It looks like the DOW has shed about 1500 points over the past 3 trading days. Volatility is definitely back in the market. Here are 10 charts that suggest we may be getting close to entering a recession:
1). Inverted yield-curve. The 2-year treasury yield has just inverted with the 5-year yield and the 2 and 10 are close to inverting. The yield-inverting has been a very accurate leading recession indicator during past recessions.
(https://i.imgur.com/zAT0gsX.png)
2). Fed is rising rates. As you can tell they are rising rates at a slower pace than the leadup of previous recessions. Instead of raising rates every fed meeting like they have in the past, they are raising it every quarter. Still, after nearly a decade of near zero interest rates and 3 rounds of QE, they can't get away from the negative impacts lower liquidity will have on the markets.
(https://i.imgur.com/lsUSw1V.png)
3). With rising rates, there is a slowdown in the real estate market. The rate of housing starts is slowing and the monthly supply of houses is beginning to rise.
(https://i.imgur.com/wurjPgu.png)
(https://i.imgur.com/EqzLg0P.png)
4). Auto sales appears to have reached peak production around 2015. GM just announced the closure of 5 plants in North America and is offering white color employees buyout offers. Ford is undergoing a similar restructuring plan.
(https://i.imgur.com/i0LRqNu.png)
5). Volatility index hit a low of 10 in late 2017 (the lowest level since the 1990 recession) but has since started to climb similar to the lead-up of previous recessions.
(https://i.imgur.com/AzlHEds.png)
6). The Warren Buffet indicator is pointing to historically high stock market evaluations. We have a 30 trillion-dollar stock market on the back of a 21 trillion dollar economy.
(https://i.imgur.com/ZyERojA.png)
7). Household net worth levels have diverged from the Gross Domestic Product. A regression to the mean coming?
(https://i.imgur.com/dh1kS8D.png)
8). Consumer sentiment is nearing record highs (when everyone is feeling good and saying buy, buy, buy that's usually when you want to sell).
(https://i.imgur.com/P0lZ4oU.png)
9). Unemployment rate is at historic lows (while this sounds good, unemployment is always in a downtrend right before a recession). You basically run out of consumers to squeeze to keep corporate profits on the rise.
(https://i.imgur.com/dDYwurv.png)
10). Visitors and conference attendees are going down in Vegas. While more regional it's similar to what happened before the last recession.
(https://i.imgur.com/q9wyeMj.png)
Not to mention it's been ten years since the last recession. That's not to say one is coming.. Australia hasn't had a recession for over 20 years. But looking at the indicators they don't look so good. This is probably a really bad analysis of the charts, but the charts themselves are the most interesting takeaway.
Can we just lock this one too before it gets any further?
We're already in a recession. Unemployment is the worst I've seen in years.
Déjà vu...
Quote from: bandit957 on December 07, 2018, 09:01:10 PM
We're already in a recession. Unemployment is the worst I've seen in years.
I know you've said in the past that based on your experiences, unemployment is high, but if that actually is the case where you live, it is
extremely local to that area; it is very low in most places.
Other than the yield curve, don't these charts just say that the economy gets better until it starts getting worse? That's like saying that the ground goes up until you get to the top of the mountain, then it starts going down, or that the low temperature happens right before it starts getting warmer. Some of the indicators go up until they start going down, so obviously they reach the top right before the decline.
Quote from: 1 on December 07, 2018, 10:26:49 PM
Quote from: bandit957 on December 07, 2018, 09:01:10 PM
We're already in a recession. Unemployment is the worst I've seen in years.
I know you've said in the past that based on your experiences, unemployment is high, but if that actually is the case where you live
Which I doubt. No one here is a statistician or a demographer.
This whole thread is a bunch of nonsense and should be treated as such.
Quote from: bandit957 on December 07, 2018, 09:01:10 PM
We're already in a recession. Unemployment is the worst I've seen in years.
:-D :-D :-D :-D :-D :-D :-D
They must have already legalized weed in New America.
(https://farm1.staticflickr.com/632/21234044658_50702df3d9_z.jpg) (https://flic.kr/p/ymo2Gf)
Either that, or it's seven and zero-zeroths, meaning an error is coming.
Quote from: hbelkins on December 08, 2018, 02:34:37 PM
Quote from: bandit957 on December 07, 2018, 09:01:10 PM
We're already in a recession. Unemployment is the worst I've seen in years.
:-D :-D :-D :-D :-D :-D :-D
They must have already legalized weed in New America.
No, it is because of who will be in the majority in the House of Representatives.
Quote from: Beltway on December 08, 2018, 05:01:04 PM
No, it is because of who will be in the majority in the House of Representatives.
Apparently you believe Dems taking back the House is fake news.
Quote from: NE2 on December 08, 2018, 05:03:39 PM
Apparently you believe Dems taking back the House is fake news.
No, that is true news.
Quote from: hbelkins on December 08, 2018, 02:34:37 PM
Quote from: bandit957 on December 07, 2018, 09:01:10 PM
We're already in a recession. Unemployment is the worst I've seen in years.
:-D :-D :-D :-D :-D :-D :-D
They must have already legalized weed in New America.
It's stronger than weed. More like 190 proof alcohol.
If the recession happens before November 2020, Trump will lose bigly, and the question is how much he will lose by. As 2020 is a census year, Democrats will gain control of a lot of state legislatures, which affects redistricting.
If the recession happens in 2021 or 2022 (which I believe is more likely than 2019 or 2020), the party elected President in 2020 will lose bigly in the midterms (exactly by how much depends on 2020 redistricting).
----
By the way, the Dow Jones, while being the most commonly used, is less accurate than the S&P 500 and several others.
Prediction: Trump will lose in 2020. In 2021, the media will finally start talking about the recession nonstop, even as the economy improves.
That's the stunt they pulled in 2009.
Quote from: 1 on December 10, 2018, 06:40:41 AM
By the way, the Dow Jones, while being the most commonly used, is less accurate than the S&P 500 and several others.
Either market will give you a general idea of direction. Since the early 2000s both the DOW and S&P have roughly the same returns. A lot of people use the S&P for their macro technical analysis but I've always just used the DOW and don't see much difference.
(https://i.imgur.com/5uw4L5o.png)
I don't know about anyone else, but my trust account has lost almost 25 percent of its value since January.
Quote from: bandit957 on December 10, 2018, 09:59:29 AM
Prediction: Trump will lose in 2020. In 2021, the media will finally start talking about the recession nonstop, even as the economy improves.
That's the stunt they pulled in 2009.
Right now the price action of the markets resembles that of early 2008 and early 2016. If the market rolls over during the next year like it did in 2008 then Trump will likely be a one term president. However, if the markets rebound and has a big leg up like it did in 2016 then he's likely to be reelected. Just because the yield curve inverts doesn't mean there will be an instant collapse in the market... in fact historically there is usually another solid year of market gains after a yield inversion. IMO if you put more weight on technical analysis, that suggests a recession may occur before the 2020 election. But if you put more weight on fundamentals, it suggests that the recession will occur after the 2020 election. It's just with the price action in the markets i can't see how the 1-year and 2-year moving averages don't cross soon. If we break the February lows from earlier in the year we could see multiple legs down and that break could happen as early as this week the way things are going. A break below 23400 in the DOW this week would be worrying.
(https://i.imgur.com/HdNmGgf.png)
Quote from: bandit957 on December 10, 2018, 09:59:29 AM
Prediction: Trump will lose in 2020. In 2021, the media will finally start talking about the recession nonstop, even as the economy improves.
Prediction: You will have much the same reaction that you had in 2004. :popcorn:
Quote from: Beltway on December 10, 2018, 11:07:07 AM
Quote from: bandit957 on December 10, 2018, 09:59:29 AM
Prediction: Trump will lose in 2020. In 2021, the media will finally start talking about the recession nonstop, even as the economy improves.
Prediction: You will have much the same reaction that you had in 2004. :popcorn:
Blaming the next guy in office? :spin:
Based on how much the DOW is falling today we could literally be hours away from testing the market lows in February. Since the great recession any consolidated low in the market hasn't been violated. I have a strong suspicion that it will be violated this time around. If it does break we may see support at DOW 21,300 before a rebound and a retest of the 200 DMA (likely to occur around April 2019).
(https://i.imgur.com/H3FYj05.png)
Quote from: US71 on December 10, 2018, 11:13:07 AM
Quote from: Beltway on December 10, 2018, 11:07:07 AM
Quote from: bandit957 on December 10, 2018, 09:59:29 AM
Prediction: Trump will lose in 2020. In 2021, the media will finally start talking about the recession nonstop, even as the economy improves.
Prediction: You will have much the same reaction that you had in 2004. :popcorn:
Blaming the next guy in office? :spin:
It's more common than you think. Anytime there's a controversial politician-elect, the focus shifts to him/her even before they've officially taken office. And those that dislike the person are quick to point out what he hasn't done...even if he's not authorized to do it yet.
Quote from: bandit957 on December 10, 2018, 09:59:29 AM
Prediction: Trump will lose in 2020. In 2021, the media will finally start talking about the recession nonstop, even as the economy improves.
That's the stunt they pulled in 2009.
2009 wouldn't have made a bit of difference for an election. Now 1992 on the other hand...
Quote from: tradephoric on December 10, 2018, 11:23:55 AM
Based on how much the DOW is falling today we could literally be hours away from testing the market lows in February. Since the great recession any consolidated low in the market hasn't been violated. I have a strong suspicion that it will be violated this time around. If it does break we may see support at DOW 21,300 before a rebound and a retest of the 200 DMA (likely to occur around April 2019).
(https://i.imgur.com/H3FYj05.png)
The markets take the stairs up and the elevator down. After the market hit a low in 2002 after the dot-com bubble there was 5 years of steady gains up before it started to wave back down. The 5 years of steady gains in the market were wiped out in short order.
(https://i.imgur.com/XBxPVDI.png)
Recessions are based upon change in GDP, not the stock market.
Quote from: Rothman on December 10, 2018, 02:34:27 PM
Recessions are based upon change in GDP, not the stock market.
Gosh, I guess my broker has no clue then why my trust account it down since she said it was the stock market.
Quote from: Rothman on December 10, 2018, 02:34:27 PM
Recessions are based upon change in GDP, not the stock market.
(https://images.law.com/contrib/content/uploads/sites/415/2018/07/RecessionsStocks_Chart2.jpg)
Over the past 118 years, the DJIA declined during every recession with only three exceptions. Those exceptions were the recessions of 1918-19, 1926-27, and 1945. Even so, these anomalies may be explained. First, the recession of 1918-19 was the second shortest of all, lasting only 211 days. Next, the recession of 1926-27 occurred during a time of intense stock speculation, which included a great deal of leverage. Moreover, the top marginal tax rate was slashed from 73% in 1920 to 25% in 1925, providing additional fuel for the stock bubble. Finally, the recession of 1945, severe as it was, may have been overshadowed by the euphoria over the end of WWII. Despite these exceptions, there is a clear trend between recessions and falling stock prices. - Source: https://www.thinkadvisor.com/2018/07/11/navigating-the-stock-price-roller-coaster-recessio/?slreturn=20181110145132
Quote from: tradephoric on December 10, 2018, 02:58:13 PM
Quote from: Rothman on December 10, 2018, 02:34:27 PM
Recessions are based upon change in GDP, not the stock market.
(https://images.law.com/contrib/content/uploads/sites/415/2018/07/RecessionsStocks_Chart2.jpg)
Over the past 118 years, the DJIA declined during every recession with only three exceptions. Those exceptions were the recessions of 1918-19, 1926-27, and 1945. Even so, these anomalies may be explained. First, the recession of 1918-19 was the second shortest of all, lasting only 211 days. Next, the recession of 1926-27 occurred during a time of intense stock speculation, which included a great deal of leverage. Moreover, the top marginal tax rate was slashed from 73% in 1920 to 25% in 1925, providing additional fuel for the stock bubble. Finally, the recession of 1945, severe as it was, may have been overshadowed by the euphoria over the end of WWII. Despite these exceptions, there is a clear trend between recessions and falling stock prices. - Source: https://www.thinkadvisor.com/2018/07/11/navigating-the-stock-price-roller-coaster-recessio/?slreturn=20181110145132
You also need to count the converse: DIJ decreasing significantly without a recession (1940—1942, 1987).
Also, 2001 went down more after the recession ended (2002) than during the recession.
Quote from: tradephoric on December 10, 2018, 02:58:13 PM
Quote from: Rothman on December 10, 2018, 02:34:27 PM
Recessions are based upon change in GDP, not the stock market.
(https://images.law.com/contrib/content/uploads/sites/415/2018/07/RecessionsStocks_Chart2.jpg)
Over the past 118 years, the DJIA declined during every recession with only three exceptions. Those exceptions were the recessions of 1918-19, 1926-27, and 1945. Even so, these anomalies may be explained. First, the recession of 1918-19 was the second shortest of all, lasting only 211 days. Next, the recession of 1926-27 occurred during a time of intense stock speculation, which included a great deal of leverage. Moreover, the top marginal tax rate was slashed from 73% in 1920 to 25% in 1925, providing additional fuel for the stock bubble. Finally, the recession of 1945, severe as it was, may have been overshadowed by the euphoria over the end of WWII. Despite these exceptions, there is a clear trend between recessions and falling stock prices. - Source: https://www.thinkadvisor.com/2018/07/11/navigating-the-stock-price-roller-coaster-recessio/?slreturn=20181110145132
Interesting chart. It appears as though recessions were more common and longer-lived pre-1933 than post-1933.
Recessions are also based on the gap between the rich and the poor.
That site discussed the nominal tax rate being slashed from 73% in 1920 to 25% in 1925 leading up to the great depression and how that added additional fuel to the stock market bubble that was forming. The recessions that occurred in the heart of the great speculative bubble before the great depression are interesting to me. With such massive increases in stocks you think there would have been a huge wealth effect going on where people would be buying anything they could get their hands on. The only other time the nominal tax rate was slashed so heavily was Kennedy slashed it quite significantly in the early 60s and when Reagan slashed them again in the early 1980s. This chart has been discussed before but there is the top nominal tax rates for the major economies dating back to the 1900s. It's interesting to compare the effect tax policy has had on asset prices.
(https://i.redd.it/uexda5402n101.png)
Quote from: bandit957 on December 10, 2018, 03:24:26 PM
Recessions are also based on the gap between the rich and the poor.
No. An economic recession is two consecutive quarters of negative GDP growth:
https://www.investopedia.com/terms/r/recession.asp
Quote from: Rothman on December 10, 2018, 03:30:43 PM
Quote from: bandit957 on December 10, 2018, 03:24:26 PM
Recessions are also based on the gap between the rich and the poor.
No. An economic recession is two consecutive quarters of negative GDP growth:
https://www.investopedia.com/terms/r/recession.asp
I think he was referring less to the definition of a recession, and more to the potential causing factors of one.
Quote from: tradephoric on December 07, 2018, 03:01:36 PM
GM ... is offering white color employees buyout offers.
Barra is a prejudiced burro jokester.
Quote from: US71 on December 10, 2018, 10:31:55 AM
I don't know about anyone else, but my trust account has lost almost 25 percent of its value since January.
My trust in the president has lost 99.99% of its value since early January 2017.
Quote from: NE2 on December 11, 2018, 02:52:27 PM
My trust in the president has lost 99.99% of its value since early January 2017.
How can you tell? 0.01% of zero is the same as 99.99% of zero.
(https://upload.wikimedia.org/wikipedia/commons/thumb/b/b7/MUTCD_OM4-1.svg/90px-MUTCD_OM4-1.svg.png)