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Predicting Next Recession

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Re: Predicting Next Recession

#21

Post by lordnacho »

I'm not gonna put out my own model, but this one seems strangely, suspiciously well fitted to the historical data.

How can you have a model that gives a 100% chance of something happening in the future? Yet that's what it says during the last recession. And it falls off a cliff when the actual recession ended in June 2009.

I was alive and trading during that time, and I reckon the business cycle would be quite easy to predict -as in, the model would be in a textbook- if you could be that confident of recession one day and the opposite the next.

Re: Predicting Next Recession

#22

Post by buboard »

perspective1 wrote: post #20

There's so much effort put into timing the next recession. It's not just that they can't even do that with meaningful certainty-- it's that they also can't tell you how significant the recession will be. I mean, with full employment right now, of course a recession is on the horizon (who knows when). But, going from full employment to 1% less doesn't mean the economy or its people is even worse off than they were 2 y…

> There's so much effort

Because there is nothing else to do? Whatever happens to the market it keeps going up. There is little reason to search for an upturn (and you don't want to jinx it), so they are searching for a downturn.

Re: Predicting Next Recession

#23

Post by take_a_breath »

NPMaxwell wrote: post #18

The 1929 crash and the 2008 crash that started the great recession were both caused by uncovering the bezzle. The "bezzle" is what Galbraith called fake monetary supply: money that doesn't exist because it has already been embezzled (but still shows up on accounting statements). Trump signaled that there would be very lax regulation, meaning "your bezzle is safe from us." The next crash will appear when major corpora…

If your hypothesis is correct, we have the signal:

“A total of 1,160 CEOs in the US have left their jobs in the first nine months of 2019, according to data from recruitment firm Challenger, Gray, & Christmas. That’s up 13% from the same period in 2018, and the highest turnover at this point in the year since the company first began tracking CEO departures, in 2002.”

https://qz.com/work/1727662/why-ceo-turnover-in-2019-is-at-a...

Re: Predicting Next Recession

#24

Post by take_a_breath »

madengr wrote: post #4
viburnum wrote: post #2

Most recessions are easy to predict because they’re intentionally triggered by central banks with the aim of controlling inflation by putting a lot of people out of work.

Then why not short sell stocks and become rich?

Stocks aren’t necessarily an indicator of economic strength. The S&P 500 is in an earnings recession right now, but continues trading at all-time highs. The market can stay irrational longer than you can stay liquid.

Re: Predicting Next Recession

#25

Post by michalu »

During the height of the bitcoin bubble I had my gym coach leave job and become "crypto investor" ... Katy Perry changed her nails to each look like one of the popular coins. And yes I did have an uber driver talk to me about crypto. The mainstream media were shilling Ripple at its highest price ever.

Today, all the same people talk about coming recession.

I was lucky to have my first job in finance during the credit crunch crisis. Until it was over media we're adamant it's just a correction. We did not believe it either ... we all thought it's a good time to buy cheap before the next bull run. Only about 3 people actually predicted it (even though AFTER the recession media came up with a dozen people who claimed so - none of them ever made any bets on it)

It's hard to imagine recession come when everyone expects it.

Re: Predicting Next Recession

#26

Post by hogFeast »

lordnacho wrote: post #21

I'm not gonna put out my own model, but this one seems strangely, suspiciously well fitted to the historical data. How can you have a model that gives a 100% chance of something happening in the future? Yet that's what it says during the last recession. And it falls off a cliff when the actual recession ended in June 2009. I was alive and trading during that time, and I reckon the business cycle would be quite easy t…

I think the 100% is when the data shows the recession is occurring i.e. if a recession is occurring now, then the chances of one occurring in the next 3 months are clearly 1 (I get your point however...it is odd). There are other factors in the model aside from the ones with charts.

The model isn't in a textbook because predicting the economy is nothing to do with economics as it is taught at universities. Economists use complex structural models because they are fun to teach and create barriers to entry. This is why DSGE models are so popular in universities, govt, and central banks but barely used anywhere else.

If you want to forecast the business cycle, you just need linear regression. You can't ever be 100% (unless a recession is already occurring) because the economy is always changing but basic models are pretty accurate (the BIS has done quite a bit on this recently - https://www.bis.org/publ/work818.htm - funnily enough, the term spread isn't the be all...but economists have a big problem with including things like credit.

Re: Predicting Next Recession

#27

Post by NPMaxwell »

take_a_breath wrote: post #23
NPMaxwell wrote: post #18

The 1929 crash and the 2008 crash that started the great recession were both caused by uncovering the bezzle. The "bezzle" is what Galbraith called fake monetary supply: money that doesn't exist because it has already been embezzled (but still shows up on accounting statements). Trump signaled that there would be very lax regulation, meaning "your bezzle is safe from us." The next crash will appear when major corpora…

If your hypothesis is correct, we have the signal: “A total of 1,160 CEOs in the US have left their jobs in the first nine months of 2019, according to data from recruitment firm Challenger, Gray, & Christmas. That’s up 13% from the same period in 2018, and the highest turnover at this point in the year since the company first began tracking CEO departures, in 2002.” https://qz.com/work/1727662/why-ceo-turnover-in-20…

Cool! I bet it needs to be fine-tuned: % of Fortune-50 companies with CEO departures and losses taken on financial statements > 5%. Or something like that.

Re: Predicting Next Recession

#28

Post by burlesona »

aguyfromnb wrote: post #11
viburnum wrote: post #2

Most recessions are easy to predict because they’re intentionally triggered by central banks with the aim of controlling inflation by putting a lot of people out of work.

> intentionally triggered by central banks with the aim of controlling inflation by putting a lot of people out of work This is the top comment, while someone calling it a conspiracy theory is down-voted. That is sad. The Fed was founded in 1913. The US had recessions in 1785, 1789, 1796, 1802, 1807, 1812, 1815, 1822, 1825, 1828, 1833, 1836, 1839, 1845, 1847, 1853, 1857, 1860, 1865, 1869, 1873, 1882, 1887, 1890, 1893…

Also note how few of those made any real impact on the people of the time or were noteworthy enough that the average person has heard of them.

I think the current finance era may come to be viewed in the same light as the fire-fighting practices of the past century. Always working to prevent the little fires leaves the forest unhealthy and sets up an eventual inferno that no one can control.

Re: Predicting Next Recession

#29

Post by all2 »

michalu wrote: post #25

During the height of the bitcoin bubble I had my gym coach leave job and become "crypto investor" ... Katy Perry changed her nails to each look like one of the popular coins. And yes I did have an uber driver talk to me about crypto. The mainstream media were shilling Ripple at its highest price ever. Today, all the same people talk about coming recession. I was lucky to have my first job in finance during the credit…

When the street gets out, it's time to get in.

Re: Predicting Next Recession

#30

Post by isimluk »

michalu wrote: post #25

During the height of the bitcoin bubble I had my gym coach leave job and become "crypto investor" ... Katy Perry changed her nails to each look like one of the popular coins. And yes I did have an uber driver talk to me about crypto. The mainstream media were shilling Ripple at its highest price ever. Today, all the same people talk about coming recession. I was lucky to have my first job in finance during the credit…

I agree with what You said.

However, You can still have downward spiral even in case "everyone is talking/preparing for coming crisis". Imagine this:

- China going finally bust

- honkong peg to dolar broken (financial companies there going bust)

- australia mining slowdown and property market bust

- australia banking woes

Even though there are money on the sidelines, you can have crisis and even more money on the sidelines during few fearful quarters.

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