Prepare for landing....the US economy

[TeamAmerica]

Prepare for landing - i'm starting to believe it will be a bit bumpy. The Fed has lowered interest rates as "insurance" for our economic expansion. they are winding down their balance sheet reduction program. Some say we have the BEST economy ever in history! all time highs in the S&P 500! record low unemployment!

What do you think? do you believe it?

10 year bond rates went below 1.6% (historic lows). The rates are "inverted" meaning you are getting a lower return on 10 year bonds than 2 year bonds. They say this is a recession warning like we had in 2007! bloomberg has reported that $16T in global debt is negative yielding. US REAL interest rates are negative (meaning that inflation is higher than what you can earn on your cash). god bless you if you are an american saver because the american borrower is hosing you on your interest income, they are getting cheap money to go spend on who knows what.

the Fed has never engineered a soft landing on a recession so be prepared. interest rates are already below "normal", so the Fed will have less room to lower them when we REALLY need it. do you have a cash reserve? when will you start buying again? on the way down, the way up?

what stocks would you buy right now? i think Matador (MTDR) oil and gas is a good buy. Ruger (RGR) is cheap for obvious reasons.

[Txhuntr2]

While an inverted yield curve has preceded recessions in the past, not every inverted yield curve is followed by a recession. I think it was Chase that just said if the Gov't didn't own so many T-notes, the yield curve would not have inverted. I am not an economist but all I am hearing indicates that the inversion is not a great predictor of a recession this time. Janet Yellen just came out and said the same.

[TeamAmerica]

Txhuntr2 - agree, there is no poison pill out there which makes this tough. the yield inversion doesn't bother me as much as the target Fed rate. End of 2007, the rate was 4.25%, currently we are at 2% - again, not much room to help when tough times arrive.

also, there are a number of articles that track uses of corporate debt. it seems an unusually high amount is being spent on share buybacks rather than investing in the business, acquisitions, etc. that would expand the economy. share buybacks are good for investors but means management may be out of ideas to grow the business (or it is too expensive to grow the business).

[Brazos Hunter]

All I know is when people start freaking out is when I start buying. 2008 when everything took a dump, I purchased two properties, a truck, and a RV. The way I look at it is it is all manipulated by those in power and I will not allow them to place fear in my life. I just keep rocking along.



Michael


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[Drycreek3189]

Don’t sweat it. Ole Hank said you’ll never get out of this world alive. And I ain’t ever seen an armored car in a funeral procession.

[Trevor73402]

All I know is when people start freaking out is when I start buying. 2008 when everything took a dump, I purchased two properties, a truck, and a RV. The way I look at it is it is all manipulated by those in power and I will not allow them to place fear in my life. I just keep rocking along.



Michael


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I’ll be ready too, with stacks of cash in hand. If things go south, I’m hoping to pick up a mid sized excavator and a D4XL size dozer for pennies on the dollar. Maybe even a big truck too. Where there is panic and chaos, there is money to be made.

[captainsling]

I'll wait and see what happens. Been watching a few stocks for a while. OPD and HOME are two I have been watching drop like a rock. Retail is not necessarily where I would want to be in a recession though. It is already a struggling area thanks to Amazon ruining retail.

Would be nice if rates go a little lower and I can refi the house for a lower note.

[Shane]

Economists I follow are saying that the current yield curve shows a bubble in the bond market rather than impending economic collapse. It's hard to have a recession with historically low unemployment, increased wages, low interest rates, reduced government regulation, growing corporate profits, etc... The trade war and cost of the tariffs are definitely a drag, but (so far) not a big enough drag to offset all the rest of the positive fundamentals that currently exist in the economy. As low as interest rates are in the US, they're even lower in several other countries - even negative in a few. Lots of folks around the world that want to hold some safe bonds are buying US bonds since they pay more than other governments' bonds right now. Couple that with the Fed still holding huge amounts of Treasuries, and you have a really high demand for US bonds. That leads to higher prices, which leads to lower yields. It has nothing to do with some magical ability for the yield curve to predict or cause a recession.


There's definitely another recession coming eventually. There's always another one. Everything is cyclical. But the fundamentals will need to shift in a negative direction before that can happen. Right now the fundamentals are largely positive for continued growth.

None of that means that the stock market can't experience some wild volatility. It can and will, regardless of what reality is sometimes.

[Tbar]

FWIW, The US is practically the only place in the world overseas investors can get a positive return on treasuries/bonds. As a result their money is coming in like a tidal wave pushing our rates lower.

Also remember that after that 800pt slide the S&P was still up 13% for the year.

[RiverRat1]

What Shane said.

I define recession as people having a difficult time getting a job or making a living wage. I don't think we're even close. The media will define it any way they can to drum up drama and fear.

My W.A.G. is markets do ok until it looks like a (D) will become POTUS Then we're screwed.

Don't get me wrong. The whole system is a scam and will fall apart at some point... But when that happens I don't think it will matter how much anyone has in the markets.

[TeamAmerica]

What Shane said.

I define recession as people having a difficult time getting a job or making a living wage. I don't think we're even close. The media will define it any way they can to drum up drama and fear.

My W.A.G. is markets do ok until it looks like a (D) will become POTUS Then we're screwed.

Don't get me wrong. The whole system is a scam and will fall apart at some point... But when that happens I don't think it will matter how much anyone has in the markets.

I agree- the stock market and economy are two very different things. But at some point unemployment can actually be too low (record low can be a bad thing)! business can't grow if labor is not available. i'm in commercial real estate in dallas. where the construction crane is the state bird! you see so much being built, it is scary but also reassuring that the number of jobs coming here should sustain us for a while.

and yes, politics should scare the crap out of us all. The biggest threat to Trump's re-election is a painful recession in 2020.

[Johnny Dangerr]

The Dems are banging the rescission drum ahead of this up coming election. Throwing stuff at the wall and seeing what sticks...........

[Russ79]

They have been talking about this on Fox News for several days but this morning WalMarts quarterly earnings came in better than expected which is an indicator that consumer confidence in the economy is still fairly strong.

[Tbar]

Retail sales for July came out today and the number was strong. Remember the consumer makes up 2/3’s of the economy.

Est- .4% Act - 1.0%

[Shane]

What Shane said.

I define recession as people having a difficult time getting a job or making a living wage. I don't think we're even close. The media will define it any way they can to drum up drama and fear.

My W.A.G. is markets do ok until it looks like a (D) will become POTUS Then we're screwed.

Don't get me wrong. The whole system is a scam and will fall apart at some point... But when that happens I don't think it will matter how much anyone has in the markets.

The official definition of "recession" is two or more consecutive quarters of GDP declines (negative growth).

They have been talking about this on Fox News for several days but this morning WalMarts quarterly earnings came in better than expected which is an indicator that consumer confidence in the economy is still fairly strong.

Retail sales for July came out today and the number was strong. Remember the consumer makes up 2/3’s of the economy.

Est- .4% Act - 1.0%

Low unemployment + higher wages + lower taxes + low interest rates = strong consumer spending = strong corporate profits