Market Sentiment - Recession Length

[harllee]

Quote:

Originally Posted by almost there Only thing different was all the printing of $$$$ at near zero% interest. The rest is the same old stuff.

On 2008 the root problem was free money too-- all the mortgages made to borrowers who did not qualify for the loans.

[Gumby]

Quote:

Originally Posted by SecondCor521 Wait...it's not different this time?

It's the end of the world as we know it, and I feel fine.

https://www.youtube.com/watch?v=Z0GFRcFm-aY

[almost there]

Quote:

Originally Posted by harllee On 2008 the root problem was free money too-- all the mortgages made to borrowers who did not qualify for the loans.

Not sure if foolishly lending existing money, and creating it are the same thing...
Will have to ask someone in Zimbabwe.

[copyright1997reloaded]

Quote:

Originally Posted by SecondCor521 Wait...it's not different this time?

It wasn't different in 1929 either. The market eventually recovered, and while there were job losses, things turned around.

Yes, it took a world war with many millions dying, 40-50 of all mortgages in foreclosure, people losing their life savings (and dying before things recovered), but in the long run wasn't different.

The reality is that none of us know what is to come. From one end of the opinion spectrum, we aren't even in recession, the economy is strong, employment is great and the market will resume its great upward trajectory soon. At the other end of the spectrum, a 1929 or worse result.

That's a pretty wide set of possibilities, and each of us has to assess where in the spectrum we will end up. In the meantime, people caught in the cross roads like Montclairbobbyb are expressing their frustration w/the "everything is fine" crowd. The one thing I know for sure, is that there are a lot of Montclairbobbyb's out there that know everything is NOT fine.

[MC Rider]

I'm gonna go with this. It sounds logical, they make a good case.
Never mind they are saying what I want to hear.


Yes, a recession looks inevitable. But it may not be that bad. Here’s why




https://www.latimes.com/politics/sto...it-be-that-bad

[harllee]

The stock market is down around 20% this year. Personally my investments are back to where they were about 18 months ago. To me it is no big deal, just a part of the normal economic cycle. For all the folks that are panicking now, I ask what did you do in 2008 when the stock market was down over 50%? If the market being down 20% is causing you to lose sleep then you have too much in the stock market. I lost sleep in 2008 but held on and after the market recovered I had learned my lesson and redid my stock allocation. Now I have a lot less in the market and much more in cash (CDs). This is a good time for folks to assess their risk tolerance.

[Katoslake]

Quote:

Originally Posted by harllee The stock market is down around 20% this year. Personally my investments are back to where they were about 18 months ago. To me it is no big deal, just a part of the normal economic cycle. For all the folks that are panicking now, I ask what did you do in 2008 when the stock market was down over 50%? If the market being down 20% is causing you to lose sleep then you have too much in the stock market. I lost sleep in 2008 but held on and after the market recovered I had learned my lesson and redid my stock allocation. Now I have a lot less in the market and much more in cash (CDs). This is a good time for folks to assess their risk tolerance.

I’m not overly concerned about the stock market or bonds for that matter.
I am far more concerned about inflation or at worst stagflation.
Not sure we’ve got enough experience in my lifetime to evaluate the dunce-tax risk

[Koolau]

Quote:

Originally Posted by MC Rider I'm gonna go with this. It sounds logical, they make a good case. Never mind they are saying what I want to hear. Yes, a recession looks inevitable. But it may not be that bad. Here’s why https://www.latimes.com/politics/sto...it-be-that-bad

I think the issue with the economy is that, even though we understand the fundamentals, we don't know how people (or gummints) will react. What should be a simple, cyclical event may turn out to be a nothing burger or a 2008 style crisis. A lot depends on what people think about it and what gummints do to "fix" it. YMMV

[DawgMan]

Quote:

Originally Posted by DawgMan First, happy Father’s Day to all you dads! So here’s a real time housing market experience. My son and DIL are opportunist house hunting in a few golf course neighborhoods (boy loves his golf!). 2 weeks ago they found one that caught their eye. It went on the market in mid May, price dropped a couple of times (about 5%) by June. Stop there - first observation, 3 months ago offers would be pouring in 10% over sticker! He makes an offer another 3% below and they counter…. Now $15k apart on a $650k house. Son holds, part ways. Today, 9 days later, Seller comes back with $5k over son’s last offer, looks good… until son prices new debt. It will cost another $10k in points to match previous loan quote… hence, the deal did not change. Father’s Day advice…. Only if he loves the house: Option 1: buy house hoping interest rates drop over the next 5 yrs and refinance, option 2: Hold tight, ride thru downturn and wait for more motivated sellers, hopefully rates moving down. IMHO, this is what we should expect from housing market effectively creating allot of no sales unless one party is very motivated.

Realtime update - Son and Seller just agreed to do the deal at Son's last offer less his increase in loan costs (less another $10K) to buy his loan down to his rate from 2 weeks ago. In the meantime, another house in this desired neighborhood flashed a price reduction!

Observation - Seller was motivated as they have another house they are trying to close on and arguably, perhaps, panicked a little to make sure they could get their house sold. In my son's case, he was an opportunistic buyer (best kind to be) and was willing to wait for the right deal. None the less, IMHO we are just at the beginning of this cooling off of the housing market and I suspect more price reductions to come IF a seller has some level of motivation. More motivated sellers may pop up 12 - 24 months from now if jobs are lost/finances are squeezed, otherwise, my guess is while housing prices/values may drop some from the recent highs, there will just be fewer transactions due to fewer buyer/sellers. Time will tell.

[milford]

Quote:

Originally Posted by MC Rider I'm gonna go with this. It sounds logical, they make a good case. Never mind they are saying what I want to hear. Yes, a recession looks inevitable. But it may not be that bad. Here’s why https://www.latimes.com/politics/sto...it-be-that-bad

His argument is logical in that if you have money, saving, and little debt the recession won't be as bad for you. His interviewee choice is almost comical... Barone has seven seasonal workers and lives modestly in an apartment on Capitol Hill. “I don’t have a car, don’t have to buy gas,” he said. “I go to the day-old bread shelf and buy my bread for half price.” Barone is more sanguine than most.

He basically has no idea like everyone else. The only thing I would add is that this time we won't have the Fed coming in to "save" the day for a while so to say that the recession won't be that bad is premature.

[copyright1997reloaded]

42% of buy now, pay later users made late payments toward those loans, per CNBC.
source: https://twitter.com/unusual_whales/s...CioxDhqdmKaDuQ

[dixonge]

Well I guess this is the right thread to drop this link in...

The Rise and Fall of the Consumer

It's the monthly research letter from Crescat Capital. I'm not a subscriber, in fact I never heard of them until they posted a long thread on Twitter. But it has caused me to reassess and think quite seriously about a bit of asset reallocation. Here are some things they cover:

Consumer Sentiment Index - all-time low!
Saving rates plummeting
Negative earnings surprises predicted for this quarter (ending June 30)
30-yr mortgage rates doubled last six months
Rise in part-time employment
US 30-yr yield has 'broken out' of a 41-year decline trend

Lots of other charts and opinion in there. Shorter summary version in this Twitter thread:

https://twitter.com/TaviCosta/status...92151109332998

[copyright1997reloaded]

Q1 GDP - final revision from -1.5% to -1.6%.

[arcyallen]

Quote:

Originally Posted by copyright1997reloaded 42% of buy now, pay later users made late payments toward those loans, per CNBC. source: https://twitter.com/unusual_whales/s...CioxDhqdmKaDuQ

It seems this is typical. In 2021 it was around 40%.
https://www.reuters.com/article/us-u...-idUSKBN2A8036

"Statistics are like bikinis - they show you a lot, but can cover up some very important things." -My junior high shop teacher

[corn18]

Atlanta Fed showing 0.3% real GDP for Q2 as of the 27 June update. So no recession for now.

[Koolau]

Quote:

Originally Posted by arcyallen It seems this is typical. In 2021 it was around 40%. https://www.reuters.com/article/us-u...-idUSKBN2A8036 "Statistics are like bikinis - they show you a lot, but can cover up some very important things." -My junior high shop teacher

I heard this one as: Statistics are like a bikini. What they reveal may be less significant than what they conceal. YMMV

[copyright1997reloaded]

Quote:

Originally Posted by corn18 Atlanta Fed showing 0.3% real GDP for Q2 as of the 27 June update. So no recession for now.

There will be a June 30th update.

Perhaps we will see +0.1% so the media (and others) can tell us all to stop worrying and stop with the Debbie Downer stuff because after all we aren't in a recession (even of the old Econ textbook kind rather than the announced several quarters later NBER kind).

[madatrub]

Most of the 1Q negative GDP wasnt "real", though, was it? Just US supply taking on huge inventory?

[copyright1997reloaded]

Quote:

Originally Posted by madatrub Most of the 1Q negative GDP wasnt "real", though, was it? Just US supply taking on huge inventory?

Quote:

A deceleration in private inventory investment weighed on growth after helping propel GDP in the back half of 2021. Other restraints came from exports and government spending across state, federal and local governments, as well as rising imports. An 8.5% pullback in defense spending was a particular drag, knocking one-third of a percentage point off the final GDP reading. But consumer spending, which accounts for about two-thirds of the economy, held up fairly well for the quarter, rising 2.7% as inflation kept pressure on prices. However, a burgeoning trade deficit helped shave 3.2 percentage points off growth as imports outweighed exports.

source: https://www.cnbc.com/2022/04/28/us-q1-gdp-growth.html

[target2019]

Quote:

The growth rate of real gross domestic product (GDP) is a key indicator of economic activity, but the official estimate is released with a delay. Our GDPNow forecasting model provides a "nowcast" of the official estimate prior to its release by estimating GDP growth using a methodology similar to the one used by the U.S. Bureau of Economic Analysis.

https://www.atlantafed.org/cqer/research/gdpnow

Quote:

Latest estimate: 0.3 percent — June 27, 2022 The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2022 is 0.3 percent on June 27, up from 0.0 percent on June 16. After recent releases from the Federal Reserve Board of Governors, the National Association of Realtors, and the US Census Bureau, the nowcast of second-quarter real gross private domestic investment growth increased from -9.0 percent to -8.1 percent. The next GDPNow update is is Thursday, June 30. Please see the "Release Dates" tab below for a list of upcoming releases.