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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

#351

Post by ummonk »

ethbro wrote: post #290
ummonk wrote: post #248

Earlier quoted context omitted.

I think the difference this time around is that the largest tech companies (Apple, Google, Facebook, Microsoft, to a lesser extent Amazon) are generating healthy profits. So while there is likely an issue with a lot of the unprofitable unicorns, the industry as a whole won't collapse.

It seems like one of the key characteristics in a crash is a domino effect. Whereby companies' financials that previously looked solid are suddenly cast as untenable in a new economic light. Usually because of an underappreciated correlation with a substantially removed market. E.g. most recently, banks and leveraged junk mortgages As you noted though, the biggest tech companies today aren't really externally depende…

I think there are definitely systemic risks which could hit the US economy (small recession due to everyone cutting back spending to weather the recession, resulting in poorly profitable zombie firms - many of them retail firms - being unable to service bad corporate debt). It's noteworthy that we've been seeing retail bankruptcies like Sears and Payless in a consumer economy this good - what happens to other retailers when the sentiment turns for the worse? Note that low fed rates won't necessarily keep the cost of servicing debt low, if investors anticipate potential bankruptcies and flee from poorly-rated bonds.

And yes, the big tech companies would certainly see revenues hit hard by such a scenario - but the big tech companies have plenty of cash to weather the storm.

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

#352

Post by marcusverus »

jermaustin1 wrote: post #12
torstenvl wrote: post #5

Time to get more conservative with your investments. Just moved my retirement accounts from 100% in a 2050 lifecycle fund to 75% in a 2030 lifecycle fund and 25% in just government bonds. Not all investment vehicles have a "lifecycle" fund but its intent is to be appropriately conservative for a target date. As the date grows closer, the fund gets more conservative in order to lessen the risk of sudden swings right b…

I'm 40% in cash, 50% in S&P and 10% in small-cap. The last few months, all of my contributions have been going into cash, so that when the fall happens, I can hopefully scoop up a deal.

There’s nothing wrong with trying to buy a dip... so long as you know that you’ve left off investing and started gambling instead.

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

#353

Post by techntoke »

kart23 wrote: post #167
mgamache wrote: post #90

Earlier quoted context omitted.

That supposes the rich and powerful give a rip about trump. They don't. If anything, they don't like his unpredictability. But, I don't think it's really tied to a person or party. For example, Obama provided the wall street bailout.

I just thought of a horrifying thought. Bernie becomes president, recession hits inauguration day. Banks start to fail, but he doesnt bail anyone out because 'bernie cant be bought'. At least obama did the right thing and saved the economy.

I think Bernie and Warren are perfectly capable to work within the constructs of a free market than most people give them credit for. However, that doesn't mean that there shouldn't be transparency involved and if bankers begin manipulating the markets to try to control politics then they should be brought in for a public investigation in front of congress.

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

#354

Post by kickopotomus »

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…

> When the yield between the 10-year and 2-year US treasury inverts, a recession is months away.

> Prepare for the inevitable recession. It's not different this time.

Just once can someone put their money where their mouth is? If you are going to say that with such certainty, I expect that you have pulled your money from the market. Perhaps you have even bought a few puts.

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

#355

Post by dobleboble »

JeremyNT wrote: post #265
empath75 wrote: post #213

Earlier quoted context omitted.

> the thought has always been that the president was using a high leverage negotiating strategy Whose thought? The people who didn't know that trump was an incompetent nutjob?

Regardless of the man himself, historically the "deep state" (for lack of a better phrase) has so much inertia that radical changes (even if desired) by the White House end up moderated. I think it's more correct to say that people are realizing that the old order under the president is gradually eroding and its moderating effects are weakening, which adds compounding risks (directly in the trade war stuff but also h…

"federal government" is probably a better term than "deep state" unless you're intentionally trying to be inflammatory...

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

#356

Post by AlexCoventry »

tunesmith wrote: post #343
refurb wrote: post #319

Earlier quoted context omitted.

You might want to consider the idea that people who disagree with you politically might in fact not be dumb, but just have views that differ from yours. Just a thought.

Philosophical question - why is that important to know? What added value is discovered by realizing your opponent's conclusion is not based off of bad facts or faulty reasoning, but different values?

It makes you more persuasive. You can align your arguments to their values.

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

#357

Post by gomez9 »

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…

Yield curve inversion is way bigger than the trade war. Also the trade war directionality favors the USA.

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

#358

Post by NikolaNovak »

refurb wrote: post #319
mwfunk wrote: post #262

Earlier quoted context omitted.

WRT making billions of dollars, clearly he didn't. WRT getting elected, he got 3mil fewer votes than his opponent, so you can thank the dysfunction of the EC. WRT to the votes he did get, it's pretty obvious- people dumber than he is, who are apparently blind to seeing his completely obvious con artist act and voting for him, that's how. By completely obvious I mean, the-sky-is-blue, 1+1=2 obvious. That's how obvious…

You might want to consider the idea that people who disagree with you politically might in fact not be dumb, but just have views that differ from yours. Just a thought.

Not the OP, but while I'll agree with your sentiment in general, it's a bit straw man argument in this particular case.

I'm generally of liberal persuasion. I did not agree with almost anything that our Canadian previous conservative prime minister did... but I respected him. I thought he was intelligent, effective, and thoughtful. I didn't like that he was effective and productive about things I disagreed with, but I'd shake his hand and I can imagine having a thoughtful conversation and learning something, even if my mind may or may not be changed.

On the other hand, in theory, I "agree" with many of the things Michael Moore for example is fighting for. But I do not respect him, and I cannot watch more than 2 minutes of his programs before wanting to yell at the TV. Certainly, I wouldn't elect him. He is a propagandist, he cherry picks data, and presents a skewed picture. Ann Coulter or Glenn Beck or Michael Moore or Al Franken (the pundit; he may or may not have been more honest as a politician, but his prior books were awful) - it's not a matter of how much I agree with them, but that I find them all fundamentally dishonest.

Which brings us to Trump - my biggest concern is not that I disagree with him (which I do). It's that I have no respect for his mental faculties, honesty, abilities, consistency, beliefs, values, thoughtfulness, or any of the characteristics some of us believe a head of state should have. Further, I think not only is he doing a disfavour for those who disagree with him, I think he's doing a disfavour for those who agree with him / voted for him.

At the end of the day, I may disagree with somebody about what's the best colour to paint the room; I may disagree with somebody on what the best way to fix a education system is, or even what its goals should be; I may disagree on budget priorities, on a country's role in the world, and so on. There's fascinating discussion, debate and learning to be had with people of opposing opinions.

But if somebody wants to buy a bridge somebody's selling them, enroll in a cult, or jump out of an airplane without a parachute thinking it'll end well for them, dunno... I don't think it's in the "difference of opinion" category :|

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

#359

Post by wonderwonder »

dageshi wrote: post #142
tlogan wrote: post #116

Earlier quoted context omitted.

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 certainly won't be worse than 2008. 2008 was a financial crisis, core parts of the banking system were suspect, nobody knew who they could trust or who was solvent and worse nobody had a clue how to solve it for a dangerously long period of time. The financial system is not in that same position this time and as for China, China's growth is largely kept to china itself and guarded jealously, China did little or no…

Just my opinion but I think it will be worse than 2008 for normal people. Companies that are cash rich due to the tax cuts will use the recession as an excuse to execute deep labor cuts and boost their stock price. There is no longer a reason for executives to even pretend to care about employees as the one time bonus / stock buy backs after the tax cuts proved.

Wells Fargo has already proven that the same rules that were in place in 2008 that allowed those that caused the collapse to escape unpunished are still there.

Assuming the current administration is in power, government assistance programs will be greatly cut leading to desperation on the part of the nations 40% that cannot afford a $400 emergency.

Household debt, especially student loan debt is far above what it was when the 2008 recession hit making people even less prepared to handle a financial collapse. "Student loan debt hit $1.486 trillion, according to credit data from the New York Federal Reserve. By comparison, student loan at the height of the financial crisis was $611 billion and has been mostly rising since"

Assuming the ACA case makes it through the courts before the recession is over, health care will likely be stripped from millions of those worse equipped to handle it. Many of the homes that were affordable a decade ago have now been bought by mega renters and are rented out at high rates. People who lose their jobs will be unable to afford rents that are only increasing nation wide.

I think large companies and banks will weather it relatively well.

We will likely invade a middle eastern country to distract the proletariat.

https://www.marketwatch.com/story/us-consumer-debt-is-now-br...

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

#360

Post by tunesmith »

dageshi wrote: post #142
tlogan wrote: post #116

Earlier quoted context omitted.

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 certainly won't be worse than 2008. 2008 was a financial crisis, core parts of the banking system were suspect, nobody knew who they could trust or who was solvent and worse nobody had a clue how to solve it for a dangerously long period of time. The financial system is not in that same position this time and as for China, China's growth is largely kept to china itself and guarded jealously, China did little or no…

Ray Dalio's model asserts that 2008 was the end of a 75-100 year cycle - the collapse and then reflation of the long term debt cycle. And that the upcoming recession (whenever it happens) is more about short-term debt cycles, that happen every 8-10 years.

That doesn't mean a recession can't be really bad, though. Particularly when our normal tools for handling recessions are constrained, like interest rates already being low.

We're also still dealing with the greater inequality effects from the 2008 debt monetization, which is partly (according to that model) responsible for the greater populism political effects of that (like Trump's election, who ran as a populist in 2016).

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