US coming into a Recession

Discussion in 'Political Opinions & Beliefs' started by HereWeGoAgain, Jul 16, 2019.

  1. Mrlucky

    Mrlucky Well-Known Member Past Donor

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    If economists had all the answers they would all be rich but most are not. The future cannot be predicted accurately and neither can a recession most of the time. The definition of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP). Sometimes a recession is called a quarter or two after but lately many seem eager to prematurely make dire predictions of a recession before one actually exists.
    There are all kind of economic indicators, ISM Purchasing Managers Index, Conference Board Leading Economic Index and lots of published government data about capitol goods, housing starts, etc.

    These are economic factors but there are also psychological factors that can trigger a recession. We are into the 11th year of a bull market, the longest in history so that must mean a recession is coming. Probably but no one knows exactly when.

    "Psychology-based theories of recession tend to look at the excessive exuberance of the preceding boom time or the deep pessimism of the recessionary environment as explaining why recessions can occur and even persist. Keynesian economics falls squarely in this category, as it points out that once a recession begins, for whatever reason, the gloomy “animal spirits” of investors can become a self-fulfilling prophecy of curtailed investment spending based on market pessimism, which then leads to decreased incomes that decrease consumption spending. Minskyite theories look for the cause of recessions in the speculative euphoria of financial markets and the formation of financial bubbles which inevitably burst, combining psychological and financial factors."

    I read a lot of opinions. I'm no economic or market guru. I try to look at technical charts as well as fundamentals when investing. I know a lot of what I read is as biased as most MSM news. A lot of financial news is political. One guy may hate our current trade policy. Another blames the tax cut plan. If GDP, interest rates and unemployment numbers remain strong, someone will find other reasons why the sky is about to fall. Inverted yield curves, slowing China or Europen economy, almost anything that might be used to spook the market.
    Financial opinion writers often have an agenda based on removing Trump at any cost. A lot of writers/bloggers have nothing to lose. Many don't save or invest their own money. I don't trust everything I read. Consumer sentiment is as good an indicator of economic health as any other single statistic.
     
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  2. Lee S

    Lee S Moderator Staff Member Past Donor

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    Very well stated! I think most people do not credit animal spirits with as much force as they have obviously had during the last two administrations.
     
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  3. Mrlucky

    Mrlucky Well-Known Member Past Donor

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    Recessions also tend to begin for the least expected reasons too. What is happening in Germany is a signal that could trigger a recession. Germany's economy is not healthy. As Germany goes the EU goes. There is fear in Europe over Brexit. Germany will blame US tariffs on China for their problems and also for sanctions we have imposed on Iran. Expect continued volatility in US and international markets.

    https://www.foxbusiness.com/markets/germany-economy-europe-global-recession-andy-brenner
     
  4. HereWeGoAgain

    HereWeGoAgain Banned

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    https://www.cnn.com/2019/08/22/economy/manufacturing-pmi/index.html
     
    Last edited: Aug 22, 2019
  5. Mrlucky

    Mrlucky Well-Known Member Past Donor

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    I would say that Liz Ann Sonders is probably Schwab's most contrarian strategist. She is well aware of the 4 phase of a business cycle. During the 1st phase, Early Expansion, Industrials will generally outperform. 2nd phase Maturing Expansion, Industrial growth may peak. That peak is also where fear of inflation may appear. There is no indication of inflation rising above 2.0 right now, tariffs or not.

    Most investors also know that August and September are usually the worst 2 months of the year and also the most volatile. Markets can be unpredictable. I'm seeing a lot more volume in equities, especially industrials and utilities that are yielding more than bonds. We are probably well beyond the typical peak of a business cycle, somewhere in the late expansion phase but with low inflation.

    Business_cycle.png
     
    Last edited: Aug 22, 2019
  6. Foolardi

    Foolardi Well-Known Member Past Donor

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    How has a recession started.A slowing of an Economy is NOT a
    Recession.It takes TWO FULL QUARTERS of marked decline in
    GDP.Plus back in march the financial experts prediction of a Recession
    were greater than the recent Inversion experts prediction.
    July had a solid jobs report.Prior to summer the same MSM were
    Ignoring entirely the good economic news.Now of sourse all it
    took was some spooked Inversion { Bond market } forecast.
    To start this Recession ball rolling.Inflation is not a ready problem yet.
    Home Mortgage rates are very low.The Housing sector is slowing.
    But that is to be expected.
     
  7. Foolardi

    Foolardi Well-Known Member Past Donor

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    August { Congressional and Presidential summer break period } is
    usually a bad month for the Stock Market.It may be entirely psychological.
    People are taking vacations and spending money.Not terribly consumed over
    making money.Same with Housing.It's the dog days.Home construction is slow
    due to heat and summer pasttimes.Like Baseball and Softball and the beach
    and beer parties.
     
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  8. Foolardi

    Foolardi Well-Known Member Past Donor

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    " Listen,there is NO economic data out there that suggests we are
    on the cusp of a Recession.The CEO of Bank of America put it best.
    Brian Moynihan said that the only fear of recession we have is fear
    of recession. " Charles Payne { 8/19/2019 }

    This Inversion Curve bidness is an attempt to confuse the public
    by throwing out numbers.It takes a lot of financial data in order
    to reflect a market.Alan Greenspan used Inventories as an indictator.
    How low were company inventories and how quick to get the needed
    bank loans to replenish inventories.
     
  9. Zorro

    Zorro Well-Known Member

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    Actually debt levels are at a near 40 year low.

    [​IMG]
     
  10. Adfundum

    Adfundum Moderator Staff Member Donor

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    Well, I guess recessions are good for something. :)
     
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  11. Zorro

    Zorro Well-Known Member

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    Well, recoveries, and better yet, economic expansion.

    FICO scores in 2018 hit an all time high.

    As of Q2/19:

    More Americans are Scoring Higher
    The average FICO® Score has increased over time as the number of Americans with exceptional scores have grown. In the second quarter of 2019, more than 20% of Americans were considered to have an exceptional FICO® Score, the same percentage compared to the second quarter of 2018.

    Meanwhile, the percent of Americans with average FICO® Scores below 550 has decreased one percentage point compared with 2018. Only 12% of the U.S. population has a FICO® Score that is less than 550 in the second quarter of 2019.

    We did unwind a LOT of household debt in the last recession, and we are keeping it off.

    [​IMG]

    It was a tough lesson and it continues to be remembered.
     
    Last edited: Sep 15, 2019
  12. ronv

    ronv Well-Known Member

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    Beware of the GM strike.
    50,000 people pulling in their spending and another 250,000 in support only weeks away.
     
  13. jdog

    jdog Banned

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    Anyone who truly believes a President can control the economy is woefully ignorant of how the economy works.
     
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  14. Quantum Nerd

    Quantum Nerd Well-Known Member

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    Good thing you posted this graph. It shows why the initial recovery from the great recession of 2008 under Obama was slow: Debt deleveraging, i.e. people were shedding consumer debt. Contrast this with the borrowing binge under GWB. Of course, Trump is doing everything he can to jump start another consumer borrowing binge, be it through unpaid for tax cuts, or through pressuring the Fed to reduce interest rates. We all know what the end result will be.
     
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  15. Sanskrit

    Sanskrit Well-Known Member

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    We are overdue a mild recession. They are a fact of economic life, and NBD so long as they are not accompanied by government chicanery like ACA, the most boneheaded thing done in a recession since FDR extended that recession into the Great Depression via the vote buying sche... erm... "New Deal," or more recently, the government-caused mortgage crash. No one can predict them, but what I do know as a contrarian is that "sky is falling" stuff correlates negatively with bad economic results. Be worried when outlooks are uniformly rosy. These are not infallible rules, but strong correlations.

    The gov-edu-union-contractor-grantee-trial lawyer-MSM Complex is running scared and terrified of what four more years of Trump would do to the SCOTUS that created their illicit, Unconstitutional Complex graft machine, hence they are cheering for the recession to come ASAP so that it would have maximal impact on the 2020 election cycle. It's about all they have other than mass voter fraud at this point, so allow them their wishing upon a star.
     
    Last edited: Sep 19, 2019
  16. HereWeGoAgain

    HereWeGoAgain Banned

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    All it took was a virus scare and the house of cards came tumbling down.
     
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  17. squidward

    squidward Well-Known Member

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    It's been in the making since 2008 and washington decided to hand the banks trillions of dollars over 12 years instead of letting the banks be properly liquidated as all poorly run, over leveraged, high risk taking entities should be when they fail
     
  18. Darthcervantes

    Darthcervantes Well-Known Member Past Donor

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    Let's fix it then!
    I just came up with an amazing solution.
    Let's just charge everyone a 90% flat tax and let the government take care of the rest. Free medical! Free college! Free play station fours!
    I know, I know, pure genius!
    The only problem is I can't find a good name for this awesome new form of government. Can someone help me out here?
     
    Last edited: Mar 11, 2020
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  19. Giftedone

    Giftedone Well-Known Member Past Donor

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    I don't care what liberals demand - nor do think your claim is correct but - "demand recessions" - and a whole lot more than liberals have been predicting a recession - albeit not so much for 3 years.

    The Trump Admin has brought the failed Reagan policy back to life - the difference being that we do not have the wind at our back like Reagan did - which makes this policy far worse.

    Stimulating the economy with massive credit card spending will give a short term boost - but for long term losses. We experienced small gain - GDP went to 3.5% (not 5-6% like Trump Predicted) for little more than a year - and then it went back to below 2%.

    There were big warning signs on the horizon - inverted yield curve - Manufacturing index at 2008 levels for many months - a global economic slowdown - and massive US but also global debt.

    When your car is in good shape - and you hit a bump in the road - it is not a big problem. When the car is in bad shape - the wheel comes off.

    A strong economy is able to weather exogenous shocks - such as Corona - and the subsequent oil war. When it is not in good shape - the wheels start to come off.
     
  20. squidward

    squidward Well-Known Member

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    It's been in the making since we disallowed a much needed reset in 2008. So now it will be much worse than 2008 would have been.
    More risk, more leverage, .......more pain
     
  21. Bluesguy

    Bluesguy Well-Known Member Donor

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    The economy is still strong, we are seeing the effects of what a global health crisis can cause to the economy. The question is who is better adept at dealing with the slowdown and possible recession. We can compare the Republicans in the late 1990's early 2000's leading to the 2001 recession and the Democrats 2007 forward leading to the 2008 recession. Care to do that?
     
    Last edited: Mar 11, 2020
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  22. Bluesguy

    Bluesguy Well-Known Member Donor

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    Haven't been keeping up with the news I see.
     
  23. Bluesguy

    Bluesguy Well-Known Member Donor

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    What policy?
     
  24. Giftedone

    Giftedone Well-Known Member Past Donor

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    I totally agree. The 2008 crash was a much needed capitulation "IF" we had let it run its course. Instead we tried to mess with the invisible hand - bailing out the folks who engineered the ponzi scheme - rather than arresting these folks and throwing them in Jail - and then came the massive efforts to mitigate the damage from the mess.

    I think we can liken this to Corona - at some point - like a cold - we all will get it. Better to let the pandemic run its course - than stall it for who knows how long - shutting down the economy in the process - in an attempt to delay the inevitable.
     
  25. Giftedone

    Giftedone Well-Known Member Past Donor

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    Massive deficit increase.
     

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