The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success

NOTABLE! The Coming Recession (2019-2020?)

Remove ads while supporting the Unscripted philosophy...become an INSIDER.

c4n

Full throttle
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
May 30, 2017
209
509
248
Europe
All these "recession-proof", "no more recessions in our lifetime", "new paradigm" articles/posts remind me of the Euphoria/Mania phase of a bubble...

My focus now is on controlling my FOMO any carefully trying to find opportunities for limited exposure to some potential remaining upside.
 

Kid

Silver Contributor
Speedway Pass
Mar 1, 2016
685
563
258
All these "recession-proof", "no more recessions in our lifetime", "new paradigm" articles/posts remind me of the Euphoria/Mania phase of a bubble...
I wonder why those people rarely count that there are offshore money inside the US stock market.
Its so simple - many new Chinese millionaires found US being better to invest then China market in past 10 years or so. So they did.

So the bull market is fueled not by extraordinary results of companies inside US but by simple economic law of demand and supply. Basically static supply and increased demand creates higher prices.
 

elusive97

Bronze Contributor
Read Millionaire Fastlane
Speedway Pass
Nov 28, 2019
345
394
176
Yorkshire
Selling my house this year. Should be on the market by May, I hope the market doesn't crash before the 3 months (avg) it takes to sell in my area or 3 months (avg) conveyancing takes. I hate this place but losing even more money on this bad investment would be crushing
 

Rivoli

Bronze Contributor
FASTLANE INSIDER
Speedway Pass
Jun 4, 2018
134
333
167
Orange County, California
Selling my house this year. Should be on the market by May, I hope the market doesn't crash before the 3 months (avg) it takes to sell in my area or 3 months (avg) conveyancing takes. I hate this place but losing even more money on this bad investment would be crushing
What City is that?
 

lewj24

Gold Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
May 12, 2016
398
1,407
423
24
St. Louis, MO
Sell off any non-cash flowing real estate. And move to cash.
Based off of everything you said in this post your conclusion to move assets to cash is ironic. Since everything you posted is bad for the dollar. The fed is creating a lot of inflation. People should move to gold.

In fact, people have already started moving to gold based off of the things you posted. Gold is absolutely killing it with an 18.9% gain in 2019. Everyone's going crazy about an amazing stock market return in 2019 and they barely beat a chunk of metal.

Buckle up buckaroos. We're going down Inflation Ave. with the Fed behind the wheel and they don't know how to hit the brakes.
 
OP
OP
JScott

JScott

Legendary Contributor
EPIC CONTRIBUTOR
FASTLANE INSIDER
Speedway Pass
Aug 24, 2007
4,268
8,527
1,961
Based off of everything you said in this post your conclusion to move assets to cash is ironic. Since everything you posted is bad for the dollar. The fed is creating a lot of inflation. People should move to gold.
People have been talking about inflation since QE1 started in 2008. In fact, many doom and gloomers have been screaming about hyperinflation for over a decade now.

I'm not saying inflation won't happen, but if anything, the past decade has seen inflation at *lower* than Fed targets, and the Fed has actually been struggling to get inflation over 2% (though, all things considered, the real number likely is over 2%).

I've also been hearing about flight to gold for half a decade now, but across all asset classes, gold has most likely underperformed most of them in this time period. Again, not saying we won't see gold jump, but that would have been a bad bet the past several years.

On the other hand, the dollar has been very strong, and with the rest of the world moving towards zero and negative interest rates, there's no reason to believe the dollar won't remain the reserve currency for at least the next several years.

Personally, I'd rather have cash/liquidity, so that I don't have to make any short-term bets on which asset classes will outperform. If inflation jumps, I can easily move that cash to real estate, bonds, precious metals, etc. But, going in the other direction (from illiquid to liquid assets) is much more difficult and costly, and I'm not ready to lock in any predictions about asset class performance just yet.

I still own a lot of real estate, I hold business equity, and I own precious metals (both physical and paper) -- but, I'm still a big fan of the US dollar right now given everything that's going on in the global economy. When that changes, so will my asset allocation.

Just my $.02...
 

James Fend

Gold Contributor
FASTLANE INSIDER
Summit Attendee
Speedway Pass
May 4, 2009
1,338
1,801
581
Las Vegas, NV
In fact, people have already started moving to gold based off of the things you posted. Gold is absolutely killing it with an 18.9% gain in 2019. Everyone's going crazy about an amazing stock market return in 2019 and they barely beat a chunk of metal.
Piggybacking.. I've been monitoring Gold and Bitcoin's relationship fairly close on a daily and macro level. I'm betting big on Gold too, and so far... Bitcoin has been "acting" like Gold against the market.

We'll see how long it can keep the act up; but if things hit the fan right after this new Roaring 20s era, Bitcoin might very well have it's opportunity and reason to go $250k+ one day. Yikes...
 

lewj24

Gold Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
May 12, 2016
398
1,407
423
24
St. Louis, MO
I'm not saying inflation won't happen, but if anything, the past decade has seen inflation at *lower* than Fed targets, and the Fed has actually been struggling to get inflation over 2% (though, all things considered, the real number likely is over 2%).
The CPI shows this. You're right. But the market shows way more inflation.

People have been talking about inflation since QE1 started in 2008. In fact, many doom and gloomers have been screaming about hyperinflation for over a decade now.
That is because QE literally causes inflation. That's why people started saying that.

In 2008 gold was around $800 per ounce. Today it is at $1560 per ounce. That is nearly double in 12 years. Total return during 12 years is around 95%. That is an annual return of 5.72%. This number in my opinion more accurately represents inflation than the CPI. If you asked the average american where they think inflation is at 2% or nearly 6% what number do you think they would pick? Inflation is one of the hardest things to see in economics and gold is the best way to see it in my opinion. I don't think the CPI is accurate at all. If you think that's a crazy idea here's a good summary of the controversy on investopedia.

I think the Fed showing that they will print as much money as it takes to keep this market from going down even though inflation priced in gold is almost at 6% is a bad sign for america. Since printing money causes inflation. And because the dollar is the reserve currency so many people around the world have it. If they start to doubt the strength of the dollar, if there is any bit of an inflation scare, they will give all of their dollars back to us Americans and they will use their own currencies. This will cause the inflation rate in America to skyrocket. This is the potential problem. Inflation can be a delayed reaction. A very delayed reaction. The Fed is playing with fire.
 

Silverfox148

Bronze Contributor
Speedway Pass
Apr 17, 2017
60
182
138
The FED is indeed playing with fire, but that's the point the "moral hazard" is gone, it's clear as day to me that they are all in on the stock market and protecting it, we are no different than Venezuela in terms of printing here, except it's by fancier sounding names.

However, the U.S has the reserve currency and most importantly the military and a proven willingness to use it. Until you start to see military defections due to an unwillingness to fight at the flag officer level then you have nothing to worry about here, and in my opinion you won't see that during our lifetime, it will no doubt happen but it's most likely generations away.
 
OP
OP
JScott

JScott

Legendary Contributor
EPIC CONTRIBUTOR
FASTLANE INSIDER
Speedway Pass
Aug 24, 2007
4,268
8,527
1,961
The CPI shows this. You're right. But the market shows way more inflation.
Agreed.

That is because QE literally causes inflation. That's why people started saying that.
Also agreed. Though things are a bit more complicated than that...

While an increase in the money supply certainly provides inflationary pressure, there are other things in our economy that are driving deflationary pressure -- and the net won't necessarily be positive inflation.

Specifically, automation is huge driver of deflation -- businesses are able to reduce their COGS, reduce their overhead and increase their margins. Some of that savings will be passed on to consumers, and as automation increases over the next decade, we could see enough deflation of commodity prices to offset the extra cash being flooded into the system.

Of course, things are going to change... Businesses will likely start to be taxed on that automation-based savings, which will eventually return us to a more typical inflationary environment. But, that could be a few years down the road.

And there are, of course, a million other variables that will contribute to the true inflation percentage. But, short-term, I'm not convinced that inflation is going to increase simply due to QE.

Again, just my $.02... I've been wrong before! :)
 

Don't like ads? Remove them while supporting the forum. Subscribe.

MJ DeMarco

Administrator
Staff member
EPIC CONTRIBUTOR
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
Jul 23, 2007
29,847
105,601
3,751
Fountain Hills, AZ
This run-up is insane, feels almost hyperinflationary.

But at least we're clear now where the bubble is as negative interest rates attack the the asks and bid up prices.

Somebody wake me up when the market decides to go down for a day or two. LOL.
 

socaldude

Platinum Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
Speedway Pass
Jan 10, 2012
1,398
3,154
786
Mexico
Fed Adds $83.1 Billion in Short-term Money to Markets

So more casino monopoly money is being force fed through the feds repo operations.

It doesnt really settle well with me the lack of transperancy in all of this. Why are they doing this? Who needs all this money? This is a sh*t ton of money.

We probably wont know what really is going on until something goes really wrong and these people are forced to testify in front of congress.
 

nitrousflame

Silver Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Aug 7, 2012
319
565
250
33
Minneapolis, MN
Why are they doing this?
They're addicted.

Fed Injects $83BN In Liquidity As Market's Repo Addiction Getting Worse

In short, just as the market got addicted to QE and the result was a 20% drop in the S&P in late 2018 when markets freaked out about Quantitative Tightening, the Fed's shrinking balance sheet, and declining liquidity, Skyrm cautions that "it will take pain to wean the Repo market off of cheap Fed cash" since "it's a circle" which can be described as follows:

For the Fed to end daily RP ops, they need outside cash to come back into the Repo market. For the Repo market to attract cash, Repo rates need to move higher. For rates to move higher, the Fed needs to stop RP ops.
We probably wont know what really is going on until something goes really wrong and these people are forced to testify in front of congress.
 

Rwill

Contributor
Read Millionaire Fastlane
Sep 9, 2019
21
25
18
canada

Repo into the to FX markets now?

I admit I knew almost nothing of this a few weeks ago but you guys have sent me off on a tangent of reading. It's quite alarming, but at this point mainly because it feels like I still don't fully grasp it all.
 

lewj24

Gold Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
May 12, 2016
398
1,407
423
24
St. Louis, MO
Why are they doing this? Who needs all this money? This is a sh*t ton of money.
Correct me if I'm wrong but they are doing this because there aren't enough lenders. When people want to borrow money but there isn't enough money to lend, interest rates go up. Until someone bites and lends money for the better interest rate. The Fed doesn't want interest rates to rise because rising interest rates pop bubbles.
 
OP
OP
JScott

JScott

Legendary Contributor
EPIC CONTRIBUTOR
FASTLANE INSIDER
Speedway Pass
Aug 24, 2007
4,268
8,527
1,961
Correct me if I'm wrong but they are doing this because there aren't enough lenders. When people want to borrow money but there isn't enough money to lend, interest rates go up. Until someone bites and lends money for the better interest rate. The Fed doesn't want interest rates to rise because rising interest rates pop bubbles.
Yes, that's the underlying issue that is being addressed by the repo loans -- not enough companies willing/able to loan overnight.

But, that only addresses the supply side.

On the demand side, it's worth asking, "Why is the demand for repo so high that existing liquidity strategies aren't working?"

And the answer is that banks have recently moved a LOT of cash reserves to t-bills/bonds in hopes of making a return on the arbitrage -- they didn't expect rates to plummet over the past year like they have. These banks are now stuck with treasuries instead of cash (they don't want to flood the market, push down rates further and take a big loss), and they can't hit their liquidity targets without repo money. So, they have to borrow a whole lot of short-term money (repo).

I'm guessing supply hasn't decreased nearly as much as demand has increased.

That, in my opinion, is the bigger issue. Banks are low on cash, which means they are at risk should there be some bigger liquidity crisis that comes along.
 

scottmsul

Bronze Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Apr 29, 2017
124
355
190
28
Boulder, CO
I can't help but wonder what other obscure financial instruments are lurking in the shadows that will out-of-nowhere decide to fail randomly. In 2008 it was credit default swaps, now it's the repo markets. These are always explained after-the-fact in a way that makes sense, but the average person would have never known they existed beforehand. If the general trend now is a lack of liquidity, what's going to be the next obscure domino to fall?
 

Kevin88660

Silver Contributor
I've Read UNSCRIPTED
Speedway Pass
Feb 8, 2019
745
672
264
Singapore
I can't help but wonder what other obscure financial instruments are lurking in the shadows that will out-of-nowhere decide to fail randomly. In 2008 it was credit default swaps, now it's the repo markets. These are always explained after-the-fact in a way that makes sense, but the average person would have never known they existed beforehand. If the general trend now is a lack of liquidity, what's going to be the next obscure domino to fall?
I suspect its inflation coming up reflected by higher commodity prices.
 

James Fend

Gold Contributor
FASTLANE INSIDER
Summit Attendee
Speedway Pass
May 4, 2009
1,338
1,801
581
Las Vegas, NV
As suspected, the public interest for "recession" has cut significantly from even a year ago. Some ~50%..

Anyways; we should see a slight bump in "recession" worry and thoughts to finish out January since I expect to see some volatility; mainly in a small correction of a few red days in a row. However this bump in interest will actually be a "lower high" than a year ago.

February and March and April and May should boom along in markets. With it; another decrease in interest where I am watching very closely; but I have a sneaking suspicion it may be hit it's ultimate bottoming out stage. No volatility and very low volume of interest...

This my friends... will be where a recession catalyst will occur. (although I still stick to my predictions that the upcoming recession will be nothing but merely a correction recession thats fairly minor, followed by a Great Depression approaching 2030.)

Roaring 20s! Gotta love it!
 

nitrousflame

Silver Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Aug 7, 2012
319
565
250
33
Minneapolis, MN
At first, it was just a "temporary" pill to take the edge off. But the source of the pain still lingers, and you tire of taking one pill at a time. Now you want the whole bottle.

 

Don't like ads? Remove them while supporting the forum. Subscribe.

MJ DeMarco

Administrator
Staff member
EPIC CONTRIBUTOR
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
Jul 23, 2007
29,847
105,601
3,751
Fountain Hills, AZ
OMG, hey, look at that! The market is up. What's this, like the 3,301 day in a row? Buy Buy Buy! There is no ceiling folks, keep buying! At this pace, the entire invested world will be able to "retire" in 2 years.
 

nitrousflame

Silver Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Aug 7, 2012
319
565
250
33
Minneapolis, MN
OMG, hey, look at that! The market is up. What's this, like the 3,301 day in a row? Buy Buy Buy! There is no ceiling folks, keep buying! At this pace, the entire world will be able to "retire" in 2 years.
29758

Of course this is a small time frame, and correlation != causation, but that said, it kind of seems like the upward trend might continue, along with repo, into February.
 

MetalGear

Gold Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
Jan 24, 2017
491
1,212
373
New York City
I have been analyzing real estate build and rehab deals in the past 4 months and am finding that NOI does not exceed replacement or the value add costs.

There is a part of me that has FOMO but I also know the song is about to pause in this game of musical chairs.
 

socaldude

Platinum Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
Speedway Pass
Jan 10, 2012
1,398
3,154
786
Mexico
"Federal Reserve officials are considering a new tool to ease stresses in the market for Treasury repurchase agreements, or repos. Through the repo market, banks and hedge funds borrow cash overnight, while pledging safe securities such as government bonds as collateral. In September, an unexpected shortage of available cash to lend sparked a surge in the cost of repo-market borrowing, prompting the Fed to intervene for the first time since the financial crisis.
One potential solution is to lend cash directly to smaller banks, securities dealers and hedge funds through the repo market’s clearinghouse, the Fixed Income Clearing Corp., or FICC."

Hedge Funds Could Make One Potential Fed Repo-Market Fix Hard to Stomach

Lmao wow did i just read that correctly. :rofl:
 

nitrousflame

Silver Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Aug 7, 2012
319
565
250
33
Minneapolis, MN
Lmao wow did i just read that correctly. :rofl:
944 Trillion Reasons Why The Fed Is Quietly Bailing Out Hedge Funds

Rough summary:
1. Hedge funds use repo liquidity to massively lever up arbitrage trades
2. "Big 4" banks get nervous and pull repo lending
3. Lack of liquidity in repo market causes repo rate to spike, and puts that massive hedge fund leverage at risk, which in turn puts the big banks (that are on the other side of the HF trade) at risk
4. Fed steps in with repo facility, and then balance sheet expansion, which is then accessed by the hedge funds through the banks
5. Fed now considering skipping the banks and lending directly to hedge funds

Can anyone find fault in the above heavily simplified summary? If not, how on earth can this situation unwind in a healthy fashion?
 

MJ DeMarco

Administrator
Staff member
EPIC CONTRIBUTOR
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
Jul 23, 2007
29,847
105,601
3,751
Fountain Hills, AZ
As a mentioned on the options thread on the INSIDE, the last 2 months have a special feeling to it, like we will never see it again in our lifetimes. Black swans are characterized by large, outlier declines; the crash of 29, 87, 08, events which mare the years to follow-- this irrational run up is like a "white swan" ... which one has to wonder, is the black one far behind?
 

socaldude

Platinum Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
Speedway Pass
Jan 10, 2012
1,398
3,154
786
Mexico
As a mentioned on the options thread on the INSIDE, the last 2 months have a special feeling to it, like we will never see it again in our lifetimes. Black swans are characterized by large, outlier declines; the crash of 29, 87, 08, events which mare the years to follow-- this irrational run up is like a "white swan" ... which one has to wonder, is the black one far behind?
What do you think, do you think speculative long puts are appropriate here or just a waste of money. :rofl: Or should we stick to short premium selling calls.

I think for sure we will be in for a big surprise. Up or down who knows. At this point im not sure if im a contrarion or a contrarion of a contrarion.

Its like jan 2018 all over again
 

Kid

Silver Contributor
Speedway Pass
Mar 1, 2016
685
563
258
This so funny.

Now think about one thing.
Assume you are guy that his main job is to make money. Not value. Money.
And you figured it out:
Don't exploit market. That's for amateurs.
Create system that all banks are tied in.
And you know that bank are needed by country.
And you know that gov will do something because otherwise it will blamed for crash,recession and social unrest (read riots etc)

So you do what you concluded.
Don't exploit the market.
Exploit the country.

P.S. It seems that those crashes of markets are systematically planed and executed.
You think about what to do IF there'll be crash in 2020/2021.
They probably already have plans how after crash in 2020, make next one in 2035.
 

Create an account or login to comment

You must be a member in order to leave a comment

Create account

Create an account on our community. It's easy!

Log in

Already have an account? Log in here.

Sponsored Offers

  • Sticky
MARKETPLACE Lex DeVille's - Advanced Freelance Udemy Courses!
LATE BIRTHDAY! I'm behind on everything this month, including getting promos out. Sorry, my bad...
  • Sticky
MARKETPLACE You Are One Call Away From Living Your Dream Life - LightHouse’s Accountability Program ⚡
Welcome to 2020, I wanted to add in a quick note about gratitude for the new year...


Don't like ads? Remove them while supporting the forum. Subscribe to become an INSIDER.

New Topics

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Monthly conference calls with doers
Ideas needing execution, more!

Join Fastlane Insiders.

Top Bottom
AdBlock Detected - Please Disable

Yes, ads can be annoying. But please...

...to support the Unscripted/Fastlane mission (and to respect the immense amount of time needed to manage this forum) please DISABLE your ad-block. Thank you.

I've Disabled AdBlock