It was like the intial gunshot at the Boston Massacre. The powder keg was ready to blow before the musket fired.Quote:
...Covid-19 is really the greatest threat or if it was just the initial blow to expose real problems in the economy.
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It was like the intial gunshot at the Boston Massacre. The powder keg was ready to blow before the musket fired.Quote:
...Covid-19 is really the greatest threat or if it was just the initial blow to expose real problems in the economy.
Another impressive jobs report today, but the Congressional Budget Office cautions to lower your optimism. According to their numbers, the economy's second half recovery will be slower than they previously expected:
U.S. economy won’t grow as fast as expected over next six months, CBO says
Yes, You should watch this one!
https://www.youtube.com/watch?v=_XETuBkcCzE
Wow! Definitely the BEST video on Federal Reserve and How Government does not OWN it... Jekyll Island is mentioned, negative interest rates, Fed buying corporate bonds /debt! Thanks for the post Nnuut!
How will the U.S. ever repay all this debt?
This Market Watch opinion piece compares the newly accumulated U.S. debt due to the stimulus spent during the pandemic to the debt it accumulated through the second World War. How did we pay that debt back then and will that work today?
Their solution includes getting investors on board for buying up long-term bonds at today's low interest rate spreading the bill across generations. Ideally this would be while avoiding hyper inflation to prevent devaluing those bonds.
Good questions, but why should a 30 year old buy a 15-30 year bond at 2, 3, 4% when they can just buy TSLA or AAPL? I'm even seeing institutions recommending to ditch the age in bonds allocation that has always seemed to work.
After the war, families were created and those families required housing. The government gave incentives via GI Bill to take out loans to build homes. Housing is a major source of jobs and wealth creation. Families also increase spending on food, clothing, energy, etc, which increases the exchange of money. In the 1940's, that meant a lot more jobs and wealth creation.
The pace we're going, generations of today are not getting married until mid-late 30's and are not too keen on having children as the rat race is more appealing to both men and women.
Creative destruction is a massive headwind. Feds know this and will continue to try to inflate, but the balloon has a hole in it.
The outlook of the global economy is looking grim. Maybe the worst coming from Europe that faces the consequences of the continents' largest war in decades. But both Europe and the U.S. are seeing a decline in business activity. The rise in the dollar has been and continues to be an obstacle for larger corporations in the U.S. by decreasing foreign demand for U.S. goods and business. This is combined with a broader decrease in consumer demand in the world's largest economies. The rise in inflation affecting the U.S. and Europe is taking away spending power from consumers; profits are shrinking outside of essential goods like food and energy.
Yet with all this, the U.S. stock market seems to be flirting with a breakout of this decline we've experienced for months. Has the worst already been priced in and market is ready to reflect the eventual bounce back? I wouldn't put all my chips in on this bet. Tom's (tsptalk) take on the S&P 500 chart in today's Market Commentary says it well,
Earnings and the market's reaction to them in the face of technical resistance will be very telling this week.Quote:
The S&P 500 (C-fund) ran up nicely again and it has moved about 9% from the recent lows to yesterday's highs, and now it is up against some resistance which could make or break this bear market rally. This is occurring basically on the eve of the release of the 5 most important stocks in the US as far as being market movers. Helmets and seatbelts may be required for the rest of the week, and of course that will lead into next week's interest rate hike.
Global Economic Growth Is Weighed Down by Inflation, Rising Interest Rates
Just a little light reading this Wednesday afternoon.. Bank of America is giving their economic and market projections for 2023 and they think:
"Markets will be ravaged by a recession next year, with the benchmark US stock index potentially falling 24% from its current level.."
The bank foresees a downturn in growth in the first quarter which will force companies to shrink their earnings projections and investors will start selling. The S&P 500 is trading around 4000 right now, they see it pulling back to 3000 at some point in 2023.
At the same time these economists expect the S&P 500 to bounce back to 4000 by the end of 2023 so no harm to buy and holders. If their is any truth to this (unlikely) then their will be a massive buying opportunity mid-2023.
Don't base your trading strategy off of this, just an interesting thought.
Expect a U.S. Recession That Will Ravage Markets and Could Send Stocks Spiraling Down 24% Next Year, Bank of America Says
The Chicago Business Barometer is validating the bears:
"..the Chicago PMI, dropped to 37.2 in October from its previous reading of 45.2. Anything below 50 represents a contraction in activity and any reading below 40 has coincided with a recession going back half a century. There has only been one recession out of the last eight—a mild one in the early 1990s—that wasn’t preceded by a sub-40 reading, and it was close to that level."
They don't mention if there were times when the indicator fell below 40 and a recession didn't follow. I think that might be a more deductive argument made.
Another Traditional Recession Indicator is Flashing a Warning Sign
Right now the headlines are bouncing back and forth between inflation and recession concerns. That makes the Fed's job tough, although they seem to be leaning more towards fixing inflation with a recession.
Walls Fargo is taking their turn to project 2023. They're using the word modest.
Quote:
Wells Fargo sees the U.S. economy slipping into a "modest" recession beginning in mid-2023 and expects it to end the year with annual growth of 0.2%, much slower than a 2% rise estimated for 2022.
They think the Fed is on track. They expect inflation to fall below 4% by the end of next year. The last CPI was 7.7% y-o-y.
The headline tells you what they think about the global economy in 2023.
Wells Fargo sees global growth slowing to 1.7% next year