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Discussion in 'Stock Market Today' started by emmett kelly, Jul 29, 2022.
many interpretations of a recession floating around out there. what say you?
I voted yes. I am not buying into all of the verbal judo as of late about the "technical" definition argument. My opinion...we have survived it before and we will survive it again. Lets just get on with fixing the issues and continue to move the US forward...together.
I'm up 16% in a week on Tesla. Economy is strong, just bruised a little. Have a ice cold Billy Beer and watch the show.
Arbitrary "recession" definitions mean nothing. The question is "will the economy be better or worse in 3 months?" I say worse.
ECRI Weekly Leading Index says things will get worse in the next few months.
It will be a interesting 3 months.
Both Q1 and Q2 Real GDP had negative growth. If Q3 is down then there is big trouble. If Q3 bounces up then everything will be back to peachy keen again.
Should you want to examine GDP without inflation adjustments, here is an image.
There are two questions floating through this topic.
1) Are we in a recession? -> No
2) Will we be better or worse off in 3 months? -> I don't know
I will say this: I think some bad stuff is going to go down in Q4 and Q1. There are too many companies that are coming off two or three bad quarters. Their balance sheets are going to start looking pretty red by the end of the year and that will trigger layoffs, etc. Of course, that doesn't mean we are in a recession. Things seem to be going surprisingly well, all things considered.
As always, I am doing nothing to brace for the end of the world.
Tom's strategy: Lead with your chin and do your best to not have a glass jaw.
Isn't that the only question that matters going forward.
Not to me.
It is a question I cannot answer. I'm not even convicted enough in my concern about the end of year when companies passing 4 consecutive down quarters and axing employees in wholesale quantities, as they would have in any other earnings pull back. We could slide by these problems with little impact.
I simply don't know what will happen in that detail and I do not believe anyone else does, either. At least, not with the certainty necessary to make a portfolio adjustment.
A year from now, I could easily be worth less than I am today but I will be happy as long as I own good companies. I'd far rather own a good company than have cash.
Full disclosure: I haven't sold a thing, nor do I plan to, but I have my DRIPs turned off and we are building our near cash position.
Here is an interesting chart I created using FRED series GDP and GDPC1 to calculate the inflation numbers the FED has been using. In the 80s Volcker had to "kill" the economy to remove this much inflation.
let's get a temperature check on this one.
I still say no recession.
Employment keeps rising, so how is the economy supposed to contract?
AMD's big miss? A +30% increase from last year, instead of the ridiculous +50% that they were hyping. +30% in a recession?
There is a slowdown in growth, but a recession is supposed to be shrinking.
Looking for a recession in ~2 years, since we've got the yield curve inversion recently.
the R word is floating around the board today. what say you?
We have been in recession for 6 months. We will probably exit the recession in Q2 but time will tell.
I say no recession yet.
And if I'm right, then I think we still see SPX hit an all-time high.
Funny thing is the yield curve un-inverts right around when the recession really hits. Since the inversion right now is so big, I think the recession could be 2+ years away.
There's 4 things I look at for a recession...it seems everyone just goes by yield curve, which is just wrong because ever since 1973 the SPX peaks after the yield curve inverted. If you want to be so simple: yield curve inverts, SPX peaks, then recession.
Anyway, back to the 4 things: unemployment claims, yield curve, new home sales, LEI (leading economic indicators).
Now it looks like LEI is calling a recession. If you really want to see some details, check out https://www.advisorperspectives.com...-february-still-pointing-to-risk-of-recession. Beware it's not just simple raw data, there's some statistical analysis involved. Not complex at all, but if you've never seen it before..."12-Month moving average of the 12-Month rate of change"
Whenever this one goes red, there's a recession.
Combine the 4 things that I look at for a recession, I think one may be called real soon. Although we do NOT have falling GDP right now, and people like to wait 2 quarters for that. It's possible they could go back and amend the last couple of quarters.
Gotta say, I was holding out for one more SPX peak.
Europe is at all-time highs (DAX, CAC40).
Not crazy to think the US will join them.