Skip to comments.Figures Don't Lie, but Liars Can Figure: The Stock Market and the Economy
Posted on 08/20/2019 6:15:56 AM PDT by SeekAndFind
Last week, two events of smallish note occurred. On August 13 and 14, the stock market suffered its biggest losses of the year. Also, an “inverted-yield curve” formed. The yield on the 10-year bond briefly slipped below the yield on the two-year note. By day’s end, the interest rates had righted themselves.
I didn’t realize it at the time, but the combination of these events foretold the end of the Trump economy. By the next day, the news was everywhere.
New York Times columnist Paul Krugman announced “Trump Boom to Trump Gloom” and added that “…an inverted-yield curve… predicted six of the last six recessions.” The Guardian asked: “Is a recession coming to the U. S.? Here’s what to watch for.” The Capitol Spectator noted: “The Bond Market’s All-In On Its Recession Forecast.” CNN declared: “A global recession may be coming a lot sooner than anyone thought.”
CNN also published an article titled “From Reagan to Trump: Here’s how stocks performed under each president.” They graphed the performance of the S&P during the administrations of the past five presidents.
Set against the four- and eight-year terms of his predecessors, Trump’s performance looks mediocre. And his modest 25% gain in the S&P to date puts him in the middle of the pack, ahead of only Reagan and last-place George W. Bush.
Ronald Reagan’s second-to-last position got me checking CNN’s figures (they were correct), and thinking about presidential legacies, and how the policies of one president might affect the success of another. So as Paul Harvey used to say: “Here’s the rest of the story.”
(Excerpt) Read more at americanthinker.com ...
On the local news this morning, one of the stories was that “the economy is slowing down, and we’re headed into recession, but Trump calls this fake news”.
Engineered economic crisis, probably fake. I remember the last “mysterious” bank run. It put obama in office.
The puppeteers who run our economy do not profit quite so when mr. mrs everday America are doing better.
Our fed, whomever they are, continue their stranglehold on our free lives.
I thought the stock market was for the rich. Wouldn’t this all mean the Dems are for the rich.
There’s always more to it. One thing that can cause an inversion is demand for US government securities. And that is happening. Here’s an article that covers it. Ut’s two years old but like they predicted it did get worse. And it can drive an inversion.
One reason it’s getting worse is the central bank negative rates in many countries.
Pos. Country August 6, 2019 10-yr yield
1 Switzerland -0.92%
2 Germany -0.53%
3 Denmark -0.49%
4 Netherlands -0.43%
5 Austria -0.30%
6 France -0.27%
7 Finland -0.27%
8 Sweden -0.21%
9 Belgium -0.20%
10 Japan -0.18%
11 Slovakia -0.14%
The US is 30th at 1.73%. Zambia is at 31% but that is because no one wants to buy them.
Todays Democratic Government policies do not produce wealth. Democratic Government policies confiscate wealth.
Democratic Government confiscates, my wealth? I stop producing wealth for Democratic Government to confiscate. Democratic Government makes laws to make me produce. Democratic Government becomes the Soviet Union, China, Venezuela.
What happens when the US goes negative?
No one is asking that questions.
Well the bottom line is the fact the US economy is based on the best tax and regulatory foundation its been on for decades. I’m not sure fed rate cuts will hurt the economy, it probably would help. People need to not conflate the markets and the economy, they are separate. The markets are subject to emotional speculation pressure, the economy not so much. The markets have to follow the economy, not the other way around.
As long as US rates are positive, the world will squeak by.
What is Chinas rate?
Pretty interesting to be having this conversation here and then watch Trump at the press scrum a couple days ago talk about the yield curve, the foreign demand for our bonds, recession etc.
Every Trump voter should be watching every video on the White House youtube channel. It’s way better than articles like the OP speculating about recession based on a microscopic picture.
One lady on twitter asked an interesting question last week Wednesday. The talking heads were saying “every recession has been proceeded by a yield curve inversion.” Her question was; was every yield curve inversion followed by a recession?”
There wasn’t any answer. What isn’t talked about is about as important, maybe more important, than what is talked about.
China is at 3.08%. People need to remember part of that rate is set by demand. Zambia set their rate that high to attract buyers, but their bond rating is barely above default. There’s no demand. Who wants to buy a security that might default and trash your principle? It might not even last 3.5 years - which would be enough to regain your principle in interest.
Our economy is arguably the best in the world, out 10yr rate is much higher than many countries, that is why our securities are selling to the point of inverting the yield curve.
Europe is rushing to the Safe Haven - US due to poor economic policies forcing negative rates. Asians are rushing to the Safe Haven - US because of Hong Kong/China debacle.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.