Archives of “recessions” tag

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NBER says US recession began in February

  
Analysis, Economy
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Business Dating Cycle Committee says contraction ongoing

The US National Bureau of Economic Research says the American economy fell into recession in February to end an expansion that started in June 2009.
It was the longest expansion in US history at 128 months.
In determining the date of the monthly peak, the committee considers a number of indicators of employment and production. The committee normally views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment. This series reached a clear peak in February.
There’s no magic in determining a recession but the NBER generally gets the privilege of making the call in the US.

Germany forecasts worst recession since at least 1950

  
Analysis, Economy
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The German government expects the fallout from the virus outbreak to send the economy into its worst recession since the aftermath of WWII

Germany
  • Forecasts GDP to fall by 6.3% in 2020
  • Forecasts GDP to grow by 5.2% in 2021
The above is the latest projections by the economy ministry, and that shouldn’t come as much of a surprise given the economic hit across the globe – not just in Germany.
This hinges on some kind of U-shaped or V-shaped recovery but the issue is we’re not even going to be sure how the next quarter is going to look like.
The focus right now is on easing restrictions but what happens if there is a secondary outbreak or the infection rate starts rising again? The latest report from Germany is that the virus’ reproduction rate is back up to 0.96 from 0.70 as of Monday.
If that goes back above 1.00, will the government impose another round of restrictions? What happens if this continues all the way into Q3 or even Q4?
It is very much play by ear at this point and the same applies to every country in the world.

Guggenheim’s Recession Probability Model shows US recession can not be avoided

  
  Analysis
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Guggenheim recession forecast model showed a 58% chance of the economy being in a recession by mid-2020

  • 77% chance of one beginning in the next 24 months
  • “aggressive policy action can delay recession, but not avoid it.”
From a note written by Guggenheim Partners global chief investment officer Scott Minerd.
  • Minerd oversees more than $US240 billion in assets under management
via Reuters, more at the link
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As an aside, when folks quote probabilities at something like 77% instead of rounded to 70, or 80, or 75 or some such they tend to gain more credibility.
I’m not dissing Guggenheim here, just making an observation. Which is accurate 76.38% of the time.
😉
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And another thing …. if the probability is 77% then it can be avoided, right? (at least in the time frame specified)

30 NUGGETS OF STOCK MARKET WISDOM

  
  Education
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Wall Street people learn nothing and forget everything.”  Ben Graham

“ Buy on the cannons, sell on the trumpets.” Old French Proverb

“A stock broker is one who invests other people’s money until its all gone.”  Woody Allen

“It is fortunate for Wall Street as an institution that a small minority of people can trade successfully and that many others think they can.” Ben Graham

“Wall Street indices predicted nine out of the last five recessions!” Paul Samuelson

“ There are two kinds of investors, be they large or small: those who don’t know where the market is headed, and those who don’t know that they don’t know. Then again, there is a third type of investor –the investment professional, who indeed knows that he or she doesn’t know, but whose livelihood depends upon appearing to know.” William Bernstein

“The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.” Gordon Gekko (more…)

9 Wisdom Quotes from George Soros

  
  Education
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George Soros doesn’t need an introduction. He is a living trading legend. Here are some of the smartest things he has ever said about markets. His thoughts are in brown.

1. Perceptions affect prices and prices affect perceptionsGeorge-Soros-gold

I believe that market prices are always wrong in the sense that they present a biased view of the future. But distortion works in both directions: not only do market participants operate with a bias, but their bias can also influence the course of events.

For instance, the stock market is generally believed to anticipate recessions, it would be more correct to say that it can help to precipitate them. Thus I replace the assertion that markets are always right with two others: I) Markets are always biased in one direction or another; II) Markets can influence the events that they anticipate.

As long as the bias is self-reinforcing, expectations rise even faster than stock prices.
Nowhere is the role of expectations more clearly visible than in financial markets. Buy and sell decisions are based on expectations about future prices, and future prices, in turn are contingent on present buy and sell decisions.

2. On Reflexivity

Fundamental analysis seeks to establish how underlying values are reflected in stock prices, whereas the theory of reflexivity shows how stock prices can influence underlying values. One provides a static picture, the other a dynamic one.

Sometimes prices change before fundamentals change. Sometimes fundamentals change before prices change. Price is what pays and until expectations change, prices don’t change. What causes expectations to change? – it could be change in fundamentals or change in prices. So what I am saying is that sometimes prices could be manipulated to change expectations, which will fuel further price momentum in a self-reinforcing way.

3. “Once a trend is established it tends to persist and to run its full course.” – Sentiment changes slowly in trending markets (up or down) and extremely fast in choppy, range-bound markets.

4. “When a long-term trend loses it’s momentum, short-term volatility tends to rise. It is easy to see why that should be so: the trend-following crowd is disoriented.” (more…)

Christine Lagarde: "China's Slowdown Was Predictable, Predicted"… Yes, By Everyone Except The IMF

  
Analysis, Education
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In what may be the funniest bit of economic humor uttered today, funnier even than the deep pontifications at Jackson Hole (where moments ago Stanley Fischer admitted that “research is needed for a better inflation indicator” which means that just months after double seasonally adjusted GDP, here comes double seasonally adjusted inflation), in an interview with Swiss newspaper Le Temps (in which among other things the fake-bronzed IMF head finally folded and said a mere debt maturity extension for Greece should suffice, ending its calls for a major debt haircut), took some time to discuss China.

This is what she said. 

Turning to China, Lagarde said she expected the country’s economic growth rate to remain close to previous estimates even if some sort of slowdown was inevitable after its rapid expansion.
China devalued its yuan currency this month after exports tumbled in July, spooking global markets worried that a main driver of growth was running out of steam.
“We expect that China will have a growth rate of 6.8 percent. It may be a little less.” The IMF did not believe growth would fall to 4 or 4.5 percent, as some foresaw.

Actually, some – such as Evercore ISI – currently foresee China’s GDP to be negative, at about -1.1%. (more…)

30 NUGGETS OF STOCK MARKET WISDOM

  
  Education
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“Wall Street people learn nothing and forget everything.”  Ben Graham

“ Buy on the cannons, sell on the trumpets.” Old French Proverb

“A stock broker is one who invests other people’s money until its all gone.”  Woody Allen

“It is fortunate for Wall Street as an institution that a small minority of people can trade successfully and that many others think they can.” Ben Graham

“Wall Street indices predicted nine out of the last five recessions!” Paul Samuelson

“ There are two kinds of investors, be they large or small: those who don’t know where the market is headed, and those who don’t know that they don’t know. Then again, there is a third type of investor –the investment professional, who indeed knows that he or she doesn’t know, but whose livelihood depends upon appearing to know.” William Bernstein

“The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.” Gordon Gekko

“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.”  George Soros

“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”  Mark Twain

“If past history was all there was to the game, the richest people would be librarians.” Warren Buffett

“Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.”  Warren Buffett

“A market is the combined behavior of thousands of people responding to information, misinformation and whim.”  Kenneth Chang

“The four most dangerous words in investing are “This time it’s different”.   John Templeton

“Money can’t buy you happiness but it does bring you a more pleasant form of misery.” Spike Milligan

“If you don’t follow the stock market, you are missing some amazing drama.”  Mark Cuban

“The average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think.”  Jesse Livermore

“In this business if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” Peter Lynch

“ Markets can remain irrational longer than you can remain solvent” John Maynard Keynes

“The markets will return to rationality the moment you have been rendered insolvent.” Dennis Gartman

“Risk is good. Not properly managing your risk is a dangerous leap” Evel Knievel

“Sometimes your best investments are the ones you don’t make.” Donald Trump

“The most predictable thing about the stock market is the number of experts who take credit for predicting it.” Dave Weinbaum

“I have probably purchased fifty ‘hot tips’ in my career, maybe even more. When I put them all together, I know I am a net loser.” Charles Schwab

“Money talks… but all mine ever says is good-bye.” Anon

“Don’t gamble! Take all your savings and buy some good stock and hold it ‘till it goes up, then sell it. If it don’t go up, don’t buy it.” Will Rogers

“Give me a stock clerk with a goal and I’II give you a man who will make history. Give me a man with no goals and I’II give you a stock clerk.” James Cash

“Never make forecasts, especially about the future.”  Samuel Goldwin

“Stocks are bought on expectations, not facts.” Gerald M. Loeb

“Your success in investing will depend in part on your character and guts, and in part on your ability to realize at the height of the ebullience and the depth of despair alike that this too shall pass.” John Bogle

“You make most of your money in a bear market, you just don’t realize it at the time.” Shelby Davis

A Look at 9 Quotes from George Soros

  
Education, Life
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1. Perceptions affect prices and prices affect perceptions

I believe that market prices are always wrong in the sense that they present a biased view of the future. But distortion works in both directions: not only do market participants operate with a bias, but their bias can also influence the course of events.
For instance, the stock market is generally believed to anticipate recessions, it would be more correct to say that it can help to precipitate them. Thus I replace the assertion that markets are always right with two others: I) Markets are always biased in one direction or another; II) Markets can influence the events that they anticipate.
As long as the bias is self-reinforcing, expectations rise even faster than stock prices.
Nowhere is the role of expectations more clearly visible than in financial markets. Buy and sell decisions are based on expectations about future prices, and future prices, in turn are contingent on present buy and sell decisions.

2. On Reflexivity

Fundamental analysis seeks to establish how underlying values are reflected in stock prices, whereas the theory of reflexivity shows how stock prices can influence underlying values. One provides a static picture, the other a dynamic one.

Sometimes prices change before fundamentals change. Sometimes fundamentals change before prices change. Price is what pays and until expectations change, prices don’t change. What causes expectations to change? – it could be change in fundamentals or change in prices. So what I am saying is that sometimes prices could be manipulated to change expectations, which will fuel further price momentum in a self-reinforcing way. (more…)

Rosie’s Rules to Remember (an Economist’s Dozen)

  
  Education
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1. In order for an economic forecast to be relevant, it must be combined with a market call.
2. Never be a slave to the date – they are no substitute for astute observation of the big picture.
3. The consensus rarely gets it right and almost always errs on the side of optimism – except at the bottom.
4. Fall in love with your partner, not your forecast.
5. No two cycles are ever the same.
6. Never hide behind your model.
7. Always seek out corroborating evidence.
8. Have respect for what the markets are telling you.
9. Be constantly aware with your forecast horizon – many clients live in the short run.
10. Of all the market forecasters, Mr. Bond gets it right most often.
11. Highlight the risks to your forecasts.
12. Get the US consumer right and everything else will take care of itself.
13. Expansions are more fun than recessions (straight from Bob Farrell’s quiver!).

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