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The Bond Market Is Telling Us Something

 
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Old 08-14-2019, 07:25 AM   #1
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The Bond Market Is Telling Us Something


Anybody following the bond market news?

It's apparently signaling that US recession risk is increasing, now up to 50% in the next 6-18 months. Yesterday it had only reached 30% and that was news.

Interesting stuff.

[If this thread gets any legs, I request that we try to keep it on market policy, etc. and not our own politics, per se. Thanks.]

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Old 08-14-2019, 08:29 AM   #2
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Re: The Bond Market Is Telling Us Something


https://www.foxbusiness.com/economy/...nals-recession

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Old 08-14-2019, 08:47 AM   #3
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Re: The Bond Market Is Telling Us Something


So is it 6-18 months or 24 months? Either way, if you believe it will happen, now's the time to plan for it...
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Old 08-14-2019, 09:02 AM   #4
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Re: The Bond Market Is Telling Us Something


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So is it 6-18 months or 24 months? Either way, if you believe it will happen, now's the time to plan for it...
Based on the current data, 9-12 months was one guru's best guess. But conditions are in flux, as you can see today. The market is already adjusting.

When short term rates are higher than long-term (inverted yield curve), the near term risk is higher, according to the market. Storm clouds ahead.

Last edited by MarkJames; 08-14-2019 at 09:04 AM.
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Old 08-14-2019, 09:25 AM   #5
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Re: The Bond Market Is Telling Us Something


just saw this:

https://www.foxbusiness.com/economy/...nals-recession
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Old 08-14-2019, 09:29 AM   #6
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Re: The Bond Market Is Telling Us Something


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Originally Posted by MarkJames View Post
Based on the current data, 9-12 months was one guru's best guess. But conditions are in flux, as you can see today. The market is already adjusting.

When short term rates are higher than long-term (inverted yield curve), the near term risk is higher, according to the market. Storm clouds ahead.
1 in 20 chance to 1 in three 3 chance a recession will occur according to the 'experts'. economic Armageddon is nigh!


If it does cross into recession territory, by definition, gut feeling, it'll be fairly minor compared the last recession. Much closer resembled a depression in end results.

Look for recession long enough,you'll find one
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Old 08-14-2019, 09:39 AM   #7
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Re: The Bond Market Is Telling Us Something


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1 in 20 chance to 1 in three 3 chance a recession will occur according to the 'experts'. economic Armageddon is nigh!


If it does cross into recession territory, by definition, gut feeling, it'll be fairly minor compared the last recession. Much closer resembled a depression in end results.

Look for recession long enough,you'll find one
Just think of this as economic storm prognostication and preparation. One has to keep an eye on the conditions.

The media hysterics miss the point, though there's going to be a lot of finger-pointing. That's part of the sideshow.
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Old 08-14-2019, 10:01 AM   #8
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Re: The Bond Market Is Telling Us Something


Rates have been inverted for at least a month, so yes, the bond market is telling us it is pricing in a recession WITH rate reductions.
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Old 08-14-2019, 10:04 AM   #9
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Re: The Bond Market Is Telling Us Something


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Just think of this as economic storm prognostication and preparation. One has to keep an eye on the conditions.

The media hysterics miss the point, though there's going to be a lot of finger-pointing. That's part of the sideshow.
LOL Like the weatherman and the media. Take any of extreme forecast models and sell it hard for ratings-clicks.

Been watching and studying the stock markets since the fifth grade, cough 45 years. & now that's it's "modern news" I just keep up on overall stock trends and the lending markets. Can't do business without borrowing money.
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Old 08-14-2019, 10:09 AM   #10
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Re: The Bond Market Is Telling Us Something


The down cycle was set up by the two rate hikes last fall, then failing to correct the error quickly. That sets up a contraction.

The question is whether it is now baked in. Historically, the answer is yes, but Kudlow has some levers that weren't available before.
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Old 08-14-2019, 10:23 AM   #11
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Re: The Bond Market Is Telling Us Something


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The down cycle was set up by the two rate hikes last fall, then failing to correct the error quickly. That sets up a contraction.

The question is whether it is now baked in. Historically, the answer is yes, but Kudlow has some levers that weren't available before.
It was also set up by slowing global markets and the trade uncertainty.

Businesses have been waiting for the trade deals to get settled so they could make their capital expenditure decisions. They're afraid to commit big investment $$, even with the cheap rates.
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Old 08-14-2019, 10:24 AM   #12
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Re: The Bond Market Is Telling Us Something


The market is pricing in an 81% probability the FED has rates at 175-200 by their 9/18 meeting, a 62.8% probability they have rates 150-175 by 10/30, where probabilities drop below 50% rates get to 125-150 by 12/11/20 and into second quarter 2020.
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Old 08-14-2019, 10:34 AM   #13
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Re: The Bond Market Is Telling Us Something


It's a global problem, and it was only a matter of time.
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Old 08-14-2019, 12:28 PM   #14
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Re: The Bond Market Is Telling Us Something


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It was also set up by slowing global markets and the trade uncertainty.

Businesses have been waiting for the trade deals to get settled so they could make their capital expenditure decisions. They're afraid to commit big investment $$, even with the cheap rates.
I'm not so certain of that, if anything the tariffs are expanding manufacturing investment in regional supply chain countries and away from China and India. There is plenty of money being spent relocating manufacturing. If anything, tariffs accelerated this.

As to the global slow down, that was happening while we were booming. Does it have an effect? Sure. Is it the kiss of death? No.

Net is more of the supply chain is moving into the US and a lot more us moving into places like Mexico.

Policies keep getting changed to favor domestic growth. It's significant. The Fed tries to control to an inflation range. They blew it on the rate hikes, pure and simple. Then they didn't backtrack fast enough.

In their defense, raising rates as quickly as possible would give room to handle a downturn without getting into stagflation, they just missed the turn in this case, twice.
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Old 08-14-2019, 12:31 PM   #15
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Re: The Bond Market Is Telling Us Something


Long term, China gets hurt worse by the Tariffs than we do. We do need to get in front of 5G, where they can potentially dominate.
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Old 08-14-2019, 12:32 PM   #16
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Re: The Bond Market Is Telling Us Something


The Fed and markets have been calling it wrong on inflation for quite a while now... so there's that...


Really makes you wonder how things would've kicked into gear if we didn't have politicians/media throwing sand into the gears...

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Old 08-14-2019, 01:07 PM   #17
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Re: The Bond Market Is Telling Us Something


This means I should buy gold, right? That's what the radio keeps telling me.
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Old 08-14-2019, 01:11 PM   #18
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Re: The Bond Market Is Telling Us Something


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Originally Posted by hdavis View Post
I'm not so certain of that, if anything the tariffs are expanding manufacturing investment in regional supply chain countries and away from China and India. There is plenty of money being spent relocating manufacturing. If anything, tariffs accelerated this.

As to the global slow down, that was happening while we were booming. Does it have an effect? Sure. Is it the kiss of death? No.

Net is more of the supply chain is moving into the US and a lot more us moving into places like Mexico.

Policies keep getting changed to favor domestic growth. It's significant. The Fed tries to control to an inflation range. They blew it on the rate hikes, pure and simple. Then they didn't backtrack fast enough.

In their defense, raising rates as quickly as possible would give room to handle a downturn without getting into stagflation, they just missed the turn in this case, twice.
This was from May 2019. He's talking about a "Cap Ex" recession. His argument is that cap ex was slowing not so much because of trade, but because companies were de-levering and cleaning up their balance sheets to avoid downgrades. Interesting. Another piece of the puzzle.

https://www.bing.com/videos/search?q...455B&FORM=VIRE
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Old 08-14-2019, 03:55 PM   #19
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Re: The Bond Market Is Telling Us Something


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This means I should buy gold, right? That's what the radio keeps telling me.
Closet Beck listener huh?
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Old 08-14-2019, 03:59 PM   #20
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Re: The Bond Market Is Telling Us Something


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This means I should buy gold, right? That's what the radio keeps telling me.
Should have already. Who knows now...maybe.

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