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Is the Market Swoon Signaling Recession?
RCM ^ | 01/12/2016 | Robert Samuelson

Posted on 01/12/2016 7:10:42 AM PST by SeekAndFind

It's hard not to wonder: Is the stock market telling us something? True, the market's record in forecasting recessions is horrendous. Stocks often move according to whim or fad. But just because the market is wrong much of the time doesn't mean it's wrong all the time.

Could last week's turbulent trading be one of the times it's right? By Friday's close, stocks had dropped 6% for the week, a paper loss of $1.5 trillion, says Wilshire Associates. Are we staring at the next recession?

The selloff originated in China with a weaker-than-expected report on manufacturing activity. This triggered a sharp drop in Chinese stocks, which spread to the U.S. and European markets.

Behind this chain reaction is a huge transfer of economic power from advanced countries (mainly North America, Europe and Japan) to "emerging-market" nations (Brazil, Russia, India and China - called BRIC - and similar countries, such as Indonesia). They now overshadow the advanced countries.

Consider. In the 1980s, emerging-market countries plus poor developing countries accounted for 36% of the world economy (gross domestic product), reports Maury Obstfeld, chief economist of the International Monetary Fund. Now their share is about 56% of global GDP.

There's nothing inherently wrong with this. Indeed, the faster growth of these economies in the past explains why their share of global GDP has risen.

The trouble is that their growth is slowing. Of the BRIC countries, only India's rapid growth has been sustained. Brazil and Russia are in recession, and China's expansion has flagged. Moreover, several large problems dampen future growth prospects, says economist Hung Tran of the Institute of International Finance, an industry group.

(Excerpt) Read more at realclearmarkets.com ...


TOPICS: Business/Economy; News/Current Events
KEYWORDS: recession; stockmarket

1 posted on 01/12/2016 7:10:42 AM PST by SeekAndFind
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To: SeekAndFind

uh oh....it wasn’t scheduled to start until 1/21/2017.


2 posted on 01/12/2016 7:14:28 AM PST by Buckeye McFrog
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To: SeekAndFind

I think what is happening now, it the world is starting to think about Trump actually winning the presidency, and realizing that a whole lot of manufacturing is now in China, which Trump will be focused on.

Big time.

They simply are mind-boggled by the reality. They sold out, and sold out, and suddenly here is this guy, who wants to bring it back.

Start getting ready folks.

Big changes ahead.


3 posted on 01/12/2016 7:16:29 AM PST by Cringing Negativism Network
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To: Buckeye McFrog
uh oh....it wasn’t scheduled to start until 1/21/2017.

The market anticipates the future. It recognizes that all of mistakes, waste, false data, of the past administration will be revealed next year.

4 posted on 01/12/2016 7:31:50 AM PST by oldbrowser (The republican party is the voters, not the politicians.)
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To: SeekAndFind

recession.... dont make me laugh
with 1/3 of the people who can work... out of work... i call it a depression
and the government and the fed and obama are hard at work to make it worse and more oppressive


5 posted on 01/12/2016 7:33:25 AM PST by zzwhale
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To: SeekAndFind

An article here on FR just yesterday—from Zero Hedge—said the Baltic Dry Index has hit zero. There is NOT ONE cargo ship plying the Atlantic at this moment.

The regime of fiat money brought in by Johnson/Nixon is finally coming to an end.

Cruz understands that gold is money. Does Trump?


6 posted on 01/12/2016 7:40:31 AM PST by Arthur McGowan
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To: Arthur McGowan; SeekAndFind
An article here on FR just yesterday--from Zero Hedge--said the Baltic Dry Index has hit zero. There is NOT ONE cargo ship plying the Atlantic at this moment.

And I believe that article was debunked within that very thread.

7 posted on 01/12/2016 7:42:06 AM PST by Future Snake Eater (CrossFit.com)
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To: Future Snake Eater

I read the article, but not the thread.


8 posted on 01/12/2016 8:47:47 AM PST by Arthur McGowan
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To: zzwhale
recession.... dont make me laugh with 1/3 of the people who can work... out of work... i call it a depression

God knows I was depressed when I was out of work, not much different being disabled, except when the doctor asks "are you depressed, sad or moody"? Then hell no! I'm happy as a clam doc, don't be sendin those boys in blue to take my guns "to keep me safe"! (of course I lost them all in that tragic abandoned mine incident)

9 posted on 01/12/2016 9:07:29 AM PST by Mastador1 (I'll take a bad dog over a good politician any day!)
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