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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

#181

Post by streetcat1 »

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…

It would not be worse than 2008. since what happen in 2008 is known, by definition it is already prepared for and backed into global risk assessments.

It can only get worse if there is something that was NOT present in 2008 will manifest itself.

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

#182

Post by SuoDuanDao »

datpuz wrote: post #141

I asked this in a similar thread a couple of weeks ago, but I feel like the sentiment is a lot more pessimistic today than it was then. Anyway, I've been holding way too much cash for the last two years in anticipation of a recession. Everyone was telling me that trying to time the market is a bad idea and that I should just invest and forget about it, but given the current signals, might it be a good idea for me to…

Statistically, the only months with average declines in the stock market since 1950 have been August and September. If I were you I'd hold out 'till Oct. 1, and not a day longer. Two years and two months isn't that much worse than two years, and you'd really kick yourself if you turned out to be right after all.

Also, setting a fixed date will probably help you come to terms with it psychologically.

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

#183

Post by roymurdock »

sxcurry wrote: post #171
roymurdock wrote: post #151

Earlier quoted context omitted.

My question is what is the point of the trade war. What does trump get from initiating/escalating it, or who is directing him to do it. Seems to be a net negative for all sectors of the economy.

As Paul Krugman says, "What looks like raw ignorance and prejudice is, in fact, raw ignorance and prejudice".

Come on this guy is the president of the US people need to stop calling him ignorant and dumb just because they don't like aspects of his persona (racist/greedy/cunning/divisive). He is surrounded by aides and business people giving him information and trying to forward their own agendas. He's not just sitting there thinking "wouldn't it be fun to start a trade war to look tough".

I respect Krugman as an economist but not as a political pundit, he needs to dig harder than resorting to the age old "don't ascribe to malice what can be explained by stupidity". There is already some simple logic (trade war = tough = re elected) behind the decision, I just believe there is more to the story that we don't see.

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

#184

Post by hnModsRDanger »

frandroid wrote: post #131
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…

> investment community's realization this might not be true Took them a while to see what everyone else can see in plain daylight...

To be fair, many industries have incentive to predict good markets.

Automotive, luxury, finance, etc... None of these benefit from recessions.

These people need to sell you, that you will have a job tomorrow.

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

#185

Post by kkotak »

elamje wrote: post #160

A very useful caveat from the insightful, and cautious, Howard Marks - > In that regard, the Financial Times noted on June 1 that “the [yield curve] has ‘inverted’ before every US recession in 50 years.” (Note, however, that this is different from saying every inversion has been followed by a recession.) https://www.oaktreecapital.com/docs/default-source/memos/thi...

Akin to - "It always rains on my birthday. It's raining today - it must be my birthday."

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

#186

Post by datpuz »

apo wrote: post #149
datpuz wrote: post #141

I asked this in a similar thread a couple of weeks ago, but I feel like the sentiment is a lot more pessimistic today than it was then. Anyway, I've been holding way too much cash for the last two years in anticipation of a recession. Everyone was telling me that trying to time the market is a bad idea and that I should just invest and forget about it, but given the current signals, might it be a good idea for me to…

What would you turn the cash into if you weren't holding it?

I guess just index funds

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

#188

Post by magduf »

roymurdock wrote: post #165
cjrp wrote: post #157

Earlier quoted context omitted.

> What does trump get from initiating/escalating it Kudos from his base, enhances his "tough guy" image, helps his 2020 campaign.

I've heard that argument but it's wrecking parts of the ag sector, hurting manufacturing (big parts of his base), and will probably push all consumer prices up. I guess if his base can't put 2 and 2 together that prices are rising due to his tariffs it almost makes sense. But I don't think it's that simple, he's clearly a coin operated guy so which coin is operating him to escalate this trade war?

>I guess if his base can't put 2 and 2 together that prices are rising due to his tariffs it almost makes sense.

His base really can't put 2 and 2 together. You seem to think it's obvious that tariffs will cause prices to rise, but you seriously underestimate just how stupid these people are.

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

#189

Post by neplus »

gniv wrote: post #169
neplus wrote: post #35

I find the general interest of the public in inversions - similar to their interest in negative yields - a bit surprising. I suppose it must be due to these concepts seeming counter-intuitive. Some brief notes, not all of which are meant to tie seamlessly together: 1. What's the lag time? Inversions in the past have had rather large lag times before recessions actually began (most recently they've been 24 months, 13…

> Because US auctions can't fail - primary dealers need to act as a back stop - you've had firms like JPM and BofA taking on huge amounts of treasuries. This has really clogged the o/n repo market and is beginning to distort bank balance sheets. I haven't heard about this. Any public reading material?

Sure, it's slightly complicated. Some may quibble on my somewhat explicit wording, but under the primary dealer system the Treasury can unequivocally ensure that auctions clear lest designations be stripped. It's hard to articulate how much an auction failure would disturb money markets. Therefore, clearing bond auctions is the highest possible priority of the Treasury and FRBNY and you saw JPM in Dec 18 taking it on the chin to make auctions clear (as there was surprise about the utter lack of foreign interest).

"The FRBNY also expects primary dealers to demonstrate their continued commitment to the market for Treasury securities by bidding meaningfully in all Treasury auctions. If a dealer fails to bid meaningfully in an auction, the FRBNY typically contacts that dealer to remind it of its so-called "underwriting" responsibilities."[1]

[1] https://www.treasury.gov/resource-center/fin-mkts/Documents/...

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

#190

Post by turk73 »

Anon1096 wrote: post #60
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…

We've already seen this in 2008. The funds will go down, then once the recession passes will return to normal. Long term holders have little to fear.

That's a pretty naive assessment. The reason stocks came roaring back was because of Quantitative Easing. There is no guarantee that further new easing could have the same effect. Governments worldwide basically bailed everything out by adding mountains (TRILLIONS) of new debt to replace the debt that vanished by write-offs.

It was all highly unethical to bail out Wall Street at the cost of Main St. Regular people got fucked big time.

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