Recession 2019/2020 Mega-thread (putteth all thy strange eruption in h're)

[Drastic]

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.

[ergophobe]

>> 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.

[rcjordan]

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

[littleman]

Inflation surges 7.5% on an annual basis, even more than expected and highest since 1982

[rcjordan]

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%.

[rcjordan]

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

[ergophobe]

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.

[ergophobe]

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”

[ergophobe]

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

[rcjordan]

#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)