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IS A RECESSION COMING, OR STARTED?


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Look at various past recessions and you should notice that it WAS NOT the Economy that went down first.

The markets went down first. The economy always lagged behind the market's demise.

So, how is it that we are ALWAYS SURPRISED (most professionals in the business) ? Yes, the general public should be and is shocked, just like the politicians and the Mandarins. But the professionals too? Then how did they get to be called professionals at all, or be in that job??????

Fear is hyped up to DRAMATIC PROPORTIONS, The media will bombard us with dooms day scenarios, via their allies in industry. We have come across this time after time, time after time, after time. In fact during Brexit the same sort of tactic was used to confuse us all and put fear of getting out. Later we found that it was not like that at all. We face normal financial and economic dynamics based on HOW THE MARKET FORCES ACT OR REACT, OR FAIL TO ACT CORRECTLY, AND BAD GOVERNMENT POLICIES.

Pundits offer governments "solutions", or do they really?

All they offer is, with hindsight, plausible reasons and the same OLD "SOLUTIONS" THAT FAILED TO GENUINELY SOLVE PERMANENTLY THE PROBLEMS. Most have their pet theories as to how, QE, helicopter money, debt write offs for companies, subsidies, etc... USE THE SAME "solutions" as used in the past, repeating the same all, same all. Same all tactics, habits and practices, or is it malpractices?

In the meantime how come the Central Bankers COULD NOT ANTICIPATE IT AND SOLVE IT? But wait! They have QE, INTEREST RATES and degradation of the currency (make our goods cheaper for abroad), that will fix it. DOES IT??? NOT REALLY.

The reason for purchasing power of money going down over the decades is simply the inability to control or manage inflation / deflation dynamics and financial stability in the first place. There are BASIC FUNDAMENTALS  FOR FINANCIAL STABILITY THAT ARE RARELY CONSIDERED OR HANDLED. INSTEAD THE FOCUS IS ON INTEREST RATES AND SUBSIDIES AND A FEW OTHER FACTORS.

We NEVER REALLY got out of the past recessions properly ---   JUST LOOK AT THE GDP GROWTH after each of the past several recessions and it has, on the whole, gotten to be less the next time round, overall. And the debts were not resolved by individuals. companies and others. Instead they were encouraged to feast on debts to get growth --- very low  interest rates   -- WOW, WHAT MAGIC. OUT WENT NATURAL ORGANIC GROWTH BASED ON MONEY PEOPLE HAVE FREE TO USE IN THEIR POCKETS. Artificial inducements seems to be the preferred way. No wonder things never solve fully and financial stress is maintained.

Subsidies, write offs, QEs, laws passed to make individual bank accounts to be "taxed" above a certain limit to "help out" failing banks or when there is a run on the banks, that is a possible action in the future.  etc, etc, etc. Governments have been sold doggy ideas to steal individuals money  as a desperate measure to solve a calamity which THEY PUT OFF HANDLING FOR DECADES. It has been done in various countries in various ways in the past, e.g Cyprus 10% tax on accounts, and gold confiscations in some countries in the past, and  in several countries your cash that you carry in the pocket can be, and has been confiscated without doing any wrong because the laws passed after 9/11 allowed it so.

The other way will be, in the future, banning paper money -- cash, and going digital. That will mean that full police state regarding financial control. Also, you then cannot take money out of the system. So if a bank run occurs, a big issue. And it will be great for negative interest rates charge. They have it worked out to save themselves after ruining the system themselves.

Before 2007 the FED the then Chairman told many that booms and bust were over. Celebrate, bing on new debts. And so the malpractices  continued (afterall that is what gots encouraged).

SO, IS A NEW RECESSION COMING? And what could it bring about?

WHAT DO YOU THING?

 

 

 

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  • 3 weeks later...
On 26/05/2022 at 12:34, skyreach said:

SO, IS A NEW RECESSION COMING? And what could it bring about?

XAU/USD Price Forecast: Tipping Point for Gold as FOMC Looms? Recession Talk and USD in Focus

 

Warren Venketas, Analyst

GOLD OUTLOOK

  • Spotlight on Fed rate decision.
  • Recession fears could help prop up gold.
  • Chart pattern breakouts being tested.
Gold Hits 4-Week Highs as U.S. Inflation Report Shocks Markets By  Investing.com

XAU/USD FUNDAMENTAL BACKDROP

Gold found some bids this morning after the week’s significant drop towards $1800/oz. The U.S. dollar being one such influence is trading marginally lower thus boosting gold prices ahead of the Fed’s interest rate decision later this evening (see calendar below). Retail sales will serve as a precursor to the Fed rate decision and we could see anything higher than 0.2% could add to the already hawkish narrative, leading to a stronger dollar and weaker gold.

ECONOMIC CALENDAR

us economic calendar

Source: DailyFX Economic Calendar

Money markets are currently pricing in 71bps which is a far cry from the Fed’s prior forward guidance of 50bps jumps (see table below). The revision higher sourced from last week’s U.S. inflation beat and should the Fed go against its own guidance, distrust for the central bank may begin to fester which could increase uncertainty and volatility in future meetings. The post-announcement press conference will serve as a key point of interest regarding the dot plot, inflation and GDP projections. Expect significant volatility for the dollar (and thus spot gold) pre and post-announcement but overall if we see a 75bps hike then my view remains in favor of the dollar. Traditionally, this should weigh negatively on gold prices but with talk of stagflation and an impending recession, bullions safe haven allure may come to the fore and allow the yellow metal to remain somewhat buoyant in the face of a ballooning dollar.

FED INTEREST RATE PROBABILITIES

federal reserve interest rate probabilities

Source: Refinitiv

The graphic below shows the tailwind factors adding to golds upside this morning in the way of lower real yields (blue) stemming from higher inflation expectations (white). This is unlikely to remain at current levels after the fed rate decision but it’s a good marker pre-Fed.

U.S. 10-YEAR TIPS BREAKEVEN RATE vs USD 5-YEAR FORWARD INFLATION LINKED SWAP

REAL YIELDS VS INFLATION FORECASTS

Source: Refinitiv

 

Jun 15, 2022 | DailyFX
Warren Venketas, Analyst

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On 26/05/2022 at 12:34, skyreach said:

IS A NEW RECESSION COMING?

Thanks for sharing @skyreach

U.S. recession isn’t ‘inevitable,’ but inflation is ‘unacceptably high,’ Treasury Secretary Yellen says
PUBLISHED SUN, JUN 19 2022 | Jessica Bursztynsky | CNBC

KEY POINTS

  • The recession that many Americans fear is coming is not “at all imminent,” Treasury Secretary Janet Yellen told ABC News on Sunday.
  • Talk of a recession has accelerated this year as inflation remains high and the Federal Reserve takes aggressive steps to counter.
  • On Wednesday, the Fed announced a 75 basis point interest rate hike, its largest since 1994.

image.png

The recession that many Americans fear is coming is not “at all imminent,” Treasury Secretary Janet Yellen said Sunday.

Talk of a recession has accelerated this year as inflation remains high and the Federal Reserve takes aggressive steps to counter it. On Wednesday, the Fed announced a 75 basis point interest rate hike, its largest since 1994. Fed Chair Jerome Powell also indicated the Federal Open Market Committee’s intent to continue its aggressive path of monetary policy tightening in order to rein in inflation.

At the same time, many expect the combination of resilience in consumer spending and job growth to keep the U.S. out of recession.

“I expect the economy to slow,” Yellen said in an interview with ABC’s “This Week.” “It’s been growing at a very rapid rate, as the economy, as the labor market, has recovered and we have reached full employment. It’s natural now that we expect a transition to steady and stable growth, but I don’t think a recession is at all inevitable.”

Although Yellen seemed optimistic about avoiding recession, the global economy is still facing serious threats in the coming months with the continued war in Ukraine, soaring inflation and the Covid-19 pandemic. “Clearly, inflation is unacceptably high,” Yellen said.

Still, she doesn’t believe a drop-off in consumer spending would be the cause of a recession. Yellen told ABC News that the U.S. labor market is the strongest of the post-war period and predicted that inflation would slow “in the months ahead.”

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13 minutes ago, MongiIG said:

 

 

 

Recession

Despite admitting the board of the central bank was very concerned about the downside risks to the economy, Governor Lowe was positive that a 'recession is out of the horizon' for Australia.

Governor Lowe does have sound reason to support his bold statement as evidence shows that domestic demand has been resilient even with winter virus outbreaks and the floods on the east coast. As such, GDP growth for the June quarter is anticipated to grow at the annual rate of 3.3%, lower than the previous two quarters but still higher than the pre-pandemic levels.

Furthermore, the combination of rising wages in a tight labour market and a high ratio of household savings should help Australian families to overcome the increasing price to some extent.

Overall, although GDP growth had slowed in the March quarter, Australia’s economy is still a safe distance away from worrying about a recession.

1655814700324.JPGSource: ABS
1655814731105.JPGSource: ABS; RBA
 
 
Hebe Chen | IG Market Analyst, Melbourne | Publication date: Tuesday 21 June 2022 
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