Market Sentiment - Recession Length

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Taco said:
Or, if we had had a magic crystal ball and known in December of 2019 that those 2 events (pandemic, Ukraine) were coming, how many would have also predicted the S&P500 would be up about 20% at this time (and closer to 50% before the recent drop)?!
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Yeah, exactly!

Emergencies that make interest rates go close to 0 tend to spike stock market prices and other asset prices.
 
harllee said:
I don't think it is going to be nearly as bad as 2008/2009 when the stock market was down 50%, there was huge unemployment and many bankruptcies and foreclosures.
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I'm looking more at the economy than the market. High inflation and unemployment is going to hurt. My daughter is struggling @ $25 / hour managing a salad bar franchise. Inflation is killing her.
 
corn18 said:
I'm looking more at the economy than the market. High inflation and unemployment is going to hurt. My daughter is struggling @ $25 / hour managing a salad bar franchise. Inflation is killing her.
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Still don't think it will be nearly as bad as 2008/09 when unemployment was over 10%, there were over 4 million foreclosures and about 2.5 million bankruptcies and the stock market down 50%. You have forgotten how awful 2008/2009 was, it was the worst economic time in US history second only to the Great Depression. I am sure inflation is hurting your daughter but at least she still has a job, in 2008/09 she most likely would have lost her job by this time in the cycle.
 
harllee said:
Still don't think it will be nearly as bad as 2008/09 when unemployment was over 10%, there were over 4 million foreclosures and about 2.5 million bankruptcies and the stock market down 50%. You have forgotten how awful 2008/2009 was, it was the worst economic time in US history second only to the Great Depression. I am sure inflation is hurting your daughter but at least she still has a job, in 2008/09 she most likely would have lost her job by this time in the cycle.
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Ok, so it won't be as bad as 2008/2009. It will still suck eggs.
 

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harllee said:
Still don't think it will be nearly as bad as 2008/09 when unemployment was over 10%, there were over 4 million foreclosures and about 2.5 million bankruptcies and the stock market down 50%. You have forgotten how awful 2008/2009 was, it was the worst economic time in US history second only to the Great Depression. I am sure inflation is hurting your daughter but at least she still has a job, in 2008/09 she most likely would have lost her job by this time in the cycle.
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How do you know what part of the cycle we are at?

In the GFC, the market peaked around Oct 07 w/unemployment at 4.7%. Six months later, (May 08), unemployment was at 5.4%, higher but not all that much higher. It didn't hit 10% until Oct 09, TWO YEARS after the market peaked. If we run the same time line, that would mean Dec 23/Jan 24. Using 08/09 as a model, we are just at the beginning.
 
The similarity of our current economy to the GFC is essentially zero. Not sure I see that period of time as providing any insights into our current situation.
 
There was an interesting article in Barron's recently about the growing number of vehicle repos. In particular it highlighted something unusual: well heeled purchasers getting cars repoed.

For me it pointed up one of the excesses that higher rates have already begun upending.

Separately a buddy told me a story of a fellow who went to all the Ford dealers within 200 miles of his city and let them know he would buy all the new Raptors as soon as they arrived. Essentially he became the default seller of the vehicles in that city, clearing $20k+ per vehicle. Not sure if it is true but buying overpriced vehicles (which had been happening) certainly figures to yield higher default rates.
 
Chuckanut said:
Does anybody here know of any person who in December of 2019 predicted a pandemic that would lock down cities around the world and greatly limit economic activity?
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Actually, I read a post on the Bogleheads forum (Investing - Theory, News & General), someone who worked in China on supply chain issues stated that there was a virus that had been shutting down parts of China and that it would have a big impact on supply chains. This was in late December. In early January I had my spouse take a couple of thousand out telling her that there was a virus in Asia and was also now in Europe and to take the money out in case our banking system hit a snag.
 
Montecfo said:
The similarity of our current economy to the GFC is essentially zero. Not sure I see that period of time as providing any insights into our current situation.
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We have no real idea of how it will compare to 2008/09/10. What I did know when the "it's transitory crowd" was crowing is that those statements were bulls*it, and I put no faith in their current statements. I picked the GFC as an example of the employment statement.

OK, pick another recession and look at the unemployment rate at the beginning of the downturn vs. the end. For example, the dot com crash. NASDAQ peaked March 2000, unemployment rate was 4.0. It ticked down to 3.8 in April 2000, and peaked at 6.3% in June 2003, THREE years later. At the six month point (Sept 2000) it was at 3.9%, essentially unchanged (actually lower) than at the market top.

My point - Six months into the market down turn tells you NOTHING about where unemployment will go, and the statement "she most likely would have lost her job by this time in the cycle" is not historically correct.
 
corn18 said:
Ok, so it won't be as bad as 2008/2009. It will still suck eggs.
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Did I not read in another thread how expensive eggs have gotten?

Nope. No eggs to suck.
 
I think there is a lot of mixing of economic conditions and stock market conditions. But the two are not closely related in many cases.

Remember 2019.when many folks could not fathom why the stock market was rallying while economic conditoons were poor. The market is not the economy and vice versa.

The thread topic is part of the confusion perhaps. Length of recession (not officially in one) versus "market" sentiment.
 
We have had a drop in GDP for 2 quarters now, I think we are already in a recession. Of course the economists will only know for certain in hind sight. A different type of recession than normal (no uptick in unemployment yet) but I think a recession none the less. I am amazed at how many people think the sky is falling just because the market is down 20%. I wonder what they did in 2008 when the market was down 50%.
 
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harllee said:
We have had a drop in GDP for 2 quarters now, I think we are already in a recession. Of course the economists will only know for certain in hind sight. A different type of recession than normal (no uptick in unemployment yet) but I think a recession none the less. I am amazed at how many people think the sky is falling just because the market is down 12%. I wonder what they did in 2008 when the market was down 50%.
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The market (SP 500) is down 20.9% YTD. Where are you getting 12% from?

I don't know how many times I need to repeat: Employment is a LAGGING indicator.
 
Yeah, this time it's different.

fredgraph.png


Really tough to find any correlation in this chart.
 
Citibank CEO: 'Little of the data I see tells me the US is on the cusp of a recession

Article today in MSN
http://https://www.msn.com/en-us/money/personalfinance/citibank-ceo-little-of-the-data-i-see-tells-me-the-us-is-on-the-cusp-of-a-recession/ar-AAZCATQ?li=BBnb7Kz
"While sentiment has shifted, little of the data I see tells me the U.S. is on the cusp of a recession," Citigroup CEO Jane Fraser said.

JPMorgan Chase CEO Jamie Dimon shares the same view."Consumers are in good shape," he said on a call with investors on Thursday after the company reported its second-quarter earnings. "They have more income, jobs are plentiful, they're spending 10% more than last year, almost 30% plus more than pre-COVID," Dimon added.
 
Earl E Retyre said:
Article today in MSN
http://https://www.msn.com/en-us/money/personalfinance/citibank-ceo-little-of-the-data-i-see-tells-me-the-us-is-on-the-cusp-of-a-recession/ar-AAZCATQ?li=BBnb7Kz
"While sentiment has shifted, little of the data I see tells me the U.S. is on the cusp of a recession," Citigroup CEO Jane Fraser said.

JPMorgan Chase CEO Jamie Dimon shares the same view."Consumers are in good shape," he said on a call with investors on Thursday after the company reported its second-quarter earnings. "They have more income, jobs are plentiful, they're spending 10% more than last year, almost 30% plus more than pre-COVID," Dimon added.
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They might be spending more, but because of inflation they are actually getting less in return.
 
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Love Gilda Radner. Her hair in that clip always makes me smile. And yes, it is always something!

But if we are trying to make the case that things are fine (such as Dimon is in this quote) how much people are now spending in comparison to the past seemed an odd point to include. I leave whether or not we are/are not in a recession - or headed for one - to smarter folks than me. But to include the fact that people are “spending more” as proof things are fine seems disingenuous at best. People are being forced to pay more at the grocery store and the gas pump and, well, just about every other category of spending as well. Unless he can show me data that the 10% more spending he cites is solely discretionary spending, I’m going to call that particular point as BS.
 
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