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

nytimes.com

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

#211

Post by tim333 »

briandear wrote: post #138
jonknee wrote: post #127

Earlier quoted context omitted.

Currently it's devolving into tariffs on everything. Like Europe's 25% tariff on Harley motorcycles. They're getting hit on both ends too because their inputs are also hit (steel being the big one). Tariff in and tariff out, it's ridiculous.

Actually the tariff is 31%. An increase of 25% over the existing 6% tariff. If Europe is so concerned about tariffs, then why did they have a 6% tariff in the first place? That’s the point of this “trade war” — countries already have tariffs. It’s disingenuous to complain about American tariffs when the EU has built their protectionist model around doing just that. France has a bunch of “protected” industries and the…

Most of the world has been reducing tariffs and bringing in free trade agreements like NAFTA, the EU single market, the almost passed Trans-Pacific Partnership and so on. Trump is kind of unique in recent times going the other way.

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

#212

Post by mistermann »

TAForObvReasons wrote: post #146
Analemma_ wrote: post #137

Earlier quoted context omitted.

It was even worse than that: the paper had multiple problems, of which the Excel bug was one, but they also chose an outrageously dumb sampling method. Basically, if a country had data for five years, it was weighted five times as heavily as a country that had that data for only one. Which, conveniently, lined up perfectly with overweighting countries whose development matched their hypothesis and underweighting coun…

The benefactors desired a conclusion, and the authors delivered it for them. They served their purpose. That "academic integrity" was not a purpose reflects the state of affairs in economics.

And people are using it today as "proof" to support their preferred flavor of an economic system.

Anyone who's been even an armchair observer of economics for 20+ years should know well how silly these conversations can get.

Just as one unimportant example: Bond vigilantes used to be a term you'd encounter regularly, when's the last time you heard it now?

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

#213

Post by tim333 »

briandear wrote: post #164
jonknee wrote: post #152

Earlier quoted context omitted.

The US charges plenty of high tariffs in return, it's not like the US doesn't protect industries. The EU laid these on in response to Trump protecting the domestic steel and aluminum industry (notionally for national security reasons, which is a joke).

Why was there a 6% tariff on motorcycles to begin with? That tax wasn’t in response to Trump. That tax was to protect EU industry which is exactly the problem. The EU has long engaged in protectionism — when the US does the same, somehow that’s a scandal? Let’s be intellectually consistent here. All tariffs are bad except in the case of dumping.

>Why was there a 6% tariff

I'm not sure the exact details but it was all set in Uruguay Round of the General Agreement on Tariffs and Trade (GATT), spanning from 1986 to 1994 and embracing 123 countries. And then I guess people kind of forgot about it. EU's trade weighted average MFN tariff was 2.3% for non-agricultural products (in 2013) and no one seemed particularly bothered about it till now.

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

#214

Post by forapurpose »

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…

> 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 balance sheet of the federal government (during a business cycle peak). Of course this is going to end terribly.

I'll add the embrace of nationalism. Many of the leaders through WWI and WWII, including Churchill, put significant blame on nationalism for the wars, which is why they supported internationalism including the EU (or the beginnings of it at the time), UN, World Bank, IMF, etc.

Here's Churchill talking about it:

http://www.churchill-society-london.org.uk/astonish.html

If Europe were once united in the sharing of its common inheritance, there would be no limit to the happiness, to the prosperity and glory which its three or four hundred million people would enjoy. Yet it is from Europe that have sprung that series of frightful nationalistic quarrels, originated by the Teutonic nations, which we have seen even in this twentieth century and in our own lifetime, wreck the peace and mar the prospects of all mankind.

...

What is this sovereign remedy?

It is to re-create the European Family, or as much of it as we can, and provide it with a structure under which it can dwell in peace, in safety and in freedom.

We must build a kind of United States of Europe.

...

And why should there not be a European group which could give a sense of enlarged patriotism and common citizenship to the distracted peoples of this turbulent and mighty continent and why should it not take its rightful place with other great groupings in shaping the destinies of men?

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

#215

Post by fullshark »

darkerside wrote: post #195
WhompingWindows wrote: post #118

Earlier quoted context omitted.

The DOW is a very poor indicator of the economy, it's just 30 "chosen" companies that somehow represent the whole US market. You're talking about precision and you use one of the most derided economic metrics.

You're not wrong about that, but I don't think it disproves my point at all. What value exactly are you going to get from predicting recessions within a two year window?

A lot of people don’t even have 3-4 month expense savings in case they lose their jobs. Knowing a recession is coming at some point in next 4 years would help them.

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

#217

Post by debt »

I can see it now...

Investors will mistake the loud pop caused by the bursting crypto bubble for gunshots. They'll jump for cover, becoming scared of tech, but as they do they'll then mistake another loud sound, this time a kaboom, of the AI hype cycle exploding. With it will go chatbots, self-driving cars and voice-powered assistants.

Then there's a rupture and a glow then a mushroom cloud appears on the horizon. People are unsure of what happened. Was that Facebook? Amazon?

Either way, this will tear a hole through the spacetime fabric of tech itself thus causing a black hole of fear; Google and Apple will hold on for dear life as everything around them gets sucked in.

At first a few Bird scooters fly past into the black hole of fear, Uber/Lyft sail by and explode in mid-air as they're sucked in, Zenefits instantly is ripped apart and evaporates creating a sort of Aurora Borealis surrounding the massive hole.

Somehow the blackhole of fear eventually closes and everything in midair tumbles back to sanity. Google/Apple regain their footing and observe the destruction around them.

The only thing left will be a few broken Lime scooters, a robotic arm that makes burgers and shitload of defense contracts.

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

#218

Post by smogcutter »

philjohn wrote: post #170
jonknee wrote: post #152

Earlier quoted context omitted.

The US charges plenty of high tariffs in return, it's not like the US doesn't protect industries. The EU laid these on in response to Trump protecting the domestic steel and aluminum industry (notionally for national security reasons, which is a joke).

Can't respond to the person below you, so I'll have to do it here - the EU doesn't actually make many motorcycles, and people who buy them don't want a harley - they want something fast and reliable, not loud and showy. I would suspect it's a general 6% tarriff on things that haven't been included in a trade deal before, and thanks to WTO rules it'll be the same for Japanese motorbikes as well.

That's what I would've thought too, but in 2017 Harley sold 140k bikes in the US and 40k in Europe. So probably a fraction of the Japanese brands, but definitely a significant portion of Harley's business.

http://investor.harley-davidson.com/our-company/motorcycle-r...

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

#219

Post by mistermann »

jedberg wrote: post #100
scrooched_moose wrote: post #15

Earlier quoted context omitted.

Ford has been sliding for 5 years: https://finance.yahoo.com/quote/F?ql=1&p=F GE has been in freefall: https://finance.yahoo.com/quote/GE?p=GE&.tsrc=fin-srch Honeywell has basically been stagnate since January: https://finance.yahoo.com/quote/HON?p=HON&.tsrc=fin-srch Same with 3M: https://finance.yahoo.com/quote/MMM?p=MMM&.tsrc=fin-srch The S&P500 index as a whole has crept up a little but many of them are struggling…

It's interesting if you look at the winners and losers in the S&P500, most of the winners are new tech, most of the losers are old tech or non-tech. So the question is, are the new-tech companies the only thing propping up the S&P500, or are they truly the "new economy" and will continue to thrive while all others fail?

This sounds pretty familiar to the broader economy and labor force. New economy companies on the coats are killing it, enough to make overall GDP look spectacular, but if you look behind that impressive headline number and the corresponding don't worry be happy cheerleading, things don't look so pretty.

I sometimes wonder if this inconsistency between perspective of view of the same reality might also have an effect on individual opinions.

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

#220

Post by dgacmu »

samsonradu wrote: post #197
samsonradu wrote: post #182

Earlier quoted context omitted.

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 th…

@dgacmu Cannot reply to your comment so I will here. > For any investor, there is a point in the mortgage interest rate vs risk-adjusted returns space at which investing is better. That point may differ, of course. I agree there always is a point, what I think is that the risk-adjusted return should be much bigger to be worth taking. The spread between the mortgage rate and the stock market return usually is not that…

Right - but what you just said was an expression of your risk/reward preference. :) But also, in the US, there's a pretty large contingent of mortgage holders who have (You don't need to account for inflation in that return calculation, since the mortgage rate is also affected by inflation.)

If you're me -- 42, great job security, relatively small mortgage relative to income, and in a high tax bracket that's unlikely to change soon -- it's a no-brainer: Take the risk and go for higher long-term expected yield. A recession just means I keep doing what I planned to do anyway - working and saving more money for retirement.

If you're 60, planning on retiring in 5 years (and so about to drop into a lower top marginal tax rate), and in an industry with uncertain job prospects ... suddenly paying off the mortgage looks more attractive from a risk minimization perspective. Or at least splitting the difference.

[1] Most people who took out or refinanced mortgages in Jun 2012 - Jun 2013, and 2016 https://fred.stlouisfed.org/graph/?g=NUh

The "or refinanced" is important, because when rates were that low, a lot of people had a strong incentive to refinance, so the actual distribution of outstanding mortgages is biased towards the lower rates. [2]

[2] This is a study from 99, but the point remains: https://www.newyorkfed.org/medialibrary/media/research/curre...

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