We are now in a recession and it isn't Trumps fault !

Discussion in 'Current Events' started by Quadhole, Jan 15, 2019.

  1. Quadhole

    Quadhole Well-Known Member

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    Below you will see the charts supporting the discussion, the man telling you this in the article is a brilliant economist. Been around for 50 years and knows the system very very well. We never in the MSM or FOX news admit that we are in a recession until we have number proof for 3 quarters in a row. A psychological blip no one admit slows the economy even more. Besides, the Politicians, FED, Gov't as a whole consider slowing down as not good. We cannot expand exponentially forever and think it will work, it never has and never will.

    We are now contracting the money supply. No more free money to the rich which will slow the economy and wall street even further this year. Before Summer the FED will either have to cut rates or stop QT to satisfy Wall Street. Earnings will drop ACB in the S&P and the market will fall if they dont.
    There is not a chart below that does not scream full on rec. and the collapse is here without help from the GOVT to kick the can further....



    Collapse In Global M1 Signals A Worldwide Recession Has Arrived



    By now everyone has seen some iteration of this chart showing that the annual change in central bank liquidity is now negative.

    [​IMG]
    Another way to visualize just the Fed's balance sheet contraction is courtesy of this chart from Morgan Stanley which shows specifically which assets - Treasurys and MBS - are declining on a monthly basis.

    [​IMG]

    When it comes to markets - where the events of December were a vivid reminder that just as QE blew the world's biggest asset bubble, so QT will deflate it - there is a simple explanation of this negative effect of QT on Markets - in terms of both flow and stock - and it is laid out as follows from Morgan Stanley:
    Fed presidents of, course - a more pressing question is how will the upcoming liquidity shrinkage affect the global economy.

    Unfortunately, the answer appears to be ominous.

    As the following BofA chart shows, global money supply has declined rapidly over the last year and a half. In fact, global money supply growth (using M1) is now flirting with the lows seen in mid-2008. And while some economies, such as China, are now pivoting back to supportive measures, BofA's Barnaby Martin warns that high global debt will constrain economies’ enthusiasm for engaging in further rounds of stimulus. Meanwhile, as the chart below suggests, lower money supply growth has often pointed to weaker global economic momentum going forward. In fact, if one uses Global Industrial Production growth as a proxy for the global economic expansion, or contraction, the World is now almost certainly in a recession; the only question is when will economists acknowledge it.

    [​IMG]
    The message from the chart above has also been heard loud and clear in high frequency economic indicators (at least in those countries where the government is not shut down and where data is still being reported), with the number of consecutive days of negative global data surprises now approaching the longest since the financial crisis.

    [​IMG]

    And just to confirm that the collapse in Global M1 growth is a major problem - perhaps the biggest for the global economy - Morgan Stanley shows the following chart which confirms that every time M1 has dipped negative - as central bank liquidity injection either slowed or went into reverse - there has been a financial crisis: whether the 2015 EM and Manufacturing Commodity Recession, the Sovereign Debt Crisis of 2011, the Global Financial Crisis and US Housing bubble burst of 2007/2008, the Tech Bubble burst of 2000 and so on.

    [​IMG]

    Needless to say, the above charts confirm that the key variable for the global economy is not whether the Fed stops hiking or starts cutting rates (although any further rate hikes will surely have an adverse impact on global liquidity), but whether the Fed - and other central banks - pause their balance sheet shrinkage, and once again start actively injecting liquidity into the global system, or soon enough we will be looking for the best description of "[insert here] crisis of 2019."


    [​IMG]

    Gordon Long
     
  2. Quadhole

    Quadhole Well-Known Member

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    The lack of Views and Comments show just how obtuse the public is in today's world. Unfortunately it is Money, and the power that comes which drives every other thread on this section. Yet, people would rather comment on the hate, the diversity, the people vs the underlying problems we have. Truly is amazing how they control the SHEEPLE and how they think, what they comment too, where their head is...
    The Proof is right here, they have us where they want us. Not caring about the important problems and bickering about worthless CRAP !
     

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