this is doing can not be understated.

We used to just need to whisper our desires in order for nations to come running to comply. This was because we were pretty much the only economic game in town - and everyone wanted to play. This is no longer the case - but the Trump administration is acting as if it is.

This flawed analysis of the geopolitical situation has led to a this massive blunder on the geopolitical chessboard. While Trump is going around threatening and bashing nations over the head .. Russia and China are doing deals and making alliances.

The backlash has been fierce. Nations all over the world giving the US the middle finger like we have never seen before.

Germany is going ahead with Nord Stream 2 - despite US Protestation
Britain is releasing the Iranian Tanker - despite pleas from the US not to "Britain - the nation that always agrees with us".
Italy is going ahead with the "belt and road initiative" - despite US Protestation.
India and Turkey going ahead with the S-400 system - despite threats and pressure from the US not to.
China - after initially going along with the reductions of Iranian oil - is reversing course - India will likely do the same.

This is just stuff off the top of my head - this is not what "winning" looks like. This is what losing looks like. No nation likes to have its sovereignty messed with. The citizens of these nations get very upset - and the politicians are forced to react -whether they want to or not. Our companies used to have VIP status .. now we are in the back of the line.

We have lost the Middle east. Obviously Syria and Iran are a lost cause - now Iraq wants us out. In a recent massive infrastructure contract - GE was sidelined and the contract given to Seimens. Qatar and Oman are neutral towards Iran (not on our side). It is only a matter of time before Saudi Arabia - and the rest of the Gulf states with it - goes the way of China -as China is now their biggest customer. El Saud is going to be using the Petro Yuan.

Russia and China will be rebuilding Venezuela - and other South American Nations are looking that direction favorably.

Africa - while we are perhaps not losing - we are not winning.

India is doing big deals with China and Russia - the next up and coming biggest growth economy.

We were "allowed" to have world reserve currency status by the rest of the world. This is a privilege granted us - not a right. Turning on these nations and using the "nuclear option" - using this privilege to beat them over the head is "dumb and dumber".

For years many nations have been calling for a competitor to the status of the USD as the "SOLE" reserve currency. Especially since the 2009 crash. Not much has happened towards this goal however .. small steps but nothing serious. Had you asked me 5 years ago I would have said at least another 2 decades.

Now ? Nations have gotten serious about getting a competitor up and running - including Europe which is the lynchpin to the whole thing in many respects.

Make no mistake - the history books will record the existence of a valid competitor to the US dollar as the defacto end of the US world economic empire .. Full Stop.

 

The above is an ugly chart - any way you slice it or dice it. Thanks for posting - I did not realize things were this bad.

 

Your chart highlights what Politicfact stated...in one region it was on the rise...nationally it's actually going down. I thought you said you read the data and stats?

https://www.agprofessional.com/article/trends-show-chapter-12-bankruptcies-not-rising-alarming-rate

"
“What our study kind of looked at is how have the trends in filing rates for chapter 12 trended over time. And since 2005, we're kind of at a range that on average we probably see around 450 to 500 bankruptcies filed for farmers each year,” said Robert Dinterman, co-author of the report released in “The Feed.”

In 2018, agriculture saw 498 Chapter 12 bankruptcies filed. In 2017, filings reached 501. While those numbers are still big, Dinterman said it’s in line with the general trend."

"“We're kind of at a stabilized period of time in about 500 bankruptcies filed each year,” Dinterman said. “This is not by any means an all-time high, in any way shape or form. Just recently, 2011 was a time where we had the highest recent bankruptcies filed--upwards of 700 Chapter 12 bankruptcies filed around that period of time. So, that was when we actually had a slight increase in bankruptcies.”

So from 700 a year under Obama in 2011, to 500 under Trump.

Sounds like things are better for the farmers under Trump then Obama. The false narrative has been exposed