US coming into a Recession

Nice chart - and one explanation - or rather a partial explanation.. but a good jumping off point. I would say we are in the very late - late expansion and arguably in the recession period - and have been for some time - certainly from a macro perspective.

World growth has slowed dramatically - well prior to Corona - we see this coupled with low interest rates. Ridiculously low in fact. Some would claim "dangerously low". .. and I agree. There is no safe place to park your cash that pays anything - and many spots are paying negative - you pay to keep it parked there.

The decreasing rate - caused money to flow into the stock market - and other more risky ventures. This resulted in at least part of the rise since the 2008 crack in the foundation.

Now that cash is not wanting to flow into high risk - Capital is now so scared that it will choose safety with no return over risk.

When the car is in good repair - a few bumps do not matter much - if not - when Corona/ Oil Price War - hits - the wheels come off.

I would not consider our economy a junker - but - a few wheels are coming off - shale oil being one example. we will see others as this black swan spreads its wings.

Then consider our debt problem - The deficit was forecast over 1 Trillion before Corona - (and 1.3 for 2021) . We will be lucky to be under 1.5 Trillion for the year. During the 2008 crash - revenue dropped from 2.7 Trillion to 2.1.

and the stimulus talk has already started " Shale oil".

There are some dark clouds for sure.

 

how did you figure that? What makes you think that if he continued republican policies it would have ended quicker.

 

The biggest concern is our bubble. We move from bubble to bubble with bad consequences for most Americans when that bubble is pricked and we crash .

Depending upon how bad the covid virus turns out to be , it could be the knife that deflates this current bubble .

 

Wow, just about every time trump opens his mouth the market crashes.

He should be called the crasher and chief.

This is what happens when real leadership is required but instead we have someone like trump.

 

Down near 2000 points again today (was 2700 at one point) - wiping out the faint glimmer of hope received on Friday. Dow is now down close to 30% from its peak.

 

It is and it will probably continue about the way recessions do until some brilliant economist declares that its over. I have never seen the markets move anywhere near this fast. It's partly because of high frequency institutional trading that is 100% based on computer algorithms put in place beginning around 2007. Over 80% of stocks and bonds are now traded by institutions. Retail investors are for the most part just along for the ride.
There was no bubble, the economy is still basically sound. Fear and panic is driving some retail investors out of the markets. Some panic over the 10 year treasury dipping to .5%, and yield curves. That is evident from the negative response of the fed's emergency interest rate reductions. Normally markets go up with lower interest rates. They may but fear of supply chain disruption has caused more uncertainty. Businesses won't borrow even with low rates if there is no demand.
We will get through this but probably with at least one slow growth quarter, maybe 2. I don't think we will see a recession but it is possible if the fear and panic continues. If so, I think it will be a short recession.

Until there is some positive news about a slowing of the virus or positive clinical trial results (not likely soon), the markets will remain volatile. I don't see any capitulation as in 2000 or 2008. This is a different situation caused by completely different reasons.

Those who sell now will never recoup their losses. The markets have moved more like the CME, way too fast. I'm looking for a bottom but I don't think we are there yet. Soon though. When that happens, I hope those who invested also were smart enough to hang on to some cash. There are some good buying opportunities now but they will probably be even better 2-8 weeks from now.

 

There will be ups and downs for sure. It doesn't feel like we have found a bottom yet to me either although some stocks are seriously oversold.

Where we disagree is on your claim that the economy is fundamentally sound - and that growth will slow for only a quarter or two.

Growth was slow before corona - we had a brief Trump bump due to his massive stimulus spending - akin to a princess with a credit card.
This nitro boost managed to get the GDP growth up to 3-3.5% for a year - and we then went right back down to below 2%.

The manufacturing index was negative for 5 months in a row - and the global economy has been slowing for a number of years.

This oil shock wiped out at least a Trillion dollars in market cap due to the shale oil ponzi scheme - and many hundreds of billions in debt will go south. That is a big economic hit that is going to reverberate.

Looks like they will try to spend our way out of this - the Deficit will likely be well over 2 Trillion for the year - and this thing is just getting started.

 

Should we just call it the trump-corona recession … or the catchier wuhan-donnie recession?


Joe 2020

 

Yeah, My Halliburton stock hasn't been this low for 30 years or more. We used to measure deficits in billions now it's trillions. What the hay, we can just print more money to finance AOC's Green raw deal I guess. Japan has been through 5 recession in the past 20 years. Why? China. Europe is in the toilet. Why? Open borders and China. The US is in far better shape than most of the world but we can't keep spending on social programs and trying to police the rest of the world. I didn't like Trumps tariffs but they have at least gotten the attention of countries who were and still are taking advantage of us. When Americans can compete with China and with other cheap labor is when unskilled and semi skilled labor here realize they aren't worth any more than what other counties pay for the same work.

 

Mini Mike Wuhan sniffles

 

Ouch on the Halliburton - my condolences - hopefully not too much a percentage of portfolio it was. I got hit too ... although no oil stuff.
Some of these pipeline companies are now undervalued - don't produce oil - just transport it to the refinery - and we are not going to stop using gasoline any time soon.

Agree with much of what you say .. 3.5 Trillion in Healthcare - half Gov't =roughly 1.75 T in 2017. Other first world nations pay half that.
That's 900 Billion on the Table per year.

From Bush through Obama there was 500 Billion on the table - x 16 years = 8 Trillion to pad pockets of the Military Industrial Complex
.. call it another 12 Trillion over the same period for Healthcare and Insurance Oligopolies - owned by same folks who own the MIC

Throw in the 400 Billion/yr for interest on our debt - same folks own the banks ... now up to 500 - and that's Trilllions more.

Had we invested that money in infrastructure, technology - ramping up our economy to compete in the 3rd millennium - we would be in a much better position.

Speaking of infrastructure ? .. what happened to that plan .. - still sitting on the shelf it seems.

Trump just exacerbated the spending dumbness and madness... huge increase in the deficit - much of which was spent on an increase to Military spending - Big Gov't Spending.. so we can pound our chests while we chase terrorists .. pretending that there is something much bigger out there that we are fighting ... some enemy massing at the city gates that we are not capable of dealing with.

All our toys have just been made obsolete by technology - an interesting cycle in history that always plays out similarly.
I have been saying this for years - Elon Musk just said it of the F-35 - and he is correct. Our carriers are sitting ducks in the face of modern missile/drone technology - and that technology has been - and continues to increase at a rate far faster than the ability to defend.

 

Oil has be a disappointment for several years. At one time I owned everything, Marathon Oil, Marathon Petroleum, BP, Hess, Chevron, Valero, Sunoco and others I can't even remember anymore. I got out of Oil about 10 years ago but kept HAL and SUN. I bought HAL real cheap after they acquired Brown and Root? It was a company that had a lot of asbestos exposure they assumed. I got it for about $11 or 12 per share. It's book value was over $30 and it did well until a couple years ago. It split once since I bought 200 so I now have 400 in paper worth practically nothing. SUN was an income play that yields around 12%. I'm not big on dividends but it has done better than I expected, until a month ago. I'm down but had a 28% gain last year so I'm actually still in better shape than those who think conservative balanced 60/40 portfolios have less risk during times like this.

I'm not going to comment on economics. Trump has exceeded my expectations and is improving. I'm a republican and always have been. If I were to vote my conscience without regard for any party, I still would not vote for dumb or dumber. If you think spending is out of control now, I can guarantee you that you will pay more in taxes, they will spend much more than Trump did and none of us will get anything in return.

Honestly, since you mentioned the military Industrial Complex, it's why Trump spent for military. It employs a lot of volunteer servicemen, and provides a lot of defense jobs. We have spent way too much in the Middle East. Afghanistan bankrupted the USSR. There is nothing there worth bombing. We need to get out of there but will need to find another big war somewhere. It's what we do. We have carriers so we don't have to occupy too much in the pacific or middle east. Musk is a smart guy but is not really correct. Most of our fighters fire from distances of over 100 miles. Same with our tanks and artillery. There is no country that can match what we have. Musk also knows nothing about our subs or their capability to protect our carrier groups. Our drones are also more advanced than what any other country has and we have a lot of experience using them.

 

Anyone who is sitting in any percentage cash right now is golden. Serious fire sale going on. I caught caught with too much invested .. when the signs were obvious - and friends of mine who I have been discussing for decades - preaching being heavy in cash. No excuse really - but it came quick !

I think Trump did some good things -- Pipelines and decreased regulations - Pipelines - Good for the Environment - Regulations got stupid .. often based on pseudo science and flawed statistical reasoning.

Most of what he boasts about though is smoke and mirrors or had little to do with him. The President has some sway over markets - Trump has attributed himself far more credit than is do .. as does every President.

Completely disagree on your assessment of our capabilities against the current missile threat. I only brought up Musk's comment on the F35 as an example of whats coming - as was Elon.. The Carrier Group vulnerability is just something I know because I like this stuff - that wasn't Elon..

An F35 is still difficult prey - A carrier group ? Not so much. That has been arguably done for 2 decades - most certainly in the last decade.

The Russian's couldn't match us plane for plane - ship for ship after the wall fell. So they focused on niche technologies - missile being a big one. You can build alot of missiles for the price of a 15 Billion dollar carrier - along with companions - and operating costs.

The Sunburn anti-ship missile came out in the early-mid nineties. Supersonic sea skimming cruise missile - from being detected at the horizon the ship has 45-50 seconds to react. We had no defense at the time. India joined forces with Russia shortly after their version is the Brahmos and China shortly after that.

The next gen Russian missile technology P-800 Oniks - 2002 - was faster - stealthy -does evasive maneuvers and then became smart. The speed of these reduced reaction time down to 25-30 seconds.



The ability to hit such a missile is extreme on the difficulty scale... but it matters not. Even in the best case - granting all claimed ability.. A Carrier's defenses can be overwhelmed - and frankly oversaturated by numbers.

That's with the older stuff - the ghoulish abilities of these missiles now is only hinted at by Iran's demonstration of its technology - including drones.

You have 3 nations working on this stuff - The RCI - consortia. Now we have hypersonic missiles to contend with. India tested its hypersonic not too long ago.

 

Good conversation. I like to think we are prepared to fight most wars if it were to come to that. I think we have some technology that the Chinese haven't yet stolen from us that can do what we need. In the past several years we have mostly been fighting proxy wars though and not with our latest and greatest hardware.

I don't think Russia wants to wage war against us no matter what missiles they may have. I don't think we would want to war against China. We have the military might but they have so many people that would just keep coming. It would be a lot worse than Vietnam.

I'm pretty sue we have stuff like EMP's that could disable at least command and communications, probably entire cities. I think we may have some smaller tactical nukes too that could be used without doing too much damage.

So even if Russia, India or China has hyper sonic missiles, we probably do too. Our ICBM's are still a pretty good deterrent. I don't know if any country would risk taking out any of our carriers. We would fight back if we didn't preemptively strike first. We may be a little behind in cyber warfare. The conventional navy ships we have is probably best for deployment or staging in places like the middle east. I don't know I'm no expert on the subject.

Yes, Trump is sort of a big blowhard who likes to toot his own horn. He's always been brash and ostentatious. Now he's becoming a politician. He has screwed up and will again. I don't like his unpolished style, but he has gotten a lot more done than most ever expected of him and with little or no credit from MSM or most democrat politicians who have been collecting pay checks for years with little or nothing to show.

 

Since the bomb - there really is no such thing as a war with Russia. So in terms of preparing for war - we need not worry about the nuclear equipped nations too much. If the nukes start flying - is over. Not even a full out nuclear war - the idea of doing a land invasion of Russia - China or other nations now .. they would nuke your ships out of existence at some point.

So what need we be prepared for - who is this enemy at our gates that we fear so much - that we need to rush to build more conventional weapons .. to fight some massive conventional battle that will never happen. You are correct - the Russians do not want war. We were the ones that forced them into this arms race to begin with. We have been the nation pretending that having a big conventional military means something. Their missiles are for defense .. and a good one. Russia has one aircraft carrier - and we are not even sure if that is working most of the time. It matters not ... we can nuke each other into oblivion - we are not going to war against each others homeland.

No - we don't have hypersonic yet .. we were a decaded behind when the sunburn came out and have not really done a whole lot since then. Remember - we need Russian Rockets to get to the space station and launch our satellites - we dropped the ball on that one - Elon will save us.

We will have it .. just we have not taken the time in the past. The point is not that we don't have missiles to take their ships out .. we do ! Russia's whole one carrier. .. the point is that our carrier fleet is obsolete against this technology - and this technology is spreading. This drone technology is getting way out of hand... or should we say "Drone Missiles" that you can pilot into your target like in a video game.

Surely we don't need 11 full size aircraft carriers and another 7 mini ones .. to fight Al Qaeda.

The problem with picking a fight with Iran is that it will be costly - as their missile technology is quite improved and dangerous. We have to stand way back in the beginning .. but 2 carriers is plenty for this .. and we have how many airfields in the ME.... Many of which will be destroyed .. but .. hey .. its war. I doubt we will be fighting Iran even - although that would be the biggest threat from a conventional military perspective ? Who else .. Yemen , Syria, Libya ?

Trump is a showman - but he not done anything radically different than any other Red President has done. The left is stupid. All they had to do was present their plan and allow Trump to shoot himself in the foot. Blue was so bad that at some point the root for the underdog instinct kicks in. specially because they don't have a clue what to do either.

You don't fix 3 decades of out of control deficits in 4 years - 3 decades of outsourcing our manufacturing base - at least 2 decades of ignoring infrastructure .. and so on.

Reagan had the benefit and updraft of the boomers being in their high spending years.. guess what phase we are in .. - "Low spending Years".. and they are also in their high healthcare cost years.

Chucky was calling for 750 Billion in stimulus spending .. he was "Trumped" by a call for 1 Trillion - that will perk the markets up !

A Trillion dollar nitro injection.

At some point - all the kings horses and all the kings men - will not be able to put poor humpty back together again.

 

I'm changing the subject some. We were and still are in the ME so we wouldn't have terrorist's threating us on our soil, so our elected leaders say. They are here anyway. We let them in. Cheating is a way of life for ME students. They consider it helping each other. They are more dangerous than a schizophrenic with a butcher knife because of there fanatical religious based beliefs. If any of them were to get their hands on some radioactive material, one or more of them would no doubt explode a dirty bomb in a major city. It wouldn't even have to be NYC. It could be London. Where it happens doesn't make that much difference. People here would still panic and prep for the world to end. It would cause more economic chaos that anything I can think of besides a bio weapon without a vaccine or antidote. I'm thinking China may have done this, at least halfway intentional. Their economy was not in great shape. They went along with Trump for 3 years but now seem to be backing Biden mainly through misinformation. Russia is not who we should be worried about. Shitt for brains and company got that completely wrong but probably 60% of our population or more bought it. China is our greatest threat. They are now proving it by trying to spread lies about the USA and Trump here and around the world. Our complacent MSM is helping them.

So this may sound like a conspiracy theory but there is a connection between Iran who hates us and China who doesn't really like us. China buys oil from Iran and gives them aid and some of their technology. I think that is why so many people in Iran that are infected with the coronavirus. They have been in close contact with the Chinese who have been working there and trading with them. I also think that China is behind a lot of the volatility in the stock and bond markets. They have backdoor connections with hedge funds here who short out markets, other institutional traders who are using high frequency trades to create very unusual volatility. China has over a trillion invested in the US markets and probably more in US real estate. If they can disrupt our economy they can do exactly what Soros does in every bear market. Cause chaos, watch the markets nose dive, tank, wait for capitulation and then scoop up billions of equities and bonds on the cheap.

I don't care too much about our military weapons. Defence contractors provide a lot of jobs. Our military and all the civilians who work on military bases all have jobs they might not otherwise have. And, we need them, for a number of good reasons.

 

I agree that China is our biggest economic threat/competitor on the geopolitical chessboard. Neither China or Russia is a military threat.

In terms of "terrorists" The risk of harm to a US citizen from a terrorist is 400 times less than the risk of harm from "walking" - you heard correctly. The risk right now is also fairly low - being higher in the 70s when stats started to be kept.

As for the ME - if you walk over to a hornet's nest and hit it with a bat - one is a fool not to expect to get stung.

It is not about the jobs and stuff - I am fine with that - the problem is padding the pockets of the international financiers that own the Military Industrial Complex - and the influence over foreign policy - and domestic policy - same folks who own the healthcare and insurance Oligopolies.

Worry not about China - or Iran - these are the folks who have enslaved us.

 

International financiers … I have always thought that a lot of the old money like the Rothchild family is still very much in business and still quite influential internationally.

I don't fear Iran that much but some of them are so fanatical that we can't predict what they might do. If they do anything really significant, we can flatten them but probably won't largely because of China. So I do fear them for that reason. Yep, we somehow let most of our technology and manufacturing go to China, I guess because of greed. They do pretty good work, and much cheaper than we can here. So how did our powerful labor unions, cough, cough let that happen?

 

I call it the Rothschild Rockefeller consortia - Most of the big international bank owners are members of the same club. Wiki State Street.

"It is one of the largest asset management companies in the world with US$2.511 trillion under management and US$31.62 trillion under custody and administration. It is the second largest custodian bank in the world"

Think the largest is Mellon - 32 under "Custody and Administration" So roughly 64 Trillion - in these two banks. Who owns that wealth - and they sure did not make the Forbes "Richest List". The top is 100 Billion - just that amount puts 640 other 100 Billionairs out there. It is more like this family owns a Trillion - that family owns Two. What does the biggest family own ? - 10Trillion ?? ..

The idea that Putin has more sway over Trump than these guys .. is laughable nonsense on steroids. Was it " Heir Putin" that bailed Trump out ? Nope - was these guys.. and the fellow working for a Rothschild bank "Wilbur Ross" - who actually did Trumps bankruptcies was appointed commerce secretary - quit pro quo.

Comparing the influence of Putsky in our process to these guys - is like comparing a raindrop to a Hurricane. The guys .. own most everything that isn't nailed down.

 

There is a list of the 25 largest hedge funds in the US (I googled it but didn't save it). Oddly, Soros isn't on that list. Maybe some members of the Rothschild family that have migrated here are listed but I didn't recognize any names. Only company names were listed and I only recognized a few. I'm pretty sure though that they are doing a lot of the high frequency trading, day trading and shorting of markets. They are responsible for a lot of the volatility and probably making billions off this virus scare.

 

If you look at the share ownership of the Fortune 100 - you will see "State Street" - and a few other names - on near every one. The families - aka "Consortia" will control enough to control the BOD.

Hedge funds are peanuts .. the largest is Bridgewater - 132 Billion .. next is like 68 Billion Renaissance.

I previously listed just two banks - with over 62 Trillion under "custody and management". 132 Billion is a rounding error.