This topic contains 4 replies, has 2 voices, and was last updated by  TRex2 2 days, 11 hours ago.

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    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.



    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.



    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.



    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.

    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.



    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.

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