‘A Powerful Signal of Recessions’ Has Wall Street’s Attention • Hacker News Board

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#181

Post by [deleted] » Mon, Jun 25, 2018, 9:29 PM UTC

bunderbunder wrote: post #29

frockington wrote: post #20

Earlier quoted context omitted.

The Fed is reducing its budget sheet which will have a significant effect on the yield curve. Inviting comparisons between the yield curve now versus any other point in history is foolish. These are probably the same people who predicted a recession when Trump was elected, after Brexit, and at least once a month for the last decade

Can you elaborate more? I'm out of my area here, but it seems like it's only foolish to say that the yield curve isn't an indicator of a possible recession if we can identify a specific mechanism that typically causes both inversions and recessions, and can also determine that that mechanism is not at play here. Otherwise, it may be that the Fed reducing its budget sheet is irrelevant, or is a factor that is only exa…

[deleted]

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#182

Post by samsonradu » Mon, Jun 25, 2018, 9:29 PM UTC

timr wrote: post #180

samsonradu wrote: post #172

Earlier quoted context omitted.

I really don't understand why you are being downvoted. I've been checking /r/investing for a while now and the general advice is to put all you have into the stock market (diversify) and HODL. Everyone says there's no way the market can underperform on a longer run and you can't time it so don't bother. When someone brings back 2008 they downvote it to death and reply that it went back up so it will be all fine. When…

"Japan would like to have a word with you." Indeed. But more prosaically, many of these HODL types are discounting how much they'll actually freak out at a market correction. They've never seen a 30% drop, or lived through a five-year correction (let alone an extreme situation, like Japan). Even if you have the stomach to handle the drop, things happen on a five-year horizon that people don't consider: extended unemp…

It's worrying indeed how most people just take growth for granted and don't want to at least consider alternatives.

Btw, here's a talk I found interesting regarding growth and the future of the economy: https://www.youtube.com/watch?v=KKLDevYyE9I&index=13&t=0s&li...

One part I liked regarding the Madoff scandal:

Obviously, you were like how could these people be so stupid to give this person all this money? Didn't they read the details? ... But one of the reasons it happened, psychologically, was because people thought 8-10% with 0 risk was perfectly normal. That's why nobody asked any questions.

EDIT

And regarding my Reddit rant, also scared me that many people don't pay off their mortgage because they get a better return from the stock market, something I find quite wrong unless you're living in a hyper-inflation economy (which is not the case in the developed world)

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#183

Post by j45 » Mon, Jun 25, 2018, 9:38 PM UTC

bla2 wrote: post #12

j45 wrote: post #2

Is there a way to see NY times articles? Hn links to NY times always brings up a pay wall.

A bit easier but also more expensive than the other options mentioned: Pay for a NY times subscription.

I happily pay for a number of subscriptions.

Sites like The Guardian, New Yorker, Atlantic, etc seem to do a better job. Newspaper funnels are entertaining - I spent some years in the newspaper world when this experimenting with paywalls started.

As a technologist, I see value after consistently accessing more than a few articles a month.. closer to 10 is where I see enough value to pay. I'm sure I'm only one persona though in their funnel.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#184

Post by tpm » Mon, Jun 25, 2018, 9:57 PM UTC

briandear wrote: post #160

s2g wrote: post #143

Earlier quoted context omitted.

Can you really not see the difference between the reasonable protectionism practiced by every country and the current trade war?

There is no such thing as “reasonable protectionism” unless you are dealing with dumping. Harley could hardly be accused of dumping. So why a 6% tariff in the first place? EU clothing tariffs already average 12% in many other categories it ranges from 4-36%. So is the EU protecting nearly every industry? Isn’t that the point of this “trade war” — the EU has been applying tariffs to almost everything for a long time.…

The tit didn't start with the Trump tariffs, but Trump also effectively stopped TTIP negotiations, and TTIP would lower trade barriers between US and the EU. This was a prelude to the current trade war with the EU. Which is very unhelpful, he should just concentrate on China.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#185

Post by ak39 » Mon, Jun 25, 2018, 10:04 PM UTC

ISL wrote: post #112

Eridrus wrote: post #77

Earlier quoted context omitted.

Looking at the table, it's odd that only "inversions" are counted as predictions, and there seem to be far more cases where it got "close" to zero, but not quite there. Without a good explanation on why that exact point is so critical, I am a bit skeptical that this is anything but noise. If there is a good explanation of why it is critical, then we're not really in worrying territory yet either then, because we're n…

An inverted yield curve is an explicit statement that bond buyers expect the near term to be worse than the long term. When the yield on the long-term note is smaller than the short-term yield, and buyers would still rather buy the long-term note, something is afoot.

Correct. This is the only rational explanation for the inversion. There is nothing else to imagine about the negative (inversion). Whether the number is "gamed" or just a single statistic makes zero difference to what the market is actually saying about debt instruments: "we care about now than the future".

What is afoot, as you say, is clearly a lack of confidence in longer term markets resulting in a move towards keeping asset in cash. Or those strange commodities like gold.

I personally believe global markets are in for a rough ride very soon. Brexit is not going to help much either. DT is going to have no time for Twitter.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#186

Post by gepoch » Mon, Jun 25, 2018, 10:09 PM UTC

hestefisk wrote: post #176

Someone should A) run a neural network across thousands of historical economic / financial metrics and find the best predictor B) ?????? C) Profit!!!

B is where you overfit your model and D is where oops actually we didn't profit :(

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#187

Post by Mountain_Skies » Mon, Jun 25, 2018, 10:14 PM UTC

jpao79 wrote: post #161

simonsarris wrote: post #73

People often note, like another comment here notes: > since 1960 there has been a US economic recession once every 5 to 10 years. The last one ended in 2009, 9 years ago This is an interesting line of thinking, but I think it's a mistake. We can use this fact itself and circumscribe some meta-thinking around it. Put the same fact another way, this is arguing that the 1960's started a brand new paradigm that was mater…

So some random thoughts on the case for this time its actually different are: 1.) The internet and computing has increased the flow of information. Investments in data mining and data science by the Fed lets it make better decisions and test stuff iteratively and react to changes faster. Companies can also track inventory in a more controlled manner and not build too much too fast. Employees can find prevailing wage…

Your second point is interesting since the US Dollar is the primary currency used for the oil trade. Demand for dollars beyond our borders lets us export our debt through inflation. If there is less reliance on oil, demand for dollars to service that market goes down and so does our ability to pass part of our debt off on to everyone who holds dollars. No idea if this is a large enough effect to matter or if there are other feedback loops that counteract it but decreased oil usage could have its own negative economic effects that aren't immediately apparent.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#188

Post by omegaworks » Mon, Jun 25, 2018, 10:14 PM UTC

> in the United States, where borrowed money is the lifeblood of economic activity

Does it work differently elsewhere?

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#189

Post by Mountain_Skies » Mon, Jun 25, 2018, 10:20 PM UTC

Animats wrote: post #122

There's not much question that a recession is coming. But when? And what form will it take? The last recession was driven by a price collapse in housing. That was unusual. The next one is more likely to be driven by trade problems, which is more common historically. Also, the last few years have seen a lot of investment into stuff that's not paying off, and after a few years, that comes back to bite you.

Perhaps the next thing will be large scale consumerism exhaustion. Consumers not getting the same thrill out of a new car or the latest iDevice that they used to stop buying so much new stuff. Not for ecological or ideological reasons but just out of boredom or exhaustion of the consumer cycle. Even fashion trends seem to be slowing down with less and less reason to buy a new wardrobe as often.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#190

Post by ttul » Mon, Jun 25, 2018, 10:20 PM UTC

akhilcacharya wrote: post #155

throwaway5752 wrote: post #78

The difference is that a powerful group of people is enacting policies that have triggered recession/depression in the past and no good historical precedent/academic support for working. It's seems kind of crazy to me we're ignoring that part. We're starting trade wars on multiple fronts, exiting or weakening multilateral alliances (and simultaneous giving an advantage to our global adversaries), and weakening the ba…

>Of course this is going to end terribly. It is basically guaranteed to do so unless the business cycle has stopped for good (unlikely). The question in my mind is who the scapegoat is going to be, and how much denial there's going to be if the real effects of slowing growth start becoming apparent.

With any luck (sorry), the crash happens just prior to Election Day.