The Core
Why We Are Here => Economics & Investing => Topic started by: littleman on December 21, 2018, 09:43:18 PM
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Dow sinks again, putting December performance at risk as the worst since 1931 (https://www.pennlive.com/news/2018/12/dow-sinks-again-putting-december-performance-at-risk-as-the-worst-since-1931.html)
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UK house prices set to tumble:
https://www.hertsad.co.uk/property/rightmove-reports-biggest-fall-in-house-prices-since-2012-1-5823358
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The European Project Comes To An End
https://www.zerohedge.com/news/2018-12-21/european-project-comes-end
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Its not quite like that in France :)
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More than 30,000 UK retailers in 'significant' financial distress
Data shows online retailers not immune from shopping slump in lead-up to this Christmas
https://www.theguardian.com/business/2018/dec/23/high-street-online-uk-retailers-significant-financial-distress-christmas-shopping
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Christmas shopping continues to rise year after year. With sales rising over a trillion dollars there seems to no slow down to the amount of spending that Christmas shoppers will make.
https://wearetop10.com/christmas-statistics/
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> https://wearetop10.com/christmas-statistics/
They just made all of that up.
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Confusing signals from Washington send markets plunging (https://www.cnn.com/2018/12/24/investing/stock-market-today-dow/index.html)
Alarmed investors drove the Dow more than 650 points lower in a shortened trading session on Monday. Markets plunged after the Trump administration sent out confusing signals about markets and the economy.
The S&P 500 fell 2.7% and the Nasdaq was off 2.2%. The Dow, which fell 2.9%, and the S&P 500 suffered their biggest Christmas Eve declines ever.
Stocks initially fell on Monday following a statement from Treasury Secretary Steven Mnuchin that he had checked on the health of the country's largest banks.
The market recovered late morning, but then slid even lower after President Donald Trump tweeted: "The only problem our economy has is the Fed." Investors are concerned that Trump may fire Federal Reserve Chairman Jerome Powell.
That's a 15 month low.
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Confusing signals from Washington send markets plunging (https://www.cnn.com/2018/12/24/investing/stock-market-today-dow/index.html)
That's a 15 month low.
I think the point of doing the "just checking in" with the bank CEOs & then publicly announcing it was to boost uncertainty rather than boost confidence. Somebody has to eat the loss & the faster it happens while being closely tied to a Fed rate raise the easier it is to blame the Fed & the harder it is for the Fed to raise rates again. Then Trump gets to claim he "saved the world" when he strikes a watered down trade deal with China.
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Mnuchin f###ed Up
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Wow Aaron.
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California, as home to Silicon Valley and Hollywood, lives and dies with capital gains taxes. In bull markets, when lots of stocks are rising and tech startups are going public, the state is flush. But in bear markets capital gains turn into capital losses and Sacramento’s revenues plunge. Put another way, the state’s top 1% highest-income taxpayers generate about half of personal income taxes. When their incomes fall, tax revenues crater.
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HMV calls in administrators
"...blamed a "tsunami" of retail challenges, including business rate levels and the move to digital."
https://www.bbc.com/news/business-46699290
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California, as home to Silicon Valley and Hollywood, lives and dies with capital gains taxes. In bull markets, when lots of stocks are rising and tech startups are going public, the state is flush. But in bear markets capital gains turn into capital losses and Sacramento’s revenues plunge. Put another way, the state’s top 1% highest-income taxpayers generate about half of personal income taxes. When their incomes fall, tax revenues crater.
Fortunately, we have a good budget reserve ATM.
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LM:
True BUT
California has come a long way to dig itself out of budget deficits, but the state remains on shaky ground due to nearly $400 billion in unfunded liabilities and debt from public pensions, retiree health care and bonds, financial analysts say.
https://www.sfchronicle.com/politics/article/California-s-400-billion-debt-worries-analysts-6812264.php
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California has come a long way to dig itself out of budget deficits, but the state remains on shaky ground due to nearly $400 billion in unfunded liabilities and debt from public pensions, retiree health care and bonds, financial analysts say.
And that only counts state-level liabilities. Our county has clawed its way back into the black, but still struggles. For many years, county workers with 25 years of service were entitled to full pension at 57 years old, which means they have a lot of young retirees. Meanwhile, any supervisor who serves six years (three terms) gets a pension for life. I almost thought about running for supervisor after I found out about that.
My saving grace is that my meager pension from a time as a state employee is from the state of Wisconsin, the only government pension I know of (definitely at the state or federal level) designed to stay solvent from the get go.
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Wow Aaron.
Tweet-driven headline just in time for a year-end one-day rally...
WSJ: U.S. and China Fleshing Out Trade Deal (https://www.wsj.com/articles/u-s-and-china-fleshing-out-trade-deal-11546126975)
On Saturday, President Trump tweeted that he and Chinese President Xi Jinping had recently talked by phone and made “big progress” in talks, due to conclude on March 1. “Deal is moving along very well,” Mr. Trump tweeted. “If made, it will be very comprehensive, covering all subjects, areas and points of dispute.”
But people familiar with the state of negotiations said the president may be overstating how close the two sides are to an agreement. They note Mr. Trump has looked to calm markets, which have gyrated in recent days, in part, because of concern that the trade fight between the U.S. and China could spin out of control.
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I think you are over estimating his intelligence.
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China’s benchmark CSI 300 index will finish the year close to 3,000, down more than 25 per cent from where it started 2018, according to Bloomberg data. The staggering drop outpaced other poor performers: Japan’s Nikkei 225 dropped 14 per cent, the US S&P 500 was down 8 per cent and the UK’s FTSE 100 fell 13 per cent.
https://www.ft.com/content/50e3e97a-0a86-11e9-9fe8-acdb36967cfc
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China's industrial profits suffer first annual drop in 3 years, piles pressure on economy
Read more at:
//economictimes.indiatimes.com/articleshow/67267426.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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Bloomberg News reports that a Federal Reserve Bank of New York gauge puts the chances of a recession at almost 16 percent a year from now, the highest since November 2008.
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The Dow dropped 660 points, or 2.8%, on Thursday after Apple warned it will badly miss its quarterly sales forecast because of weakening growth and trade tensions in China.
Apple (AAPL), among the world's most widely held stocks, plummeted 10% in its darkest day in six years. The former king of the stock market fell to the fourth-biggest public company, behind Amazon (AMZN), Microsoft (MSFT) and Alphabet (GOOGL).
The news sent shudders through global markets. The Nasdaq plunged 3%, closing back in bear market territory. The S&P 500 shed 2.5%, led lower by tech and industrial stocks. The market ended near the lows of the day.
Even though the market rose slightly on Wednesday, this is still the S&P 500's worst two-day start to a trading year since 2000, according to Refinitiv data.
Beyond Apple, investors were also rattled by the biggest one-month decline in US factory activity since the Great Recession. The closely-watched ISM manufacturing index tumbled to a two-year low, providing further evidence of slowing growth and pain from the US-China trade war. ISM said manufacturing activity is still growing, but suffered a "sharp decline" last month.
https://www.cnn.com/2019/01/03/investing/stock-market-today-apple-dow-jones/index.html
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DOW goes up & down.
China has real problems!
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Retail sales were flat in December, as UK businesses experienced their worst Christmas in a decade, according to the British Retail Consortium (BRC).
https://www.bbc.com/news/business-46807146
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Macy's shares crater on holiday sales results, slashed outlook
https://www.cnbc.com/2019/01/10/macys-shares-crater-12percent-on-holiday-sales-results.html
Ford Europe: Thousands of jobs to be cut in overhaul
https://www.cnn.com/2019/01/10/business/ford-europe-jobs/index.html
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<added>
We're on a roll.
Jaguar Land Rover confirms 4,500 job cuts - BBC News
https://www.bbc.co.uk/news/business-46822706
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Yeah, there are so many companies in the process of downsizing. It's like none of them want to be late to the punch, but collectively they may all end up pulling the economy down faster than it would otherwise.
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China’s economy grew 6.6% in 2018, the lowest pace in 28 years
https://www.cnbc.com/2019/01/21/china-2018-gdp-china-reports-economic-growth-for-fourth-quarter-year.html
AND they lie about their stats!
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This was actually the middle of last year.
https://www.theguardian.com/business/2018/jun/14/rolls-royce-cut-jobs-britain
Aircraft engine maker announces restructuring, with 4,600 jobs to go worldwide
alot of people I know work here. Mate is a fuel cell specialist.....gone.
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Ouch! That's gonna leave a mark.
Tesco says 9,000 jobs 'impacted' in changes to UK business
https://www.cnbc.com/2019/01/28/tesco-says-9000-jobs-impacted-in-changes-to-uk-business.html
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https://techcrunch.com/2019/01/28/chinas-smartphone-shipments-dropped-14-percent-in-2018/
China’s smartphone shipments dropped 14 percent in 2018
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Much of what’s at play here is a familiar story all over. A matured market means upgrade cycles have slowed down, as more users are choosing to hold onto handsets for longer. Even more pronounced, however, is a combination of slowed economic growth and lowered purchasing power in the country.
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Deutsche Bank Says German Economy Is Drifting Toward Recession
https://www.bloomberg.com/news/articles/2019-02-05/deutsche-bank-says-german-economy-is-drifting-toward-recession
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TAKE THIS TO THE BANK 8)
Mr. Mackin predicts no recession in the USA in the near future.
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More bad news: Street sees Q1 profits declining and full-year growth rates cut in half
https://www.cnbc.com/2019/02/07/more-bad-news-street-sees-q1-profits-declining-and-full-year-growth-rates-cut-in-half.html
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My personal feeling is we'll ride this out for about the next year and a half until election time. It'll be rocky here and there but will remain relatively stable overall. Then, I think we'll see the real swing either starting or maybe already starting to be felt around Q1 2021.
This is the timing I'm sorta counting on so, a bit biased maybe.
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Bank of England sees weakest UK outlook since 2009 on Brexit, global slowdown | Reuters
https://uk.reuters.com/article/uk-britain-boe/bank-of-england-sees-weakest-outlook-for-uk-since-2009-on-brexit-world-slowdown-idUKKCN1PW1BO
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Uh-oh, average 2018 tax refund $$ is down over 8%.
Filing Season Statistics for Week Ending February 1, 2019 | Internal Revenue Service
https://www.irs.gov/newsroom/filing-season-statistics-for-week-ending-february-1-2019
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8% is huge. The 2018 tax reform is doing its damage.
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>huge
I've read in the past that a large number of families use their tax refund as a forced savings account. Add to that the more recent reports finding that 40% of the nation can't scrape up $400 in an emergency and you've got a recipe for a potentially massive downturn in consumer sentiment and spending. Hence, this post under "Recession."
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>>tax refund as a forced savings account
I am HORRIBLE at saving. I have a few different services that automatically take some money and tuck it away but for the most part if it is in my account I spend it. It is nice getting a big chunk all at once in the spring to do stuff like pay for a vacation, buy furniture, tires for the van, etc. that cost more than a couple hundred bucks. I haven't updated my withholding since I started my current job 5 years ago and we have added 2 kids.
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The economy is like Jenga...
Main Street pares back its economic outlook - Axios
https://www.axios.com/main-street-expectations-for-economy-drop-1852609a-2846-4a00-96df-f65b60289eff.html
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A record number of Americans are 90 days behind on their car payments
https://www.cnbc.com/2019/02/12/a-record-number-of-americans-are-90-days-behind-on-their-car-payments.html
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Came to post that. It seems they are cherry picking the numbers, going by this:
https://www.finder.com/car-loan-statistics
Since 2010 we've increased a million accounts behind 90 days, but we've grown about 30 million accounts total. So, overall it was about 8% of total loans then and the new loans are less than 4%, bringing the overall to around 6.5 currently.
Seems about right to me?
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U.S. National Debt Hits Record $22 Trillion (https://www.npr.org/2019/02/13/694199256/u-s-national-debt-hits-22-trillion-a-new-record-thats-predicted-to-fall)
The U.S. government's public debt is now more than $22 trillion — the highest it has ever been. The Treasury Department data comes as tax revenue has fallen and federal spending continues to rise. The new debt level reflects a rise of more than $2 trillion from the day President Trump took office in 2017.
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Both parties MUST stop spending money we do not have.
It will be painful BUT must be done!
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We're blowing through a couple of bad tipping points lately.... climate, budget.
By 2020, interest will cost the federal government more than Medicaid. In 2023, the federal government will spend more on interest than defense. In 2025, interest spending will outpace spending on all discretionary programs, excluding defense. Those estimates come from the Congressional Budget Office.
That’s a best-case scenario. The CBO projections don’t include the ramifications from an economic downturn in the next 10 years, which is a virtual certainty. Expenses, such as food stamps and unemployment benefits, would increase. Revenues, especially income taxes, would drop. That would explode the debt at a greater rate, as the government relies on even more deficit spending to make up difference.
https://www.reviewjournal.com/opinion/editorials/editorial-us-will-soon-spend-more-on-interest-than-defense-1535577/
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Humbug holidays: US retail sales drop 1.2 pct. in December
https://abcnews.go.com/Business/wireStory/humbug-holidays-us-retail-sales-drop-12-pct-61072690
US wholesale prices dip 0.1 percent in January
https://abcnews.go.com/Business/wireStory/us-wholesale-prices-dip-01-percent-january-61072724
US unemployment claims rise by 4,000 to 239,000
https://abcnews.go.com/Business/wireStory/us-unemployment-claims-rise-4000-239000-61072761
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Germany narrowly avoids recession; US retail sales slide
Yes, Germany.
https://www.theguardian.com/business/live/2019/feb/14/germany-economy-recession-gdp-eurozone-growt-trade-talks-business-live
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Climate disasters cost $650 billion over 3 years: Morgan Stanley
https://www.cnbc.com/2019/02/14/climate-disasters-cost-650-billion-over-3-years-morgan-stanley.html
North America absorbed two-thirds of the global cost of climate disasters over the last three years, Morgan Stanley says. At $415 billion, the price of the disasters is equal to 0.66 percent of North America's GDP
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Feb 15, 2019: New York Fed Staff Nowcast
- The New York Fed Staff Nowcast stands at 2.2% for 2018:Q4 and 1.1% for 2019:Q1.
- News from this week's data releases decreased the nowcast for 2018:Q4 by 0.2 percentage point and decreased the nowcast for 2019:Q1 by 1.1 percentage points.
- Negative surprises from retail sales, capacity utilization, and industrial production data drove the decrease.
https://www.newyorkfed.org/research/policy/nowcast
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> https://wearetop10.com/christmas-statistics/
They just made all of that up.
......
Humbug holidays: US retail sales drop 1.2 pct. in December
https://abcnews.go.com/Business/wireStory/humbug-holidays-us-retail-sales-drop-12-pct-61072690
Your bullshit filter was working well there Mark.
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No recession but global growth will slow down, Janus Henderson says
https://www.cnbc.com/2019/02/18/no-recession-but-global-growth-will-slow-down-janus-henderson-says.html
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Federal data:
"Throughout much of the Midwest, U.S. farmers are filing for chapter 12 bankruptcy protection at levels not seen for at least a decade"
Farm Belt Bankruptcies Are Soaring - WSJ
https://www.wsj.com/articles/this-one-here-is-gonna-kick-my-buttfarm-belt-bankruptcies-are-soaring-11549468759
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Big in my feeds.
Average tax refund down 17 percent, IRS reports - POLITICO
https://www.politico.com/story/2019/02/22/irs-tax-refunds-2019-1207283
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I find this one a little odd. No one seems to be complaining about the 21% flat tax on C corps and how that will translate into more tax burden for individuals and greater debt burden for future generations. Yet, people are getting angry because they are not having more taxes withheld and then given back to them as a refund. I guess the average American is incapable of fiscal discipline or thinking things through very much.
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>Your bullshit filter was working well there Mark.
It's a curse not a power.
"...the line, sometimes wrongly attributed to Paxman, that he approaches every interview by asking of himself the question: "Why is this lying ba*tard lying to me?"
https://www.theguardian.com/media/2005/jan/31/mondaymediasection.politicsandthemedia
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Three-fourths of business economists expect a recession by 2021, survey finds
https://finance.yahoo.com/news/nabe-economic-policy-survey-171131067.html
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>2021
Well we're about due for another one about then anyway. Boom - Bust - Boom - Bust.
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Housing will not cause the 2019 recession says the NYT....
https://www.nytimes.com/2019/02/19/business/economy/housing-recession.html
Housing Is Already in a Slump. So It (Probably) Can’t Cause a Recession.
A decline in residential real estate has led several recessions. With construction still in a multiyear slump, it seems unlikely to be the culprit this year.
The United States has had 11 recessions since the end of World War II. All but two were preceded by a big decline in the housing market.
Inside that bit of trivia lie some fundamental insights into housing’s outsize role in the business cycle, along with clues to suggest that the economy is on firmer footing than the increasingly pessimistic forecasts make it seem. The gist is this: The United States may or may not enter a recession this year, but if it does, housing is unlikely to be the cause, because it never really recovered in the first place.
Much of the problem is that while job growth has been strong, home prices have gone up faster than incomes.
Prices have gone up so far so fast that even markets previously considered affordable are beyond the reach of many buyers. Home prices have risen by about 50 percent since 2012, according to Zillow, and many of the more affordable markets have shot up even faster. In Phoenix, home values have doubled since 2012, not adjusted for inflation. The Denver market is up 90 percent, Atlanta 84 percent, Nashville 78 percent and Dallas 76 percent. If people can’t afford a home in Texas, where can they?
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Fiat Chrysler laying off more than 1,300 workers at Belvidere Jeep plant (https://www.chicagotribune.com/business/ct-biz-fiat-chrysler-layoffs-belvidere-jeep-plant-20190226-story.html)
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On the other hand LM:
FCA announced Tuesday that it plans to build a new factory in Detroit. The factory won't be brand-new, but rather will be built on the site of the company's existing Mack Avenue Engine Complex, with the conversion process costing $1.6 billion. The plant is earmarked to build the next-generation Jeep Grand Cherokee and Jeep's long-awaited three-row SUV.
FCA says the factory would also be used to build plug-in hybrid variants, as well as offering the "flexibility" for pure-electric versions of those vehicles down the road. Construction on the plant is intended to begin by the end of the second quarter of this year, with the first three-row SUVs set to roll off the line by the end of 2020 and the next-gen Grand Cherokee arriving in the first half of 2021. The plant conversion is expected to add 3,850 jobs.
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drip, drip, drip...
US consumer spending fell sharp 0.5 percent in December | Miami Herald
https://www.miamiherald.com/news/business/article226972754.html
Toyota, Fiat Chrysler U.S. auto sales fall in February | Reuters
https://www.reuters.com/article/us-auto-sales/toyota-fiat-chrysler-u-s-auto-sales-fall-in-february-idUSKCN1QI4UW
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Retail Apocalypse Is Heating Up in 2019
Major Stores Currently on Deathwatch:
https://beta.finance.yahoo.com/news/retail-apocalypse-heating-2019-major-181546342.html
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"The roll call of closings continued Wednesday, with discount retailer Dollar Tree’s announcement that it would close up to 390 Family Dollar locations this year. As of mid-February, retailers had announced 2,187 store closings in the United States this year, according to Coresight Research."
PDF:
https://coresight.com/wp-content/uploads/2019/02/US-Store-Closures-No-Light-at-the-End-of-the-Tunnel-in-2019-Feb-13-20191-1.pdf
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Note shift to offshore
Ocwen planning to lay off more than 2,000 mortgage employees
https://www.housingwire.com/articles/48369-ocwen-planning-to-lay-off-more-than-2000-mortgage-employees
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>yes, Germany
ECB Injects More Stimulus as Draghi Reveals Slashed Forecasts - Bloomberg
https://www.bloomberg.com/news/articles/2019-03-07/draghi-slashes-ecb-outlook-as-officials-inject-more-stimulus
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Aaackk!
More than 1,100 store closures were announced in a single day as fallout from the retail apocalypse picks up steam - SFGate
https://www.sfgate.com/technology/businessinsider/article/More-than-1-100-store-closures-were-announced-in-13671313.php
Charlotte Russe, Family Dollar, Abercrombie & Fitch, and Chico's announced more than 1,100 store closings in total over the course of 24 hours this week.
The news comes one week after JCPenney, Gap, Victoria's Secret, and Tesla announced that they would close more than 300 stores.
These announcements bring the total number of planned closures this year to more than 5,300.
More than 5,300 stores are closing in 2019 as the retail apocalypse drags on — here's the full list
https://www.businessinsider.com/stores-closing-in-2019-list-2019-3?utm_source=hearst&utm_medium=referral&utm_content=allverticals
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A record 7 million Americans are 3 months behind on their car payments, a red flag for the economy (https://www.washingtonpost.com/business/2019/02/12/record-million-americans-are-months-behind-their-car-payments-red-flag-economy/)
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Another one today: https://www.bbc.co.uk/news/business-47499326
Btw, a check on the DJI over the past 5 days doesn't look good: https://www.google.co.uk/search?site=finance&tbm=fin&q=INDEXDJX:+.DJI#scso=_yNCCXO6IMOedlwTOybj4CA2:0
There was a big drop toward the end of December, enough for news outlets to report a bear market. With no good financial news to report, I figure we'll see that come to pass over this year. The question is, if so, how far with the DJI fall? More importantly - when is the best market opportunity that follows after? :)
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> how far with the DJI fall?
I'm 20-30% cash position right now. 50% in tax-exempt bonds. Even at that, the equities have been putting the portfolio into wild mood swings.
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US payrolls shock suggests dawn of long forecasted slowdown - Independent.ie
https://www.independent.ie/business/world/us-payrolls-shock-suggests-dawn-of-long-forecasted-slowdown-37896196.html
I'll post this 'cause the last US payroll numbers have been in my feeds with apocalyptic headlines since they came out. I think they'll be revised upward. If not, we've hit the wall.
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I think there are some major sinkholes under the foundation that aren't uncovered yet.
We had rounds like this before the 2008 recession. We all knew that one was coming ahead of time too. For some reason a lot of investors didn't want to recognize it then either. Unfortunately, many people I knew sold off near the bottom and lost years of gains. Those folks would have been better off just leaving everything where it was.
This thing is coming, might as well tighten up before the crash and buy in after the drop -- look at it as an opportunity with your investments. The worst thing to do is react after it hits hard.
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"This thing is coming"
TRUE
2020???
3/11/2019
While there's a chance that a US-China trade deal, the Fed's "pause", and a fading of the pressures plaguing Europe might stave off a global recession, Bloomberg economists Dan Hanson and Tom Orlik said the risks appear to be tilted toward the downside. "The risk is that the downward momentum will be self-sustaining."
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Oh it's definitely coming. We are overdue.
Inside - 2020, outside, 2022. IMFO
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>??
Economy at "very real risk" of entering recession in late 2020
https://www.cnbc.com/2019/03/13/economy-at-very-real-risk-of-entering-recession-in-late-2020-ucla.html
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The bond market is flashing its biggest recession sign since before the financial crisis
CNBC is showing their trend
https://www.cnbc.com/2019/03/21/a-key-recession-indicator-just-did-something-that-hasnt-happened-in-12-years.html
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>bond market
The yield on 3-month Treasuries rose above the rate on 10-year Treasuries for the first time since 2007
investors should wait for weekly and monthly averages to show an inversion before they read it as a "powerful recession signal."
Dow falls nearly 400 points as recession indicator flashes red - CNN
https://www.cnn.com/2019/03/22/investing/dow-stock-market-yield-curve/index.html
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The bond market is flashing its biggest recession sign since before the financial crisis
CNBC is showing their trend
https://www.cnbc.com/2019/03/21/a-key-recession-indicator-just-did-something-that-hasnt-happened-in-12-years.html
The BBC reports on this, too:
https://www.bbc.co.uk/news/business-46530860
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love the clickbait-ish headline.
Recession Worries Move to DEFCON 3
http://nymag.com/intelligencer/2019/03/will-there-be-a-recession-worries-move-to-defcon-3.html
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lmao DEFCON 3. OH sh## let's get to the bugout vehicle.
/seriously...Can you feel it though? The beginning rumbles always start like this. Not this particular headline but the wild swings and uh-oh predictions.
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I guess my debbie is out on a limb here eh.
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Debbie's getting the bad vibe, but I'm trying to remain in denial.
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>Can you feel it though?
We've had a hell of a run and right now everything is overvalued. Home prices are starting to slip from their high. There has been a steady drumbeat of layoffs and closures over the last year. If you put your ear to the railroad tracks you can hear the train coming.
Added: By the time you feel it it is already here.
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>already
U.S. economy shifts into low gear as fiscal boost wanes | Reuters
https://www.reuters.com/article/us-usa-economy/u-s-economy-shifts-into-low-gear-as-fiscal-boost-wanes-idUSKCN1R81FP
Buffett on the economy: 'It looks like things have slowed down'
https://www.cnbc.com/2019/03/28/buffett-on-the-economy-it-looks-like-things-have-slowed-down.html
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>Added: By the time you feel it it is already here.
Sorta, but like the train it takes a while to fully slow down from top speed. A year or two for things to get bad all over and fully hit the depth on the front end. I think we've been easing into it since q4 last year.
If I seem to be wishing it on, it's only because I think the sooner the better. The longer it takes the more it's going to hurt.
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>hurt
Yeah, we are doing our best to plan for it -- tough going because of self-employment, but we're as lean as we can stand at the moment.
On the investment side we're ready to buy in after the major correction. During the last recession we bought REITs & BDCs at low prices which gave us relatively high dividends for the investment.
BTW: https://en.wikipedia.org/wiki/SEP-IRA (US only)
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US economy slows down sharply as impact of Trump's tax cuts fades
Government slashes its growth numbers as consumer spending, business investment, government spending and housebuilding all came in worse than had previously been predicted
(https://www.independent.co.uk/news/business/news/trump-us-economy-tax-cuts-china-trade-war-a8843946.html)
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https://www.mercurynews.com/2019/03/31/trump-white-house-doubles-down-on-threat-to-close-u-s-mexico-border/
Will the economic impact out weigh the costs?
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>yes, Germany
Germany to halve 2019 economic growth forecast to 0.5 percent - Spiegel - Reuters
https://uk.reuters.com/article/uk-germany-economy/germany-to-halve-2019-economic-growth-forecast-to-0-5-percent-spiegel-idUKKCN1RN2KD
-
? Hawaii has an immigration issue? From where?
-
# Hawaii
If you offer FREE STUFF they will come!
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What Will Cause The Next Recession - Joseph Stiglitz (https://www.youtube.com/watch?v=lyzS7Vp5vaY) - video
tl;dw:
Trump's protectionism, fiscal irresponsibility
China's debt
EU's stagnation
-
Peak Ford
Ford Motor Co to cut 10% of white-collar jobs as part of global restructuring - Reuters
https://www.reuters.com/article/us-ford-motor-layoffs/ford-motor-co-cutting-about-10-of-global-salaried-workforce-idUSKCN1SQ1FV
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Dressbarn is going out of business, to shut all 650 stores
https://www.cnbc.com/2019/05/20/dressbarn-is-going-out-of-business-to-shut-all-650-stores.html
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https://www.steel-technology.com/projects
-
Jamie Oliver restaurant chains collapse
https://www.bbc.com/news/business-48352026?ns_mchannel=social&ns_campaign=bbcnews&ocid=socialflow_facebook&ns_source=facebook
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>> Dressbarn is going out of business, to shut all 650 stores
Yikes, I just bought some things from Dressbarn on our recent trip. They were a nice place to shop.
-
British Steel on the brink with thousands of jobs at risk
https://www.ft.com/content/e11c8bee-7b94-11e9-81d2-f785092ab560
British Steel was braced to fall into administration as early as Wednesday with thousands of jobs at risk, after talks with the government over an emergency £75m loan to keep it afloat appeared all but dead.
-
Richmond Fed President: We could talk ourselves into a recession
https://www.cnn.com/2019/05/15/economy/economic-sentiment-recession/index.html
-
Dressbarn, CVS, Pier 1 and Topshop shuttering stores, pushing planned closures to 7,150 (https://www.cnbc.com/2019/05/28/heres-a-running-list-of-retail-store-closures-announced-in-2019.html)
Already, more than 7,150 store closures have been announced by U.S. retailers in 2019, according to Coresight Research. And it’s not even June. Last year, Coresight tracked 5,524 store closures, down more than 30% from an all-time record 8,139 closures announced in 2017. Meanwhile, Coresight has tracked 2,726 store opening announcements so far this year.
With the threat of additional tariffs taking effect on consumer-facing goods like apparel and footwear imported from China hanging over retailers, things could get even worse, according to one analyst. UBS’ Jay Sole recently said in a note to clients: “The market is not realizing how much brick & mortar retail is incrementally struggling and how new 25% tariffs could force widespread store closures. ... We think potential 25% tariffs on Chinese imports could accelerate pressure on these [companies’] profit margins to the point where major store closures become a real possibility.”
-
Boots plots hundreds of store closures in new retail blow | Sky News
https://news.sky.com/story/boots-plots-hundreds-of-store-closures-in-new-retail-blow-11730149
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Consumer Confidence in the United States > ALL TIME HIGH
https://tradingeconomics.com/united-states/consumer-confidence?
-
Yeah, after corecon, I've had to adjust my forecast. I hope my previous timeline in here is way off, and making a bit of a play now that it is off.
Some of this lately is more bricks-morgue related than econ overall.
-
> lately is more bricks-morgue related
Agreed. Mass habits & trends are morphing substantially ...restaurants, retail (malls|High St), particularly clothing (anywhere in the bricks, but clothing is in flux across the board online or offline), tourism. It's hard to say where it's going to land, but Debbie says people are tired of the 70s-90s stuff and want new experiences & products.
-
>I've had to adjust my forecast.
Do you think it is farther away?
Consumer Confidence is a lagging indicator.
July 31 2007: Consumer confidence near 6-year high (https://money.cnn.com/2007/07/31/news/economy/consumer_confidence/index.htm?postversion=2007073110)
-
>Do you think it is farther away?
Yes, at least in a way. But really, I think we have a new normal. The revenue flows are there, but not making it down to lower & middle class as much any more. Things are adjusting, and when it settles we may be in for a bigger reckoning.
Markets, to me, seem abnormally stable for what has been going on in the world the last 6 months.
I am currently hoping for another good 4-5 years. Not necessarily great, but not bad or tanking.
-
Thanks for putting your perspective out there Dras. I hope you are right, 4 to 5 years of not-bad times would sure be nice.
-
I am currently hoping for another good 4-5 years. Not necessarily great, but not bad or tanking.
I was just reading some articles that didn't seem good enough to share, but the brief version is that Mark Zandi of Moody's is saying recession is very unlikely in 2019 and 30% chance by summer 2020. That is roughly the same prediction they made in 2011 for 2012 (which, as you will recall, was not a recession). So Moody's is betting that there is less than even odds before 2021.
-
US economy grew at solid 3.1% rate in Q1 | Idaho Statesman
https://www.idahostatesman.com/news/business/article230978488.html
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[Home] Sales were 2% lower compared with April 2018, the 16th straight month of annual declines. (https://www.cnbc.com/2019/05/30/april-pending-home-sales-fall-unexpectedly.html)
The continued decline in RV shipments implies the next recession is here. (https://seekingalpha.com/article/4267177-rv-shipments-recession-predictor-refuses-take-month)
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The Treasury yield curve, a key recession indicator, is at its widest since 2007 - Axios
https://www.axios.com/yield-curve-inversion-2008-recession-bonds-bbcd9568-e340-4c8b-ae65-241cb5f5cca6.html
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And then there is the orange elephant in the room. (https://www.washingtonpost.com/business/2019/05/31/markets-sink-trump-opens-new-trade-war-front-against-mexico/)
-
Peak auto. The pain is just the beginning:
https://www.businessinsider.com/peak-car-38000-layoffs-job-losses-sales-at-auto-makers-2019-5
So does this mean the trend of people just rolling credit to the new ride has stopped?
-
Global Manufacturing Shrinks Amid Wall Street Recession Warning (https://finance.yahoo.com/news/asia-factories-feel-trade-war-020553337.html)
-
The Mall Meltdown Continues
https://www.wsj.com/articles/the-mall-meltdown-continues-11559559600
-
IBM layoffs: Company expected to cut more than 1000 employees | Durham Herald Sun
https://www.heraldsun.com/news/business/article231297813.html
-
US employers added a weak 75,000 jobs in May - ABC News
https://abcnews.go.com/Business/wireStory/latest-us-employers-added-weak-75000-jobs-63551382
-
Ouch, that is worse than I was expecting.
-
Top comment from the seekingalpha article LM linked:
https://seekingalpha.com/article/4267177-rv-shipments-recession-predictor-refuses-take-month
RV shipments have declined but not in a manner that is telling us a recession is here or coming anytime soon, (maybe a slow down)? Granted, sales of Motorhomes and Fifth wheel units are seeing a slow down, but overall trailer sales are still in line. Our dealership has been up every month this year vs. YOY numbers from 2018. Last month unit sells were up 10% and F&I profits were up just over 10%.
Our net margins have declined to about 11% average for 2019 vs. 14% in 2018. Margin decline mainly is coming from myself reducing inventory on our lot, but we’ve offset that with F&I profits. My plan started last September and so far has played out very well. We are still in our busy season in the southeast and have a good 4 months left in 2019 to move volume and get our inventory where I want it. Overall our dealership should be inline with 2018 numbers. FYI, we have been buying new units every week, all year long.
As some have read my previous posts, we only sale affordable new and used travel trailers. This is one of the main reasons our dealership has always done well no matter the economy. The main reason I have been deleveraging for 9 months now is my concern on lending. The banks for several years now have been lending to customers with sub 600 credit scores, 30% of our loans are sub prime loans,(15%+ interest rates). My concern is when banks say, “no more loans”, then there goes 30% of our sales.
Regardless of what happens we will come out on the other side still selling campers to folks at affordable prices.
The slow down should only take 6 more months to correct itself and early 2020 dealers should have their inventory where they want it. I personally don’t see RV’s being sold at 2017-2019 volume for several more years, but regardless of the economy they will still be produced.
Departing statement;
As long as banks keep lending to sub prime customers and unemployment stays below 4.5% we will not see a full blown recession, only a slow down.
RSM
29 May 2019, 10:19 PM
Anecdotal yet interesting take.
-
>As long as banks keep lending to sub prime customers
So, our economy is dependent upon continuing to milk those poor bastards? Not a good sign of fundamental strength, imo.
-
First in establishing a successful Sub-Prime selling machine you need a manager
that knows the Sub-Prime game, and who possesses two essential characteristics:
Integrity and Motivation. If the leader does not believe the department can be
built into a raving success, it will never happen. Check out the manager’s concept
of how far the department can go. If the manager does not believe that the
department can become a huge success (and it may take some time), find
another Leader.
http://www.automotivedealersnetwork.com/Articles/RHarris/SubPrimeCustomers.html
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I haven't known real fundamental strength for a while. You?
I thought it was a given they were basically doing the same thing that we already did with the housing crisis, its just autos now. RVs fit that mold too.
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>same thing that we already did with the housing crisis, its just autos now.
There still seems to be some craziness in the housing market too.
To me, this looks like a bomb waiting to go off the moment the job market softens.
-
https://www.bloomberg.com/news/articles/2019-06-15/tips-for-spotting-a-u-s-recession-before-it-becomes-official
-
There still seems to be some craziness in the housing market too.
This has been on my mind a bit lately.
Back in 2006-2007, there were some things that baffled me.
1. We had come off a period of earning very little. In a rational system, our income would not have qualified us for a car loan. We got approved for up to $2,000,000.
2. We were told that if didn't qualify based on our income, we could do a "no doc" loan and just "estimate" our income to reach a level where we would qualify.
3. People were buying investment properties in our area and I could not figure out how they could possibly make it pencil out. In 2006/2007, they didn't seem to be doing basic due diligence.
#1 and #2 are not true this time.
#3 doesn't seem quite as bad, but people are buying vacant lots that are prohibitive to build on. One just sold and I know the guy who has the excavation contract. He said that just one piece of equipment, which is to drive in a *temporary* retaining wall to hold back the earth while the permanent wall is built, will cost $100,000 for the minimum rental (it has to be brought in from far away - normally for building highways and ports). This isn't even for the house. This is for the parking. It will likely cost $200K to $250K to put in TWO PARKING SPACES!! The house, which is capped by zoning at two bathrooms, will cost over a million dollars all in.
That's just one story. I can think of a lot that has sold three times because it has no access. My friend owns the lot next door. His 35-year-old driveway cuts across the easement in a way that makes this other lot impossible to put in a driveway at a reasonable cost. So last spring, he walks out of his house and finds a realtor and a client standing in his driveway. "How long has this driveway been here?" one of them asks. "35 years, why?" Turns out, the client had bought the lot in the dead of winter not realizing that my friend does not plow that driveway in the winter. He just shovels the steps that lead to the parking space on the road. They literally spent $150,000 on a lot without realizing the driveway would cost $300,000.
Anyway, we saw a lot of this in 2007. Lately, we're seeing a lot of it again. Purchases that just make you shake your head.
-
Oh, the 2007 madness resulted in a wave of foreclosures as leveraged buyers who had not done due diligence on what actual rental profits would be couldn't make their loans. Lots of auctions, foreclosures and short sales.
One thing that's different this time is that a lot of the buyers are Chinese with cash they are trying to expatriate, so they are not as sensitive to falling returns. They seem to be looking for long-term safe-havens for cash.
-
>Chinese
I think this is probably more of a California thing than the rest of the country; but I think this has its own risks. China's real estate market is basically insane (https://www.citylab.com/equity/2019/02/china-vacant-apartments-housing-market-bubble-ghost-cities/583528/), I can't even imagine what that will do here once that is accounted for.
-
A lot of US farm land is being bought up by foreigners. I'm assuming it's the same reason now as it was during the Cold War: a safe haven for wealth.
-
Thanks Brad, I had no idea. (https://www.npr.org/2019/05/27/723501793/american-soil-is-increasingly-foreign-owned)
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a safe haven for wealth.
And perhaps virtual water exports, though they don't necessarily have to own the land for that.
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How to Invest and Profit in the Next Recession (https://www.bloomberg.com/opinion/articles/2019-06-17/how-to-invest-and-profit-in-the-next-recession)
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Is it appropriate to add an entire country?
If so Australia, almost 30 years without a recession, second longest run after Japan I think.
It's coming, will come as somewhat as a shock to everybody under 50 odd years old, that's the majority of people by a fair margin.
"The median house price in Sydney has not been less than $1 million since March 2015."
And most of those people have mentally "banked" those "profits", they've gone now. The best hope is a quick, short, sharp recession and maybe a bounce back. I think a long slow decline is more likely, death by a thousand cuts with Asia holding the knives.
From a (my) business perspective a quick, short, sharp recession would be good.
-
>Chinese
I think this is probably more of a California thing than the rest of the country; but I think this has its own risks. China's real estate market is basically insane (https://www.citylab.com/equity/2019/02/china-vacant-apartments-housing-market-bubble-ghost-cities/583528/), I can't even imagine what that will do here once that is accounted for.
Vancouver worth looking at as an example of what *has* happened already. From experience it's not a China thing, maybe not even an Asian thing but it's certainly a "black" money thing.
-
>Vancouver
When they came they called them "The Yacht People"
-
>peak Ford
Ford to cut 12,000 jobs in Europe as part of restructuring
https://www.washingtonpost.com/world/europe/ford-to-cut-12000-jobs-in-europe-as-part-of-restructuring/2019/06/27/80b781f8-98ce-11e9-9a16-dc551ea5a43b_story.html
-
Unprepared U.K. Facing Highest Risk of Recession Since 2007 - Bloomberg
https://www.bloomberg.com/news/articles/2019-07-13/unprepared-u-k-facing-highest-risk-of-recession-since-2007
-
The Fed cutting rates isn't really getting the attention it deserves imo.
“Investor enthusiasm around the idea of easier Fed policy is understandable,” Wilson said. “However, if the Fed were to cut out of concern that we are entering a real unemployment cycle, we think such a cut should not be bought. Until there is further clarity on the employment picture, we think Friday’s rally should be faded and investors should continue to skew portfolios defensively.”
(https://www.cnbc.com/2019/06/10/morgan-stanley-even-if-the-fed-cuts-rates-this-summer-it-could-be-too-late-to-stop-a-recession.html)
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but it's certainly a "black" money thing.
I'm not sure that's always true. I think back to the 1980s when I had a Columbian friend. They were dairy farmers... but the largest dairy farmers in the country and the grandfather had been president of the country. They maintained an apartment in NYC and perhaps others. I was young and don't know details, but I think they were trying to offshore assets because they had seen a lot of countries in the region attempt to nationalize assets or have outright revolutions.
So, imagine you were a completely legit business person with a thriving business in Venezuela a decade (or more) ago. Black money or no, you would be trying to offshore assets before everything you had vaporized.
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US manufacturing is in recession Feds data show - MarketWatch
https://www.marketwatch.com/amp/story/guid/11CDA5CC-A73F-11E9-8107-2EB69FA343E0?__twitter_impression=true
-
Recession fears rise for middle-class families
(https://www.cnbc.com/2019/07/16/more-middle-class-families-say-american-dream-is-out-of-reach-study.html)
Middle-class Americans are less optimistic about their economic prospects than they were just six months ago, according to a new report from CUNA Mutual Group.
Although the majority of those polled said they feel relatively stable overall, they graded their chances of achieving the American dream as a “C,” down from a “B-minus” in the fall, the insurance provider found. Close to half were increasingly concerned about an upcoming recession.
-
https://www.cnbc.com/amp/2019/07/17/foreign-purchases-of-american-homes-plunge-36percent-as-chinese-buyers-flee.html
- The dollar volume of homes purchased by foreigners from April 2018 through March 2019 dropped 36% from the previous year, according to the National Association of Realtors.
- Foreigners bought 183,100 properties with a total value of about $77.9 billion, down from 266,800 properties valued at $121 billion a year earlier.
Smells like a trigger.
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Ray Dalio uses history to hypothesize future moves by the fed, etc... and expects gold to be good in the future. The "G" word always makes me cringe, but he makes good points.
https://www.linkedin.com/pulse/paradigm-shifts-ray-dalio/
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A Recession Is Coming (Eventually). Here’s Where You’ll See It First.
https://www.nytimes.com/2019/07/28/business/economy/economy-recession.html
-
(Eventually). Here’s Where You’ll See It First.
I will not be able to see it first...
I have my ad blocker on 8)
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Switch to ublock origin and they can't tell. Works great.
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DRAS:
TY
DONE
"Indicator 4: Consumer Sentiment"
-
Lowe's lays off thousands of assembly, maintenance workers
https://www.upi.com/Top_News/US/2019/08/01/Lowes-lays-off-thousands-of-assembly-maintenance-workers/7311564694470/
-
OMG
Bill Maher: ‘I’ve Been Hoping for a Recession’ to Get Rid of Trump
-
He is kinda speeding along the process.
https://www.bloomberg.com/amp/news/articles/2019-08-05/china-s-offshore-yuan-tumbles-past-7-per-dollar-to-record-low
-
Beijing Risks Economic Self-Harm by Weaponizing the Yuan
https://www.wsj.com/articles/beijing-risks-economic-self-harm-by-weaponizing-the-yuan-11564983069?
-
HSBC to cut 4000 jobs
https://www.bloomberg.com/news/articles/2019-08-05/hsbc-ousts-flint-and-seeks-new-ceo-to-battle-tough-environment
-
Tesco announces 4,500 job cuts as it overhauls Metro stores
https://news.sky.com/story/tesco-to-cut-4-500-jobs-from-metro-stores-chain-11778072
-
https://www.bbc.co.uk/news/business-49247514
More than 1,000 jobs could be at risk after fashion firm Boohoo bought the online business of UK brands Karen Millen and Coast for £18.2m.
Boohoo, an online-only retailer, said acquiring the website operations of the two brands "would represent highly complementary additions".
The firms' 32 UK High Street stores and 177 concessions, employing 1,100 people, now appear set to close.
Administrators Deloitte said the stores would trade for a "short time".
It is understood they will continue to trade for months, as opposed to a matter of days.
-
Walgreens to close 200 US stores
That's on top of 200 UK closures.
https://www.cnbc.com/2019/08/06/walgreens-to-close-200-stores-in-us.html
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They bought Boots in the UK. It used to be a Great local company (National but based in Nottingham)
I think they borrowed heavily to buy, and it then never made a profit, as the interest rates the owners charged were so high.
Clever, but it stripped the company. The Rich get Richer, and the poor.....
-
I think the dollar stores are having an effect on Walgreens along with other erosion like online buying and health insurers encouraging mail order prescriptions.
-
Sears and Kmart store closings list: 21 Sears and 5 Kmart locations to close in October
https://beta.finance.yahoo.com/news/sears-kmart-store-closings-list-030519645.html
-
I know I said this before, but Sears had it all to capitalize on the web and threw it all away; oh well it is a very old story repeated again and again.
The last Sears catalog was 1993.
The first year of Amazon was 1994.
-
>Sears
They are such a pale shadow of what they once were that it is almost a kindness to have them shut down.
-
BofA raises chance of a recession to 1-in-3 in the next 12 months
https://www.cnbc.com/2019/08/12/bank-of-america-raises-chance-of-a-recession-to-1-in-3-in-the-next-12-months.html
-
Value stocks have already priced in a recession: the SCHV (Schwab Large Cap Value ETF) sports a dividend yield of 2.96%, nearly double the 10-year Treasury yield of 1.64%. Meanwhile, the QQQ (Invesco QQQ Trust), the tech-heavy talisman of growth investors, pays only 0.78%. It's normal for growth stocks to pay a lower dividend than value stocks, but the size of the current gap is historically huge. The disparity can no longer be ignored.
A stock like Amazon (AMZN), trading at 73 times trailing earnings, can lose half its value in a Nasdaq minute as soon as a recession becomes visible. The sky-high multiple depends on continued high rates of growth, and even companies like AMZN lose momentum in a recession. Most readers of this article are too young to remember, but AMZN lost more than 90% of its value in the recession of 2001. It barely shows up in the chart today, but AMZN declined from a late-nineties high of over $100 to less than $6 by September, 2001.
The Coming Recession Will Crush Growth Stocks (https://www.forbes.com/sites/jamesberman/2019/08/13/the-coming-recession-will-crush-growth-stocks/#2fa2fbf545e5)
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All the news this morning on the radio was of recession
- German economy contracted .1%
- coastal housing markets dropping (I believe 4% price decline in Los Angeles)
- record unemployment in Chinese cities (is Trump winning the trade war or other structural issues?)
- two and ten year T bonds inverted for first time since 2007
- US homeowners carrying highest level of mortgage debt since 2007 (but defaults still low)
- oil prices down on fears of recession and Saudis who had been planning to boost production are looking at that again.
-
>this morning
All warning signals are flashing red.
-
Yeah, lots of bad news today.
-
Compare us to Europe or Japan:
Economy growing
Low Unemployment
Rising wages
AND
When folks put money in the USA, we actually pay interest :-)
-
Welp, since I just made my largest financial commitment to date last week, we should be entering a full blown recession in 3....2....1....
-
What did you commit to Dras?
-
> largest financial commitment
Bank some money and wait for contractor prices to go down while they're scrounging for work. I saved >$7k on a commercial-grade bulkhead installation at the peak of the last recession. The contractor was dealing near cost just to keep his crews employed.
-
Rising wages
Yes. If we can just hold onto this economy a bit longer, we'll see some significant wage increases. Right now in the US, some big pain points I see are caused by labor shortages. The shuttle system in Yosemite is a mess because they can't find drivers. If the economy holds up for another 9 months, I *hope* we'll see significant wage incentives to get drivers to take that job.
What's interesting in the US is the level of anxiety, which is so out of step with the traditional metrics. I think it basically boils down to many forms of insecurity - job insecurity, scheduling insecurity, benefits insecurity and so on that has people on edge in a way that is atypical for these levels of unemployment.
-
When the unemployment rate gets LOW employers begin to hire the unemployable.
-
Oil Price Fundamental Daily Forecast –Slight Rise Indicates Traders Downplaying Recession Concerns
https://beta.finance.yahoo.com/news/oil-price-fundamental-daily-forecast-084032914.html
-
Early in the week, the markets were underpinned by optimism over potential production cuts by OPEC. Today, it’s better than expected U.S. retail sales data supporting prices. On Thursday, the U.S. reported that retail sales rose 0.7% in July as consumers bought a range of goods
Betting on the blissful ignorance of the average American consumer to fuel the economy can only work so long.
-
Low unemployment, wage gains and a growing economy can bring on
-
RV Shipments are down 2 years in a row, which happened before last 3 recessions.
https://www.newser.com/story/279343/what-rv-shipments-say-about-a-possible-recession.html
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"We live in an interconnected world"
https://www.youtube.com/watch?v=MzKLs8l9UPM
-
US has half a million fewer jobs than believed after big government revision (https://www.usatoday.com/story/money/2019/08/21/jobs-u-s-employment-501-000-lower-than-believed-after-revisions/2076069001/)
The large change means job growth averaged 170,000 a month during the 12-month period, down from the 210,000 initially estimated, according to JPMorgan Chase.
Employment in several industries was revised down especially sharply. Payrolls dropped 175,000 in leisure and hospitality, and 146,000 in retail – two bellwether service sectors that depend heavily on consumer spending, the economy’s main engine.
Employment also fell by 163,000 in professional and business services and 69,000 in education and health services.
-
Recession Fears Are Overblown
The yield curve is no longer a reliable predictor, and other economic indicators are strong.
https://www.wsj.com/articles/recession-fears-are-overblown-11566341495
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The yield curve is no longer a reliable predictor
Highly debated, but possibly true for many reasons. I guess two years from now we'll know (the Great Recession began 23 months after the yield curve inverted)
https://www.npr.org/2019/08/21/753185863/episode-934-two-yield-curve-indicators
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Yep, possible July 2021
-
I'd rather we don't have a recession for another 10 years, but if it's going to come, I wish it would come right now.
-
Our massive debt is going to make the coming recession that much more painful.
Why skyrocketing federal debt will mean the next recession is harder to overcome (https://www.pbs.org/newshour/amp/show/why-skyrocketing-federal-debt-will-mean-the-next-recession-is-harder-to-overcome)
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The deficit is now expected to close in on $1 trillion this year, and then stay over $1 trillion for every year on the horizon.
Remember how shocking it was when the DEBT passed $1 trillion? That was 1982.
The last time there was a decrease of more than 5% was... 1995 to 2000. The time before that was after WWII. In 1946, it was 119% and by the 1970s, it was bouncing around between 31% and 35%. Now we're looking at 106% next year. Prior to 2016, we had hit 104% or more only three time: 1945, 1946, 1947.
https://www.thebalance.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287
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It is complete fiscal irresponsibility -- basically Baby Boomers robbing Millennials.
-
Manufacturing sector contracted for the first time since 2009 (https://www.washingtonpost.com/business/2019/08/22/manufacturing-sector-contracted-first-time-since-data-show/?noredirect=on)
US consumer sentiment for August comes in well below estimates (https://www.cnbc.com/2019/08/16/us-consumer-sentiment-august-2019-preliminary.html)
-
There could be a "Recession" in the 1st year of his second term.
-
The Next Recession Will Destroy Millennials
"The trade war is dragging on. The yield curve is inverting. Investors are fleeing to safety. Global growth is slowing. The stock market is dipping. The Millennials are screwed."
https://www.theatlantic.com/ideas/archive/2019/08/millennials-are-screwed-recession/596728/
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As a father I try to strike a balance when it comes to what I tell my kids about my political and economic outlooks of the future. They are definitely inheriting a mess caused by the laziness and selfishness of previous generations. So far, the adult ones have done a good job of not getting into debt. I try to get them to think about practicality of career choices in tough times ahead. There is only so much one can do.
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Corporate insiders have sold an average of $600 million of stock per day in August, according to TrimTabs Investment Research, which tracks stock market liquidity.
August is on track to be the fifth month of the year in which insider selling tops $10 billion. The only other times that has happened was 2006 and 2007, the period before the last bear market in stocks
https://www.cnn.com/2019/08/26/investing/stock-market-insider-selling/index.html
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https://www.bloomberg.com/news/features/2019-09-09/a-manufacturing-recession-could-cost-trump-a-second-term
About 250 Kuhn employees spent the Labor Day holiday caught in a two-week furlough, and they’re facing another in early October. A shrinking order book means Kuhn is cutting costs and slashing production as Petras and his managers peer out at a U.S. economy that looks far bleaker from the swing-state heartland than it does in either the White House or on Wall Street.
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Household debt bombs
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you can add Student Debt to the DEBT BOMB :-[
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Yeah, it is over 1.5 trillion. My kids have so far spent their lower division at community college to keep their experiences low.
Even more crazy is the auto loan debt, it is approaching the same amount and is something completely avoidable.
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My kids have so far spent their lower division at community college to keep their experiences low.
I hope you meant expenses ;-)
Seriously, my nephew did this and then transferred to a well-known engineering school and now makes a nice living in Silicon Valley and started his working life with very little student debt. It's a great plan.
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As a father, hopefully both! ;)
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https://news.gallup.com/poll/266960/economic-confidence-drops-lowest-level-shutdown.aspx
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Americans' confidence in the economy has become less rosy this month as Gallup's Economic Confidence Index fell to +17 from August's +24 reading, marking the lowest level since the government shutdown ended in January.
At the same time, the public is evenly divided over the likelihood of a recession in the next year. The current expectation of a recession is nine points higher than it was in October 2007, just two months before the Great Recession began but slightly below a February 2001 reading, one month before that eight-month-long recession.
In my own little circle it seems most are oblivious. I've seen a lot of new car purchases, a lot of debt being stacked on. It is probably where I live.
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>seems most are oblivious
I'm not seeing any changes in behavior, either.
That said, I'd think those left stranded by the Thomas Cook collapse *might* be a little more wary now.
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In my own little circle it seems most are oblivious.
In my own little circle, there is an uptick in people asking me what I remember about how the local hotel and vacation rental industry did during the Great Recession. Nobody was asking me about that a year ago.
I've mentioned this before, but I wonder to what extent recession worry becomes a self-fulfilling prophecy. Now a lot of people in Trumpworld seem to be asking the same question. Here's three examples from, respectively, conservative, center-right and center-left media...
https://www.nationalreview.com/the-morning-jolt/trump-sounds-the-alarm-on-a-conspiracy-against-economic-growth/
https://markets.businessinsider.com/news/stocks/trump-recession-commentary-accuses-media-of-trying-to-create-one-2019-8-1028463363
https://www.nytimes.com/2019/08/30/business/economy/recession-trump.html
et cetera
I don't agree with Trump's allegation ("the media wants a recession"), but I think his basic observation is probably right - we could talk ourselves into a recession. The thing is, he has been well-served so far by using confrontation with "the media" to rally the base. I think he's playing with fire here though - by talking about recession and making accusations about a media conspiracy, he's keeping the topic in the news, which is probably the worst thing an incumbent president can do.
So to me it looks like there are two risks, one that Trump sees and one that he apparently doesn't.
1. By talking about recession enough, we could cause one, which will make re-election harder. He sees and fears this one, and rightly so.
2. By talking about recession, even to deny it, he makes people nervous and pessimistic on the economy and traditionally that is bad for incumbents. So if he doesn't learn a little restraint for once, he could face a situation where he runs for re-election in the midst of an excellent economy with no signs of recession and nevertheless loses the election because of the economy.
He needs to read George Lakoff's book, "Don't Think of Elephant." He keeps telling people, "News of a recession is fake news," failing to understand that the only word people hear in that sentence is "recession."
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A majority of the ultra-wealthy expect a recession by 2020 and are hunkering down, says UBS survey
(https://www.cnbc.com/2019/09/24/a-majority-of-ultra-wealthy-expect-a-recession-and-are-hunkering-down.html)
- UBS surveyed 360 global family offices with an average family wealth of $1.2 billion.
- The result showed 55% of family offices see a recession by 2020.
- To mitigate risks, 45% of them are already adjusting their portfolios, including shifting to bonds and real estate, while 42% are increasing their cash reserves.
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US manufacturing survey shows worst reading in a decade (https://www.cnbc.com/2019/10/01/us-manufacturing-economy-contracts-to-worst-level-in-a-decade.html)
The U.S. manufacturing Purchasing Managers’ Index from the Institute for Supply Management came in at 47.8% in September, the lowest since June 2009, marking the second consecutive month of contraction. Any figure below 50% signals a contraction.
The new export orders index was only 41%, the lowest level since March 2009, down from the August reading of 43.3%, ISM data showed.
“We have now tariffed our way into a manufacturing recession in the U.S. and globally,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
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>>worst reading in a decade
What are the chances we are already in a recession?
What are the chances that the trade war is rolled back in 2020 and we never go into a recession?
Meanwhile, this is in my inbox from Visit California (state tourism board)
Take a moment to view Year in Review FY18/19, to reflect on statewide marketing accomplishments and record-breaking tourism impacts – a collective success for the industry.
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What are the chances we are already in a recession?
What are the chances that the trade war is rolled back in 2020 and we never go into a recession?
None of us are clairvoyant, but the trade war is not solely responsible for the slowdown, it just hastened it. So, I doubt that rolling back tariffs will do much at this point other than push the timeline back a bit. My bigger concern is the record breaking deficit (https://markets.businessinsider.com/news/stocks/us-deficit-federal-budget-short-record-amount-in-may-2019-6-1028274824) gives us very little fiscal wiggle room to deal with the next crisis.
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Low interest rates take away a big tool as well. In fact, the only tool left once interest rates bottom out is massive deficit spending, which should make you even more afraid of those deficits, especially in places where the rate is already basically zero and supra-national bodies can dictate how much deficit spending they can do.
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Manufacturers are mired in their deepest slump since the Great Recession - CBS News
https://www.cbsnews.com/news/manufacturing-recession-manufacturers-are-in-their-deepest-slump-since-the-recession/
Luckily, I guess, we don't have much manufacturing in my region of the state. I'm still not clear as to the end result of all the farm commodity tariff brouhaha. Riding by, things appear to be normal and yields look good. But the farmers may be operating at a loss on borrowed money, FAIK. I don't see as much shiny new high-$$$$ equipment as in previous years, though.
<added>
Just saw this.
Deere to lay off 163 U.S. workers as trade war dents equipment demand - Reuters
"The layoffs come weeks after the company said it would reduce production by 20% at its facilities in Illinois and Iowa in the second of half of the year to keep inventory in line with retail demand."
https://www.reuters.com/article/us-deere-layoffs/deere-to-lay-off-163-u-s-workers-as-trade-war-dents-equipment-demand-idUSKBN1WG4OW
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UK economy headed for recession after services shrink unexpectedly
https://www.lse.co.uk/news/uk-economy-headed-for-recession-after-services-shrink-unexpectedly-pmi-udwy2ayjqsfzygr.html
<added>
US stocks sink following weak services sector report
"The services sector, which makes up the bulk of the U.S. economy, grew at a slower pace in September than economists had forecast. The weak report follows disappointing figures on business hiring on Wednesday and a dismal manufacturing report on Tuesday."
https://abcnews.go.com/Business/wireStory/us-stocks-sink-weak-services-sector-report-66033141
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I'm sure other's have checked, but I'm not sure anyone has posted, at least not recently
https://trends.google.com/trends/explore?date=all&geo=US&q=%2Fm%2F06bmj -- search interest in Recession (topic)
Dec 2007 = 100
August 2019 = 76
Aug 2011 and Dec 2018 hit 30
The last time we saw 76 was Mar 2009 on the downslide from the recession
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If you restrict it to "Finance" you can see that the chatter peaks right at the beginning and the "during" chatter is less than when looking at search in general
https://trends.google.com/trends/explore?cat=7&date=all&geo=US&q=%2Fm%2F06bmj
Basically, there's a massive peak when the recession actually starts and then there is another peak around the time the recession is *declared*, but the second peak is much smaller when looking just at finance.
By that measure, Google Trends number for August was the highest number by a large margin since December 2007.
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Meanwhile, over at the New York Times
For one brief, terrifying moment this summer, the word “recession” was on everyone’s lips — the stuff of television segments, front-page articles and Google searches.
Then, just as abruptly, everything started to look pretty much fine.
....
But it would be premature to declare a clean bill of health....
The latest, starkest reminder was a new manufacturing number published Tuesday. It showed the sector was contracting in September at its fastest rate since 2009....
...the manufacturing industry in the United States has added an average of only 3,000 jobs a month, down from 25,000 a month as recently as the spring of 2018.
...Spending on nonresidential construction fell 0.4 percent in August
https://www.nytimes.com/2019/10/02/upshot/recession-risks-economic-outlook.html?action=click&module=RelatedLinks&pgtype=Article
Meanwhile, Washington Post reports this:
Others even speculated that reports about presidential candidate Sen. Bernie Sanders’s health might have sparked the sell-off.
https://www.washingtonpost.com/business/2019/10/02/dow-plunges-more-than-points-wall-street-extends-october-losses/
which mostly goes to prove that lots of people who speculate about the economy are untethered from reality (which may be true of me too, but WaPo is not interviewing me!)
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Ooooph!
HSBC to cut up to 10,000 jobs in drive to slash costs
https://www.reuters.com/article/us-hsbc-hldg-layoffs/hsbc-to-cut-up-to-10000-jobs-ft-idUSKBN1WL0J9
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Related, Robots to cut 200,000 U.S. bank jobs in next decade:
https://www.americanbanker.com/articles/robots-to-cut-200-000-us-bank-jobs-in-next-decade-study
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ROBOTS should be a MEGA thread of its own.
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That's what the Terminator thread sort of evolved into.
Imagine that thing malfunctioning.
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I'm having my annual meeting with my Edward Jones broker. This thread has gotten to me, so I'm going to tell him to shift to circling the wagons.
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Billionaire Warren Buffett Is Predicting a Stock Market Crash; Is He Right? (https://www.ccn.com/billionaire-warren-buffett-predicting-a-stock-market-crash/)
The Oracle of Omaha’s Berkshire Hathaway (NYSE: BRK) had cashed out nearly 60% of its investment portfolio at the end of June according to an SEC filing. The $122 billion cash pile is unusual for Buffett, who typically puts his money to work through acquisitions, stock buybacks or equity purchases.
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Global economy faces $19tn corporate debt timebomb, warns IMF (https://www.theguardian.com/business/2019/oct/16/global-economy-faces-19tn-corporate-debt-timebomb-warns-imf)
Low interest rates are encouraging companies to take on a level of debt that risks becoming a $19tn (£15tn) timebomb in the event of another global recession, the International Monetary Fund has said.
In its half-yearly update on the state of the world’s financial markets, the IMF said that almost 40% of the corporate debt in eight leading countries – the US, China, Japan, Germany, Britain, France, Italy and Spain – would be impossible to service if there was a downturn half as serious as that of a decade ago.
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Weak U.S. retail sales cast shadow over slowing economy
(https://www.reuters.com/article/us-usa-economy-retail/weak-u-s-retail-sales-cast-gloom-over-economy-idUSKBN1WV1NG)
WASHINGTON (Reuters) - U.S. retail sales fell for the first time in seven months in September, suggesting that manufacturing-led weakness could be spreading to the broader economy, keeping the door open for the Federal Reserve to cut interest rates again later this month.
The downbeat report from the Commerce Department on Wednesday came on the heels of data this month showing a moderation in job growth and services sector activity in September. Signs of cracks in the economy’s main pillar of support, ahead of the holiday season, could further stoke financial market fears of a sharper slowdown in economic growth.
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Nordstrom seven-story, 320,000-square-foot space offers a glimpse into the future of retail.
Seems they are bucking the trend.
https://www.elledecor.com/shopping/a29550435/nordstrom-manhattan-flagship/
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"With the probability of a recession looming large, consumers can be expected to play it safe and not go for big-ticket purchases. That’s bad news for the US housing market."
The U.S. Housing Market Crash Is Officially Here
https://www.ccn.com/u-s-housing-market-crash-officially-here/
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https://www.realtor.com/research/2019-national-housing-forecast/
ADDED, But
https://www.wsj.com/articles/once-asking-250-million-americas-onetime-priciest-home-sells-for-less-11571943798
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The top article is a year old, I wonder how correct they were?
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The US economy is slowing (https://www.cnn.com/2019/10/30/economy/us-gdp-third-quarter/index.html)
The economy was helped by growing consumer and government spending, but the pace of growth decelerated. Americans spent less on cars, continuing a trend that has been ongoing for a year.*
But Americans also spent less on clothing and footwear. The Trump administration hit some Chinese imports of clothes and shoes with tariffs during the summer.
Nevertheless, the report beat analyst expectations. Economists polled by Refinitiv expected growth to be as slow as 1.6% ahead of the release.
I guess 1.9% is god news these days.
*Anecdotally, as I've said elsewhere, I am seeing a bunch of new cars on the road. It would be interesting to see a map of where new cars are selling. I feel like Californians are oblivious the the economic risks at the moment.
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Yahoo Finance• November 4, 2019
Stocks have canceled the 2020 recession
https://beta.finance.yahoo.com/news/stocks-have-canceled-the-2020-recession-111918255.html
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The ‘mother of all bubbles’ could blow up the economy if profits don’t improve, warns Blackstone strategist (https://www.marketwatch.com/story/the-mother-of-all-bubbles-could-blow-up-the-economy-if-profits-dont-improve-warns-blackstone-strategist-2019-11-04)
I don't know, we'll see.
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https://www.cnbc.com/2019/11/06/us-industrial-productivity-labor-costs-q3-2019.html
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Recent in the UK:
https://www.independent.co.uk/news/business/news/mothercare-close-uk-stores-jobs-loss-administration-a9187546.html
also heard a family who had people working at Peacocks were worried about their jobs.
The oldest department store in the UK closed its doors in Derby recently. Bennetts.
https://www.bbc.co.uk/news/uk-england-derbyshire-50027472
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Anecdotal, but pretty strong here that a lot of people are nervous, and cashflow is tightening a bit.
If we didn't talk ourselves into already, we're walking that way now.
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Recession fears have vanished - Axios
https://www.axios.com/recession-fears-have-vanished-0d02ba58-81ac-4c47-a645-001ff8908023.html
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Interesting.
"The CNN Fear & Greed Index registered 'extreme fear' (<25 on a scale from 0-100) in August but is now in 'extreme greed' (91), indicating we may have gone too far too fast."
:o
One of the signals I always use is a friend who is a piano tuner. His clients seem to put off tunings when they are worried. He kept telling that there was "no work." Yesterday he told me tunings have picked up again and he's doing better.
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Actually, the Fear and Greed Index commonly makes massive moves
https://money.cnn.com/data/fear-and-greed/
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https://www.msn.com/en-us/money/markets/personal-loans-are-growing-like-a-weed-a-potential-warning-sign-for-the-us-economy/ar-BBX7SW0
Also, I've had a prospective startup client contact us for marketing for "installment loans" which seems to be a very high interest (well into double digits) loan structured in a way to be legal with current regs. Reading up on it, seems very nasty.
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The great American labor paradox: Plentiful jobs, most of them bad (https://qz.com/1752676/the-job-quality-index-is-the-economic-indicator-weve-been-missing/)
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That is the problem... everyone has a job, often two or three. But they are scared they won't make rent, scared they will get laid off, scared they will need to go to the doctor and fail to show up for work on an on-call day and lose their job.
Scheduling security and overtime threshold are two big frontiers for the American labor movement in the coming years. Just-in-time scheduling is one of the biggest complaints people have, more so even than wages.
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Moved here
http://th3core.com/talk/economics-investing/america's-auto-loan-debt-is-truly-out-of-control/15/
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Trucking is an early indicator.
America's $800 billion trucking industry has been in a recession since the beginning of 2019.
That downturn is now affecting truck manufacturers and the people who work at them.
Cummins, a manufacturer of heavy equipment based in Columbus, Indiana, told its employees last week that it would lay off about 2,000 workers worldwide. Cummins' 2018 revenue totaled $23.8 billion.
https://www.businessinsider.com/cummins-confirms-2000-layoffs-at-truck-engine-manufacturer-trucking-downturn-2019-11
The data backs up Boblett's claim, particularly when it comes to new orders of big rigs. According to the most recent data from FTR Transportation Intelligence, October orders of heavy-duty trucks were down by 51% from last year. October is typically the hottest month for new truck orders, and this October's orders hit a three-year low, the weakest since 2016.
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U.S. economy shakes free of recession fears in striking turnaround since August
https://www.msn.com/en-us/news/us/u-s-economy-shakes-free-of-recession-fears-in-striking-turnaround-since-august/ar-AAK9ByW
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Debenhams will begin a make-or-break year with 19 store closures this month that will result in 660 job losses on the UK’s fragile high streets.
https://www.theguardian.com/business/2020/jan/03/debenhams-kicks-off-make-or-break-year-with-19-store-closures
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Nine States Face Economic Contraction, Most Since 2009 Crisis
Report from the Philadelphia Fed, who issues this forecast monthly
https://www.bloomberg.com/news/articles/2020-01-02/nine-states-face-economic-contraction-most-since-2009-crisis
The overall outlook for the economy, which is enjoying the longest expansion on record, has been helped by the Trump administration scoring trade deals including a pact with China due to be signed this month, lower interest rates, a tight labor market and a rally in stocks.
A Bloomberg Economics model to determine America’s recession odds estimates the chance of one within the next year at about one in three -- though that’s down from last year.
And then of course, there's the assassination of Soleimani... which is a bit of a wildcard
https://www.marketwatch.com/story/investors-are-misplacing-threats-to-the-us-stock-market-2020-01-03
When the first Gulf War started in 1990, I started short-selling the market, only to see the market shoot straight up.
Historical precedences aside, there is a small probability that this time may be different. The reason is that the U.S. has hurt Iran’s pride. When a nation’s pride is hurt, its leaders may not act rationally. The rational view is that it is in the interest of all parties to de-escalate the situation.
The real danger to investors is not a war with Iran but the simple fact that this stock market is controlled by the momo (momentum) crowd. A big part of the buying has occurred just because the market is going up. The momo crowd is fickle and can easily start selling if momentum reverses. For this high valuation, fundamental and macro underpinnings are weak in this stock market.
Here’s what typically happens to the financial markets after major Middle East crisis events
https://www.cnbc.com/2020/01/03/heres-what-happens-to-the-markets-after-major-middle-east-events.html
Stocks and oil tend to outperform defensive assets like gold and Treasurys in the months after major crisis events in the Middle East, according to an analysis by CNBC.
et cetera
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UK's HMV still making bad news.
"HMV has warned of possible job losses as it fights to keep open stores across the country in the face of high rents and business rates."
https://www.theguardian.com/business/2020/jan/04/hmv-confirms-three-stores-are-closing-with-job-losses-expected
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I've been saying this for years, commercial properties are not an asset, they are a liability.
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IIRC, this one was on the watch list upstream;
Pier 1 Imports closing nearly half of stores as sales falter - ABC News
https://abcnews.go.com/Business/wireStory/pier-imports-closing-half-stores-sales-falter-68105591
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"commercial properties are not an asset, they are a liability"
Having spent years in the commercial Real Estate BIZ, I would agree that online BIZ has taken over. With the continuation of expanded GOV under both GOP & DEM > office buildings in CAPITAL cities will remain strong IMFO
BUT getting back to "Recession"
I'd encourage you to search the phrase "Household Formation 2020"
"Millennials, once held down by the worst job market since the Great Depression, are now in a position where they are the primary demographic driving housing demand."
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More than 1,700 stores are closing in 2020 as the retail apocalypse drags on. Here's the full list.
https://www.businessinsider.com/stores-closing-in-2020-list-2020-1
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Store closings are a reflection of the change in consumer buying habits.
Do they effect the GDP is the question when it comes to recession.
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Economy in a Nutshell: Manufacturing in Recession. Services Booming.
https://www.nytimes.com/2020/01/10/upshot/economy-in-a-nutshell-manufacturing-in-recession-services-booming.html
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The manufacturing recession underway shows up in the employment numbers: The nation’s factories shed 12,000 jobs in December, with the steepest loss in the making of fabricated metal products. A further 8,000 jobs were lost in the mining sector, reflecting a slump in spending on energy exploration. Transportation and warehousing employment fell by 10,400, another potential knock-on effect of the manufacturing slump.
This story is not too complicated: The sectors that bear the brunt of the global economic slowdown and the trade wars are cutting jobs, or at least they were in December.
Lots of low level service job growth, but I'd like to see a map of where those jobs are. I have a suspicion that the places hit the most from the decline in skilled labor jobs aren't opening too many Starbucks.
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More on the topic.
In a recent analysis, we found that 53 million workers ages 18 to 64—or 44% of all workers—earn barely enough to live on. Their median earnings are $10.22 per hour, and about $18,000 per year. These low-wage workers are concentrated in a relatively small number of occupations, including retail sales, cooks, food and beverage servers, janitors and housekeepers, personal care and service workers (such as child care workers and patient care assistants), and various administrative positions.
https://www.brookings.edu/blog/the-avenue/2020/01/08/low-unemployment-isnt-worth-much-if-the-jobs-barely-pay/
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>> 44% of all workers—earn barely enough to live on
That is a damning statistic for one of the richest societies in the history of the world.
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There’s Almost No Chance of a Recession This Year, Experts Say. Here’s Why.
https://www.marketwatch.com/articles/why-markets-will-gain-despite-looming-risks-barrons-roundtable-panelists-say-51578707631
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I've been saying this for years, commercial properties are not an asset, they are a liability.
Care to expound this a bit?
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I hope he chimes in, but I am going to guess. When the economy tanks people still need a place to live but stores/businesses close down and the property owner is stuck paying the mortgage/insurance/taxes on an empty building.
During the last recessions when there were tons of empty buildings rents were actually going up in some parts as people lost their homes and put upwards pressure on rentals.
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Home Sales, Housing Starts Seen Rising in 2020
Among the positive demand factors are: solid job gains, historically low mortgage rates and above-trend household formations.
https://www.builderonline.com/money/economics/home-sales-housing-starts-seen-rising-in-2020_o
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>>above-trend household formations
This maps to your previous comment about how millennials are finally starting to fuel household formation.
The one thing that I find is how many of those millennials are planning on forming permanent two-person households. Of course, when my brother got married, he swore he didn't want kids... then one day he did.
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This is interesting, seems the consumer is a lagging indicator.
Consumers and corporate chieftains are heading in the opposite direction, with one group still brimming with good thoughts about the future and the other sure that tougher times are coming.
Recent surveys exemplify a trend that began a few years ago and has accelerated over the past several months. The gap between sentiment is broad and growing, though there’s some reason to believe that a change could be coming.
Chief executive officers and chief financial officers see an economy that is heading into a slowdown if not an outright recession. Recent surveys show that CEOs believe recession is the biggest risk in 2020, while almost all CFOs surveyed by Deloitte think the economy is likely to at least slow.
They view the U.S.-China trade war, a slowing global picture and increasing headline political risks as threats to the decadelong expansion that is the longest in American history.
But consumers are in the opposite camp.
While sentiment has leveled off from record highs, they still view conditions as generally positive. Spending remains strong even amid a growing savings rate, as consumers remain the beneficiary of a 50-year low in the unemployment rate and historic highs for the stock market.
https://www.cnbc.com/2020/01/09/ceo-confidence-in-economy-has-cratered-consumers-say-things-are-ok.html
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>consumer sentiment
It's a sugar high.
Families Still Drowning In Consumer Debt, Adding To Financial Insecurity
https://www.forbes.com/sites/christianweller/2020/01/18/families-still-drowning-in-consumer-debt-adding-to-financial-insecurity/
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>It's a sugar high.
U.S. Economic Confidence at Highest Point Since 2000 (https://news.gallup.com/poll/283940/economic-confidence-highest-point-2000.aspx)
National Debt Increased by $3 Trillion Over the Past Three Years (https://www.newsweek.com/donald-trump-national-debt-increase-3-trillion-first-three-years-presidency-1483660)
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The Corona virus may change the equation. We have lots of supply chains being disrupted and travel curtailed.
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The economy will survive. It does every year!
https://www.cdc.gov/flu/about/burden/preliminary-in-season-estimates.htm
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>The economy will survive. It does every year!
No doubt, the sky isn't falling. What I'm wondering is if this may be enough to slow down the global economy to the point of negative growth. Manufacturing is already in recession.
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U.S. farm bankruptcies hit an eight-year high (https://www.reuters.com/article/us-usa-farms-bankruptcy-idUSKBN1ZT2YE)
According to data released this week by the United States Courts, family farmers filed 595 Chapter 12 bankruptcies in 2019, up from 498 filings a year earlier. The data also shows that such filings - known as “family farmer” bankruptcies - have steadily increased every year for the past five years.
Eurozone economy barely growing at all (https://www.bbc.com/news/business-51327611)
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https://www.patentlyapple.com/patently-apple/2020/02/apple-joins-starbucks-and-mcdonalds-corp-in-closing-all-mainland-china-apple-stores-until-at-least-february-9.html
Most/almost all countries closing borders to china, airlines shutting down and now these all-mainland retailers. This is definitely going to hurt China, maybe just a bump for the rest of us.
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"just a bump"
YEP
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>bump
A $174 billion bump, for starters.
China to inject US$174 billion of liquidity into markets amid new coronavirus outbreak | South China Morning Post
https://www.scmp.com/economy/china-economy/article/3048618/china-inject-us174-billion-liquidity-markets-amid-new
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>just a bump
China oil demand has plunged 20% on coronavirus lockdown; biggest shock since global financial crisis (https://www.straitstimes.com/business/economy/china-oil-demand-has-plunged-20-on-wuhan-virus-lockdown-biggest-shock-since-global)
Chinese oil demand has dropped by about three million barrels a day, or 20 per cent of total consumption, as the coronavirus squeezes the economy, according to people with inside knowledge of the country's energy industry.
The drop is probably the largest demand shock the oil market has suffered since the global financial crisis of 2008 to 2009, and the most sudden since the Sept 11 attacks. It could force the hand of the Opec cartel, which is considering an emergency meeting to cut production and staunch the decline in prices, which are headed for the lowest close in a year.
We're still in the very early stages.
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Chinese Stocks Are Tanking as Markets Reopen. Why U.S. Stocks Are Rising.
https://beta.finance.yahoo.com/m/c35b3166-4fe8-347c-bd59-44d7a63bc437/chinese-stocks-are-tanking-as.html
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Investors should prepare for ‘soberingly low’ returns - MarketWatch
"expected the real return of the traditional U.S. portfolio — 60% stocks to 40% bonds — over the next five to 10 years to be 2.4%" (oooph!)
https://www.marketwatch.com/story/heres-how-a-top-hedge-fund-manager-says-investors-should-prepare-for-soberingly-low-returns-2020-02-03
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'“It is big. It’s going to paralyze China. It’s going to cascade throughout the global economy,” said the Allianz chief economic advisor.'
El-Erian says coronavirus to 'paralyze China,' don't buy stock dips
https://www.cnbc.com/2020/02/03/el-erian-says-coronavirus-to-paralyze-china-dont-buy-stock-dips.html
See my post about pharm shipments from China, for example. This morning, my contact said that not only are there few transport flights but that the factories are closed and her associates in CN are not available.
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>'“It is big. It’s going to paralyze China. It’s going to cascade throughout the global economy,” said the Allianz chief economic advisor.'
When I was typing out maybe we'd just have a bump, debbie knew it was wishful thinking.
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WHaaaa??
"We have not seen a demand destruction event of this scale that moves this quickly"
Oil hits 13-month lows as coronavirus cuts demand - Reuters
https://www.reuters.com/article/us-global-oil/oil-hits-13-month-lows-as-coronavirus-cuts-demand-idUSKBN1ZX033
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70% chance of recession in next six months, study from MIT and State Street finds
https://www.cnbc.com/2020/02/05/70percent-chance-of-recession-in-next-six-months-study-from-mit-and-state-street-finds.html
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I can't see this not having an impact.
airlines cancel more than 46,000 flights amid coronavirus epidemic (https://www.cnbc.com/2020/02/06/coronavirus-china-becomes-increasingly-isolated-as-airlines-pull-out.html)
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>airlines
This is probably worse. From my maritime news feeds
Coronavirus Disrupts Global Container Shipping – gCaptain
https://gcaptain.com/coronavirus-disrupts-global-container-shipping/
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Big one.
'Quinn warned there would be "meaningful" workforce reductions in the bank's home market of the United Kingdom. Other cuts to jobs and costs will come from a simplification of the bank's organizational structure and from the effect of technology and digitization on the business.'
'The bank plans to reduce its global headcount by roughly 15% to 200,000 over the next three years, a company spokesperson said, although the precise figures have not been finalized.
HSBC will also ditch $100 billion in assets, shrink its investment bank and close a third of its US branches as it shifts resources to the Middle East and Asia, where it already makes most of its profits. The changes are expected to cost $7.2 billion by 2022.'
HSBC plans to cut 35,000 jobs as profit drops 33%
https://www.cnn.com/2020/02/18/business/hsbc-results-2019-announcement/index.html
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They will close 76 branches in the USA.
I'm not sure that I have ever seen one.
https://en.wikipedia.org/wiki/HSBC_Bank_USA
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>I'm not sure that I have ever seen one.
Same here. Must be Yankee/Cali-only. Which may explain their problem in the US. I live in a small town, but it's the business hub of dozens of outlying rural communities. We have too many banks, but there has been some down-sizing over the last decade.
Oh, and don't forget ....DON'T BANK ONLINE! hhh
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Macy's Downgraded To Junk; Stock Tumbles
S&P Global Ratings
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Dow Slides After Morgan Stanley Warns the ‘Downturn’ Has Begun (https://www.ccn.com/dow-slide-morgan-stanley-warns-downturn-has-begun/)
Warren Buffett' Berkshire Hathaway has moved into defensive stocks while trimming banks and consumer discretionary stocks. Should investors be concerned about recession? (https://www.ccn.com/warren-buffetts-stock-moves-warn-of-looming-recession-for-u-s-economy/)
Japan’s Economy Shrinks 6.3% (https://www.wsj.com/articles/japans-economyshrinks-as-sales-tax-increase-cools-consumption-11581898410)
Could the coronavirus epidemic trigger a China-led global recession? (https://www.scmp.com/comment/opinion/article/3049412/could-coronavirus-epidemic-trigger-china-led-global-recession)
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China's passenger car sales tumble 92% in first half of Feb due to virus outbreak
https://www.thestar.com.my/business/business-news/2020/02/21/china039s-passenger-car-sales-tumble-92-in-first-half-of-feb-due-to-virus-outbreak
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The Glub, Glub, Glub Of Recession Circling The Drain (https://seekingalpha.com/article/4326458-glub-glub-glub-of-recession-circling-drain)
In short, manufacturing remains in recession; corporate profits remain in recession; freight remains deep in recession; Carmageddon remains in recession; and the Retail Apocalypse remains a recession for brick-and-mortar stores, while employment - the last holdout - is now also turning downward.
Anecdotal: The Mrs & I went out to dinner last night and there were a lot less people out downtown than there was six month ago. We were speculating that its coronavirus making people stay in.
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Moody's downgrades auto sales forecast on virus fears - ABC News
https://abcnews.go.com/International/wireStory/moodys-downgrades-auto-sales-forecast-virus-fears-69228781
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>>virus fears
SFO just declared a state of emergency despite no confirmed cases. In Russia, they are monitoring and putting restrictions on Chinese.
All of this is going to throw some cold water on global trade and eventually even local trade.
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> state of emergency
Saw a headline that London did the same.
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Saudi Arabia suspends pilgrimages to Mecca over coronavirus
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So, with CV I think we went fro recession speculation to now speculating on how bad it's going to get. We haven't had a disruptive force like this in decades.
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>>decades
Do you think it's bigger than the complete shutdown of air traffic and then launching two wars in 2001?
But yes, that's the only thing I can think of in a long time that seems this disruptive to the economy.
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>Do you think it's bigger than the complete shutdown of air traffic and then launching two wars in 2001?
Probably yes, this is a global crisis with massive economic disruption basically everywhere.
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Companies are canceling U.S. domestic travel over coronavirus fears
https://www.msn.com/en-us/news/us/companies-are-canceling-us-domestic-travel-over-coronavirus-fears/ar-BB10xnbr
Coronavirus prompts United Airlines to offer pilots a month for flight cuts
https://www.cnbc.com/2020/02/29/coronavirus-prompts-united-airlines-to-offer-pilots-a-month-for-flight-cuts.html
The travel industry, a linchpin of the global economy, is suffering its worst shock since 9/11
https://www.cnn.com/2020/02/29/business/travel-industry-coronavirus-economic-impact/index.html
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$6 trillion gone in six days (https://www.cnbc.com/amp/2020/02/28/global-stock-markets-have-lost-6-trillion-in-value-in-six-days.html)
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Still, the likely end-point of this outbreak will see it settle down as an endemic disease — one of the suite of respiratory viruses like influenza and the common cold that travel around the world year after year, with most of us regarding them as little more than a nuisance. Bloomberg via Yahoo
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>>likely end point
The problem is that the end point can take a couple of centuries to reach for some diseases and others (the Plague) remain virulent even today. Basically, a disease becomes less virulent if the virulent form kills too regularly and too quickly for that strain to spread.
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Deepening Rout in Commodities Stokes Fears About World Economy
https://www.wsj.com/articles/deepening-rout-in-commodities-stokes-fears-about-world-economy-11583064001
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Redditor compiles a worldwide supplychain status post daily.
Today's entry:
https://www.reddit.com/r/supplychain/comments/fc9ztk/covid19_update_2nd_march/
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That's a great link Dras, thanks.
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The Fed just hit the coronavirus panic button (https://www.cnn.com/2020/03/03/investing/federal-reserve-interest-rate-cut-coronavirus-emergency/index.html)
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Wrong thread...
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Depends on how you look at it. Fed as in Federal Reserve.
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Sorry. I meant that I deleted my post b/c it was the wrong thread. I meant to add the Google/Amazon info to the coronavirus thread, though it could go here too
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https://www.reddit.com/r/supplychain/comments/few230/covid19_update_saturday_7th_march/
A few I picked though most of it is a good read:
Cases since yesterday-
...
- Italy: 4,636 (up 50.1%)
- Iran: 4,747 (up 62.5%)
- Germany: 639 (up 59.8%; 15 out of 16 states now have recorded infections)
- France: 613 (a jump of 50.0%)
- Japan: 408 (up 16.9%)
- Spain: 374 (up 43.8%)
- USA: 213 (up 43.9%)
...
"Chinese authorities say 76m workers have gone back to work (60% of the total workforce that left for the Chinese New Year)."
...
"The US may already be in a recession - Bloomberg reports (link) that New research from State Street Associates and Massachusetts Institute of Technology indicates that the U.S. economy was already vulnerable a recession before the virus outbreak; in January the chance of a recession was 70%. If stocks give up all their growth over the past 12 months the chance will rise to 80%. The Treasury yield curve was perilously close to inversion in January as well; Bloomberg explains that inversion of the yield curve - which long-term interest rates are lower than short-term ones - is a strong indicator of recession.)"
...
"Is China really back up to speed? - Caixing media, an independent Chinese media company, is reporting (Link) that local governments are fraudulently boosting electricity consumption and other metrics in order to meet tough new back-to-work targets. It adds that leaving lights and air conditioners on all day long in empty offices, turning on manufacturing equipment, faking staff rosters and even coaching factory workers to lie to inspectors are just some of the ways they helped manufacture flashy statistics on the resumption of business for local governments to report up the chain. Beijing is apparently tracking power consumption to identify whether companies are operational."
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I really like the daily summaries this guy is doing. Its crazy how the case numbers are out of date by the time their published.
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Perfect storm.
Dow futures drop 1,000 points as all-out oil price war adds to coronavirus stress
https://www.cnbc.com/2020/03/08/dow-futures-drop-700-points-as-all-out-oil-price-war-adds-to-coronavirus-stress.html
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Likely to be a very rough day tomorrow.
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I keep wondering if it's finally time to put some cash into the stock market.
I don't think we have hit Peak Fear yet. When the US is behaving like China and Italy with everything on lockdown, that, I would say, will be a buy signal... but I might not dare to part with my cash at that point, since I might have to actually spend it in that circumstance.
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The Dow Will Bounce Back. History Tells Us When
https://www.barrons.com/articles/time-to-buy-stocks-history-offers-a-guide-51583637721
ADDED
We have the strongest economy in the world. As long as the government does NOTHING the market will correct itself'. To quote Elon Musk https://www.usatoday.com/.../coronavirus.../4994870002/
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The Dow Will Bounce Back. History Tells Us When
The challenging part is:
For starters, it appears big dips beget more big dips.
“The coronavirus is reminiscent of 1990 in terms of stock-market effect,” wrote Stifel head of institutional equity strategy Barry Bannister, referring to the year Iraq invaded Kuwait. “A short, sharp, out-of-the blue shock that, after the fact, proved to have been painful, but economically overrated.”
There wasn’t a 10% weekly decline in 1990. There was, however, a 7.8% decline, and the market dropped six straight weeks around the August occupation.
As littleman said early on, this will probably have a longer effect than Sept 11 (or the Gulf War).
I suppose this is probably a great time for dollar-cost averaging. If you have $12 to invest, invest a dollar month through the downturn
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>I keep wondering if it's finally time to put some cash into the stock market.
If you want to hedge your investment you could start dollar cost averaging, but
I doubt we are at the bottom yet. Given that stocks tend to fall faster than they rise it seems to make sense to wait imo.
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dollar cost averaging, but
:-) See last line of my post. Still, before Corona, I was thinking a 20% downturn would be a signal to jump in. Haven't checked whether we are there or not.
In terms of economic effects, I draw your attention to items 3 and 4 on this page
https://industry.visitcalifornia.com/marketing-communications/coronavirus
We are currently modeling impacts based on an assumed five- to six-month crisis window but a longer impact on travel. The most affected market segments will be large events and overseas visits. In 2003, overseas visits to the US contracted for 8 months with China falling 30% for the year and the rest of Asia falling 10%. Total international visits fell 5.4%. Canada and Mexico were less affected than overseas markets with declines of 2.5% and 1.9%, respectively.
Here, scroll below the recording replay (I did not attend the webinar) and look at the charts.
https://keydatadashboard.com/coronavirus-impact-report-on-short-term-vacation-rental-regions/
The travel industry is going to experience a bloodbath... actually, it already is.
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Coronavirus crackdown is cutting Italy's GDP by 10-15% - economist (https://www.nasdaq.com/articles/coronavirus-crackdown-is-cutting-italys-gdp-by-10-15-economist-2020-03-10)
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Ships' logs...
Busiest Port in U.S. Sees 23% Drop in Cargo Volumes in February – gCaptain
https://gcaptain.com/busiest-port-in-u-s-sees-23-drop-in-cargo-volumes-in-february/
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Coronavirus fallout: At least 150 companies have warned of earnings hit
https://www.cnbc.com/2020/03/11/coronavirus-at-least-150-companies-have-warned-investors.html
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They're talking about a payroll tax cut, that's not going to do much.
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>payroll tax cut, that's not going to do much.
Restaurants across the country are already on the brink of collapse. What happens when this goes on for a month or more?
I see a lot of chatter about uber drivers and hourly workers getting paid. There'll be some spotty feel-good stories, but the overall impact on payroll numbers is going to be horrific.
...And nobody has even mentioned anything about those that work on commission or tips. No protection for them. For instance, how many real estate agents are going to have their income wiped out for a few months?
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Just heard a radio story on this on the way to work - 30% of US workers have no paid sick leave. 70% have less than two weeks.
I am thinking that does NOT count those who are self-employed - real estate agents, handymen, solo SEOs...
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> Restaurants
Almost a total wipeout in Vietnam, no customers. They will hang on though.
In my Cyprus neck of the woods restaurants are empty, sort of pre-season but nipped to the shops earlier and had to avoid the tumbleweed. Eerily quiet. More leveraged here, some will take a tumble.
I'm in the process of building a 28 room resort in Ninh Binh, Vietnam. Thankfully won't be finished until next year, ready to ride the wave of pent up travel demand ;) Assuming anybody is still alive :-\
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> 28 room resort
Get one of those disinfectant-spraying drones to patrol the hallways and common areas.
Don't buy a cruise ship.
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The first wave of coronavirus-related layoffs has started - The Washington Post (paywalled)
https://www.washingtonpost.com/business/2020/03/11/layoffs-coronavirus/
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From /r/dataisbeautiful/, shows the stark contrast between this downturn and 2008. Looks like a stone falling off a cliff.
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A friend of mine in New York closed his office on Wednesday. Manhattan office, family-owed business, luxury products, 30-40 employees. Everyone is hunkering down at home "until further notice".
He fears the company won't stay solvent for long.
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Federal Reserve cuts rates to zero and launches massive $700 billion quantitative easing program (https://www.cnbc.com/2020/03/15/federal-reserve-cuts-rates-to-zero-and-launches-massive-700-billion-quantitative-easing-program.html)
Futures trading hinting that its going to be little help. We may be in for a very bad week.
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>hinting
Futures hit limit down almost immediately Sunday evening. -4.5% AFTER the Fed action.
Added: Lots of chatter about banning shorts or closing the markets possible.
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Coronavirus: China’s economy suffers dramatic collapse in January, February in warning to rest of world | South China Morning Post
https://www.scmp.com/economy/china-economy/article/3075314/coronavirus-caused-dramatic-collapse-chinas-economy-warning
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Isn't it about to bounce back and re hit China.... again and again and again?
If it is possible to stop it in its tracks, and never let it in again then fine. But that means reduced trade with TROTW doesn't it?
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>Isn't it about to bounce back and re hit China....
If it follows the Spanish Flu pattern, yes. Next Fall will be worse.
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Aviation group: Coronavirus could bankrupt most airlines worldwide by May
https://thehill.com/policy/transportation/487752-aviation-group-coronavirus-could-bankrupt-most-airlines-worldwide-by/
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Pubs and restaurants 'could go bust within weeks' - BBC News
https://www.bbc.com/news/uk-scotland-51925295
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18% of U.S. workers have lost jobs or hours since coronavirus hit (https://www.latimes.com/business/story/2020-03-17/coronavirus-layoffs-work-hours-jobs)
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Lots of chatter about Boeing etc. spent all their cash on share buybacks and are now expecting a MASSIVE taxpayer-funded bailout. Privatize the gains, nationalize the risk. Repeat.
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>spent all their cash on share buybacks
Saw the same about airlines, but only read headlines.
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U.S. hotel, travel industry ask for bailout as job cuts begin - Reuters
https://www.reuters.com/article/us-health-coronavirus-usa-hotels/u-s-hotel-travel-industry-ask-for-bailout-as-job-cuts-begin-idUSKBN2142Y0
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>bailouts
In due time. I'd like to see some action on the immediate medical crisis first. Bailouts later.
-
https://www.standard.co.uk/business/laura-ashley-files-administration-coronavirus-a4389316.html
https://www.standard.co.uk/news/uk/carphone-warehouse-stores-close-2900-jobs-axed-a4389051.html
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"In short: bail out everyone... everywhere. The alternative is 107 years of fake price discovery and Fed market manipulation crashing upon themselves, ending the fiat system as we know it, and leading to the biggest social, economic and financial catastrophe of all time."
https://www.zerohedge.com/markets/zoltan-stares-abyss-fed-has-failed-here-what-powell-must-do-right-now-avoid-catastrophe
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A bit of personal QE would help right now.
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This Is Not a Recession. It’s an Ice Age.
https://www.theatlantic.com/ideas/archive/2020/03/quantifying-coming-recession/608443/
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Jobless Claims Near 1 Million in Canada, Crushing Weekly Record
https://www.bloomberg.com/news/articles/2020-03-24/jobless-claims-are-said-to-soar-to-nearly-1-million-in-canada
Multiply x10 for U.S.
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The stimulus bill is more balanced than I anticipated.
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I call it a "rescue" bill.
Stimulus may come later, if needed.
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A Major Medical Staffing Company Just Slashed Benefits for Doctors and Nurses Fighting Coronavirus
"Alteon Health, a staffing company backed by private-equity firm Frazier Healthcare Partners, will cut salaries, time off and retirement benefits for providers, citing lost revenue. Several hospital operators announced similar cuts."
https://www.propublica.org/article/coronavirus-er-doctors-nurses-benefits
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>Slashed Benefits
And so private healthcare begins to crumble in the US.
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Alteon Health
-
And so private healthcare begins to crumble in the US.
A friend who is part of a large group was saying they had recently conducted a study and asked what would happen if every patient paid Medicaid rates. They result was that the physicians would make $16/hour. This was not a deep study and did not count any efficiency from laying off the billing department, but even if that's 25% savings, that doesn't change the basic equation.
The point of this conversation was that he was saying that what makes the practice lucrative, is elective surgeries for people with good, private insurance.
So fast forward to now:
- physicians are super busy and starting to get run down (60 to 80 hours)
- no elective surgeries
- higher than normal proportion of patients on Medicaid, Medicare or no insurance at all
- the admin and support staff currently receiving full pay. Payroll is unchanged
- rent on office space, malpractice insurance, etc, etc is unchanged
At the current burn rate, he says they hit bankruptcy in 4-6 months if the patient mix stays the same.
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More bad news:
Nearly 60 Percent of U.S. Workers Won't Be Able to Meet Their Basic Financial Needs Under One-Month Coronavirus Quarantine, Survey Shows (https://www.newsweek.com/nearly-60-percent-workers-wont-meet-financial-needs-under-1495364)
Also, 3.5 million Social Security recipients (https://www.washingtonpost.com/business/2020/04/01/bailout-checks-social-security/) (read retired & disabled people) will not receive a stimulus check.
There will be no additional help for families with older dependents (17-24) (https://www.cbsnews.com/news/stimulus-checks-who-doesnt-get-one/). I don't quite get the logic there, even if they think teens and young adults should be in the work force, it makes no sense to use that logic when they are forced to stay home during quarantine.
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Here's who won't get a stimulus check:
People who haven't filed 2018 and 2019 tax returns.
Crap! I have not filed yet. My accountant filed for an extension because I'm late and at this point in the tax season nobody is getting a rush job.
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Ah... that journalist is not a programmer. Their Boolean logic is off. It should read: "Have not filed 2018 OR 2019 taxes"
I haven't filed my 2019 taxes yet. Does that matter?
No. The government will base its checks on either your 2019 or 2018 tax filing. If you haven't filed your 2019 taxes yet — and many people haven't, given the IRS has delayed its tax filing deadline from April 15 to July 15 — the government will use your 2018 tax returns to determine your stimulus payment.
https://www.cbsnews.com/news/stimulus-checks-coronavirus-relief-package-how-much-when/
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US box office last week..... $5k
https://www.boxofficemojo.com/weekly/?ref_=bo_nb_wey_secondarytab
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Brace for the ‘deepest recession on record,’ says BofA analysts, as jobless claims surge to 6.6 million - MarketWatch
https://www.marketwatch.com/story/brace-for-the-deepest-recession-on-record-says-bofa-analysts-as-jobless-claims-surge-to-66-million-2020-04-02
Great headline, btw. Brace!!
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"About half of UK companies are planning to furlough many of their staff because of coronavirus, according to surveys that threaten a much higher cost to the Treasury than expected."
I think someone straight out of school could have told them that.
https://www.ft.com/content/8e2c0615-f2af-4885-a9bf-78deeb94bc80?fbclid=IwAR1Rwr7xAgAkgSkYOtscEEpMrg56BwiCKSfwcKmDKWxC0zlcv8tYEo_xaRg
Comments make for interesting reading.
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The data speak: Stronger pandemic response yields better economic recovery | MIT News
http://news.mit.edu/2020/pandemic-health-response-economic-recovery-0401
-
The data speak: Stronger pandemic response yields better economic recovery | MIT News
http://news.mit.edu/2020/pandemic-health-response-economic-recovery-0401
I forget the name, but I heard an interview with the point person in the Obama admin who led the stimulus effort in 2008/09 and he said the key thing they learned was
- act fast. As with a pandemic or climate change, the longer you wait the more it costs in total
- make it easy. He said they were so worried about fraud they put too many restrictions in place and that slowed getting money into the economy. Simpler is better and you just have to deal with having some fraud.
Of course, it's less clear if you start asking people who were NOT part of the administration
Did the stimulus work? A review of the nine best studies on the subject
https://www.washingtonpost.com/blogs/ezra-klein/post/did-the-stimulus-work-a-review-of-the-nine-best-studies-on-the-subject/2011/08/16/gIQAThbibJ_blog.html
Of the nine studies I’ve found, six find that the stimulus had a significant, positive effect on employment and growth, and three find that the effect was either quite small or impossible to detect.
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So, at this point it probably should be asked; is this going to be a Great Depression level event?
Some of the answer will depend on the choices our governments make.
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>Great Depression
Probably. Plan that way. Anything less is probably good.
>Some of the answer will depend on the choices our governments make.
Take a look at the White House. Take a look at the Republican flat earthers. Take a look at the DNC which loves big banks and bankers. It's like the perfect storm on top of a dose of the clap.
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>Great Depression
Probably. Plan that way. Anything less is probably good.
I would disagree. I think long-term recession. Serious pain and hardship for many. Life changes for most, perhaps all.
But the Great Depression was truly Not Great. Honestly, I think it's like on September 11 when people were saying it was the same as Pearl Harbor (which was absurd). Or after the 2016 election when people said "We've never been so divided" (uh... we fought a civil war once). People forget how bad the bad things in the past really were. Very, very low chance we are headed there.
Markets
First, there's the markets. I think it's the least important aspect, but since the 1929 crash is generally thought of as the start of the Great Depression, I figured I would start there. I think the March bottom was the bottom. I actually made my max IRA contribution right near the bottom and am up 10%. I think the markets could go down from where we are right now, but I don't think we'll find a new bottom.
Why? Because markets are not a measure of the real economy. They are a measure of people's confidence in the future of a given business and the economy more broadly. When we hit bottom, people were imagining bodies piled up like cordwood and the price was based on that. We now know it's not going to play out like that, so there's no virus-based reason to go below that.
I do think there are massive structural problems like huge government debt and gross inequality and large numbers of terrible jobs that don't pay a living wage. But those were true before the virus. I think those will be an increasing drag on our nation, but my opinion on that has not changed. What's changed is that I thought the markets were 20% overpriced and they dropped 30%.
In 1929, many of the structural issues were the same as what's mentioned above, but remember there was no Social Security income, there was no stimulus, there was no unemployment insurance. There was limited liquidity. There were fewer limits to buying on margin so people were heavily leveraged. There was no FDIC. There was no kill switch on the stock market (meaning the "pause" insituted after Black Monday in 1987). Most importantly, there was no precedent for aggressive government action.
Also, what we had in 2020 was the 1918 Pandemic + September 11 + the Arab Oil Embargo all wrapped into one. Great uncertainty. We're now seeing the range of possible outcomes to the pandemic is narrowing. We now know that our dear president was full of sh## when he said that there were 15 cases in the US and the following week there would be five. We also know that in the absence of federal leadership, at least 30 governors, even some Republicans, are willing to break with Trump and take measures to protect their populations. We also know that we are past peak hospital resource usage unless... ahem... *someone* fucks up and opens things up too fast. Barring that, we are not going to have bodies stacking up in the streets while hospitals are overloaded.
It also looks like the Russian/Saudi oil war will stabilize.
So we now see a more narrow range of possibility and those possibilities are mostly priced into the market.
One concern is that a lot of the optimism seems to be based on the government stimulus package and the actual impact of those packages is debated (I posted a link to an overview of a dozen studies on the 2008 stimulus that argued the long-term effects are between minimal and significant but smaller than advertised).
This doesn't mean that I think the virus will be NOT a long-term drag on the economy. It means that I think in the 12-18 month timeframe, that is priced in already.
It doesn't mean I think we will not see abnormal volatility for a couple of years. If earnings reports come out and they have not only dropped (no problem, that's priced in), but dropped far more than expected, we'll see another brief freefall.
It doesn't mean I think the *current* price is a low. We could fall from here. I'd just be surprised if the floor we found in March is not the long-term floor.
Businesses and Jobs and Wages
First off, there are going to be some huge losers. Serveral airlines could disappear. Boeing might retract from the commercial sector and end up as mostly a military contractor, as happened with General Dynamics or mostly with McDonnell-Douglas before the Boeing merger. Bricks and mortar retail has taken yet another hit from which it won't come back - all sorts of people are now buying things online they never would have bought online before. The whole idea of the car dealership is in trouble.
One thing that happens in an economy though is that old companies go out with a bang and small companies come in with a slow crawl to success. So we tend to see the 10 big losses, and not the 1000 small gains.
So let's look at jobs and wages.
After 2008, it took six years to gain all those jobs back and when the job numbers came back, the job quality did not. It took another few years to see wages rise.
I think this event is going to suck for working people and will lead to ever-greater income inequality. The *wealth* inequality may be temporarily reduced because the investor class have lost a lot of their money in the market, whereas the poor have little to lose... unless they run up credit card debt, in which case this will exacerbate wealth inequality too as upper-middle class and above see their investments recover (again, optimistic scenario for the markets) while most of the middle class and below will not be able to save because they'll be paying their credit cards off for the next few years.
At the very bottom of full-time wage earners, some people may actually do better with the stimulus funds (the extra $600 in unemployment until July 31 means that many of them are earning more on unemployment than they were at their jobs).
As for unemployment, though, these numbers need to be taken with a grain of salt. Take the hotel I work for. It's actually almost a small village. We have a water treatment system, a sewage treatment plant, a fire and rescue department. So some people are always working. Those systems cost many millions of dollars and need to be managed.
But I would guess that all in, there are about 15 people working and 90% of the full-time staff is laid off. But here's the thing. If the hotel comes back to 50% of normal capacity, a large number of those people get their jobs back? Why is that? Because the full-time staff is your baseline staff that you hold onto most or all of the year to meet baseline need. To meet the high-season surge, the hotel hires J1s, temp workers and full-time workers get a lot of OT.
Compare that to the Great Depression when 80% of auto workers lost their jobs because demand wasn't there. In this crisis, a lot of the long-term job loss is in travel and tourism and that, again, is an exogenous event.
Put it this way: our community and several other tourist areas had to pass measures to keep lodging operators from continuing to welcome tourists because despite government orders to stay in place, people kept coming. That's not the same as an auto company laying off 80% of the work force because nobody can afford to buy a car. We're a long ways from that yet.
So though the job loss is staggering, in even a pessimistic scenario of a late and slow economic relaunch, a lot of those jobs come roaring back to meet up pent-up demand *unless* it goes on so long that people can't afford to buy anything for a long time. This is an exogenous event and the question is whether or not that exogenous event will last long enough to trigger endogenous events within the economy. But if we start opening the economy anytime before July, I think unemployment will start coming down fast.
It may take six years as it did in 2008, but I doubt we're going to see Great Depression levels of unemployment lasting for years as it did then.
Stimulus Timing and Extent
As I mentioned, it's debated how much good stimulus actually does when you look at GDP. But GDP is horrible measure of the economic health of a country. Our policy decisions would be way better if we eliminated the two most useless statistics in the economy: the Dow Jones Industrial Average and GDP.
What it will do, is keep many people from starving, suffering unrecoverable financial loss, opening up the gun safe and blowing their brains out, looting and pillaging (burglaries are WAY up in NYC).
But we are about one month into the economic crisis part of this overall crisis and already stimulus checks are arriving. If you think of the Great Depression, the market tanked in late 1929. Hoover opposed government intervention into late 1931.
https://courses.lumenlearning.com/suny-ushistory2os2xmaster/chapter/president-hoovers-response/
In 1929 he said, “Any lack of confidence in the economic future or the strength of business in the United States is foolish.” In 1930, he stated, “The worst is behind us.” In 1931, he pledged federal aid should he ever witness starvation in the country; but as of that date, he had yet to see such need in America.... In a 1931 radio address, he said, “The spread of government destroys initiative and thus destroys character.”
Eventually, Hoover agreed in late 1931 that unemployment relief of some kind was needed to shore up the economy and keep people from starving. Aside from a minor effort by Congress in 1931, it wasn't until 1932 that Hoover supported a Senate bill for $1.5 billion in relief. Even adjusted for inflation, that's a comparatively modest $29 billion. That's about $60 billion of you adjust for a doubling of the population. Still minuscule compared to 2009 or 2020 numbers.
Basically, for nearly three years, the government did little. It took almost four years, under Roosevelt, for the government to enact the New Deal. The New Deal was a big deal. In inflation-adjusted dollars, it was smaller than the 2009 stimulus, but it was bigger on a per-capita level. It was equivalent to a full 40% of US economic output vs about 6% for the 2009 package. Both the New Deal and the 2009 package led to a similar increase in federal debt as a percentage of GNP.
I am not sure, but the current package will likely be the largest in history by any measure except as a percentage of total output. But the key thing is that whereas the New Deal kicked that money in 4 years after the market crash, this money is coming just over four WEEKS after the market crash.
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>I think the March bottom was the bottom.
With respect, you done lost your mind.
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Ha ha! We'll see.
I do think Brad's advice about planning for things to be bad is good advice simply because if you plan for it to be bad and you're wrong, you miss out on some opportunity. If you plan for it to be good and you're wrong, you're screwed.
So I am still behaving quite conservatively in general and holding onto a lot of cash and a lot of food. But I do not see us ending up like in the Great Depression or, if we do, it won't be because of coronavirus directly. For the long term, I'm more worried about government debt (partly but not wholly driven by coronavirus) and climate change.
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And in today's news
Goldman Sachs says U.S. stock prices have probably hit bottom already
https://fortune.com/2020/04/13/goldman-sachs-stock-prices-hit-bottom/
Goldman’s Rosy Stock Market Bottom Call Is Ridiculously Foolish
https://www.ccn.com/goldmans-rosy-stock-market-bottom-call-is-ridiculously-foolish/
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Ergo, you are not alone in your sentiment. A good friend of mine just plopped in $30k thinking this was the bottom too.
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https://time.com/5819080/unemployment-coronavirus/
“Even if the economy starts to re-open in mid-May, more than 20 million Americans will have lost their job with the economy likely having contracted around 13% peak-to-trough, more than three times deeper than the global financial crisis,” James Knightley, chief international economist at ING Financial Markets, wrote with his forecast submission.
“It will be a gradual re-opening of the economy, so a return to ‘business as usual’ is many months away. Throw in crippling financial losses and a legacy of defaults and it means we estimate U.S. economic output won’t return” to the late-2019 peak until mid-2022 at the earliest, Knightley said.
What’s more, years of robust job creation that pushed the jobless rate down to a half-century low of 3.5% will prove a distant memory. The unemployment rate is projected to fall gradually after peaking in the second quarter, yet it will only drop to 8.1% in the final three months of 2020. Even in 2022, unemployment is expected to average 5.4%.
This bit here reflects that the US economy is more consumer driven than the rest of the world.
The Bloomberg survey also showed the U.S. economy will shrink 3.3% this year, more than double the 1.5% contraction for the entire world. U.S. growth will also lag behind in 2021 and 2022.
Still, this all seems too optimistic to me.
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Actually, those predictions strike me as optimistic too.
I don't want to sound Polyannish. I am worried, holding cash, delaying work on the house, trying to be sensible and I think everything Brad said makes sense except the "probably" part. I would say "possible but unlikely." But I'm holding enough cash to live on for at least a year just in case.
My bet is simply that we are not headed for anything like the Great Depression, for the reasons stated above. But that is the "red team" argument. There are a lot of structural similarities - huge income and wealth inequality, a market that has quadrupled in 10 years, lots of debt (though very different in nature), etc. I'm not saying the "blue team" argument is without merit. I'm just not betting on it.
I hesitated to make that long post because 1) I knew many people would think it was insane and 2) I'll have to eat crow if I'm wrong. But then I decided it would be more interesting to be willing to put myself out there with a prediction. If I am wrong, I will be happy to accept donations of crow or anything else to eat with a few calories and some protein.
I would revise the above only to say that I would not be surprised if March was not an absolute "to the point" bottom. I just don't think we will see the market give up large amounts relative to that March bottom. And as I say, really the market is the part I care about the least, except insofar as I have some retirement savings in index funds.
But, for it to mirror the GD, that would mean:
- S&P at 363. In the Depression the market rallied and had regained a lot of value by April 1930. At that point, though, the air just went out of the system and by July 1931 it was down to 41, which accounts for about 86% of the 89.2% the market gave up between 1929 and 1933. The equivalent would be if the S&P 500 dropped to 363, or roughly 1990 levels.
In addition:
- 11,000 banks failed with no FDIC insurance leaving huge numbers of people virtually penniless.
- unemployment hit 25% not because of lockdown, but because of true economic contraction, with no unemployment insurance.
- GDP fell 30 percent
Could it happen? Sure. Of course. In fact, someday it certainly will. I just don't think this is that day. Is everything rosy and looking great. Of course not. We're in for a few years of pain. I just don't think it will be Great Depression-level pain. But I also agree that a 1.5% global contraction, roughly 1/20th of the Great Depression contraction, seems unbelievably rosy
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Ergo, you are not alone in your sentiment. A good friend of mine just plopped in $30k thinking this was the bottom too.
One last thing - for me it was less timing than staying the course. It was a planned IRA contribution that I was going to make by April 15, but I have been holding off believing through all of 2019 that we were head for a downturn. When it didn't come, I was planning to contribute, but considering something other than index fund because of the overheated market. And then it came, so I went back to plan.
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This from New Zealand ...
Covid 19 coronavirus: Burger King slumps into receivership
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12324626
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Smithfield Foods, Inc., is a meat-processing company based in Smithfield, Virginia, in the United States, and a wholly owned subsidiary of WH Group of China
Smithfield Foods closes one of nation's largest pork plants as worker COVID-19 cases spike
CLASSIC: What goes around comes around!
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Why this bailout is worse than 2008
"The larger problem is on the financial side, where we've just sort of accepted the idea that maintaining prices in the financial market is an end to itself. So we're throwing trillions of dollars with literally no oversight."
https://thehill.com/hilltv/rising/492232-matt-taibbi-why-this-bailout-is-worse-than-2008
TL;DL (Too Long; Didn't Listen): the reason so many companies need bailouts is because they took the 2008/9 stimulus money and spent it on stock buybacks.
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Exclusive: Neiman Marcus to file for bankruptcy as soon as this week - sources
reuters.com
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>> Neiman Marcus
This will create new losses for my client who is an NM supplier and already hanging on by a thread.
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<q>
Retail sales fell 8.7 percent in March, the largest drop ever on record, and clothing and accessory sales dropped most of all, by 50.5 percent.
So far, Gap has canceled its orders for the fall season. JC Penney and Nordstrom are rumored to be filing for Chapter 11 if store closures extend into summer. Macy’s has furloughed the majority of its nearly 130,000 employees. Rent the Runway laid off its entire in-store staff over Zoom. Though brands have focused their efforts on e-commerce sales, most retailers say they’re not expecting online orders to make up for the loss of in-store purchases
</q>
Nobody’s buying clothes right now. So stores are filing for bankruptcy. - Vox
https://www.vox.com/the-goods/2020/4/19/21227275/neiman-marcus-bankruptcy-coronavirus-retail
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>> Nobody’s buying clothes right now
From the clothing shopper's perspective there are some great markdowns available right now as retailers scramble to keep some cash flow going. If there's an item you need / want, now might be a good time to shop for it.
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24 Hour Fitness weighs bankruptcy as coronavirus pushes fitness industry to brink
CNBC
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U.S. car rental company Hertz to lay off 10,000 staff on coronavirus hit - Reuters
https://www.reuters.com/article/us-hertz-layoffs-idUSKBN2222XD
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Exclusive: Lord & Taylor explores bankruptcy as stores remain shut in coronavirus pandemic - Reuters
https://www.reuters.com/article/us-lord-taylor-bankruptcy-exclusive/exclusive-lord-taylor-explores-bankruptcy-as-stores-remain-shut-in-coronavirus-pandemic-sources-idUSKBN22300J
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Bankruptcy looms over U.S. energy industry, from oil fields to pipelines - Reuters
https://www.reuters.com/article/us-global-oil-usa-restructuring/bankruptcy-looms-over-u-s-energy-industry-from-oil-fields-to-pipelines-idUSKCN2250FQ
PS --add ethanol producers to the above
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Billionaire investor Howard Marks just told CNBC on Monday that “the world is more screwed up” than what the action in the stock market might lead you to believe.
https://www.marketwatch.com/story/warren-buffetts-favorite-indicator-scares-the-beejezus-out-of-this-investor-2020-04-20
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Hussman, who’s been very vocal about getting burned by his bearish misfires in recent years said the current position of this market is reminiscent of Rodrigue’s “return to normal” stage. If that’s the case, “fear” and “capitulation,” followed by “despair,” are still to come.
https://www.marketwatch.com/story/why-a-return-to-normal-could-mean-disaster-for-the-stock-market-2020-04-22
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US private payrolls drop by 20.2 million in April, the worst job loss in the history of ADP report (https://www.cnbc.com/2020/05/06/adp-private-payrolls-april-2020-drop-by-record-20point2-million.html?__source=facebook%7Cmain)
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Video that brought down the market today: Fed's Powell Says U.S. Economy Faces Unprecedented Risks (https://www.youtube.com/watch?v=5ghUedyrf0c)
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Pier 1 is asking for approval to shut down its business and close all its stores.
I furnished my first apartment from these guys.
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Rolls-Royce to cut 9,000 jobs amid virus crisis
https://www.bbc.com
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L Brands to close 250 Victoria’s Secret stores, 50 Bath & Body Works locations
https://www.10tv.com/article/l-brands-close-250-victorias-secret-stores-50-bath-body-works-locations-2020-may
Hoo boy, adding all the closures & bankruptcies, there's going to be a LOT of dark glass out there.
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Hertz
Rental-Car Company Hertz Files for Bankruptcy [WSJ]
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https://www.business-live.co.uk/retail-consumer/list-shops-fallen-administration-2020-18177619
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U.S. car rental company Hertz to lay off 10,000 staff on coronavirus hit - Reuters
https://www.reuters.com/article/us-hertz-layoffs-idUSKBN2222XD
Hertz gave $16M in bonuses ahead of bankruptcy
Hertz Global Holdings Inc. paid more than $16 million in retention bonuses to senior managers, including its new chief executive, just days before it filed for bankruptcy Friday night.
The car-rental company said it agreed to pay a $700,000 bonus to Chief Executive Paul Stone, who was named to the post this month. Chief Financial Officer Jamere Jackson received $600,000 and Chief Marketing Officer Jodi Allen got $189,633, according to a Tuesday regulatory filing.
https://www.marketwatch.com/story/hertz-gave-16m-in-bonuses-ahead-of-bankruptcy-2020-05-26
JC Penney too
https://www.forbes.com/sites/jackkelly/2020/05/18/jc-penney-executives-given-millions-of-dollars-in-bonuses-days-before-it-filed-for-bankruptcy/#7370df9154d5
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For Economy, Worst of Coronavirus Shutdowns May Be Over
Recovering air travel, hotel bookings and mortgage applications are among the early signs the U.S. economy is slowly creeping back to life
https://www.wsj.com/articles/for-economy-worst-of-coronavirus-shutdowns-may-be-over-11590408000?mod=hp_lead_pos1
The outlook, however, is far from clear: Unemployment has still soared while business activity has plummeted, and the latest improvements are tied to potentially temporary factors, including emergency spending from Congress, declines in new U.S. COVID-19 cases and the gradual reopening of states.
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>I think the March bottom was the bottom.
With respect, you done lost your mind.
The benchmark index is now 41.7% above that low, and less than 9% from its February all-time high level.
https://www.cnbc.com/2020/06/03/this-is-the-greatest-50-day-rally-in-the-history-of-the-sp-500.html
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The benchmark index is now 41.7% above that low, and less than 9% from its February all-time high level.
I would say the jury is still out and I'm still nervous. We won't really know for years. I'll be prepared to say I was wrong if we drop significantly below March, but I won't be prepared to say I was right until 2022. There's still a lot of uncertainty and a lot of stimulus sugar high.
That said, the money I threw into an index fund when I made the above comment has had a 29% return thus far. If I had been less nervous, it would have been more money, but all I did is max out my IRA contribution. Still, so far it was better than sitting on the sidelines.
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U.S. Unemployment Rate Fell to 13.3% in May
Payrolls rose by 2.5 million, suggesting jobs are returning
https://www.wsj.com/articles/may-jobs-report-coronavirus-2020-11591310177?mod=breakingnews
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When the U.S. government's official jobs report for May came out on Friday, it included a note at the bottom saying there had been a major "error" and the unemployment rate likely should be higher than the widely report 13.3 percent rate.
The special note said that if this misclassification error had not occurred, the "overall unemployment rate would have been about 3 percentage points higher than reported," meaning the unemployment rate would be about 16.3 percent for May.
https://www.stamfordadvocate.com/business/article/The-May-jobs-report-had-misclassification-error-15320999.php
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No, the unemployment rate didn’t really drop in May
https://www.brookings.edu/blog/fixgov/2020/06/08/no-the-unemployment-rate-didnt-really-drop-in-may/
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Don’t Lose the Thread. The Economy Is Experiencing an Epic Collapse of Demand.
https://www.nytimes.com/2020/06/06/upshot/coronavirus-economic-crisis.html
You can already sense in the public debate over the economy that people are starting to lose the thread — viewing the slight rebound from epic collapse as a sign that a crisis has been averted. That certainly is the kind of optimism evident in the stock market, which is now down a mere 1.1 percent for the year.
But there are clear signs that the collapse of economic activity has set in motion problems that will play out over many months, or maybe many years. If not contained, they could cause human misery on a mass scale and create lasting scars for families.
The fabric of the economy has been ripped, with damage done to millions of interconnections — between workers and employers, companies and their suppliers, borrowers and lenders. Both the historical evidence from severe economic crises and the data available today point to enormous delayed effects.
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It's official: The recession began in February (https://www.cnn.com/2020/06/08/economy/recession-economy-coronavirus-nber/index.html)
The longest economic expansion in American history is officially over. The National Bureau of Economic Research declared Monday that the recession began in February.
The economy collapsed so rapidly that NBER wasted no time in announcing a recession, a stark contrast to previous downturns when the body took upwards of a year to declare what most people already knew. This was the fastest that NBER has declared any recession since the group began formal announcements in 1979.
Social distancing requirements imposed to fight the pandemic have crushed broad swaths of the US economy, from airlines and cruise ships to restaurants and Broadway shows.
"The unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions," NBER wrote.
More than 42 million Americans have filed for unemployment benefits. Major companies including JCPenney, J.Crew and Hertz have filed for bankruptcy. And economists are predicting GDP imploded at an annualized rate of 40% during the second quarter.
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UK economy shrinks record 20.4% in April
https://www.bbc.co.uk/news/business-53019360
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"Investor sentiment has moved into the “extreme optimism” zone"
https://www.schwab.com/resource-center/insights/content/market-perspective
Uh oh. Here we go again. I can't believe how fast stocks went from wildly overpriced to corrected to wildly overpriced.
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The virus is over and we're dancing in the streets. Except, it is far from over.
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>far from over.
Many are speculating that our current spike was from Memorial Day. Just imagine what's about to unfold after the protests, rallies, convention and American population largely in f### it mode.
>Here we go again
f### it mode won't last indefinitely. I think part of what's happening is that institutional investors are coaxing retirees to catch their falling knives.
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>Just imagine
Summer vacation at the beaches.
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An interesting idea.
COVID-19 Broke the Economy. What If We Don’t Fix It? (https://www.vice.com/en_us/article/qj4ka5/covid-19-broke-the-economy-what-if-we-dont-fix-it)
Instead of reopening society for the sake of the economy, what if we continued to work less, buy less, make less—for the sake of [ourselves and] the planet?
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>what if we continued to work less, buy less, make less—for the sake of [ourselves and] the planet?
It's easier to start wars
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I just read the teaser sample of James Suzman, "Affluence Without Abundance" - without reading more than the Kindle free sample, he goes over Keynes' prediction that we would be working 15 hours per week now and the anthropological research that shows that people generally "worked" 15 hours per week before the invention of agriculture. They were also healthier and lived longer than people in agricultural societies until recently.
That said, the fact is that it is horrid to be poor in a rich society. There are many things that are mostly no longer allowed, like having no address, hunting and fishing for your food and so on. So there is a terror that goes along with poverty in agricultural and industrial societies that makes economic collapse particularly scary.
https://www.bloomsbury.com/us/affluence-without-abundance-9781632865748/
https://www.irishtimes.com/culture/books/affluence-without-abundance-the-disappearing-world-of-the-bushmen-by-james-suzman-1.3246773
You can think if it as an update to Marshall Sahlins' "original affluent society" idea and the criticisms of that work, which Suzman contends both overstated their cases.
https://en.wikipedia.org/wiki/Original_affluent_society
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Millennials never recovered fully since the Great Recession and now Covid-19 is bringing a painful economic reckoning. (http://www.mybudget360.com/millennials-never-recovered-fully-since-the-great-recession-and-now-covid-19-is-bringing-a-painful-economic-reckoning-half-of-us-households-own-no-stock/)
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The economy is a central example. Its surprisingly rapid growth in May and early June initially seemed encouraging, Ben points out. But it now seems to have been a sign that Americans were resuming normal activity in ways that spread the virus. Now the virus’s resurgence is causing new shutdowns that will delay a true recovery.
-- From the NYT "Monday Briefing" newsletter
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Deep European Recession Forecast for 2020
https://www.statista.com/chart/22213/ec-gdp-growth-forecast/
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Don’t the Markets Know We’re Living in a Disaster Movie? (https://www.nytimes.com/2020/07/10/business/dont-the-markets-know-were-living-in-a-disaster-movie.html)
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>>Disaster movie
I'm much more nervous now than I was in March when the market was crashing. The initial drop in the market seemed to be a reasonable response to an already overvalued market and an uncertain future. I hoped and bet that much of the uncertainty was priced in and things would stabilize at 25-30% off the peak and take 3-5 years to crawl back to pre-Covid levels if everything went well.
Meanwhile, in the US, everything is not going well, and yet the 3-5 months turned out to be 3-5 months. The author is right - THAT is scary.
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Homebuilders just saw the strongest June sales since the last housing boom as pandemic pushes more buyers to the suburbs
https://www.cnbc.com/2020/07/13/homebuilders-just-saw-the-strongest-june-sales-since-the-last-housing-boom.html
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>sales
True here. One of our builders had a rock solid offer and sale within 4 hours of putting a newly built home on the MLS.
Existing homes are going fast too. My neighbors sold their home within 48 hours.
The problem is nobody knows how long this will last.
I'm hearing reports that lumber and materials are in short supply. A lot of smaller general contractors and sub-contractors went out of business in 2008 - 2009 this has led to a shortage of both.
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>reports that lumber
I saw a headline on short supply of lumber a few days ago. A quick search confirms.
Coronavirus pandemic causes shortage in lumber supplies
https://www.wflx.com/2020/07/06/coronavirus-pandemic-causes-shortage-lumber-supplies/
Living on the edge of lumber (pine) country, I can tell you that the number of log trucks on the highway seems to be down.
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>reports that lumber
One of my sons is the manager of a lumber yard in rural Manitoba and he says they're getting hit from both ends: increased demand for many products ... especially items relating to home improvement ... but supply lines not keeping up. Prices are so uncertain that when he provides a quote for materials it's only valid for a few hours, then subject to revision if prices have changed.
Inventory management is a major challenge when things are so volatile over and above seasonal fluctuations.
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"worst in history"
The U.S. economy plunged by a record-shattering 32.9% annual rate last quarter, and the coronavirus pandemic is still cutting a path of destruction.
https://www.chicagotribune.com/business/ct-biz-us-economic-plunge-20200730-t25tj4pzdvcmrirdufstpla2nm-story.html
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Yet the Dow is down just 225.92 points today. So odd.
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GOLD & Bitcoin are UP
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The markets make no sense ATM:
Stocks up
Bonds up
Commodities up
Dollar down
Interest rates extremely low
Everything is being propped up by free money. Are we going to have a giant spike in inflation, or is it all going to come crashing down?
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THAT is why GOLD & Bitcoin are UP
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UK recession is worst of any major economy - CNN
https://www.cnn.com/2020/08/12/economy/uk-economy-gdp/index.html
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Goldman Says Almost a Quarter of Temporary Layoffs in U.S. to Be Permanent (https://www.bloomberg.com/news/articles/2020-08-22/goldman-says-nearly-fourth-of-u-s-virus-layoffs-to-be-permanent)
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American Airlines to Furlough 19,000 Workers
https://www.nytimes.com/2020/08/25/business/american-airline-furlough-19000.html
ncluding buyouts, retirements and leaves of absence, the company expects to have about 40,000 fewer employees on Oct. 1 than it did before the pandemic, a 30 percent decline in its work force.
Evidence is mounting that the once-strong economic recovery is losing steam. Hiring slowed in July, and various indicators suggest it has slumped further in August. Weekly claims for unemployment benefits have jumped back above one million, reversing a gradual decline. And new data on Tuesday showed that consumer confidence fell in August to its lowest level since the pandemic took hold.
Things could get worse in the coming months. Restaurants and other businesses that have been able to shift some operations outdoors will struggle when the weather turns colder.
For many businesses, time is running out. Cases of the virus are falling but remain high in much of the country, making a full reopening of the economy impossible. Entire sectors, such as live entertainment, hospitality and travel, remain either shut down or severely restricted. And experts warn that the longer the crisis persists, the more lasting the damage will be: Furloughs will turn into permanent job losses, short-term business closures will lead to bankruptcies, and sectors that were relatively insulated from the pandemic will suffer as the public health crisis morphs into a more traditional recession.
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>shift some operations outdoors will struggle when the weather turns colder.
I hadn't thought about that one.
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Grim picture, and the colder weather is likely to push the case numbers up.
>Cases of the virus are falling
Testing is going down, I think deaths are a more reliable meter.
https://raw.githubusercontent.com/lettergram/covid19-analysis/master/graphs/us-counts-log.png
Edit:
A better graph for testing over time:
https://i.redd.it/ndott0ge1oj51.png
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Fed study: Wage growth an “illusion” that’s “almost entirely attributable” to low-wage job losses | Salon.com
https://www.salon.com/2020/09/05/fed-study-wage-growth-an-illusion-thats-almost-entirely-attributable-to-low-wage-job-losses/
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GameStop Is Closing Up to 450 Stores This Year
https://www.pcmag.com/news/gamestop-is-closing-up-to-450-stores-this-year
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NPR Poll: Financial Pain From Coronavirus Pandemic 'Much, Much Worse' Than Expected
COVID-19's Serious Financial Impact Hits Almost Half Of U.S. Households
https://www.npr.org/sections/health-shots/2020/09/09/909669760/npr-poll-financial-pain-from-coronavirus-pandemic-much-much-worse-than-expected
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US: 6 million miss rent, mortgage payments in September
https://www.usatoday.com/story/money/2020/10/17/covid-19-stimulus-6-million-miss-rent-mortgage-payments-september/3694327001/
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This is going to be a rough winter. I'm sort of surprised it isn't worse for us and generally, but we have friends who are right on the edge including some who would be over the edge if their friends weren't joining together to keep them afloat. Anyone who was precarious before or doing okay but without big reserves is struggling.
I don't know what a lot of these folks are going to do.
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The banks and the landlords just need to let it go and realise the money is not coming in.
OK, I am probably in dreamland again (I spend too much time there) but realistically the people who borrow money from the printers, just need to borrow a bit more and throw it down the line again.
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China leads major economies in post-covid recovery - The Washington Post
https://www.washingtonpost.com/world/asia_pacific/china-economy-recovery-covid/2020/10/19/d574d08c-1204-11eb-a258-614acf2b906d_story.html
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>>China leads
https://www.arte.tv/fr/videos/099397-000-A/chine-le-paradoxe-de-wuhan/
I didn't watch the whole thing, but it's pretty incredible. Dance clubs packed. No masks. Visitation to Wuhan is up 40% YOY. Apparently, once not that well-known, Covid has put Wuhan on the map and it is now a tourist destination and it hopping.
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Why America gave up on Covid-19 relief and economic stimulus - Vox
https://www.vox.com/21523204/coronavirus-unemployment-stimulus-economy
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>economic stimulus
I think we've given up on this until after the election. It seems one party doesn't want to negotiate to supply more relief while orangeman is in charge.
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80,000 furloughed as tour bus industry grinds to a halt - CNN
https://www.cnn.com/2020/10/24/business/motorcoach-employees-furloughs/index.html
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Pretty good read.
The Dark Side Of The Recovery Revealed In Big Data : Planet Money : NPR
https://www.npr.org/sections/money/2020/10/27/927842540/the-dark-side-of-the-recovery-revealed-in-big-data
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> Dark Side
This is going to add to political tensions.
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Ah... I meant to post an article by Raj Chetty earlier. I wonder if I can still find it.
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Exxon, Chevron to cut US jobs as oil industry struggles
https://borneobulletin.com.bn/2020/10/exxon-chevron-to-cut-us-jobs-as-oil-industry-struggles/
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Sainsbury's closing 420 Argos stores and cutting 3,500 jobs after posting £137m losses
https://inews.co.uk/news/business/sainsburys-closing-argos-stores-jobs-cut-losses-lockdown-749677
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https://www.huffingtonpost.co.uk/entry/arcadia-philip-green-collapse-explained_uk_5fc5ed86c5b68ca87f876f7b
Arcadia: What Its Collapse Means For Jobs, Pensions And Shopping Orders
with Debenhams, it half the UK high street.
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>half the UK high street
From over here it seems like the UK retail bricks economy is taking a harder, deeper hit than the US.
<+>
The fall of Topshop
https://www.fastcompany.com/90581871/where-topshop-went-wrong
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And another. formal wear is struggling... Tell me about it! A cousins wife, who works in a charity shop was telling me how she could not shift second hand suits.
now this:
https://www.standard.co.uk/business/leisure-retail/thomas-pink-up-for-sale-as-covid19-hits-demand-for-office-shirts-b257770.html
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I wonder if this is permanent or if it will come roaring back when people are able to hold fancy parties again.
I think the long-term trend is away from formal wear and even "business" attire, which seems rarely worn in most business settings now. But I think for "evening" formal wear, there will be a thirst for events and for splurging once people can.
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...and there is less competition out there.
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I may have flicked past an article recently while I was doom-scrolling but I didn't read it. The teaser was something about a Black man dressing up because he was taken more seriously by others. That is true no matter what your ethnicity: if you walk in wearing a business suit and tie you get treated differently (read better) than some schmuck in jeans and a hoodie. You are signaling that you are a player rather than a mark.
There are marketing points here but you have to educate the intended customer base as to the benefits.
Back in the early 1980's, when I was starting out and needed to wear suits, I bought the book "Dress for Success" by John T. Molloy. It served me well on building a wardrobe for work on a very tight budget.
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Molloy's "The Woman's Dress for Success Book" was not as good as his book for men IMHO but I learned from them both.
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My brother bought me that book as a joke. I actually read it (which would shock people who know how I dress, but maybe not shock people who know how I read). I liked that it was not "ideological." If memory serves, his basic viewpoint is, "This is nothing but arbitrary convention, but it's the culture we live in. You can opt out, but there are situations where opting out will hurt you. Your choice. If you choose to opt in, this is how."
That actually made me more comfortable and gave me a framework for opting in and opting out and understanding the tradeoffs.
It was also my mother's advice. When I was applying for a programmer job, back then they expected you to wear a blazer and tie to the interview. Now it would count against you of course. Anyway, I was surly and she said, "Look, getting a job is just a game. Like many other games, such as football or hockey, this game has a uniform. The uniform is a blazer, tie, dress shirt, dress pants, belt and dress shoes. If you want to play the game, you need to wear the uniform. If you don't have the uniform, you're not allowed on the field. That's just the way some games work."
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One of the things I got from Molloy: Buy suits that are in good taste. "Style and fashion" come and go but good taste is never out of style.
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That's all a tremendous boost folks thank you.
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How the Economy Is Actually Doing, in 9 Charts
https://www.nytimes.com/interactive/2020/12/17/business/economy/economic-indicator-charts-measures.html
Executive summary - lots of long-term unemployed, overall workforce has contracted by 4 million, unemployment worse among Black, Asian and Hispanic women, but Asian men are doing about as well as white men. The economy has shifted from goods to services. There is considerable food insecurity (12.7%) and housing insecurity (9.1%). And yet, there are increases in home prices (11%) and rent (5.6%). Wages and salaries have, nevertheless, witnessed a "V-shaped" recovery (went from $9.2t in Jan 2019 to $9.7t in Jan 2020 to $8.7t in April 2020 to $9.6t in Oct 2020) and productivity is up.
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Wages and salaries have, nevertheless, witnessed a "V-shaped" recovery
Is that because its the low paid who have lost their jobs do you think?
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>lost their jobs
Yes.
"Another shape that shows what is really occurring is a K-shaped recovery. This kind shows a portion of the population and businesses recover quickly and fully, while another suffers a great deal. Given the impact of Covid-19 and what it has done to the restaurant, bar, travel and hospitality industries it isn’t hard to realize that this is the type of recovery the U.S. is experiencing. As opposed to industries such as technology and some segments of retail"
Three Charts Show A K-Shaped Recovery
https://www.forbes.com/sites/chuckjones/2020/10/24/three-charts-show-a-k-shaped-recovery/
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Especially when you consider that tipped workers in most US states can be paid close to nothing in wages. So even a waiter who makes a nice living in a nice restaurant, may have close to nothing in wages. You fire sixty of them and add one engineer and wages remain unchanged, though total income will have changed significantly for the worse.
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New COVID strain: A fresh blow to Britain′s economy
https://www.dw.com/en/new-covid-strain-a-fresh-blow-to-britains-economy/a-56007942?maca=en-GK-Inoreader-NewsPolitics-21641-xml-media
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New COVID strain: A fresh blow to Britain′s economy
https://www.dw.com/en/new-covid-strain-a-fresh-blow-to-britains-economy/a-56007942?maca=en-GK-Inoreader-NewsPolitics-21641-xml-media
Its right across London, it will be in every other country too. The French are making a hard point imho about their fishing needs, and how important France is to the UK.
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>will be in every other country too
Already found a case in Rome.
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Auctioning Off a Dead Mall
When a shopping mall closes, where does all of its stuff go?
https://www.nytimes.com/2020/12/17/style/auctioning-off-a-dead-mall.html
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>I think the March bottom was the bottom.
With respect, you done lost your mind.
NOW I'm worried with the valuations we're seeing. I expect we'll see another correction soon. But just FYI, since that day when I done lost my mind, the IRA contribution I made that week is up 61%.
Again, I will be shocked if it is still up 61% come Dec 31, but on paper, staying in stocks and adding a little when the panic was at its maximum has turned out pretty good so far. Very scary though. That said, I'm more scared about having money in stocks right now than I was at the end of March.
Pre-Covid, I was holding cash because everything seemed overvalued despite a basically good economy for investors (not particularly good for workers, but that's another story). My expected scenario was that stocks would take 2-3 years to claw their way back. Now that they're already above the pre-Covid nosebleed valuations with money-losing companies having terrific IPOs. It feels like 1999.
So... I wasn't that worried at the end of March, but now I am. Now we have nosebleed valuations in a *bad* economy. As Orwell wrote: 2+2=5
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>1999
Dizzying Valuations, IPO Craze Tick Boxes on Bubble Checklist - Bloomberg
https://www.bloomberg.com/news/articles/2021-01-02/dizzying-valuations-ipo-craze-tick-boxes-on-bubble-checklist
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Ya... I saw that article. It's one of the ones I was thinking about when I wrote the previous posts.
For all the reasons I stated back in April, I did not expect Covid to lead to a Great Depression, but I did agree it was a possibility. By the standards of The Core, I was an optimistic outlier, but I would NEVER have considered the the possibility that the S&P 500 would close the year at a record high.
I don't watch the markets or even the general economy very closely, so there could be a lot of faulty memory and selection bias in what follows. But still, there are only three times where I felt that I just couldn't make sense of what was happening.
1999: absurd, stupid, ridiculous companies offering services that I couldn't imagine many people wanting, losing money like mad and planning to make it up on volume and yet enjoying sky high valuations. I just couldn't figure that out. As a historian (and not at all an investor), the explanation that "This time it's different," struck me as very unlikely. It's one of the few other times I made a good investment call. My grandmother died in 1999 and I got a small inheritance that friends told me to put in the market. I paid off my student loans instead. That decision was less a function of my great foresight than the simple facts that I didn't really understand why the market was going up so fast and I hate having debt, so I paid off the debt, assuming I would regret it in the long run.
2006: We had only recently become full-time gainfully employed after a period of dissertation writing and some budget travel and the bank said we could qualify for a $2,000,000 loan for a house. This struck us as absurd because there was absolutely no way we could pay that back. Other than not taking out a loan I couldn't repay, I only had a vague sense that something was wrong with the housing market, so I didn't take any action.
2021: many of the people I know are unemployed, Covid is far from vanquished, the efficacy of the vaccine is not really proven on a population scale, Americans are still banned from travel to Europe, in law (though not in practice) people can't travel to or within California without quarantine, and a lodging listing service just blew away all expectations with its IPO and the stock market is at a record high.
I don't want to imply in any way that I called it in 1999 or 2008. I was not nearly that prescient. I was not expecting a collapse in the stock market or the housing market and most definitely did not predict those things. I was as surprised as anyone.
It's only in retrospect that I was able to correlate my feeling of, "Huh??" with future events. But having had that experience twice and now sitting here a third time thinking, "Huh???" it is making me quite nervous.
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Why Markets Boomed in a Year of Human Misery
It wasn’t just the Fed or the stimulus. The rise in savings among white-collar workers created a tide lifting nearly all financial assets.
https://www.nytimes.com/2021/01/01/upshot/why-markets-boomed-2020.html
The article does note that though it wasn't "just the stimulus," a trillion dollars shot into the economy didn't hurt.
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https://www.cityam.com/pink-goes-offline-as-covid-takes-the-shirt-off-its-back/
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Long-term unemployment is rising toward a Great Recession record
https://www.cnbc.com/2021/02/05/long-term-unemployment-is-rising-toward-a-great-recession-record.html
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US unemployment rate actually double official rate, worst since Great Recession: Fed
https://www.businessinsider.com/us-unemployment-rate-double-official-rate-fed-worst-great-recession-2021-2
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Perfect storm of covid & brexit:
U.K. hit with biggest economic decline in more than 300 years - CBS News
https://www.cbsnews.com/news/uk-covid-biggest-economic-decline-in-300-years/
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This thread has been fun, but it's time to unpin it.
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I had the same thought today when I noticed it still there.
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Change the title to Runaway Inflation and leave it pinned, hhh.
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S&P 500 has 51st record closing of the year, the most at this date since 1995
https://www.marketwatch.com/story/sp-500-marks-51st-record-of-2021-matching-the-most-in-a-calendar-year-as-stocks-clamber-higher-wednesday-2021-08-25
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https://www.economist.com/leaders/2022/02/05/interest-rates-may-have-to-rise-sharply-to-fight-inflation
There are few examples of central banks taming inflation without the economy suffering a recession. The last time America’s inflation fell from over 5% without a downturn was over 70 years ago.
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Interest increase will wipe out much of the current home & vehicle buying, as people buy on the amount of monthly payment and not on the amount of the loan. Car dealerships are already reporting that prices have seemed to peak.
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I'm sure you're right. Every slimy car salesmen (about half of the total and, yes, all men) at some point all utter the line: "And what sort of monthly payment are you looking for?" That is the underlying assumption behind a gazillion mortgage calculators as well.
A while back I calculated (and I think I posted it here somewhere) what the value of a house is at 4% interest vs at 7% interest. If you assume the same monthly budget, prices plummet. The question is, is it a long-term issue or a short-term issue? Another article in The Economist says that savings are very high by historical standards. One factor is the growing income inequality - people with a lot of money can afford to save and, in a fairly real and direct way, the debt of the less wealthy drives the savings of the more wealthy. Very high savings leads to a lot of deposits which drives interest rates down (The Economist estimate was 0.6% due just to the increased income inequality in America and the resulting deposits) which leads the less wealthy to borrow more, which allows the more wealthy to invest in products (mortgage-backed securities) that make money off the debt of the less wealthy, increasing the savings of the more wealthy and driving the cycle.
Now, it seems like we might get out of that cycle with inflation eating away at savings and shaving away at debt and labor shortages increasing wages, and that may indeed be what happens.
However, another big driver of the "savings glut" (Bernancke term from 2005) is that populations nationally and globally are aging. I believe it was something like 25% are over 50 today and 40% will be over 50 in 2100. You have people living longer and fertility dropping. That's a double whammy. People are living longer so they need to save more for retirement and retirees tend to spend down their savings slowly. So that increases savings already, but then you compound that with more of the population being older and, therefore having more savings relative to the number of people who are in the market for debt (i.e. home loans, car loans).
So the net effect could be that after a period of inflation (The Economist projects the inflation bubble going to 2024 assuming the Fed takes decisive action soon) we return to long-term low inflation and therefore low interest rates until we bottom out on the aging cycle of populations and then things return to "normal" whatever that will mean in 2150.
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Any Debbie estimates on when the recession might manifest?
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Too early?
I'm feeling 12-15 months.
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>Too early?
Yeah, Debbie is drawing a blank on this one.
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There is talk that the Fed will raise rates 50 basis points instead of the usual 25 at the next meeting. That will be our first indication.
In the 1970s, the Fed always raised rates and then the second blood started to flow, brought them back down. By the time Voelker came along, the only solution was to drive the economy into a deep recession. Presumably they Fed has learned both lessons. So if we see 50 basis points, expect some damage in the asset markets (stocks, homes), but for most of the real economy to be reassured (consumer confidence, durable goods). If we see 25 basis points, I think that will keep assets afloat, but make people worried.
This is interesting though. There is so much worry about inflation, that it's possible that 50 basis points will actually juice the asset markets briefly.
The Fed is also signaling that they might raise rates at all eight meetings this year. That will definitely increase interest rates significantly and put a bit of a damper on investment and growth.
So my guess (and for the record, my record at prediction is horrible): they do 50 basis points to show they are serious about this. That reassures people, takes some of the heat out of the economy, but doesn't result in a major retraction. Then they wait and see and do a few smaller increases over the year.
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Thanks ergo, great background.
I came across this forecast:
https://tradingeconomics.com/united-states/inflation-cpi#forecast
Which if accurate, things wouldn't be so rough by end of the year. It feels optimistic to me.
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>> Inflationary pressures are likely to last well into the middle of 2022
I'm hearing the "soft landing" scenario means inflation does not return to the traditional 2% target until 2024.
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No Recession In 2022—But Watch Out In 2023
https://www.forbes.com/sites/billconerly/2021/11/02/no-recession-in-2022-but-watch-out-in-2023/
Forget About Inflation. Contrarians Expect a Recession and a Drop in Bond Yields. | Barron's
https://www.barrons.com/articles/inflation-recession-bond-yields-51643997182
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Inflation surges 7.5% on an annual basis, even more than expected and highest since 1982 (https://www.cnbc.com/2022/02/10/january-2022-cpi-inflation-rises-7point5percent-over-the-past-year-even-more-than-expected.html)
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It is really starting to bite. I manage my impaired brother's finances and his weekly allowance only has to cover food, gas, & personal expenses --but these are some of the things where inflation seems to be even higher than 7.5%. I've recently had to bump his allowance by 10%.
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Markets are waking up to the probability the Fed is making a mistake by slamming on the interest-rate brakes, Mohamed El-Erian says
Markets Pricing in Higher Probability of Fed Policy Mistake: El-Erian
https://markets.businessinsider.com/news/stocks/fed-reserve-interest-rate-hikes-inflation-policy-mistake-el-erian-2022-2
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There is talk that the Fed will raise rates 50 basis points instead of the usual 25 at the next meeting. That will be our first indication.
So... week makes a difference. From the article:
He now wants a rate increase of 100 basis points — a full percentage point — by July.
The Fed is always a weird thing. Back in the Greenspan era it was more spin than information. I don't know now. I wonder if the talk of 100 points is basically meant to signal to people that the free-money era is ending and then they will be looking for signs that they don't need to go that high. I'm still betting on 50 basis points next meeting to show that they are serious and then seeing how markets react and what indicators there are for inflation before going for a full percent.
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What would happen if financial markets crashed?
Look to history for a guide, but know that next time will be different
https://www.economist.com/leaders/2022/02/12/what-would-happen-if-financial-markets-crashed
Asset prices are high: the last time shares were so pricey relative to long-run profits was before the slumps of 1929 and 2001, and the extra return for owning risky bonds is near its lowest level for a quarter of a century. Many portfolios have loaded up on “long-duration” assets that yield profits only in the distant future. And central banks are raising interest rates to tame inflation. America’s Federal Reserve is expected to make five quarter-point increases this year.
...total borrowings and deposit-like liabilities of hedge funds, property trusts and money market funds have risen to 43% of gdp, from 32% a decade ago.
...If asset prices fall, other blow-ups could follow, accelerating the correction... ETFs, with $10trn of assets, rely on a few small market-making firms to ensure that the price of funds accurately tracks the underlying assets they own. Trillions of dollars of derivatives contracts are routed through five American clearing houses.... The Treasury market now depends on automated high-frequency trading firms to function.
...If credit markets gum up, households and firms will struggle to borrow. That is why, at the start of the pandemic, the Fed acted as a “market-maker of last resort”
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After years of hearing about the driver shortage...
It will be 'really tough' for trucking companies to stay in business if things don't pick up by Memorial Day, says an American trucking association
https://www.msn.com/en-us/money/markets/it-will-be-really-tough-for-trucking-companies-to-stay-in-business-if-things-don-t-pick-up-by-memorial-day-says-an-american-trucking-association/ar-AA1aLSDj
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#1 - U.S. manufacturing orders in China are down 40% in what a logistics manager described to CNBC as an unrelenting demand collapse.
https://www.cnbc.com/2022/12/04/manufacturing-orders-from-china-down-40percent-in-demand-collapse.html
#2 - The move to online sales and away from local wholesalers & retail as likely gutted the LTL shipping business. (per Debbie)