Skip to comments.Dow tumbles 400 points after bond market flashes a recession warning
Posted on 08/14/2019 7:11:42 AM PDT by Berlin_Freeper
The Dow slid more than 400 points Wednesday after the bond market, for the first time in over a decade, flashed a warning signal that has an eerily accurate track record for predicting recessions.
(Excerpt) Read more at edition.cnn.com ...
The media is desperate to convince us were in a recession. From what I read in between the lines though its more a foreign recession they think is coming. Recession in China maybe.
The Deep State will do all they can to crash the economy before the election.
Over a decade ago, the banks were up to their butts in securitized crap loans. Trade policy encouraged businesses to outsource and go offshore. Unemployment was heading upward.
None of those things are true now, fundamentals are far better. A re-balancing of trade with China will and is resulting in better fundamentals for the US - we won’t all just be marketing and fulfillment center workers.
So the real question for Wall Street is...what’s gonna crash? Real estate prices? Oil? In adjusted terms, all those things are not bad off now. The only thing that’s crashing is the Communist theft of US industries.
Guess that bothers them.
And it keeps going down.
Inversion in interest rates is not a media creation, and nothing to sneeze at. It just means bond investors are seeing slowdown ahead and willing to accept lower long term rates.
Something about making money in Bonds in only 2 years instead of 10
What was Soros wanting to buy?
Stock market is quite inflated based on inflation adjusted historical data.
Cavuto started talkin about recession the day after President Trump was inaugurated.
He is talking about it MORE now.
The U.S. Gross Domestic Product (GDP) is the sum total of all business activity in the U.S. Our economy is incredibly complex, but our GDP grows or declines based on two simple factors: (1) population changes, and (2) productivity changes.
Our population continues to grow, but our productivity has probably been in steep decline for nearly two decades. This is the result of a growing base of retirees as well as an alarming increase in younger people who are simply unemployable.
There's a reason why interest rates have remained at or near historic lows for years, folks.
translation: The global elites are going to trigger a recession before the election.
The U.S. economy is strengthening. The US dollar is strengthening.
Many foreign countries are in an economic free fall, so investors are going for a safe haven - the U.S.
Investors expect the foreign problems to continue for some time, and they expect that the U.S. will elect Donald Trump in 2020.
Due to this - investors are buying longer term U.S. Treasury bonds.
Buying lots of 10-year bonds causes the interest rate on them to drop - since the U.S. Treasury doesn't have to entice investors as much to buy them.
Two-year notes are under less demand, since most investors believe foreign problems will last longer than that.
This causes the interest rate on two-year notes to stay around the same, since the U.S. Treasury still has to entice the investor on them.
All of this together causes a yield inversion, which has absolutely nothing to do with the U.S. entering a recessionary cycle!
Fake media, and stupid markets.
Nonfarm business sector labor productivity increased 3.4 percent in the first quarter of 2019, the U.S. Bureau of Labor Statistics reported today, as output increased 3.9 percent and hours worked increased 0.5 percent.
“What was Soros wanting to buy?”
Not just him. Throw in Bloomberg, Steyer, any number of hedge funds - IOW, anyone with a lot of money to throw at something in order to make a killing.
Debt at all levels (government, student, mortgages, personal) is very high. This is a worrisome backdrop in view of the inverting yield curves.
Any stock market downturn and a corresponding deterioration in the ‘wealth effect’ could spark a sell off. Of course, the Fed could always lower rates again and the trade tariff situation could improve, but stocks are still at high valuations and it wouldn’t take much to trigger a “risk off” sentiment.
“Inversion in interest rates is not a media creation, and nothing to sneeze at. “
No, it’s a Fed Reserve creation. The Fed kept the rate high while other countries set their’s to near zero or even negative. So investors in those countries purchase US Treasuries driving the yield down and, now “signaling recession”.
If/when the Fed cuts rates in Sept and October the bond purchases will subside and yield will increase reversing the ‘recession signal’. This is why Trump is brow beating the Fed for keeping interest rates high while the rest of the world is near zero. It causes them to buy US treasuries, lowering the yields and pushing the stock market to selloff. Hence some ppl referring to it as a manufactured crisis.
When this happens, remember that you heard it from me first.
I'm talking about productivity per person for the entire nation as a whole.
If we have an economy of just five working people -- and nobody else -- and we produce $1 million worth of goods and services that we sell among ourselves, then our productivity is $200,000 per worker AND per person.
But if these five working people have to support 15 other retirees and unemployable misfits and malcontents, then their productivity would still be $200,000 per WORKER but the economy's overall productivity would only be $50,000 per PERSON.
The tiny and shrinking part of my portfolio which I use for speculation buys Bear ETFs and Gold on up days and sells them on days like today.
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