Posted on 01/12/2016 3:25:07 AM PST by expat_panama
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?...
Behind this chain reaction is a huge transfer of economic power from advanced countries (mainly North America, Europe and Japan) to "emerging-market"...
The trouble is that their growth is slowing...
One is high debt levels...
The other problem is the legacy of the boom in commodities --oil, grains, metals...
The China bubble has popped. Price indexes have dropped...
Here's the picture that emerges: Over-borrowing has decelerated growth in many emerging-market countries. To offset that, China may be devaluing its currency -- the yuan -- to improve the competitiveness of its exports. In advanced nations, growth seems stuck between 1% and 2% a year.
With so much weakness, the world economy is vulnerable...
There are skeptics....
...Very little of the labor market is connected to the rest of the world through trade."
Exports constitute only 13% of U.S. GDP; the other 87% reflects domestic demand. In December, payroll employment expanded by a strong 292,000...
Large losses could cause a negative "wealth effect": When people feel poorer, they spend less (similarly, when they feel richer, they spend more)...
To the crucial question -- does the market foretell a recession? -- there's not yet a conclusive answer. How much China slows and how the rest of the world responds are open issues. American stocks may have overreacted. Whatever happens, this is not your father's business cycle.
(Excerpt) Read more at news.investors.com ...
The Obama Great Recession
Don’t Canadians understand that when the US dollar does well up there they can’t vacation in Wildwood NJ? Years ago they had practically disappeared (while hotels still flew the Quebec flag).
We really wanted to do DNL the next fall but I don’t think we can now. Anot her good example are Apple products. They have already reprised them our retailers and probably will again.
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