Recession

This topic contains 9 replies, has 3 voices, and was last updated by  TRex2 1 month, 3 weeks ago.

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  • #53308

    Here’s an article on the possible up coming recession. I didn’t know but 77% of our GDP goes to the national dept and at the end of the next 10 years, they expect it to be 97% of our GDP, doesn’t look good.

    With the possibility of putting a tariff of 25% on steel and 10% on alunimum it’s not going to help matters if other countries retaliate against us. If they do retaliate, China and Russia will own us.

    Hopefully, China, Japan and the rest of the countries we owe, won’t call in their markers, yet.

    https://www.marketwatch.com/story/the-heightened-danger-of-the-next-recession-2018-01-26#false

    #63455

    TRex2
    Participant

    If China and Russia retaliate against us economically, they will be like Butch Cassidy and Sundance Kid’s last stand. And because of the way the world economy works, if China and Japan “call in their markers” it will cause their economies to collapse before ours does.

    Few people realize the difference in size of our economies. The US economy is larger than China and Russia combined. And if China goes through with its plan not to buy our soybeans, their people will starve. They can’t afford the instability that will bring to their own nation.

    All nations are paper dragons today, but our paper dragon is just a bit more solid than theirs is.

    #64088

    TRex2
    Participant

    There are some signs of recession, but they are not immanent.

    Flattening of the interest rate curve. When the interest rates for longer loans is the same or less than interest rates for short term loans, recession is right around the corner.
    Healthy Yield Curve in May 2018

    Prices of Copper and Diesel fuel. Copper prices reflect the global manufacturing situation. A falling price means global manufacturing is weak. Diesel is more of an indicator of American economy, and falling Diesel prices mean the US economy is weak.
    Price of Deisel
    Copper Prices

    The above indicators, except copper, show a healthy economy. That copper is weak shows that global industrial production is weak, but not US manufacturing. This weakens the economies of everyone except us.

    The situation could change in any month, but these indicators should give you an early warning.

    #64107

    TRex2
    Participant

    On May 5th I said:

    if China and Japan “call in their markers” it will cause their economies to collapse before ours does.

    All nations are paper dragons today, but our paper dragon is just a bit more solid than theirs is.

    What I read today has me wondering if China’s economy will collapse on its own regardless of what they do.
    https://www.themaven.net/mishtalk/economics/weekend-roundup-mall-vacancies-soybeans-chinese-defaults-taxes-us-politics-7kQ38LQlEEC-dH4BiWWEKg/

    China is zooming to a record year of corporate-bond defaults, with the 2018 total already more than three-quarters of the previous high even before an expected economic slowdown bites.

    … – agencies including Dagong Global Rating Co. have been downgrading firms by an unprecedented margin.

    With rising trade tensions with the U.S. threatening to hurt corporate cash flows, the temptation to shore up credit provision may rise. Data over the weekend showed that a gauge of export orders tumbled into contraction in June.

    An escalation of the trade conflict could add to defaults in China’s financial system, said Jing Ulrich, JPMorgan Chase & Co.’s vice chairman for Asia Pacific. Consumer demand and the wider economy are likely to weaken and that “may translate into worse credit quality down the road,” she said in a Friday interview in Hong Kong.

    Short version, China may be on its way to broke. Instead of boycotting our soybeans, they may simply be too broke to buy them.

    #64128

    TRex2
    Participant

    So, what do some of the recent market numbers indicate?

    I don’t tell people to watch the stock markets, unless they are a trader or unless they want their blood pressure to go up.

    The Bond market interest rates are useful. Right now there is less than a 1% spread between the 2YR treasury bond and the 10YR Treasury bond.
    Interest rate difference 2YR and 10YR

    This is pretty weak. Looking at the above chart, when it drops below Zero, a recession should show up between a year and two years later.

    Then there is Gold. Generally a declining gold price indicates the markets are fairly stable. And Silver. Generally, a declining silver price indicates a stable social and government situation. (Silver is at a price that, if I didn’t already have my silver bought, I would be buying some.)

    So, despite what the news would have you believe, market indicators are showing that we are doing well, though not spectacular.

    This doesn’t mean that nothingcould go wrong. No one guarantees tomorrow. It just means that the fear-mongers are doing what they always do: stirring up extra fear.

    #64204

    TRex2
    Participant

    Two weeks ago, when I wrote that rising diesel prices indicate a strong US economy, I should have added a couple of details.

    First, is to note the reason a strong US economy causes diesel prices to rise. The reason is because almost everything in our economy travels by truck, so a robust economy means more trucking.

    It is interesting to note that there is currently a shortage of truck drivers.

    But the second thing I should have written about is a ‘self correcting mechanism in fuel prices. Higher prices, especially in crude oil will cause more oil wells to start pumping, increasing the supply. This will tend to offset the rise in prices. Indeed, as you can see from the link below, the number of oil rigs pumping crude has been rising for some time now.

    How many rigs pumping oil.

    It can also be noted that in 2015 and 2016, the rig count was falling, indicating we were headed into a recession, until Trump took office.

    #65122

    TRex2
    Participant

    As August ends, it looks as though recession may indeed be on the horizon, but it isn’t at the doorstep. There is an approaching flat spot in the interest rate curve, with the 2 year through 10 year treasury bonds all being near the same interest rate. When it inverts, that usually means a recession is only a few months away.

    In addition, while I was right, earlier about copper and diesel, those commodities are slipping now as well. There were some false signs earlier in July and Aug, with the increasing number of wells in the US producing oil, and the rising “Dollar Index” (meaning each dollar was worth more), but now it appears the signs are real.

    For the past several months, trucking has been the bottleneck in our economy. Specifically, the number of truck drivers. I was seeing ads looking for truck drivers, every day. And Schools were trying to graduate as many drivers as possible.

    Now the situation is changing. I don’t see the adds for drivers every day, and the demand for diesel is beginning to slip.

    But other market forces are still strong. Capital investment is up, as is employment (new numbers will come out in about a week to tell us how good this is). Especially important is manufacturing employment.

    In addition, the prices on Gold and Silver are down. A continued low price on gold indicates the economy is stable, and a continuous low price on Silver indicates an absence of political unrest, especially among conservatives who actually understand how the world and the government works.

    So, for the time being, things are good, but in a few months, this could change. (And again, there is no guarantee someone won’t decide to nuke someone and mess up the whole system.)

    #65124

    Illini Warrior
    Participant

    no recession signs around here – 1,000s and 1,000s of job openings – more ads for truck drivers than ever …

    even with the whole tariff crap Harbor Freight jist broke local ground on a new 2.1M sq ft warehouse – 6 more multi-million warehouses proposed …

    US Steel is spending $750M at the Gary Works – re-opening 7 more idled steel facilities around the country …

    ONLY economic downer talkers are the Trump Objectionists – more fake news – fake polls – fake racial claims >>> trying to sway the fall elections ….

    and no Russians involved !!!!!!!!!!!!!!!!!!!!

    #65128

    TRex2
    Participant

    ONLY economic downer talkers are the Trump Objectionists – more fake news – fake polls – fake racial claims >>> trying to sway the fall elections ….

    That is just the MSM trying to help keep people working, creative writing of fake news Lol!

    True, there is no recession now, nor should there be for a few months. Harbor Freight is planning ahead. Way ahead, to go through any future recession and be ready to emerge in the lead afterwards. Caterpillar has done the same thing during a couple recessions, as they did during the Great Depression.

    But the signs are gathering, and some time down the road there will be another recession. Maybe a year from now, maybe two. The wise man plans ahead, to take advantage when it arrives.

    #65254

    TRex2
    Participant

    Just thought I would give this thread another update.
    Illini Warrior was right:

    no recession signs around here – 1,000s and 1,000s of job openings – more ads for truck drivers than ever …

    The lack of truck driver adds I see where I am looking is because a couple of the employers struck a deal with local truck driving schools to recruit directly from their graduating classes.

    OTOH, there was a huge rally in the “markets” yesterday, and the numbers immediately made me suspicious, so I checked and found that I was right. The majority of the rise in the stock markets on Sept 20th was merely a reflection of the drop in the value of the dollar, so the stocks had nearly the same value, but the numbers looked bigger.
    Dollar Index

    That said the economy is still in excellent health, and short of someone Nuking us, it should remain that way for at least the next few months.

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