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NOTABLE! The Coming Recession (2019-2020?)

Tossek

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Personally, I think it is quite good to have some mild downturn right now. In 2008 it was more like drastically and people were hit quite hard. Having time to react is crucial. Many companies turn to shorttime work already.

I do think as well that the impact is spreaded more over time. I am very concerned about inflation because people do not know where to go with their money anymore. And honestly, if you unsure of the future or in a downturn, turning down the interest rate might help a bit but you will not put your business life on stake. And here in the EU, we already have zero interest rates. German and Swiss yield curves are under 0. German GDP went down last quarter, I expect to drop it further in second quarter. US consumer sentiment index forecast dropped to ~92 which is an indicator for less expected national spending.

I am expecting a recession in Germany starting already this year due to the sum of missing manufacturing orders. I am expecting igniting fear to all other countries in the EU and a slowdown to the US. But recession in the US will hit 2020 earliest, I guess.

@JamesFend, I am agreeing on that we need a new horse for innovation but the old one called the internet is still not fully out of the game. It is just not so obvious anymore....
 

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Antti

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Very interesting thread to read, big thank you to all contributors.

Even if we have a recession, will the stock market go much down if the interest rates are this low? And real estate is also very expensive in desirable locations. Where would all the money go from the stock market?

Pension funds are major players in the stock market and this is the first economic downturn after the babyboomer generation has largely exited the workforce and pension funds on both sides of the Atlantic desperately need to get a good return on their investment. I read somewhere that most pension funds in the US require a minimum annual return of about 8% a year to cover their future liabilities. That sounds ridiculously high. What options do they have other than the stock market and real estate?
 

Aix-Geneve

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Saw this video yesterday and it seems to me, to make sense. Major points:

1. Hedge funds going into gold=rally ahead. Tells how to capture it
2.Downturn in stockmarket is orchestrated and for a reason
3.Aim=reduce stock prices. Boomers will panic and dump stocks


This is quite a sophisticated video. I would imagine that this will fix the housing and stock bubbles simulatenously. I get the impression this is planned, orchestrated. Again, after its over, there'll be money to be made. Thoughts??

View: https://www.youtube.com/watch?v=NA4MfGt3Gho
 

Ahmet1054

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Thanks for the topic! Very interesting indeed.

Does anyone have an idea on the French market? On the European market more generally, besides Germany?

Real-estate gets hit a few months after the recession hit. So, if it hits in June-July 2020, the right time to buy must be Nov/Dec 2020 I guess?
What about gold? It took +26% since January 2019, is it too late to buy already?

The stock market is at an epic high, so better wait the recession to buy some stocks I guess?
 

Ahmet1054

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Another thing regarding crypto currencies, is it wise to say that BTC and stuff will rise a lot during the recession? Because after the '08 crisis and the upcoming financial crisis, people have less and less trust in financial institutions. And the blockchain system keeps growing so... how about buying BTCs and stuff?
 

YanC

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Thanks for the topic! Very interesting indeed.

Does anyone have an idea on the French market? On the European market more generally, besides Germany?

Real-estate gets hit a few months after the recession hit. So, if it hits in June-July 2020, the right time to buy must be Nov/Dec 2020 I guess?
What about gold? It took +26% since January 2019, is it too late to buy already?

The stock market is at an epic high, so better wait the recession to buy some stocks I guess?
Europe may be hit the hardest. We are already printing money like crazy and interest rates are ridiculous. France borrows at a 0% rate or slightly negative, Germany borrows at a negative rate. Lending money to Portugal over 10 years will get you 2%...
According to various indicators, France has already been in recession for several months (OECD macro-economic indicator). Italy lost 25% of its industry since the Euro. Germany's commercial excess is equal to what they lent to Spain and Italy so they could buy Mercedes and BMWs. They might as well have sunk them in Hamburg's harbor. European banks are in a terrible shape, the German ones being the worst.

So here we are, after the longest bull market ever seen, printing money and with negative interest rates. That means we'll have no tools left at our disposal when it's gonna crash. At least not those we used in 2008...

In my opinion, one should be wary for now and keep his money safely parked for when good deals will start to pop up. Now how to weather the storm? I have no clue...
 

nitrousflame

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Wall Street Journal said:
Shipments of recreational vehicles to dealers have fallen about 20% so far this year, after a 4.1% drop last year, according to data from the RV Industry Association. Multiyear drops in shipments have preceded the last three recessions.
 

Aix-Geneve

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Another thing regarding crypto currencies, is it wise to say that BTC and stuff will rise a lot during the recession? Because after the '08 crisis and the upcoming financial crisis, people have less and less trust in financial institutions. And the blockchain system keeps growing so... how about buying BTCs and stuff?
Personally I don't like Bitcoin or any of the cryptos. They are too easy to be controlled by govts etc. Nonetheless, if you are trading, they appear to be useful for speculation. But you would have to know what you are doing. That's just what I think.
 

Aix-Geneve

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In my opinion, one should be wary for now and keep his money safely parked for when good deals will start to pop up. Now how to weather the storm? I have no clue...
True, I think Europe will be hard hit. I wouldn't touch equities personally. Keep in cash, wait for opportunities. My interest is in AUD, I suspect it will tank, but I've been waiting a long time, so who knows.

I am interested in gold, but it could be useful to wait for a retracement. I saw a yt video on that recently, a few days back, and it seemed to make sense. I mean yes gold is high, but it was higher a few years back. Nonethless, hedge funds are buying (and note... they waitied for a retracement). IMO, if hedge funds are there, they know something. (and some hedge funds are as simple as trend following).

I draw your attention to this link Sam's Thesis - SKAL Capital and download the thesis attached , it's like 199 pages just on gold, it's very informative and forward looking ie 2020-2039. I've half read it and I am convinced. Anyway, that's what I think and I am always pleased to hear anybody's opinions and ideas...
 

Aix-Geneve

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Europe may be hit the hardest. We are already printing money like crazy and interest rates are ridiculous. France borrows at a 0% rate or slightly negative, Germany borrows at a negative rate. Lending money to Portugal over 10 years will get you 2%...
According to various indicators, France has already been in recession for several months (OECD macro-economic indicator). Italy lost 25% of its industry since the Euro. Germany's commercial excess is equal to what they lent to Spain and Italy so they could buy Mercedes and BMWs. They might as well have sunk them in Hamburg's harbor. European banks are in a terrible shape, the German ones being the worst.

So here we are, after the longest bull market ever seen, printing money and with negative interest rates. That means we'll have no tools left at our disposal when it's gonna crash. At least not those we used in 2008...

In my opinion, one should be wary for now and keep his money safely parked for when good deals will start to pop up. Now how to weather the storm? I have no clue...
Check this out Will Russia's Economy Exceed Germany's Anytime Soon? | Armstrong Economics he's talking of stagflation for the next 4 years for Europe and outlines his reasoning. I am inclined to agree with him. I am also of the opinion that the time for a crash is not yet here. Gold isn't high enough. There are no wars. I follow Jim Rickards on this, check out his video, he explains his reasoning
View: https://www.youtube.com/watch?v=ojuNdko_Bw4
 

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Aix-Geneve

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Another thing regarding crypto currencies, is it wise to say that BTC and stuff will rise a lot during the recession? Because after the '08 crisis and the upcoming financial crisis, people have less and less trust in financial institutions. And the blockchain system keeps growing so... how about buying BTCs and stuff?
Be aware in the US the IRS is chasing people for not declaring their crypto revenues. It's starting in Australia too. Trap? I suspect so. I remember listening to the line of reason on a Macro Voices podcast (the one with Eric Townsend) macrovoices.com They are very informative, detailed and free
 

YanC

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I am interested in gold, but it could be useful to wait for a retracement. I saw a yt video on that recently, a few days back, and it seemed to make sense. I mean yes gold is high, but it was higher a few years back. Nonethless, hedge funds are buying (and note... they waitied for a retracement). IMO, if hedge funds are there, they know something. (and some hedge funds are as simple as trend following).
There's definitely a surge in the interest for gold, hence the price growing. But on the long term, it looks expensive now but I think what happens is currencies are losing value. And comparatively, gold looks super expensive as it holds in value.
I remember reading the dollar lost 90% of its value to gold since it stopped being backed by it. I guess the same happens with euros and other currencies.
 

Aix-Geneve

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There's definitely a surge in the interest for gold, hence the price growing. But on the long term, it looks expensive now but I think what happens is currencies are losing value. And comparatively, gold looks super expensive as it holds in value.
I remember reading the dollar lost 90% of its value to gold since it stopped being backed by it. I guess the same happened with euros and other currencies.
True. Have a look through the other links I posted Sam's Thesis - SKAL Capital specifically, there's quite a long thesis 199p on on Gold on the website. If you're super interested, you can read it. I'm half way through and I understand much more now. You are 100% spot on.
 

Aix-Geneve

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This is interesting. If you follow macroeconomics, these are Hedge fund guys – they typically are ahead of the trend. It’s interested to follow these guys on twitter. Each of them have their companies on twitter too. Very interesting because everyone compares notes and lots of discussion, on twitter especially.

View: https://www.youtube.com/watch?v=NyyjUicoAEY
 

NicholasCato

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So... how is this gonna effect us starting our fastlane ventures? Should we even pursue it? Should we change course for something more stable?
 

Get Right

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So... how is this gonna effect us starting our fastlane ventures? Should we even pursue it? Should we change course for something more stable?
To somewhat quote the late Peter2 : Are you going to wait on all the stoplights to be green before you drive to the supermarket?

EDIT - Sorry just realized I was being lazy. Here is the direct quote:

"The time is NEVER right. If you wait for all the lights to turn green before you are heading to town, you are going to stay home the rest of your life."
 

vulcansx

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So... how is this gonna effect us starting our fastlane ventures? Should we even pursue it? Should we change course for something more stable?
Wouldn't be wary of starting up, just be wary about what industry you are starting in.

People still eat in recessions, but they do away with designer bags.

I wouldn't invest in single family homes before a recession but I would invest in movie theatres, liquor stores and thrift stores.

If you are starting a cosmetics brand, start a NYX vs a Lancôme.

etc.
 
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JScott

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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.
Since I wrote this last week, I've had a lot of people ask me if I really thought China would jeopardize their economy just to hurt ours. I think today answered that question...

There is zero chance China would have assumed that their tariff threat wouldn't result in a counter-attack, and since their threat wasn't an immediate response to anything, it's probably safe to say that there was a strategy behind the Chinese announcement of $75B in additional tariffs. In other words, this wasn't a rash move by China

Based on what we saw today, I'm going to make a prediction that China is prepared to sink their own economy in order to sink ours. I think things are going to escalate over the next several months and we're going to see an all out currency war with China that could easily result in a clear economic downturn by the beginning of 2020.

I've been wrong before, but this is my prediction...
 

Kid

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, I've had a lot of people ask me if I really thought China would jeopardize their economy just to hurt ours. I think today answered that question...

There is zero chance China would have assumed that their tariff threat wouldn't result in a counter-attack, and since their threat wasn't an immediate response to anything, it's probably safe to say that there was a strategy behind the Chinese announcement of $75B in additional tariffs. In other words, this wasn't a rash move by China

Based on what we saw today, I'm going to make a prediction that
I'll throw my guess.

China isn't just trying to sink US economy.
Looking back at their actions they might be for something bigger:

Making Yuan the global currency instead of dollar.

It seems reasonable. They could "lower" both, their economy and US economy. Then they could have plan to rebound, leaving US without one.

Who knows how low China can go without serious consequences for them?

At least that are my two cents (no pun intended ;))
 
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JScott

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Who knows how low China can go without serious consequences for them?
Whatever they do, there will likely be major short-term consequences for their economy. But, it's game theory at this point -- will the short-term consequences be better than the long-term consequences of not doing something drastic. Pre-Trump, the answer was obvious (not worth doing anything); with Trump looming for a potential 4 more years (and then a potential Trump-like successor), the math is getting much more complicated for them...
 

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PizzaOnTheRoof

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Interesting (and genius) play by Trump if true...


TL;DW: Trump is going to cause a slight downturn in the economy by tightening tariffs on China, forcing the Fed to lower rates and print $$$ to prop up the economy...

Then before the 2020 election, he’ll strike a deal with China, lifting the tariffs and the economy will boom due to low rates and stimulus from the Fed + free market.

He’ll have lowered rates, been the toughest POTUS yet on China, and boomed the economy.

Democrats will basically have zero chance of winning in 2020.
 

Tossek

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Well, it is an interesting thought, I like this point of view.

However, the mandat of the FED just tries to control inflation and unemployment levels. It would be a huge gamble, because these are indirect measures of a downturn and Trump would need to time it perfectly + be lucky. Reaction of FED and reaction of consumers might then be not fast enough for his second election.
 
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JScott

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Then before the 2020 election, he’ll strike a deal with China, lifting the tariffs and the economy will boom due to low rates and stimulus from the Fed + free market.

He’ll have lowered rates, been the toughest POTUS yet on China, and boomed the economy.

Democrats will basically have zero chance of winning in 2020.
Except that:

1. The global slowdown is going to have a great effect on the US economy, and if by election time, things could be too far gone globally to create a boom here in the US; and

2. Unlikely China is going to do anything to encourage another 4 years of Trump. If they make a trade deal, they've basically ensured that he has another 4 years to put pressure on them. Unless there is some back-room agreement between Trump and China that we don't know about (and that China believes he will actually follow-through on), this seems unlikely.

The fact that China is ratcheting up the trade war this week tells me that they are ready to dig in and risk their own economy if that's what it takes to get Trump out of office.

Just my $.02...
 

MJ DeMarco

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TL;DW: Trump is going to cause a slight downturn in the economy by tightening tariffs on China, forcing the Fed to lower rates and print $$$ to prop up the economy...

Then before the 2020 election, he’ll strike a deal with China, lifting the tariffs and the economy will boom due to low rates and stimulus from the Fed + free market.

He’ll have lowered rates, been the toughest POTUS yet on China, and boomed the economy.

Democrats will basically have zero chance of winning in 2020.
Seems plausible but the timeline for those events is not within the election timeframe, more like a 2-4 year time horizon. The Chinese know that Americans will demand their cheap Chinese goods and any pain felt at Target, Amazon, or Walmart will not be good for Trump's reelection. As I mentioned some time ago, China plays the long game, Americans are incapable of playing it and always play the short-game. China is doing exactly what I would do: make the average American consumer (pretty much 99% of the Scripted population) feel a little pain so that Trump is guaranteed a one-term Prez. And since he correlates his success with the stock market and economic turbulence will ensure that by Nov 2020 the markets be in a downdrift, it seems like a solid plan for China.
 

PizzaOnTheRoof

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That's a pretty bold statement.
Eh, he won the first time....

And it seems like the dems are running around like a bunch of chickens with their heads cut off...maybe if they turn up the racist and free shit dials even more they could win.

It’s either dumb luck or Trump is playing chess while everyone else is playing checkers.
 
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scottmsul

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Eh, he won the first time....

And it seems like the dems are running around like a bunch of chickens with their heads cut off...maybe if they turn up the racist and free shit dials even more they could win.

It’s either dumb luck or Trump is playing chess while everyone else is playing checkers.
That wasn't meant to be an agreement or disagreement with whether Trump will win or not. More just that elections seem to be pretty unpredictable in general.
 

Primeperiwinkle

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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.
Is this what you’re talking about?
 

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