The Damage is Becoming Irreparable…
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- เผยแพร่เมื่อ 30 ก.ย. 2024
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The problem is that we've never printed 8 trillion dollars before. I think that might be why a lot of these classic indicators aren't as accurate as they used to be
They say the economy is strong, but not a single person i know feels that way. They all say the same thing "prices are way too high" from grocories to housing, and its only been getting worse. It may be great for investors and fortune 500s, but for the rest of us in the normal world this economy sucks. Our government lives in fantasy land and believe printing money has zero consequence.
By the end of the decade I bet we have a new definition of a Great Depression
The unemployment is not low, the people who aren't working just are not being counted. They don't label you as unemployed if you are not actively searching for a job within a 4 week period. So if you stop searching for a month, you are no longer "unemployed" apparently and don't count towards the rate.
For the last two years, I have never seen markets where everything is the opposite. It's the george costanza of markets. Interest rates hikes that have never been seen before. Equates to a bull market and a runaway Housing market???? Gold goes up as the dollar goes up.??? Even more disturbing is the Length of time that these continue to happen.
I can safely say... Something will happen, at some point.
I honestly don’t believe the economy is doing that well. Corporate price gouging is unchecked and while corporate profits may be extremely high the middle class is vanishing. People can’t afford to buy a home or even afford rent in many places. Costs of food and consumer goods, gas are so overpriced and in many cases low quality. Since the US is an oligarchy there is just a huge imbalance of wealth. that doesn’t make for a strong economy when only a small percentage of people hold the majority of wealth
Neat story, but it wasn't oil price that triggered recession in 2008, it was housing loans. It's not inverted yield curve that erodes financial conditions, it's differing expectations that inverts the curve and expectations drive the markets. Interesting data points however and everyone should expect some downwards movement after such long rally up.
Remember 9000 US bank's went bankrupt during the Great Depression. Depositors lost over 7 billion in their savings accounts with no recourse. That fact seems to get overlooked when discussing the Great Depression.
Could you imagine how resilient our economy would be if we didn't have speculative investors? Overnight recessions would be a myth of the past. Our well-being could be determined by our actual resource production and labor, and not by how much investors want to make a quick buck off of owning us.
There is so much manipulation and distortion in the markets from Fed intervention over the last 15 years that historical indicators and patterns are mostly impotent. We've been in an asset bubble for at least 7 years now and still kicking that can down the road. It's brand new territory. It's really different this time!
I believe from the bottom of my heart that a severe recession or even a depression is on the horizon given all the leading economic indicators such as the yield curve inversion and the M2 money supply shrinking dramatically. I think wars will play a big role in the next economic downturn.
So where are you going to run? Cash? (Or other fiat-denominated securities?) In 1929 people sold their stocks for dollars that were backed by gold. What backs your dollars these days?
If we live in a system that must constantly borrow more, we are doomed.
"The economy is doing that well", seriously?! The stock market WAS doing OK, but the economy was basically an anxiety riddled mess. Corporate profit taking, large scale layoffs, and short terms gains prioritized over long term.
HOW TO ACQUIRE WEALTH
If you print enough money everything will go up.
If the economic indicators you pay attention to are based on a fiat currency everything looks great.
Then you look at the real rate of inflation (not the one provided by the government) and you see a very different picture.
Excellent video. People who think "nothing will break" must absolutely watch this. Something always broke. Something will once again break.
It's very simple. The inversion doesn't cause the recession, the recession end the yield curve. When do central banks cut interest rates? When the economy is beginning to contract. That's why this indicator has a perfect track record. JPOW isn't going to start cutting rates until he sees softness in the economy. That's the signal that the party's over, not the inversion itself.
The unemployment rate is deceptive. The difference is in the types of jobs people have. Temp and part time, mostly service oriented, with lower pay rates. Skilled trades and professional level jobs are on the decline. And many college grads have useless degrees.
5:40 Seems like the downturns usually come after the yield curve has corrected itself at least back above zero -- if not after climbing a little back up into the positive even.
The United States has no control over its fiscal policy anymore. It is spending like crazy and we will not be able to service the debt in a few years. Many people think that inflation will deflate our national debt, but that is a fallacy. This country will default on its debt within the next five years or so. That will be the end of the United States as we know it and we will cause a worldwide depression that supersedes the crash of 1929 and the disparity of the depression during the 1930s.
Unless the people force the government and into being fiscally responsible in the United States, we will become a second country and similar to France. I am not calling the French people out on this. It is the French government that we are starting to emulate, and that is the cause of France’s downfall economically which will become our downfall. The same thing happened in Rome during their empire, as well as Spain and all the other superpowers.
okay! so.. what is a yield curve.
Im sorry, but you need to stop comingling the terms causing and correlation. Oil prices did not cause recessions, rather oil.prices droppee because there was a recession. Inversions do not cause recessions. It is an indicator of institutional investor confidence for long and short term risk adjusted outcomes.
I think it's going to be all over red rover when these AI stocks eventually pop, when people realise they're nothing but pies in the sky.
The problem with this, as you mentioned in the end of the video, is that we can end up closing positions that are about to rally and miss out. I use to follow a guy called Ron Walker who was constantly saying a crash was coming. That made me sell positions in Feb last year includind nvda, meta, crm and tsla just to see them sky rocket in the following months. What I am trying to say is that being exposed to growth stock during a crash is bad but selling before a rally is as bad and damaging. That guy I mentioned cost me thousands of dollars because of the fear he caused on me. Just be aware of that.
The issue you left out is the growing M2 money supply. Data before 1971 should not be used as we were on the gold standard and could not print ourselves into a boom. Today, they are more than willing to print the next boom even at higher rates.
You forgot to say usually recession comes 1-2 years after inversion. Until then markets will go up.
Here in August 24 at the start of the unfolding. This prediction aged like wine!
It is dangerous to try and time it. If it is expensive just park in cash and do nothing. Doing nothing is the hardest investment advice but it is why Warren Buffett is so rich. Not him trying to get a few weeks of gains.
Unemployment is low and the economy still sucks because most people aren't paid anywhere near enough
Yeah, but THIS TIME is different. ;)
Imagine the coming QE.....lol
Our market, our economy, and our social system is a joke. I feel as if everything besides tech advancements is a lie
Seems to me that "economy doing good, stock market doing well, and low unemployment" are not in any way giving an accurate picture of the situation. I'm not exactly well educated in economics but these terms have been in use for a while and it doesn't seem like these conditions are beneficial in any manner to the common person, i.e. lower 70% of earners.
I love how a good chunk of my early teens was lived in the shadow of a massive recession destroying the economy and leading to my family having almost no money. Now I'm an adult, finally living on my own, and I get to live through another historic recession! Really makes a person believe that capitalism is the most efficient system to distribute wealth and there are no flaws in it.
I have a theory that the reason why oil prices are final boot drop before a crash is because it acts like a siphon. When oil prices rise is sucks up liquidity which forces a crash in our debt based system.
If we just print money then why do we have to pay taxes
How was the Bitcoin in 1929?
There are other interesting indicators, such as looking at the price of stocks, ie PE ratios, PEG ratios and gold vs S&P, etc. Typically the stock market gets more and more expensive over time until suddenly the music stops. It isn't a hard limit on these indicators, but it usually is good to compare historical data.
Plus, if looking for a strategy, I'd suggest cash diversification. A simple one is don't put all your cash in stocks. Leave some in stocks to grow as the market keeps melting up, but in the meantime keep lots of powder dry. Keep increasing your cash (and now getting ~5% on it) the higher things go. When the whole thing craters, start selling some cash to buy shares, if it craters again, sell more cash. Buy other assets as well, and adjust as desired.
The more I listen to people talk about this stuff the more it looks to me like modern day astrology. Most of these videos are cherry picking, confirmation bias, and lucky guesses (survivorship bias). People saying there's going to be a recession and saying "I told you so!" when it happens 4 years later.
Here's my ominous prediction "There will come a point where unemployment hits 10% because of some conflagration of external and internal causes" now like and subscribe and buy my finance classes.
Could someone explain to me why this yield curve talk is disregarding inflation expectation?
Second, if the treasury wouldnt lean on the front of the curve so much, it would surely look different. Right?
If real rates are less or not inverted, does that change anything?
I have experienced most of the recessions that you have referred to (except the one in 1929) and although the phrase, 'this time is different' is much maligned, these days things may be different. For example the largest companies in the S&P are technology companies with lots of cash, and little debt so interest rates are less of a concern compared to heavily indebted industrial companies. Some are suggesting that the neutral fed rate may be higher than once thought and perhaps oil is less critical to our economy than it once was. Unfortunately most recessions are caused by the fed leaving interest rates too high for too long.
these numbers provided keep changing every minute. Once this inversion is 530 days, next time it's 540, first the worst one is 600 days, next time it's 700, next, the time after the worst one is over 2 years, a few seconds later, and the longest time between start of inversion and stock market high is 657 days, which is way less than 2 years, and so on, and so on.....
So, yea, I have just a _little_ trouble believing anything in this vid, to put it mildly
Your were spot on. Great analysis. Perfect prediction.
Nothing bad happening?
Have you seen the prices of even the most mundane items in stores?
The whole concept that the longest the inverted curve yield lasts, the worse is the recession that follows it is blatantly false, refuted by 1978 streak of 624 days of inversion, the longest in recorded history and, yet, followed by the silliest of GDP drops, a mere stupid -2.2%, little more than a rounding error. 😅 If we need to resort to fortune telling, let's just use tarots, it's way less effort. 😂
With 300,000 baby boomers retiring every MONTH, the labor shortage makes a recession very difficult, even with a negative yield curve. So you go short, and I will go long.
I smell opportunity.
Bond market is manipulated, longer duration bond yields are artificially low making yield curve inverted. Now without us government manipulating bond market the yield curve might have been uninverted since begining of 2023. So hard to say really..
Kk but what is yield curve.
Fun fact- as of this comment (2024-06), the us is NOT in a recession.
The fact that there hasn’t been deflation (vs disinflation) means that even if prices aren’t rising as much from 2023, they are still much higher than 2019 levels, where people are still thinking of.
And wages? They have advanced for the bottom of the market, but not really as much for those higher up, let alone whether it keep’s up against inflation.
Of course, we’d rather not have high unemployment (right?)… but nobody really notices that unless if they are
- fired
- looking for a job
High prices, even if wages catch up, are always noticed
I’m more worried about the Fed getting too antsy about inflation and giving us the Recession We Didn’t Have To Have (because we could’ve just held out cut)
I just wish i knew what a yield curve is... i feel like that would help me understand this video!
This time, the yield curve was inverted for 788 days... Very bad days coming up soon...
The duration of the inversion might have something to do with the amount of money printing that took place leading up to the inversion. The Fed has been deflating for 24 straight months. It does this by allowing government securities it holds to mature without replacing them. The government pays them and the Fed just poofs the money out of existence.
The assets the Fed is holding is mostly short term government securities. When the Fed allows one to mature and doesn't replace it, the government must try to sell one like it to someone else. This drives down the price of shorter term government securities. Thus inverts the yield curve.
Why then is the Fed doing this? Because they printed 80% of all the money in existence in 2020 and 2021. Now they are unprinting it. They can print about as fast as they want to but unprinting is this monthly process I described above. The more they print, the longer it takes to unprint until there is a recession. Because we had record printing, we might have a record number of days of inverted yield curve. So far, they have unprinted 17% of everything they had ever printed in its 111 year history.
Reading some comments of Panic selling before this crash comes.
Long story short: Dont panic sell.
Long story: Keep your Positions, maybe they will rais another 60% that means you can tank a -40% beore starting to lose money, that you recover fast by buying low (Time in the market always beats timing it). My advice should you be afraid of a crash: Keep all you positions and relocate new funds, maybe funds from your monthly investmentpayment into other assets, like Gold (-mines) or Bitcoin and Diversify.. so should a crash come, maybe this positions retain their value and the money of the last couple of months, do not need 15 years to return to buy-in-hifh
Great video but unnecessarily sensationalizing title. You can do better than that.
We are nearing September end . How many days since the yield curve has been inverted ? When do we cross 700 days of inversion ?
No offense, I worked as a stock bond and commodity broker from 1985-1992 and the yield curve in 1989 was -3. The yield curve ring now is about -.75 so the graph is wrong. Or more likely they are picking maturities that lead to wrong conclusions. The short term rates are about 3/4 of 1% higher than longer term rates. the graph shows 2% higher or something.
So while the short term rate is less than 1% more than the long term rate, in 1989 it was 3-4 % less then the short term rate. The thing you are not taking into account is Demographics.
But..... in 1929, was there housing and govt debt bubbles? Everyone struggling with high inflation? No, all other crashes were just the market, this time its EVERYTHING!!!! Whatever this crash is, it has to be at least 50% and maybe 70-90% with housing 30-50% Min and in fact in US, some places are already down that much.
My hypothesis is between Sept & Dec this year we will know if the crash will happen or not. That's about where the 12 month lag period is from the interest rate changes.
If the market crashes 657 days after the inversion, then there is some other fundamental cause for the crash, when that crash happens, as it was for all of your historical examples, its not the result of t he inversion. Your analysis is flawed.
inflationary depression is coming, everyone will get rekd.
The market up 98% in 2 years since the yield curve inverted in 1929. How much has the stock market risen currently since the yield curve inverrted?
Lets see what happena...I am going 100% gold long term...😅
Gas prices in CA have been steadily rising… now about $5
Get ready.. the sh.. will hit the fan....
I think it is worth adding that the level of debt is of a far greater magnitude than at any previous time in history, which will no doubt have significant bearing on a forth coming recession.
This turned out to be partially true now in Aug 2024 where the S&P 500 appears to have lost 8.49% and NASDAQ 100 has lost 13.12% as on 6th August 2024. Kudos to the analyst who predicted this! Great job!
Very usefull. Thanks! In 1929 everybody was investing with borrowed money and even before that, in the roaring twenties they had inflation, which for a moment looks as if the economy is booming, but it is not in real terms.
What program do you use for your exceptional graphics. Envious! Jerry
Recession is inevitable, but, in that bad turn is when you make your money.
The time for our big shorts will come boys, just stay patient and keep some money on hand.
Does anyone know where we can track the inversion day count?
Love this data and all of your presentations. Keep up the good work.
Things are different this time. Infinite QE = infinite asset price inflation. Don’t fight it, the central bankers have worked out how to not have recessions 🎉
When the "dollar stores" shuts down in USA things are dire. Brace, brace...
Low employment rate..... really? Who's hiring? Gov I'm guessing. Tech, bank and sme are down sizing to prop up profit margin. Retails are closing. Go figure how long will this stock market last if USD go South and what will cause it?
Hold on though correlation doesnt imply causation. You have to look at the great depression in a historical context, and it was in the 1930s when the US was helping rebuild europe, europe defaulted on their payments and thus the whole thing came crashing down
Recession is just around the corner , valuations dont much earnings growth, consumer spending is going down, only part time jobs are created while full time jobs are being lost (mild recession going on as we speak), layoffs starting...the market has peaked
I'm gonna keep this short. I love your knowledge, and overall how you deliver it....... But for some reason your new style of videos feel very very very unfinished of abrupt. It suddenly begins and even more suddenly ends. It makes your point not seem........ Complete.
If we have a modern great depression we'll never recover and may even turn anarchist or dictor
Interest rates are absolutely irrelevant in a system under Fiscal Dominance… waiting for a recession is waiting for Godot. Expect inflation to come back instead
The national debt problem has never been this bad especially at this high interest rates, the looming banking crisis because of commercial real estate and this oil shock are plenty of reasons to believe that the market has peaked. Well the party could continue until August because the stockmarket has become a casino!!!
This mofo is going to absolutely crater.
fortunately, not my problem (I'm Pilipino)
I don't believe the markets are a very good indicator of the economy. In fact they have very little to do with it.
We've been inverted since July 5th 2022, so we are more like ~650 days of being inverted. Two more months and we break the 700 day inverted you have listed on the great depression. That is unless you define inverted a different way.
From what I understand, unemployment is actually quite high. It's just that a lot of people are taking second jobs, in order to afford the basics.
That's a mammoth inversion.
The economy is booming; it's just that the average person isn't seeing any of that cash because CEOS getting payraise after payraise whilst also laying off workers. It's greed.
Look around you! We have people living on the streets because the dollar is being inflated into worthlessness. The only thing we are waiting for is the government to declare we are in a recession. But when they do you can bet we will actually be in a Depression.
Plant a garden as you will need it.
In December 2018, the 3vs.5 bonds inverted followed by the April 2019 2vs.10 inversion.
A 2vs.10 inversion doesn't signal a recession. A 2vs10 after a 3vs5 signals a recession.
2020 was projected to be sub-2% GDP with a recession that summer. MAGA should thank COVID-19. It gave the recession and the $2.2T followed by the $900B stimulus an excuse. The federal budget to start 2020 was -$1.1T marking the first fiscal budget to be negative $1T in a non-recession year.
Inversion does not mean much as everyone expects short term rates are expected to be high for a longer period of time without the FED raising rates to unaffordable levels.
While I’m waiting for the potential economy correction to come I’m going to position myself in a better spot so I may benefit from it. I will not let this opportunity pass again.
Great analysis. Keep up the good work!
When I go to buy McDonald's for 2 people it's $45 bucks.
Home ownership is hard now. Priced out many people.
lol, be sure to post this before the end of trading day
with the background of record amount of debt, of additional debt and of the liquidity trap (zero and even negative rates in 2019 - after the C.thing was initiated as a "rescue operation" following with the agenda points that followed right after) ... together with the understanding that so many of the established sub-systems that make up the total socio-economic system have reached the end of its lifecycle (you cannot "play" MONOPOLY forever...) - the outcome, the reset, the new start and new order will be much different from what most of the people do expect today ... but sure: I do stick with "ceteris baribus" as well - at least with one foot ...
Watching this video in August 2024... 😵💫 I'm pretty concerned.
We definitively have a recession baked in for the near future. This latest jobs revision of 2.9 million jobs also tells us that we can't even trust the week to week metrics. The biggest problem with a crash this time is that trust in almost every single institution that makes up our society has been crumbling. How do we climb back up as before with no trust or confidence?