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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

#131

Post by Bromskloss »

throwaway5752 wrote: post #87
tjr225 wrote: post #33

As someone who (I'm guessing like a lot of others who post here) didn't really have any financial responsibilities during the .com bust and the real estate bust, it will be interesting to have a neck in the game this go around!

This, in a nutshell, is why the human condition is so tragic. This won't be "interesting", believe me. Watch what happens when the body of startups funded by global pools of capital (which are the underlying source of capital for VCs) sees the NPV of software startups vanish as lower expected investment returns smack up against higher risk-free rates. The current software economy is incredibly leveraged and intertwin…

So, it _will_ be interesting, after all!

Now, how do we make money from this?

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

#132

Post by Bromskloss »

madamelic wrote: post #113
johnchristopher wrote: post #108

Earlier quoted context omitted.

> [..] part of the game! Why not trying to spice things up with a baby coming at the same time or your significant other being diagnosed with cancer ? /s Wtf, people :|.

Pessimism is never fun.

Wohoo! :-)

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

#133

Post by ahelwer »

WalterGR wrote: post #104
zukzuk wrote: post #88

Earlier quoted context omitted.

"This time it's different" is literally the last things always said right before the next recession kicks in. A nice, 500 page overview: https://press.princeton.edu/titles/8973.html

Blind link goes to page for: This Time Is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart & Kenneth S. Rogoff (2009)

Aren't those the economists who managed to turn a spreadsheet bug into disastrous worldwide accepted economic policy?

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

#134

Post by ThenAsNow »

toomuchtodo wrote: post #26
scrooched_moose wrote: post #19

Earlier quoted context omitted.

They're down about 10% on the year: https://finance.yahoo.com/quote/WBA?p=WBA&.tsrc=fin-srch Also hadn't seen that news. Interesting.

GE long term is dead as an industrial conglomerate powerhouse, destined to be parted out. Jack Welch turned them into a bank, and then they divested the bank (now Synchrony). Very disappointing.

So at least to GE's credit, the end of Welch's tenure and during Immelt's GE solidified its position at the pinnacle of aeropropulsion and related research (namely, GE Global R&D). Until recently, GE had maintained this excellent reputation and while Schenectady is not desirable for everyone, for those in the physical engineering realms, a GE Global R&D position was coveted and brought it with it significant cachet. Apparently not any more. They've laid off quite a few staff involved in bringing serious technology to fruition (e.g., Ceramic Matrix Composites in gas turbine hot sections). This recent activist shareholder garbage once again brings us back to the persistent theme of destroying the seed corn in favor of short-term returns. It's a real travesty.

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

#135

Post by Bromskloss »

apo wrote: post #99

One way to profit from yield curve inversion: When you see a persistent yield curve inversion, buy the longest maturity treasuries you can find. For example, 30 years. This is counterintuitive because shorter maturities (2, 5 years) will yield more when you make your purchase. However, your capital gains will likely compensate for missed yield after the recession has run its course and return a tidy profit. Alternati…

> When you see a persistent yield curve inversion, buy the longest maturity treasuries you can find. For example, 30 years.

> This is counterintuitive because shorter maturities (2, 5 years) will yield more when you make your purchase. However, your capital gains will likely compensate for missed yield after the recession has run its course and return a tidy profit.

Sorry, could you flesh out the details here? You buy treasuries with a long maturity. What is expected to happen with them after that, and after how long?

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

#136

Post by [deleted] »

ahelwer wrote: post #133
WalterGR wrote: post #104

Earlier quoted context omitted.

Blind link goes to page for: This Time Is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart & Kenneth S. Rogoff (2009)

Aren't those the economists who managed to turn a spreadsheet bug into disastrous worldwide accepted economic policy?

[deleted]

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

#137

Post by Analemma_ »

ahelwer wrote: post #133
WalterGR wrote: post #104

Earlier quoted context omitted.

Blind link goes to page for: This Time Is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart & Kenneth S. Rogoff (2009)

Aren't those the economists who managed to turn a spreadsheet bug into disastrous worldwide accepted economic policy?

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 countries that contradicted it. Frankly I will never be convinced that it wasn't outright academic fraud in order to generate the conclusion they wanted, and I'm angry that they still have jobs.

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

#138

Post by briandear »

jonknee wrote: post #127
shams93 wrote: post #93

Earlier quoted context omitted.

Ultimately they're not raising tariffs on end products, they're raising it on parts, but that will still cause inflation plus unemployment because tariffs on parts will drive production out of the US where it gets taxed on the way back in, so you'll both lose exiting US jobs while driving up the cost of products coming back in as you both make it impossible to produce in the US and also drive up prices.

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 they have the nerve to complain when others retaliate?

For the record, I am opposed to all tariffs and subsidies. But framing this as a Trump-caused issue is intellectually dishonest. He’s just attacking the status quo (wrongly or rightly.)

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

#139

Post by debt »

Bromskloss wrote: post #128

There is something sketchy in the underlying report [0]. In figure 2, they draw what I understand to be a curve of the probability (according to their model) of a recession happening within 12 months. The strange part is that they identify a "critical threshold" (at probability 0.24), and seem to imply that when the prediction goes above that value, a recession happens. That's not how probabilities work. Are they mea…

The probability of a recession rises immediately prior to a recession. When the recession occurs, the probability drops immediately back down below the threshold; as the probability of a back-to-back recession is very low and the conditions that caused the recession immediately change.

So the critical threshold is saying "at any point beyond this line, as conditions remain the same, bad things may happen at a very accelerated rate"

I think that's why the lines jump from .24 or .6 to 1.0(recession) and then back below .24.

So as far as I can tell, they're not saying a recession is guaranteed if the probability increases beyond the critical threshold, but are instead saying the probability of a recession increases more quickly up into the point of an actual recession than our ability to reliably predict and update the probabilities that would predict said recession.

but idk

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

#140

Post by addicted »

WhompingWindows wrote: post #118
darkerside wrote: post #79

Earlier quoted context omitted.

DOW 2005: ~10,000 DOW 2007: ~13,000 DOW 2009: ~8,000 DOW 2009 (later): ~10,000 DOW 2011: ~12,500 A 2 year window of precision is completely useless

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.

Also the DOW constantly drops underperforming companies and replaces them with better ones. Further it would be interesting to see the Dow ex Apple.
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