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NOTABLE! The Coming Recession (2019-2020?)

Solid Snake

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So, you don't want to debate the issue on facts? You just want to throw out opinions without providing any support?

As someone once said, "The facts don't care about your feelings."




Again, I've provided data. You don't seem to be able to refute that data, other than to say, "I believe I'm right and you're wrong."

I guess we're done here...

Why do I have to argue with you?

I, numerous times, said, “here’s my position, let’s see who’s right”

Debating eachother has ZERO impact on whatever the outcome is
 

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Interesting reading this post after many years off the Fastlane, just got emailed because of my absence. Remember J Scott originally getting into flipping, must say you have evolved and with all your respect for detail - very good points.

Think the biggest issue of predicting timing of a recession/downturn is the ability of the economy to not collapse in a wave of unhealthy indicators in which the numbers are so large and unwieldy (out of control) that it defies logic. No one has actually referred to the reserve currency role of the US on a macro level combined by the ability of the individual to revert to zero based spending. Also the negotiation ability of a powerful "do the right thing approach" with its support (tariffs).

My admitted bias in critical predictions of doom while at the same time believing in idealized abundance because of the individual and not government. We are in a catch 22 with everything being bet on government deformations. Keeping it simple I am strictly in real estate getting out of the market 15 years ago as it is a short term play - gamble. Intrinsic learning of skill is in the long term. Real estate is slow but paradoxically fast in the Fastlane, but more importantly it is a hedge in itself as it is the last thing to be taken in a regulatory onslaught which has been ongoing in the continued corruption in the markets.

Time and timing is reconciled by Positioning and Activity. Activity is "in and out" - the malfunctions do not allow efficient markets with mass deformations which squeeze any true profitability. One must be able to see through all this for what it is (gambling vs true investment). The markets are not efficient (output over input) not just from the lack of integrity of the transactions (in and out), derivatives, modern finance, and corporate buy backs, etc. Buy backs are re-positioning because of no legit activity to invest in to grow and prosper. Fiat currency underlies the whole game.

To offset this one must be in property at minimum which represents control, creativity, and a business in itself grounded in certainty. The certainty then allows for a business risk investment knowing the environment you play in. This is the formula. The balance of the execution of production then produces skills that compound (conceptual, human, and technical). Conceptual skill in linking the human and technical. Behavior malfunctions are offset by the technical gains in today's economy. Once you gain conceptual skills you can predict where all the chips will fall and their timing in the worst of times. Skills are the output of production and the measure of true efficiency, money and wealth is just the by-product.

Having cash which now approaches zero in value is put to work as fast as possible, as the positioning of cash is not a store of value, activity of transitioning cash into assets creates value. Assets cash flowing with certainty then compound and are proof of concept. The ideal of the entrepreneur and the work and courage is giving back and not modern financial theory in mass deformation. Crony capitalism will only come back to bite the player. Warren Buffet sitting on $122 billion and Mitt Romney are not examples of real truth lost in "bigness." They do not represent the individual which this forum does more efficiently. The individual is the source of work and courage and the discovery of skill breakthroughs. Know the game you are playing.

On the positive side all problems are the potential for great learning with executed activity.
 
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Honestly, no idea...

He's been saying a lot of things that would lead me to believe he's preparing to do another hike, including direct references to hikes not having to hurt the global economy and inflation potentially spiking for some period of time. But, I have to imagine there's a lot of pressure not to do this now, especially with mid-terms around the corner.

I've been tremendously bad at predicting rate changes over the past couple years, which is why I like to look at the current conditions rather than speculate on where things are going. Historically, the Fed has been pretty immune from politics...that's no longer true after the past 10 years...
yes great job
 

andviv

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I live in an inflated, expensive real estate area. By seeing the bid wars and the full open houses every weekend, one would think the Washington DC area is not even aware a recession is coming... maybe they know something we don't, or maybe the last interest rate drop just fuels more RE investments....
 

Dan_Cardone

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The recession is coming. Question is... How are you going to profit from it?
 

MJ DeMarco

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Indicators keep lining up.
What I found unusual was the Fed lowering rates at a time when the market was at all time highs. Usually rate decreases are conducted after significant market declines. The idea that the Fed opened its umbrella in what *appears* to be sunny skies is troubling.
 

nitrousflame

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What I found unusual was the Fed lowering rates at a time when the market was at all time highs. Usually rate decreases are conducted after significant market declines. The idea that the Fed opened its umbrella in what *appears* to be sunny skies is troubling.
Absolutely. In addition to the markets being at all time highs, unemployment is under 4%, a 50yr low! Seems like a very strange time to be cutting rates indeed.
 

andviv

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The idea that the Fed opened its umbrella in what *appears* to be sunny skies is troubling.
Maybe it is a political move in response to the personal feud between the chairman and the white house?

I could not find any other explanation.
 

jesseissorude

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Maybe it is a political move in response to the personal feud between the chairman and the white house?
There's no personal feud. The president might have a feud with Powell, but not the other way around. Now that he's firmly the chairman, he's just doing what he thinks is necessary.

If anything, it would hurt the fed if it looked like he was capitulating to politics and that's the last thing that Powell or anyone in finance, Wall Street, the Fed, or the banking industry wants.

The Fed is just acting on global growth indicators (among other things, I'm sure) that they think are troubling
 

Creep

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The recession is coming. Question is... How are you going to profit from it?
i have a healthy chunk invested in VXX, and will cash out when the panic hits my local news.
 

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1) Fed mandate is inflate or die
2) Decision is short term
3) Low interest reduces deficit acceleration and buys time
4) Low interest accelerates spending and decreases savings (capital)
5) Low interest increases debt (money)
6) Holding power allows production theoretically to catch up to offset living off borrowing
7) Low interest with printing debases currency

Any increases of rates (opposite of the subsidy) is a danger to hit the tipping point and deflation is more destructive and harder to stop. Buying time then has too much cash pursing no return investments in the deformation. The tipping point has been extended because of reserve currency extended globally instead of just the US (passing the buck).

When cash flows are being attacked the only productive thing to do is to trade equities which can be done positioning for the long term. In the end deflation is healthy reset but it has to be combined with backing (gold?). The market is a ponzi with false pricing feedback.

If one is betting the trend up to continue the flash flood will be more instantaneous at the tipping point.
Under all derivatives there must be cash flow and it is drying up.
 

andviv

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Under all derivatives there must be cash flow and it is drying up.
So what assets will continue generating cash flow?

And, other than piling gold under the mattress, quite unrealistic, what alternatives do you see out there?
 

Kevin88660

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So what assets will continue generating cash flow?

And, other than piling gold under the mattress, quite unrealistic, what alternatives do you see out there?
My war chest of cash is piling in on China equity now. FXI etf to be exact.

I think buying distressed emerging market equities is the way to go. Trade war plus U.S. dollar strengthening gives a good opportunity.

FXI composed of Chinese banks, Petrol chemicals and Telco, basically state run monopolies that are listed.

I also trade along the volatility. Take mini profit on resistance. Buy more on dips. Rinse and repeat. At initial accumulation stage there will be inevitable drawdowns that one have to be comfortable with.
 

Rivoli

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My war chest of cash is piling in on China equity now. FXI etf to be exact.

I think buying distressed emerging market equities is the way to go. Trade war plus U.S. dollar strengthening gives a good opportunity.

FXI composed of Chinese banks, Petrol chemicals and Telco, basically state run monopolies that are listed.

I also trade along the volatility. Take mini profit on resistance. Buy more on dips. Rinse and repeat. At initial accumulation stage there will be inevitable drawdowns that one have to be comfortable with.
How is China an emerging market? Their growth is tanking, debt more than Europe and United States combined. Aging population. Dependent on trade without the navy to protect it. China is toast. That like buying Brazil.

There are only two countries really in good position for next 50 years, United States and Mexico. Maybe India.

United states:
Huge consumption economy not dependent on trade
Millennials/young population
Surrounded by allies and two oceans with a huge navy
Good courts and laws for the most part
Drowning in natural resources, has enough food water, and oil to sustain itself forever basically

Mexico:
Huge young population
Cheap labor but better than china
Right next to the biggest consumption economy on earth

Invest in USA or Mexico
 

andviv

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Cheap labor but better than china
Interesting perspective.
Better how?
What metrics/indicators do you use to make this assessment?
 

Kevin88660

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How is China an emerging market? Their growth is tanking, debt more than Europe and United States combined. Aging population. Dependent on trade without the navy to protect it. China is toast. That like buying Brazil.

There are only two countries really in good position for next 50 years, United States and Mexico. Maybe India.

United states:
Huge consumption economy not dependent on trade
Millennials/young population
Surrounded by allies and two oceans with a huge navy
Good courts and laws for the most part
Drowning in natural resources, has enough food water, and oil to sustain itself forever basically

Mexico:
Huge young population
Cheap labor but better than china
Right next to the biggest consumption economy on earth

Invest in USA or Mexico
There are several strong points of China that is unrivaled elsewhere.

-Strong work ethic. Tech workers in china have a 996 culture. 9am-9am for six days. Employees not employers. Employers would be more.

-Strong emphasis in education with focus on math and science. Millions of engineers will enter the work force every year. Just think about the effect for industries like AI and Telecommunication.

-Chinese factory owners tried moving oversea in response to higher cost the result is mixed. Foreign workers in south east asia do not like to work overtime even if paid extra OT money unlike Chinese workers. Chinese workers are more experienced and skilled and like to work for money. There is also Economics of scale in China as the production chain is already there.

-Debt is largely internal debt in investment. Less of a problem compared to external debt due to consumption. Bad investment will still make someone much richer in his life compared to a smart consumer.

-Aging population is a serious issue. No easy solution. Even open borders will not be offer enough workforce for such a large population.

Eventually for investment/trading I think the economic future of China is largely seen as a bonus. Core plus point are still volatility. Trump and the trade war creates enough opportunities to accumulate my positions slowly and taking partial profits along the way regardless of the long term direction of that index. With RMB as cheap as today there is little downside currency risk as well. (Base currency here SGD)
 

Kevin88660

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United states:
Huge consumption economy not dependent on trade
Millennials/young population
Surrounded by allies and two oceans with a huge navy
Good courts and laws for the most part
Drowning in natural resources, has enough food water, and oil to sustain itself forever basically
High consumption is really a minus than a plus in the long run. Wealth is eventually accumulated through investment, which requires spending less on consumption.

Agree with the rest of the plus points.

But I do not see at current level of external debt and exchange rate, America can continue to sustain its current living standard.

I see that U.S. has a very good, well managed and transparent capital market. Being top in the world for military power makes U.S. dollar a safe heaven. This gives U.S. dollar the position of the global reserve currency. But this is creating immense pain for the other industries that are no longer competitive on a global scale. That’s why global U.S. brands have their products manufactured oversea and Trump is trying to bring the jobs back.

Another issue as we know is the enormous public debt the U.S. had. As U.S. prints its own currency this is another huge incentive to debase it.

Eventually I see the only solution is a huge devaluation of the dollar and a reduced living standard in the U.S. before a true meaningful reindustrialisation can take place. Before that happens all GDP growth in U.S. is just a meaningless cycle of borrowing money from foreigners to buy good made oversea. It is not going to end well.
 

unicon

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I believe in micro thinking and base setting before macro applications with "Certainty" as a priority concept. Real Estate is the base and its cash flow is based on the physical world (space). Conquering time and scale come later. This is long term thinking. One can start with an optimum investment in RE and power down the debt even in a non-cash flow environment till it does cash flow. We are all builders and searchers so this is the first productive base which can naturally be repeated. Secondly you can do the same thing in the stock market in buying only dividend stocks again prioritizing cash flow. Both can be held for infinity. If you start a business that cash flows only 2K/month it will add to the base. The synergy in all 3 (RE, Stocks, Bus.) combined with certainty in cash flow in building a long term efficient base allows speculative investment from excess cash flows. The paradox is that speculation is necessarily minimized as you grow because you move toward 100% production and learning. You also pay no tax so efficiency (output over input) is moving toward mastery. You know real work and courage when you see it.

On the maco level you are attempting to balance all the technical indicators offset by the human behavior that distort it. Speculating on timing is the game. If you can spot real value you can trade equities (capital gains). If you can spot real motivations you can use derivatives. If the overall trend is up the biggest returns are riding the wave. The macro can give you clues on how to scale more dramatically but if you miss the real learning along the way developed from the micro priority and certainty, you will inevitably crash and burn. Or in the alternative never giving back what was given in a balanced life.

Best guess today is that human behavior magnified both ways (good & bad) as the world is smaller, technical skill is toward minimizing government and increasing innovation against scarcities. Conceptually money will not buy you anything more on the micro level that you need as small will become big in influence. Macro money used to buy, control, and abuse time will collapse at an accelerating rate as real work and production cannot be bought with debased money. Leverage reverses against bad behavior. A zero based spender with real certainty and productivity in a network of reality has the best quality asset. You are conquering Time and Space.
 
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JScott

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I've been getting a lot of messages the past couple days asking for my take on the economy given the yield curve inversion and other data... Here's what I posted on Facebook today in case anyone here is interested:

The current bond market (Treasury yields) is a reflection of global risk, not so much the domestic economy. Globally, there's a slowdown happening. And these countries slowing down are our trading partners -- if their economies are slowing down, that's bad for us, as it means they produce less and buy less from us.

We talk about the trade deficit with China, but remember that only about 15% of our trade is with China. 85% is with the rest of the world. If China, Europe and the Middle East go into recession, they could easily drag us down with them.

That said, the overall US economic numbers are still holding up. Many numbers (like retail sales) are weakening year-over-year (for example, retail sales are down 16% July over July), but not so much month-over-month (sales are up 4% July over June).

This indicates that we've reached a lower economic plateau but things are stable. There are two big short-term risks I see:

1. China. If China decides it's in their best interest to really hurt our economy, they have the ability to do it. They could flood our market with Treasury bonds, pushing up rates and making it very expensive to cover our debt payments. Or they could cut off the supply of certain products that we really need (like rare Earth elements). They'd hurt themselves in the process, but if they think destroying our economy to tip the next election is their best alternative, they could do it.

2. Consumer Confidence. The only reason that the US has been immune to the global slowdown is that Americans are still spending like crazy. If Americans start to believe that things are going to get bad, they'll change their spending habits and things WILL get bad. The question is whether low interest rates is enough to keep Americans spending and for how long.

As for interest rates, I believe the Fed (at the urging of the executive branch) will continue to drop rates. That's good short term, but near zero rates means that when the downtown comes, the Fed now has one less option (lowering rates) to help spur growth and recovery. Their only remaining option will be to print more money, which has plenty of other problems that go with it.

I don't like to predict, but I'll make some relatively easy guesses here:

- I don't see a US recession in the next six months, as consumer confidence, economic numbers and Fed policy are all propping up the economy for now. (with China as the wild card).

- I'd bet that Trump eases tariffs over the next few months. He says that we're winning the trade war, but he knows it's hurting us and that China has the nuclear option if they choose to use it. He will want to avoid that and play nice for the next 12 months.

- The rest of the world will continue to slow, and we'll start seeing recession in parts of Europe in the next few quarters.

- We'll see interest rates drop again in the Fall.

- When the next recession comes, I don't have any idea how bad it will be, but I am guessing that it will be LONG. With interest rates so low, there won't be a lot of options to pull us out of a downtown quickly.

Again, none of that is controversial to most economists -- I'm not saying anything above that is unique or surprising to anyone who is paying attention. But for those of you who don't follow economics, that's what is likely going on.

EDIT: For the people asking about the impact on real estate... First, there's no arguing that real estate is generally local. That said, I'm a big believer that at the inflection points (very top and very bottom of the market) real estate is actually not local.

When a recession starts, nearly every market will get hit. When a recession ends, nearly every market will benefit. This is a case of rising tides drop and lift all boats.

We're not at the top inflection point yet (actually, I think we're bouncing around the top, but we haven't started down the other side in earnest), so real estate will continue to be dependent on local conditions. Things like population growth, employment growth, wage growth and other hyper local economic indicators. Also, with interest rates continuing to drop, it seems fairly obvious that real estate will continue to stay propped up, at least as long as the economy does.

Long story short, I'm guessing that there will be a plateau for most local real estate markets over at least the next few months (or even a year or more), until the broader market sees the correction. Given that I don't see major inflation or wage growth over the rest of this cycle, I don't expect prices for inventory levels to move much short-term.

And just to clarify, none of this real estate stuff is based on any special insight I have... It's just common sense conclusions from my take on how the economy tends to work and how it's been working throughout this most recent cycle.
 

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@JScott has been spitting FIRE in this whole thread. I've been observing it, but not really inputting on purpose.

I'm a very 'social psy fundamentals' type investor, which is why I did well in crypto cause it's literally all emotional driven. Anyways, my thoughts (which actually recently changed in the past weeks):

No recession is in the short-term or mid-term horizon. Dare I even say long-term of 3-5 years from now. It may be one of the rare few times the Inversion Curve was a false-positive.

90% traders/investors lose. 10% win.

Pretty much means; do the opposite or neutral of what the 90% do. (much easier to say, than to actually do).

Millennials do not buy homes or stocks in general. Millennials were affected big time and big sour taste from the Great Recession. Millennials (and other gens) also saw the same homes (that were on a 90% discount sale during the recession) almost 3x in value or more in the past 4-5 year span. Millennials are impatient, and generally "lazy", and love easy money (which is why 'gurus' have exploded). The average Millennial associates the term 'recession' with automatic housing market failure; they do not realize not every recession includes 90% discounts on real estate; some devaluation, yes, but nothing comparable to the Great Recession.

"Inversion Yield Curve" is the headline in mainstream news. Not just business related news.

So now; you have a bunch (millions and millions and millions) of general population Millennials suddenly perk their ears up. It's time. It's almost time to make that easy money here soon! It's time to finally buy a house, some Apple Amazon Tesla Chipotle stock.. cause it's going to be so cheap here soon and then I can triple+ that! Or better yet! I'm going to short the market and be the Big Short guy!

Essentially you have a HUGE influx of very impatient, greedy people ready to throw money (take out loans) here "soon". We define that as dumb money aka the 90%.

It's not just millennials.. it's Greedy people in general. Those coming completely out the wood works from no where licking their chops at this 'recession opportunity'.

This is why a recession is not on the short or mid-term horizon.. or possibly even in the long-term. It might very well be 2023, 2024 before a recession comes.

There's a strong chance the next recession will come when it is least expected because right now; everybody is expecting it. And without a big impactful 'catalyst' to actually trigger it, it will not self-prophesied by the 'dumb money' in the next 24 months, they don't have enough actual control to make a dent and be that catalyst.
 

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Also to note: Another possible argument the recession window may start 4-5 years from now.

What lead us out of the last recession? The internet.

Internet brought upon us: streaming, cell phone data, Amazon FBA, social media, and pretty much any and everything. Which is clearly evident from the tech stocks completely dominating the top, flipping the Forbes 100 list, etc.

At it's current capacity; the internet has reached it's peak utility. Meaning... the same companies that took this new tech called internet and made completely innovative world-changing stuff are no longer innovating anymore.

Those innovation guys are moving sideways now, no longer pushing out new ways to apply internet based tech into real world utility.. The pie stopped growing. Now; it's just a big game of grab pie from each other. Turning into a zero sum game.

No true innovation = no new value created.

Until the next infrastructure (5-6-7g mobile speeds, peer to peer internet transmitted via proximity like bluetooth aka true blockchain utility, true AI, true virtual reality, etc.)... we tapped out the internet at it's current form. When this new 'secondary layer of internet' finally emerges in the next 10 years is when the next BOOM happens.

Until then; I compare it very much like how a War can pull an economy out of a recession. War = Internet. War Over = Internet tech peaked out. Look closely at how future recessions occurred and behaved after one of the recessions pulled out by a War. This is how it may very well go.
 

Your Boy George

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People are naturally worried about the next recession because the last one was so bad. Like anything's possible, but a once in 80 years recession as bad as 2008, again just a decade later? I don't think so.

I wasn't alive before 1998, but did people actively worry about recessions this much before the Great Recession scared everyone and made "recession" such a dirty word?
 
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JScott

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People are naturally worried about the next recession because the last one was so bad. Like anything's possible, but a once in 80 years recession as bad as 2008, again just a decade later? I don't think so.
Recessions don't have to be like 2008 to be devastating to people. Anyone living beyond their means without adequate savings (read: most people) are at risk during a recession simply because unemployment rises, leading to a snowball effect that impacts all aspects of many people's lives.

I wasn't alive before 1998, but did people actively worry about recessions this much before the Great Recession scared everyone and made "recession" such a dirty word?
Yup. I grew up in a relatively poor household, and financial patterns always changed as the economy changed. Our once-a-year vacations were skipped, we scrimped on non-essentials and food choices were changed. I remember my parents talking about having to start saving some emergency money after Black Monday (stock market crash in 1987) as it was a major indication that a recession as coming.
 

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I've been getting a lot of messages the past couple days asking for my take on the economy given the yield curve inversion and other data... Here's what I posted on Facebook today in case anyone here is interested:

The current bond market (Treasury yields) is a reflection of global risk, not so much the domestic economy. Globally, there's a slowdown happening. And these countries slowing down are our trading partners -- if their economies are slowing down, that's bad for us, as it means they produce less and buy less from us.

We talk about the trade deficit with China, but remember that only about 15% of our trade is with China. 85% is with the rest of the world. If China, Europe and the Middle East go into recession, they could easily drag us down with them.

That said, the overall US economic numbers are still holding up. Many numbers (like retail sales) are weakening year-over-year (for example, retail sales are down 16% July over July), but not so much month-over-month (sales are up 4% July over June).

This indicates that we've reached a lower economic plateau but things are stable. There are two big short-term risks I see:

1. China. If China decides it's in their best interest to really hurt our economy, they have the ability to do it. They could flood our market with Treasury bonds, pushing up rates and making it very expensive to cover our debt payments. Or they could cut off the supply of certain products that we really need (like rare Earth elements). They'd hurt themselves in the process, but if they think destroying our economy to tip the next election is their best alternative, they could do it.

2. Consumer Confidence. The only reason that the US has been immune to the global slowdown is that Americans are still spending like crazy. If Americans start to believe that things are going to get bad, they'll change their spending habits and things WILL get bad. The question is whether low interest rates is enough to keep Americans spending and for how long.

As for interest rates, I believe the Fed (at the urging of the executive branch) will continue to drop rates. That's good short term, but near zero rates means that when the downtown comes, the Fed now has one less option (lowering rates) to help spur growth and recovery. Their only remaining option will be to print more money, which has plenty of other problems that go with it.

I don't like to predict, but I'll make some relatively easy guesses here:

- I don't see a US recession in the next six months, as consumer confidence, economic numbers and Fed policy are all propping up the economy for now. (with China as the wild card).

- I'd bet that Trump eases tariffs over the next few months. He says that we're winning the trade war, but he knows it's hurting us and that China has the nuclear option if they choose to use it. He will want to avoid that and play nice for the next 12 months.

- The rest of the world will continue to slow, and we'll start seeing recession in parts of Europe in the next few quarters.

- We'll see interest rates drop again in the Fall.

- When the next recession comes, I don't have any idea how bad it will be, but I am guessing that it will be LONG. With interest rates so low, there won't be a lot of options to pull us out of a downtown quickly.

Again, none of that is controversial to most economists -- I'm not saying anything above that is unique or surprising to anyone who is paying attention. But for those of you who don't follow economics, that's what is likely going on.

EDIT: For the people asking about the impact on real estate... First, there's no arguing that real estate is generally local. That said, I'm a big believer that at the inflection points (very top and very bottom of the market) real estate is actually not local.

When a recession starts, nearly every market will get hit. When a recession ends, nearly every market will benefit. This is a case of rising tides drop and lift all boats.

We're not at the top inflection point yet (actually, I think we're bouncing around the top, but we haven't started down the other side in earnest), so real estate will continue to be dependent on local conditions. Things like population growth, employment growth, wage growth and other hyper local economic indicators. Also, with interest rates continuing to drop, it seems fairly obvious that real estate will continue to stay propped up, at least as long as the economy does.

Long story short, I'm guessing that there will be a plateau for most local real estate markets over at least the next few months (or even a year or more), until the broader market sees the correction. Given that I don't see major inflation or wage growth over the rest of this cycle, I don't expect prices for inventory levels to move much short-term.

And just to clarify, none of this real estate stuff is based on any special insight I have... It's just common sense conclusions from my take on how the economy tends to work and how it's been working throughout this most recent cycle.

Thoughts on how long the recession would be?
 

MJ DeMarco

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Thoughts on how long the recession would be?
He alluded that it would last YEARS because the FED is already firing bullets. When it hits and all the bullets are gone, it's one less tool to slow the bleeding.

I wasn't alive before 1998, but did people actively worry about recessions this much before the Great Recession scared everyone and made "recession" such a dirty word?
Yes, because is can ruin lives and erase life savings.

Today people like saying "Oh don't worry about it, the markets eventually recover."

I laugh at that. Obviously they haven't lived through a crisis that lasts longer than a few months.

There's an old saying...

View: https://twitter.com/MJDeMarco/status/1158446507508420608
 

James Fend

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My current thoughts on probabilities:

Shock/Catalyst/Trigger
  • Asset Bubble: 15%
  • Government Policy: 65%
  • Oil Price Surge: 20%
I lean more with @MJ DeMarco 's sentiment about the Feds, the hidden signals behind rate adjustments, and some of it has to reach a tipping point eventually.

I don't see a financial crisis, a huge company failing, or any other bubble brewing. There's no exuberance of blind optimism euphoria that I can find.

I would watch Oil Prices very carefully though over the next 1-4 years. I think this might be a sneaky one.

Other Things Nearing Capacity/Likelihood:
  • Wealth Effect at 85%. (google this, it's very interesting read)
  • Yield Inversion, Positive Signal at 66% probability.
    • Recession in 2019: 5%
    • Recession in 2020: 20%
    • Recession in 2021: 30%
    • Recession in 2022: 25%
    • Recession in 2023: 20%
  • False Positive Yield Curve Inversion at 33% probability
    • If False Positive, Another Yield Inversion 3-5 Years Later at 90% probability
 
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James Fend

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Here is a chart I just made. In month increments; It overlays:
  • S&P (red/green candles)
  • 'Inverted Yield Curve' Google Trends (orange)
  • 'Recession' Google Trends (blue)
Almost two years after the December 2005 Yield Curve signal did the stock market top. I think we all know there's a buffer of time from the signal.. however, look at what's more interesting..

Contrarianism of public sentiment.

Fear (yield inversion): Get in
Happy (yield inversion interest lessens) + Early Adopter phase of Recession Fear: Get out
Fear (mid to late majority of public fear): Get in

Zig. Zag.
 
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JScott

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Thoughts on how long the recession would be?
Like MJ said above, my take (and again, this is just my guess and I'm NOT an economist) is that this is going to be a longer-than-typical recession. Mostly because (again, as MJ said) interest rates won't be an option for the Fed to spur growth. That leaves printing money (the only other real option they have), and while printing money can certainly work (it did after 2008), it comes with risks -- namely inflation.

So, my gut tells me this will be a long recession, though that doesn't necessarily mean it will be a deep/bad recession (that I won't even try to predict)...
 

JunkBoxJoey_JBJ

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@MJ DeMarco can we rename the thread 2018-2020, as I have said before...no real idea of the true in & outs here, but an absolute favorite thread!

Would it be unreasonable to “expand” the timeline since we recently passed July 2019 and some predictions?

Minutiae now, but future “GOLD thread!!!” That I’ll even guarantee.

Future lessons learned here.
 
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