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‘A Powerful Signal of Recessions’ Has Wall Street’s Attention
- j45 8y agoIs there a way to see NY times articles? Hn links to NY times always brings up a pay wall.
- protonimitate 8y agoDisabling JavaScript works for me, no paywall.
- pwg 8y agoSame here. NoScript in default deny all JS and the article appears with no paywall.
- deleted 8y ago[deleted]
- WhompingWindows 8y agoI use incognito browsing mode and some extensions, would incognito alone work for you? Otherwise I think I'm using privacy badger and fair adblocker?
- crishoj 8y agoVisit the article from a web search on the title.
- bla2 8y agoA bit easier but also more expensive than the other options mentioned: Pay for a NY times subscription.
- colechristensen 8y agoThis is one thing I did to attempt to make a small difference in the current climate, picked a few media outlets I thought were doing a good job and paid for subscriptions. Living in very solidly blue places, nothing else I have done has likely mattered at all.
- jadedhacker 8y agoYou can do a lot in blue states/towns, but it involves pushing the Democratic party further left (Medicare for All, Abolish ICE, Affordable housing, and more) if that's your cup of tea.
- colechristensen 8y agoIt isn't my cup of tea. Pushing democrats further from center makes them lose more than they already do. I also don't think many of those things achieve their goals or are correct for a free society depending on context. I'm a very blue moderate with some ideas that are sometimes rather far from the traditional one dimensional spectrum.
- volkl48 8y agoNote that if you have a .edu email, you can get a NYT sub for $1/wk.
- j45 8y agoI happily pay for a number of subscriptions. Sites like The Guardian, New Yorker, Atlantic, etc seem to do a better job. Newspaper funnels are entertaining - I spent some years in the newspaper world when this experimenting with paywalls started. As a technologist, I see value after consistently accessing more than a few articles a month.. closer to 10 is where I see enough value to pay. I'm sure I'm only one persona though in their funnel.
- jadedhacker 8y agoI did that for a while until I became completely disillusioned with them. They're in the pocket of corporations and the White House (they actually suppress news if the WH doesn't like it). Find a more progressive outlet than them if you want to pay for media. They can certainly use the cash. EDIT: Here's a recent case of NYT suppressing newsworthy clips: https://theintercept.com/2018/06/20/administration-of-hate-the-snatching-and-caging-of-immigrant-children-it-is-happening-here/ https://theintercept.com/2018/06/20/administration-of-hate-t... Search for "The Daily" in the transcript.
- bla2 8y agoI am pretty disillusioned with them too, and they do push an agenda in many areas (pro-military, anti-tech, etc). I loathe their opinion pages, they're a weird mix of bland and constantly pseudo-outraged. But I still like lots of stuff they create and a subscription isn't super expensive, so paying seems like the right thing to me personally. I'm just reading a newspaper, not looking for someone to marry. (I wouldn't want to marry someone who always agrees with me either, come to think of it.)
- jadedhacker 8y agoYea I knock on them for the same reasons, but when the topic isn't of national interest, they have some excellent story tellers and reporters. Their digital remixes are great too (e.g. Snowfall and its intellectual children). Nonetheless, as my perspective evolved, I realized I can't countenance supporting them when they endorsed actual evil like the Iraq War and perpetuate so many things wrong in society. They'll always let you down when it counts, so I don't see a reason to be there for them when it doesn't.
- riffic 8y agoLog in via your local public or academic library - https://www.google.com/search?q=Library+subscription+new+york+times https://www.google.com/search?q=Library+subscription+new+yor...
- AndrewDucker 8y agoHere's a plugin for FF and Chrome: https://bypasspaywalls.weebly.com/ https://bypasspaywalls.weebly.com/
- DesiLurker 8y agomy standard PSA: any browser plugin you install has a full clear text view of content on ALL the websites you visit. choose wisely.
- george-takei 8y agoLike anyone wants to look at your Muslim goat porn.
- astura 8y agohttps://outline.com/tyLgaw https://outline.com/tyLgaw
- AznHisoka 8y ago"Stocks have been in a sideways struggle since the Standard & Poor’s 500 last peaked on Jan. 26." Is this really true? Almost every single stock I've been tracking has just been going up this year, especially the tech ones. Even ones with decreasing revenues like GoPro.
- wgerard 8y agoYes: https://www.nasdaq.com/symbol/spy/stock-chart https://www.nasdaq.com/symbol/spy/stock-chart https://investor.vanguard.com/etf/profile/performance/vti https://investor.vanguard.com/etf/profile/performance/vti
- kgwgk 8y agoGoing up this year or going up since January 26?
- icedchai 8y agoIt's basically true, except for some sectors, like tech...
- scrooched_moose 8y agoFord has been sliding for 5 years: https://finance.yahoo.com/quote/F?ql=1&p=F https://finance.yahoo.com/quote/F?ql=1&p=F GE has been in freefall: https://finance.yahoo.com/quote/GE?p=GE&.tsrc=fin-srch https://finance.yahoo.com/quote/GE?p=GE&.tsrc=fin-srch Honeywell has basically been stagnate since January: https://finance.yahoo.com/quote/HON?p=HON&.tsrc=fin-srch https://finance.yahoo.com/quote/HON?p=HON&.tsrc=fin-srch Same with 3M: https://finance.yahoo.com/quote/MMM?p=MMM&.tsrc=fin-srch https://finance.yahoo.com/quote/MMM?p=MMM&.tsrc=fin-srch The S&P500 index as a whole has crept up a little but many of them are struggling. Edit: I can't figure out how to get it to link to the 5 year charts, which is how I was looking at it.
- toomuchtodo 8y agoWhat about Walgreens (with their recent replacement of GE on the DJIA)? Edit: Yep, Walgreens also not much higher vs 5 years ago. https://finance.yahoo.com/quote/WBA?p=WBA https://finance.yahoo.com/quote/WBA?p=WBA
- ronnier 8y ago> The so-called yield curve is perilously close to predicting a recession — something it has done before with surprising accuracy — and it’s become a big topic on Wall Street. > The yield curve is basically the difference between interest rates on short-term United States government bonds, say, two-year Treasury notes, and long-term government bonds, like 10-year Treasury notes. > Typically, when an economy seems in good health, the rate on the longer-term bonds will be higher than short-term ones. The extra interest is to compensate, in part, for the risk that strong economic growth could set off a broad rise in prices, known as inflation. Lately, though, long-term bond yields have been stubbornly slow to rise — which suggests traders are concerned about long-term growth — even as the economy shows plenty of vitality.
- signa11 8y agoinversion of the yield-curve aka short-term > long-term-bond-yields should be (is a) good indicator of a looming recession...
- frockington 8y agoThe Fed is reducing its budget sheet which will have a significant effect on the yield curve. Inviting comparisons between the yield curve now versus any other point in history is foolish. These are probably the same people who predicted a recession when Trump was elected, after Brexit, and at least once a month for the last decade
- 67_45 8y agoWhat does that mean "reducing budget sheet?" Also, what is meant by long and short term interest? I thought the fed only set one universal interest target.
- kamarg 8y agoShort and long term interest rates in this case are for US Treasury Bonds that mature at different lengths of time. Short term bonds tend to have lower interest rates since you're taking less risk that your money will be tied up when the economy grows at a faster pace. If you invest in long term bonds and the economy hits a growth spurt, your money is stuck for a much longer period of time earning less interest than if you had invested in something other than that bond. Edit: Missed the first question in your post. The Federal Reserve is essentially buying fewer Treasury Bonds when the bonds it currently holds matures. Instead of reinvesting the payoff + interest that it received for those bonds, it is now just taking that money and essentially keeping it out of circulation.
- haskellandchill 8y agoIf we weren't going to enter a recession anyway, a trade war will surely accelerate the process.
- debt 8y agoWhy do central banks still want to drive down long-term interest rates?
- tryptophan 8y agoThey don't. QE ended many years ago.
- melling 8y agoThe unwind of QE is just getting started. It’ll be interesting to see the impact.
- tryptophan 8y agoIf anything, unwinding QE would raise long term rates.
- melling 8y agoYou are oversimplifying it. Actually, no one knows the repercussions.
- chiaro 8y agohttps://tradingeconomics.com/united-states/interest-rate https://tradingeconomics.com/united-states/interest-rate they don't
- ameister14 8y agohttps://www.bloomberg.com/news/articles/2018-05-14/fed-s-bullard-blames-central-bank-for-flattening-yield-curve https://www.bloomberg.com/news/articles/2018-05-14/fed-s-bul... David Kelly from JPMorgan and Bullard, the head of the Fed Reserve of St. Louis, say the yield curve going inverted doesn't mean that much because it's being manipulated by the Fed - that means it's broken as a measuring tool (still should be watched, though)
- Analemma_ 8y agoA Fed chairman is never going to say, "Yup, there's a recession coming": the incentives of their position don't permit it. So they will always come up with reasons why a signal with a previous 100% success rate doesn't mean much now, but in the end, it always amounts to "This time is different", aka, the four most expensive words in history.
- justwalt 8y agoNote that it isn’t quite a 100% success rate, there was a false positive in the 60s.
- Eridrus 8y agoLooking at the table, it's odd that only "inversions" are counted as predictions, and there seem to be far more cases where it got "close" to zero, but not quite there. Without a good explanation on why that exact point is so critical, I am a bit skeptical that this is anything but noise. If there is a good explanation of why it is critical, then we're not really in worrying territory yet either then, because we're not there yet, and we're in the zone of lots more false positives.
- ISL 8y agoAn inverted yield curve is an explicit statement that bond buyers expect the near term to be worse than the long term. When the yield on the long-term note is smaller than the short-term yield, and buyers would still rather buy the long-term note, something is afoot.
- madballneek 8y agoI've been hearing this for years. It'll happen when it happens and no one can actually predict. #golong
- solotronics 8y agoI always toyed with the idea of taking small positions far out of the money buying puts to hedge against my 401k.
- coliveira 8y agoOptions are fairly priced. Meaning that they are priced according to the risk. Unless you have some very good reason to use them, they can lead to ruin. This is just another way to say that it is like playing in the casino. On the other hand, if you have a lot of gains in the stock market, using options may be a small price to keep your piece of mind. Just understand that they give you no clear edge.
- jedberg 8y agoIf used correctly, options are like buying an insurance policy. You pay a small amount up front to hedge against large future losses. Hence where the term "hedge fund" comes from.
- cityhomesteader 8y agoPretty much every finance site - marketwatch, wsj, cnbc, bloomberg, zerohedge, etc along with the peter schiffs/etc clickbait it. For some reason, nytimes paywalled clickbait is constantly spammed here. The inverted yield curve. There are thousands of articles about the inverted yield curve. The death cross. The black swan event. All just voodoo clickbait nonsense. Also, I love how the nytimes say "wall st is concerned" as if they knew what wall st was thinking and most importantly, they think that wall st is one entity. A lot of players make up wall st. If any of these people at these news companies knew what wall st was thinking, they wouldn't be working at news companies making pathetic union salaries. They'd worked in finance and retire before they were 25. Simply put, when the big players want there to be a recession, there will be a recession. Markets are human created and controlled by humans. It isn't a natural entity following the laws of nature. The invisible hand of the market doesn't mean that the hand controlling the market doesn't exist. It just means that us mere peasants aren't allowed to see it.
- tjr225 8y agoAs someone who (I'm guessing like a lot of others who post here) didn't really have any financial responsibilities during the .com bust and the real estate bust, it will be interesting to have a neck in the game this go around!
- fokinsean 8y agoSame, I remember how much the last one stressed out my Dad. I was in high school and didn't fully appreciate the significance of what was going on. I'm a bit anxious anticipating the next one, but it's part of the game!
- johnchristopher 8y ago> [..] part of the game! Why not trying to spice things up with a baby coming at the same time or your significant other being diagnosed with cancer ? /s Wtf, people :|.
- madamelic 8y agoPessimism is never fun.
- Bromskloss 8y agoWohoo! :-)
- LarryDarrell 8y agoIt's not a game. Suicide rates will go up. People in their late 40s are going to get laid off and have a hard time finding equivalent work ever again. There are a lot of people straining themselves to buy a home at this exact moment. Kids graduating with record student debt, thinking they did everything they were supposed to do, will find themselves in an even softer economy. And all of this will happen during a 4 year assault on our social safety nets.
- 8y ago
- javiramos 8y agoA page with technical documents and data explaining the yield curve as a recession leading indicator [1]. [1] https://www.newyorkfed.org/research/capital_markets/ycfaq.html https://www.newyorkfed.org/research/capital_markets/ycfaq.ht...
- mhuffman 8y agoI don't agree with Ray Dalio on everything, but his take on the business cycle seems useful and solid: [1] https://www.youtube.com/watch?v=PHe0bXAIuk0 https://www.youtube.com/watch?v=PHe0bXAIuk0
- Bromskloss 8y agoSpecifically, what is presented here is a Keynesian view, right?
- peterwwillis 8y agoWhile it's not a very accurate predictor, since 1960 there has been a US economic recession once every 5 to 10 years. The last one ended in 2009, 9 years ago.
- pnathan 8y agoYep. "We're due" is my perspective on bear markets. We've had a bull for a long time now, and there's adequate macro factors that a tipoff into a bear is a fairly reasonable expectation. In other words, it's quite time to make sure your holdings are prepared for a recession.
- TimTheTinker 8y ago> make sure your holdings are prepared for a recession How do you do that? If you're market-invested, there's very little chance of actually predicting the timing of the downturn. Perhaps sell while confidence is high and then buy like mad when prices have gone way down? Sounds risky...
- kickopotomus 8y agoYeah trying to "time the market" is generally higher risk. I am not offering any sort of advice, but personally I am just making sure my emergency fund is healthy (>=6 months of expenses) and looking at lower risk investment options like CDs.
- pnathan 8y ago> make sure your holdings are prepared for a recession Make sure your bond / stock / cash / etc holdings are properly balanced. Don't overweight in one area. If you've not paid attention to your risk exposure over the past while, it's a good time to do so!
- deleted 8y ago[deleted]
- zeveb 8y agoI think it's nearly unarguable that the current market is irrational. The problem is the old adage that the market can remain irrational longer than you can remain solvent, and thus simply shorting it can result in short-term bankruptcy. Worse, there's a corollary that even trying to move your funds into lower-risk vehicles now can still lead to long-term losses vice keeping them in higher-risk investments now and moving them later (e.g. in a month, or a year, or two years). I honestly don't know what to do with my money. Right now I'm basically keeping everything where it is: not selling stocks, bonds or real estate, but not buying much either. But leaving my cash as cash has its own cost.
- mnctvanj 8y agoIn same boat. I've just been splitting my new investments between stock and cash and treat my cash as part of my diversification strategy (or a hedge against possible market peak). If a recession occurs, I'll hope it drops a lot, put my cash back in, and hope it comes back up. All those things have always happened (recession, recovery - not necessarily me timing a market bottom) so I feel ok about my cash. Whatever it loses in value to inflation should come back if I buy cheaper stocks during a market lull. Or so I tell myself.
- yosito 8y agoSo it's probably a good idea to have some investments that aren't tied to USD right now, yeah?
- qaq 8y agoUS due to its unique position can offload it's problems on the world at large it had -3% GDP in 2009 for some countries it dropped 10X that.
- tryptophan 8y agoGlobal markets have at least .5 correlation with each other. Doesn't matter which country or money you buy investments in. If you want to avoid market risk then just stick to short term bonds(arguably the safest investment).
- pretendscholar 8y agoRecessions in other parts of the world don't always affect the US but recessions in the US always affect other parts of the world.
- mabbo 8y agoIt's almost always smarter to have a geographically diverse portfolio, and to invest for the long term. I use a low-fee robo-investor, WealthSimple[0], that has me invested in a variety of ETFs (Canadian, American, international) and bonds, and will rebalance my portfolio when any specific market falls or grows more than the others. I prefer this kind of investing because it's stupid, cheap, and works. [0]https://wealthsimple.com/ https://wealthsimple.com/ Or https://wealthsimple.com/invite/FCU4AG https://wealthsimple.com/invite/FCU4AG for a referral that gets you both of us some additional cash managed for free.
- cal5k 8y agoAn article from 2005 with the same prediction: http://money.cnn.com/2005/12/27/news/economy/inverted_yield_curve/index.htm http://money.cnn.com/2005/12/27/news/economy/inverted_yield_... The recession didn't happen until 2-3 years after that, making me question the utility of such predictions. "A recession will happen - eventually" is about as useful as predicting your own eventual demise.
- ISL 8y agoThe S&P on roughly that date was 1268. In the depths of the recession, it reached as low as 684.
- yellowstuff 8y agoThen a year after the lows it was back over 1200, and it's basically been straight up since then. Unless you timed things very accurately you were better off simply holding.
- codingdave 8y agoOver the long run, that is always true. Just hold and grow, until you are within 10 years of retiring. Then move to a more conservative position.
- timr 8y ago"Over the long run, that is always true. Just hold and grow, until you are within 10 years of retiring." No, it isn't. It's quite possible to lose money with a buy-and-hold strategy if you get unlucky, particularly if you aren't diversified. It's probably the most reliable way of investing, but you can still lose money. Stocks are not guaranteed to go up over all possible 50-year intervals. Monte carlo simulations of S&P500 investments illustrate this: https://seekingalpha.com/article/4109617-buy-hold-just-works?page=2 https://seekingalpha.com/article/4109617-buy-hold-just-works...
- 8y ago
- dlandis 8y agoOf course they bury the most important part in the last sentence of the article. > So if long-term rates were pushed lower by central bank bond buying, and now short-term rates are being pushed higher as the Fed tightens its monetary policy, the yield curve has nowhere to go but flatter. “In the current environment, I think it’s a less reliable indicator than it has been in the past,” said Matthew Luzzetti, a senior economist at Deutsche Bank.
- simonsarris 8y agoPeople often note, like another comment here notes: > since 1960 there has been a US economic recession once every 5 to 10 years. The last one ended in 2009, 9 years ago This is an interesting line of thinking, but I think it's a mistake. We can use this fact itself and circumscribe some meta-thinking around it. Put the same fact another way, this is arguing that the 1960's started a brand new paradigm that was materially different from the 1950's-before. For all we know, the 2020's+ will repeat the past (in a way) and usher in a paradigm different from the 1960's! No more recessions every 5-10 years. So: * Maybe from now on there will be a recession every 20 years * Or Fed manipulation will get "so good" that we won't have large recessions * Or capital's other options for returns (real estate, emerging markets, etc) will look bad-ish for the next 10 years and continue to prop up the stock market because its the only good outlet for extra cash for a decade or three I could see any of these being plausible. I think leaning on the past is a bit of a mistake. Personally, I think the third one is quite possibly the case. Other non-stock-market options simply do not look as attractive as they used to, relatively. The future will look very different from the past, as Thiel says.
- alexpetralia 8y agoOne thing we can be sure will _not_ be different is the irrationality of human nature.
- imbokodo 8y ago> Or capital's other options for returns (real estate, emerging markets, etc) will look bad-ish for the next 10 years and continue to prop up the stock market because its the only good outlet for extra cash for a decade or three. And if capital flows into the stock market, not to keep pace with growth or to expropriate the standard rate of profit, but simply because it has nowhere else to go, then the natural outcome of this is overproduction. Which leads to a falling rate of profit. Which eventually means falling stock prices, as earnings and market cap are always linked over the long term (even for Amazon.com, which will have to start showing a profit when it moves from #8 to #2 on the Fortune 500 list).
- zukzuk 8y ago"This time it's different" is literally the last things always said right before the next recession kicks in. A nice, 500 page overview: https://press.princeton.edu/titles/8973.html https://press.princeton.edu/titles/8973.html
- throwaway5752 8y agoThe difference is that a powerful group of people is enacting policies that have triggered recession/depression in the past and no good historical precedent/academic support for working. It's seems kind of crazy to me we're ignoring that part. We're starting trade wars on multiple fronts, exiting or weakening multilateral alliances (and simultaneous giving an advantage to our global adversaries), and weakening the balance sheet of the federal government (during a business cycle peak). Of course this is going to end terribly.
- shams93 8y agoUltimately they're not raising tariffs on end products, they're raising it on parts, but that will still cause inflation plus unemployment because tariffs on parts will drive production out of the US where it gets taxed on the way back in, so you'll both lose exiting US jobs while driving up the cost of products coming back in as you both make it impossible to produce in the US and also drive up prices.
- throwaway5752 8y agoWhat reason do you have for expecting current tariffs to not escalate into broader and more destructive tariffs in this ongoing trade war? Are you basing this on rational choice theory? Because I have some disappointing news for you in that case.
- amluto 8y agoIf I were in charge of a country subject to new tariffs, I would consider playing it differently. Rather than applying punitive tariffs back, I would consider trying to get US manufacturers that are affected to the tariffs to move to my country and export finished products to the US. After all, the nonsensical structure of Trump’s tariffs may be more harmful to the US than to anyone else.
- AnimalMuppet 8y agoThe problem with that is timing. Politically, people demand action now - like, this week. Getting a business to move takes months to years.
- cubano 8y agoIt's my current understanding that recessions are caused not by economic news, but by the people's reaction to it's apparent demise. I feel like they are priming the pump with stuff like this...I guess it's time to hit the flush button on the Dow and suck all that "buy-n-hold" money outta the market, and start the cycle all over again. Cynical? I guess but I call it like I see it.
- ataturk 8y agoThese breathless "now fear this" articles aren't worth reading. Furthermore, the quality of the NYT is so low, that it isn't worth reading, either.
- apo 8y agoOne way to profit from yield curve inversion: When you see a persistent yield curve inversion, buy the longest maturity treasuries you can find. For example, 30 years. This is counterintuitive because shorter maturities (2, 5 years) will yield more when you make your purchase. However, your capital gains will likely compensate for missed yield after the recession has run its course and return a tidy profit. Alternatively, the economic landscape after the recession may be much worse afterwords. Persistently low interest rates (even deflation) will be in your favor if you decide to keep your treasuries because you'll find nothing to buy with a better risk/return ratio. Of course, it goes without saying that selling your long treasuries to pay expenses will truncate your returns.
- Bromskloss 8y ago> When you see a persistent yield curve inversion, buy the longest maturity treasuries you can find. For example, 30 years. > This is counterintuitive because shorter maturities (2, 5 years) will yield more when you make your purchase. However, your capital gains will likely compensate for missed yield after the recession has run its course and return a tidy profit. Sorry, could you flesh out the details here? You buy treasuries with a long maturity. What is expected to happen with them after that, and after how long?
- jakecrouch 8y agoOne explanation of the inflation of the public and private markets in the US is that the Chinese are in the middle of a massive debt bubble, anyone with cash there has nothing good to do with it, so they've been willing to invest in the US at almost any price.
- adventured 8y agoThat isn't a good explanation. China has extremely tight capital export controls in place, you can't easily get your money out of China to invest it into the US. Beyond the annual $50,000 currency conversion limit they've put into place domestically, they've also made it an obnoxious and suspicious process to go through even if you attempt to convert the allowed $50k. The US is far wealthier than China is anyway, and that's with 1/4 as many people. There is no need for Chinese capital to spur asset inflation in the US, the US has more than enough capital to do that on its own.
- Animats 8y agoThere's not much question that a recession is coming. But when? And what form will it take? The last recession was driven by a price collapse in housing. That was unusual. The next one is more likely to be driven by trade problems, which is more common historically. Also, the last few years have seen a lot of investment into stuff that's not paying off, and after a few years, that comes back to bite you.
- pesmhey 8y agoCould you elaborate on bad investments made over the last few years?
- Mountain_Skies 8y agoPerhaps the next thing will be large scale consumerism exhaustion. Consumers not getting the same thrill out of a new car or the latest iDevice that they used to stop buying so much new stuff. Not for ecological or ideological reasons but just out of boredom or exhaustion of the consumer cycle. Even fashion trends seem to be slowing down with less and less reason to buy a new wardrobe as often.
- Bromskloss 8y agoThere is something sketchy in the underlying report [0]. In figure 2, they draw what I understand to be a curve of the probability (according to their model) of a recession happening within 12 months. The strange part is that they identify a "critical threshold" (at probability 0.24), and seem to imply that when the prediction goes above that value, a recession happens. That's not how probabilities work. Are they meaning something else, or are they just lost here? [0] https://www.frbsf.org/economic-research/publications/economic-letter/2018/march/economic-forecasts-with-yield-curve/ https://www.frbsf.org/economic-research/publications/economi...
- debt 8y agoThe probability of a recession rises immediately prior to a recession. When the recession occurs, the probability drops immediately back down below the threshold; as the probability of a back-to-back recession is very low and the conditions that caused the recession immediately change. So the critical threshold is saying "at any point beyond this line, as conditions remain the same, bad things may happen at a very accelerated rate" I think that's why the lines jump from .24 or .6 to 1.0(recession) and then back below .24. So as far as I can tell, they're not saying a recession is guaranteed if the probability increases beyond the critical threshold, but are instead saying the probability of a recession increases more quickly up into the point of an actual recession than our ability to reliably predict and update the probabilities that would predict said recession. but idk
- Bromskloss 8y ago> I think that's why the lines jump from .24 or .6 to 1.0(recession) and then back below .24. None of the curves ever go to 1. The main curve ("spread only") never even reaches 0.4. > So as far as I can tell, they're not saying a recession is guaranteed if the probability increases beyond the critical threshold They certainly shouldn't be saying that, since the curve being at that level means precisely that the probability of recession is 0.24, not 1.
- hestefisk 8y agoSomeone should A) run a neural network across thousands of historical economic / financial metrics and find the best predictor B) ?????? C) Profit!!!
- gepoch 8y agoB is where you overfit your model and D is where oops actually we didn't profit :(
- jessaustin 8y agoDo you imply that someone has tried this before?!
- karlmcguire 8y agoThis time, we add a blockchain!1!!
- saryant 8y agoSomeone should read up on Long Term Capital Management.
- omegaworks 8y ago> in the United States, where borrowed money is the lifeblood of economic activity Does it work differently elsewhere?
- awinder 8y agoI’m curious about a related question for people who have been around a bit (or are just generally knowledgeable). How should your average retirement investor react when reading about the market like this? I’ve been well-educated on staying the course, markets will dip etc. But I entered the market with some force at the depths of the last recession so it’s been very easy to take this advice. Now it feels like sitting on a railroad track waiting to get smooshed by an oncoming train because it’s “the right thing to do”.
- Apocryphon 8y ago"Sure, it seems like a strange time to be worried about recession. Unemployment is at an 18-year low, corporate investment is picking up steam, and consumer spending shows signs of rebounding." Isn't that always the best time to be worried about recession?
- deleted 8y ago[deleted]
- debt 8y agoI can see it now... Investors will mistake the loud pop caused by the bursting crypto bubble for gunshots. They'll jump for cover, becoming scared of tech, but as they do they'll then mistake another loud sound, this time a kaboom, of the AI hype cycle exploding. With it will go chatbots, self-driving cars and voice-powered assistants. Then there's a rupture and a glow then a mushroom cloud appears on the horizon. People are unsure of what happened. Was that Facebook? Amazon? Either way, this will tear a hole through the spacetime fabric of tech itself thus causing a black hole of fear; Google and Apple will hold on for dear life as everything around them gets sucked in. At first a few Bird scooters fly past into the black hole of fear, Uber/Lyft sail by and explode in mid-air as they're sucked in, Zenefits instantly is ripped apart and evaporates creating a sort of Aurora Borealis surrounding the massive hole. Somehow the blackhole of fear eventually closes and everything in midair tumbles back to sanity. Google/Apple regain their footing and observe the destruction around them. The only thing left will be a few broken Lime scooters, a robotic arm that makes burgers and shitload of defense contracts.
- freehunter 8y ago>bursting crypto bubble I've been looking for lateral career moves in my industry for a while now, and I'll be damned if every "exciting new company" in information security isn't a blockchain company. And not a single one of them can tell you what they're doing with the blockchain to help with security, they can only tell you how much money they're making.
- williesleg 8y agoSame old same old, just like those who said we'd have a nuclear war with North Korea. The real news is not the fake news. These are the same people who told us Hillary had a 99% chance of winning. Same people who can't even manage their own newspaper to make a profit. Bitter leftist marxists.
- lpgauth 8y agoAssuming there's a recession coming what is a good investment strategy?
- Nzen 8y agoI am an undereducated stranger who hasn't grown a nest egg into millions. I think I've heard the advice of people who have, albiet not reproducibly. +<I only practice once a year, unlike Warren Buffett who has employees who think on this full time all year.> Consider treating what I say, on this NP-Hard problem, as naive misinformation. It ultimately depends on your time scale and tolerance for paper money variation. I've heard buy low, sell high is good; and, I have twenty or more years to move things around. So, when I notice a recession, I increase my proportion of stocks, on the assumption that they are undervalued. If I were to notice a bubble (unlikely) I would increase my proportion of government backed bonds, to wait until the next recession. If I were retirement age, and needed to reify that paper into real money, I'd probably divest stocks in favor of government bonds that hold value during the downturn. "Government", on the assumption that they are less likely to default than corporate backed bonds.
- george-takei 8y agoPlenty of lamp posts across America to hang the leftists from.
- Sophistifunk 8y agoCan anybody ELI5? It seems to me that having the long-term bonds at a similar ratio would mean good predictions? Wouldn't the rates have to be higher if trouble is coming, in order to make the increased risk of a longer term bond worth it?
- crb002 8y agoIt depends if Trump tariffs raise enough tax revenue to offset deficit spending and curb inflation. Like to see the tariff revenue numbers at the end of the next quarter. The potential upside is that tariffs are stress testing industries with supply chain issues, shaking out mal-investment.
- jokoon 8y agoIsn't scare mongering a common way to prevent risk? Usually if the future seems bleak, don't traders adjust their behavior and investments to avoid loss? As long as finance is scared, it seems that a recession cannot happen. Of course some might get frustrated and find that they are unable to expand their business, and break through barriers, and lobby against regulations. I wonder how wall Street is behaving since Trump's election, and if risky policy is being put in place, and if wall Street is being cautious.