It's a non falsifiable position because if a recession doesn't happen for another 5 years, they'll just say that 5 years was what they mean by just around the corner.
These IPOs are too late.
[1] https://reddit.com/r/investing/comments/a66a1g/_/ebsgrmv/?co...
The US went for Keneysian stimulus and Europe went for austerity. The results have been unambiguous.
Europe let the crises drag on for years, with questions about whether Greece, Portgual and Ireland would even stay in the euro. 0% now is much too little, far too late.
[1] https://fred.stlouisfed.org/series/FEDFUNDS
[2] https://www.ecb.europa.eu/stats/policy_and_exchange_rates/ke...
These are going to be famous last words. The US is going to be doing horribly over the next decade, precisely because of how "great" the last decade has been. If I borrowed (or pseudo-borrowed a.k.a "printed money" because of reserve currency status) a trillion dollars and enjoyed a commensurate lifestyle, neither my awesome lifestyle nor the fact that there have been a lot of suckers to sponsor it is any indication of what the future will hold.
Soon, US will not be able to borrow any more money and sustain its quality of life. Potential lenders will spurn them: "Why, so you can borrow the money to sponsor your lavish lifestyle, and then turn around and conduct trade wars and actual wars with us? No thank you!"
China will probably do worse, because its greatest borrower, and source of economic prosperity, is going to massively default.
In comparison, this correction will mean the rest of the world is probably going do better, unless they foolishly allow themselves to be dragged into a war which one of these countries will almost certainly start as a last resort to placate any internal discontent.
https://www.newsmax.com/finance/economy/us-debt-italy-imf/20...
Interest rates are a bit worrisome - historically the Fed has a tendency to overshoot and cause a recession, and do so 2-3 years after the rate hikes go through. If they didn't hike at all, we'd end up with the mother of all bubbles, though.
To learc83's point - the last time I can remember when people didn't think a recession was imminent was 1998-2000, when everybody was talking about the "New Economy" and how profits didn't matter anymore and insane stock valuations would be justified by productivity increases going forward. That was a helluva bubble. Then from 2001-2003 we actually were in recession, 2004-2007 smart money was predicting the coming CDO/housing/hedge fund crash, 2008-2009 the crash happened, 2010-2011 everyone was talking about a double-dip, 2011-2014 was the "jobless recovery" and talk about how the sectors that were destroyed in 2009 were permanently dead and tech was the one bright spot in the economy, 2014-2015 was the seed funding/delivery startup/sharing economy bubble, 2015-2016 was a tech slowdown as that bubble popped, and 2017-2018 was all about how Trump was about to ruin the economy (hasn't happened yet, who knows about later?). In the process, we've had bubbles in dot-coms, housing, derivatives, hedge funds, Web 2.0 startups, mobile apps, accelerators, delivery startups, West Coast real estate, and cryptocurrencies, all of which have amounted to a large transfer of wealth from those who followed the news to those who make the news.
[1] https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx?pan...
[2] http://www.ncsl.org/research/labor-and-employment/national-e...
[3] https://www.thebalance.com/unemployment-rate-by-year-3305506
If you want to discuss how structural changes in the economy have let capital fuck over labor, that's a different conversation. That trend has been going on since before I was born, though, and the takeaway I learned from it, before even entering the workforce, was "Build capital."
And like I said, your citation doesn't take I to account increases in CPI.
Real wage growth is falling. https://www.forbes.com/sites/patrickwwatson/2018/09/25/real-...
It doesn't matter if they're getting more Uncle Sam Fun Bucks, if those Fun Bucks are worth less than they gained.
> If you want to discuss how structural changes in the economy have let capital fuck over labor, that's a different conversation.
Nah, they're pretty related.
> That trend has been going on since before I was born, though, and the takeaway I learned from it, before even entering the workforce, was "Build capital."
It's next to impossible to build capital if you're not being paid a living wage to start with, and your real wage growth is negative.
Well said. This should no doubt be the focus.
Exactly this. I don't understand why everyone keep overlooking.
Low interest rates are basically propping up the finance industry. The cheap money that banks can borrow from the Fed is not going to end up at yours truly, it will only end up in investment shenanigans. In addition, low interest rates also kill savings for poor(er) people - this is something that's a real problem in the European Union right now. Banks offer their customers sometimes negative rates on their savings, and no "conventional" savings accounts hit even inflation percentages which means both poor people and "rich-ish" (=not poor, not rich enough to be able to risk money on the stock markets, but rich enough that their banks charge negative interest) effectively lose money.
You can find it here: https://www.principles.com/big-debt-crises/
The short of it is interest rates are a tool used by the Fed to attempt to control the rate at which people and institutions take on debt. Too much debt = recession. Too little debt = recession. I'm greatly oversimplifying here but Ray does a fantastic job explaining things. If anyone wants to dig in deep I highly, highly recommend you read this book.
That model is Japan, no?
^^^This guy/gal gets it. The 10-2 treasury yield spread is currently at 0.16 and has been steadily falling since the beginning of 2014. Since the 1950s, every time the 10-2 spread dipped below zero, a recession followed within two years.[1]
The Fed just announced another rate hike less than an hour ago and have indicated that there will be two more rate hikes in 2019.[2] As the federal funds rate continues to rise, the yield curve will continue to flatten.
[1] https://fred.stlouisfed.org/series/T10Y2Y
[2] https://finance.yahoo.com/news/preview-feds-last-monetary-po...
In 1995 there were fears of a recession due to the Fed increasing rates further: "Indeed, if there is a risk to what is generally seen as a solid if not glowing outlook for the stock market this year, it is that in its effort to rein in growth, the Fed might push interest rates too high, forcing the economy into recession." [1]
The Fed put the brakes on raising the Fed Funds rate in 1995 [2]. Subsequently from 1995 - 2001 the S&P 500 index went from 465 to 1425 [3]. I wonder what made 1995 different than 2018. Being in tech, one obvious thing leaps out which is increased investment in capital related to the commercialization of the Internet, the dot com boom and bubble [4]. In 2018, is there a new opportunity to spur growth again, or will 2018 be another 2006, 2000, 1989, etc?
[1] - https://www.nytimes.com/1995/01/03/business/outlook-1995-mar...
[2] - https://fred.stlouisfed.org/series/FEDFUNDS
[3] - http://www.multpl.com/s-p-500-historical-prices/table/by-yea...
[4] - https://www.investopedia.com/terms/d/dotcom-bubble.asp