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Yield Curves Invert in U.S., U.K

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Re: Yield Curves Invert in U.S., U.K

#121

Post by freehunter »

mrep wrote: post #88
freehunter wrote: post #48

Earlier quoted context omitted.

We had one close call in the mid 90s, about 1995-1996. I don't think it actually inverted but it was within less than one percentage point away from inverting. Luckily, 1995-1996 was the start of the Dotcom bubble, which gave us a few more years before the recession of 2001 hit. We could stave off the coming recession if we had another Dotcom-type bubble, but market corrections are inevitable so it would just be a de…

> We could stave off the coming recession if we had another Dotcom-type bubble, but market corrections are inevitable so it would just be a delay. Recessions aren't some magical part of economies that are required to happen every so often. As freddie_mercury pointed out yesterday [0], Australia, has gone 27 years without a recession, Japan had no recession from 1961-1993 (32 years), and the Netherlands had no recessi…

If there are bubbles, there will be corrections. And the more "bubbly" the economy, the more often there will be corrections. It's hard to quote other, wildly different economies as examples of why market corrections are not inevitable, but Australia, Japan, and Netherlands are not the same economies as the US.

>Recessions aren't some magical part of economies that are required to happen every so often

Correct, but they do seem to be some magical part of America's economy that is required to happen as often as bubbles happen. They're not regular and you can't set your watch to them, but as sure as there is expansion, there will be contraction. And the bigger the expansion, the bigger the contraction.

Re: Yield Curves Invert in U.S., U.K

#122

Post by benmarten »

apo wrote: post #33

Key recession indicator is flashing red. Unlike the stock market, which is both backward- and forward-looking, the bond market is myopically forward-looking. When the yield between the 10-year and 2-year US treasury inverts, a recession is months away. This chart, showing the difference between the yield (or spread), shows recessions in grey: https://journal.firsttuesday.us/using-the-yield-spread-to-fo... Notice how…

10y/2y inverted also in 1998, but recession only came in 2001. so 3years later.... it can be long time until recession ;) note that the 10y/3m already inverted though. its more reliable....

Re: Yield Curves Invert in U.S., U.K

#123

Post by xwdv »

hammock wrote: post #99
paganel wrote: post #46

Earlier quoted context omitted.

> That's partly because the market boom is itself a self-fulfilling prophecy. Stock markets go up because other people think they're going up. I'm really curious how the index funds will behave in the upcoming recession, afaik that was one of their main mantras and selling points, so to speak, i.e. that the market only goes up (or a certain part of the market, the most important part of the market) and that you'd be…

Are you in index funds? Take a look at what they did in 2008. The selling point is not "they only go up." It's "you can't beat the market."

It is a myth that the market can’t be beaten.

You can beat the market if you take more risk and it works out for you.

I’m beating the market right now, I’m up 33% this year still in my portfolio even with all the bullshit that’s happened. And recently, I’ve dumped all the extra margin I was holding so now I’m holding 100% equity in my stocks and paying no interest.

Beating this market since 2010. That’s why my net worth is well above a million with little to no effort.

I took a risk yes, but it’s not greater than the risk of building a startup and trying to make it successful which people seem to have no problem doing around here.

Re: Yield Curves Invert in U.S., U.K

#124

Post by gilbetron »

kaolti wrote: post #87
synaesthesisx wrote: post #22

Market conditions have changed to the point where the yield curve is likely irrelevant, and markets will continue to moon indefinitely.

Not even the universe goes on indefinitely.

It probably does: https://www.space.com/24073-how-big-is-the-universe.html

Re: Yield Curves Invert in U.S., U.K

#125

Post by throwaway5752 »

tlogan wrote: post #116
throwaway5752 wrote: post #109

Everyone serious knew that a trade war would set a recession in motion, and that it would be a trade war the US would lose because of the directionality of the trade. The thought has always been that the president was using a high leverage negotiating strategy (see https://www.newyorker.com/news/news-desk/for-trump-diplomacy... , for example) to extract maximal concessions from PRC. But in the end, most of the people…

And things will be worse because China is also heading into recession. You know, you need sell all these products to somebody... And when US consumer stops buying new iPhones (or what ever) combined with recession then situation is going be really really tough. So this will be worse that 2008. Much worse. Back in 2008, China was growing and helping to ease the recession. I do not think China's economy will grow durin…

The Fed does not have the tools at its disposal that it did in 2008, they have been exhausted. The leadership on either side of the 2008 transition was much better at every level. Also, 2008 was a balance sheet depression that was more tractable to fix with monetary approaches.

What is happening, right now, is literally what happened in the Great Depression (with the concurrent reemergence of nationalism) and is what led to two back-to-back world wars https://www.dartmouth.edu/~dirwin/Eichengreen-IrwinJEH.pdf

Re: Yield Curves Invert in U.S., U.K

#126

Post by radiorental »

frankbreetz wrote: post #94
alkonaut wrote: post #72

It will be interesting to watch a recession that hits with zero or near zero (or even negative) central bank rates together with ongoing market disruptions such as the US/China trade conflict and Brexit. By “interesting” I mean terrifying.

I agree with this, also will we try to pass another tax cut to try to stimulate the economy. It seems to me should use tax cuts, large increases in government spending, and rate cuts to stimulate the economy on a "rainy days". Doing these things during a good economy seems foolish to me.

And Mitch McConnell recently argued the exact opposite. When asked he said (paraphrising) "Why would we increase taxes when the economy is doing well, why would we want to hurt that growth?"

The mind boggles.

Re: Yield Curves Invert in U.S., U.K

#127

Post by rchaud »

voidfunc wrote: post #45

I don't want the economy to tank anymore than the next guy but if it blows up before the 2020 elections and kills President Trump's chance of re-election that would be a fantastic silver lining.

The effects of a recession have to be seen and felt on a visible, visceral level, with a limited lag effect, for it to affect people's votes. In 2008, the subprime crisis led to people's homes being foreclosed on a mass scale while big banks and auto companies got government bailouts and the US was embroiled in two major wars.

That kind of stark contrast ("privatized gains and socialized losses") is easy to grasp, and much more likely to create public outrage regardless of where people sat on the political spectrum.

Since then, there's been so much misinformation and polarization around things like climate change, international trade, unionization, public services, tax cuts, the deficit etc., that even if the markets fall, there will be plenty of blame for political parties to heap on each other, while the working classes and middle classes bear the brunt of the recession, as they always have.

Re: Yield Curves Invert in U.S., U.K

#128

Post by kaolti »

gilbetron wrote: post #124
kaolti wrote: post #87

Earlier quoted context omitted.

Not even the universe goes on indefinitely.

It probably does: https://www.space.com/24073-how-big-is-the-universe.html

In terms of space, yea. I mean there's a cycle of expansion and contraction that happens in time.

Re: Yield Curves Invert in U.S., U.K

#129

Post by ohyes »

hn_throwaway_99 wrote: post #98
cletus wrote: post #82

Earlier quoted context omitted.

I'd just like to point out that the yield curve inverted in 2018 [1] yet here we are. > Prepare for the inevitable recession. It's not different this time. This point is tautological. Of course there will eventually be a recession. No one can say when. There are different factors in every cycle. The QE period is essentially unprecedented. The rise of tech stocks in the last 20 years is a once-in-a-century type struct…

> I'd just like to point out that the yield curve inverted in 2018 [1] yet here we are. As pointed out in the article you linked, what happened in late 2018 was a small section (3-5 year treasuries) inverted. When people talk about yield curve being a harbinger of recession, they're usually talking about the 2-10 year spread, which is what the parent post referred to. You may argue "things are different this time", b…

Okay, I’ll get my shorts in. What date do you think everything will collapse?

Re: Yield Curves Invert in U.S., U.K

#130

Post by JoeAltmaier »

xwdv wrote: post #123
hammock wrote: post #99

Earlier quoted context omitted.

Are you in index funds? Take a look at what they did in 2008. The selling point is not "they only go up." It's "you can't beat the market."

It is a myth that the market can’t be beaten. You can beat the market if you take more risk and it works out for you. I’m beating the market right now, I’m up 33% this year still in my portfolio even with all the bullshit that’s happened. And recently, I’ve dumped all the extra margin I was holding so now I’m holding 100% equity in my stocks and paying no interest. Beating this market since 2010. That’s why my net wo…

Its easy to beat the market. Just say you did!

But seriously, there are always outliers who got lucky. For every one that gambles on a dark horse, there are 1000 who lost that way. And the winner is always, always certain that they knew what they were doing and luck wasn't involved.

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