Coming Economic/Markets Crash

[Front Ranger]

A lot of very smart people think that we're heading rapidly into an economic downturn, and some believe it could be pretty severe.

The stock market is already down over 10% this year, and some believe it has a long way to go down. 

The housing market has seen record appreciation the past couple years, and now with rising interest rates homes have reached the upper levels of historic unaffordability. A lot of signals point to cooling and potentially a crash by end of the year.

With the mix of high inflation and rising interest rates in a highly leveraged environment, I think there it's very likely we're in for a rough ride overall economically the next couple years. A recession at minimum. 

Thoughts?

[Mr Marine Layer]

57 minutes ago, Front Ranger said:

A lot of very smart people think that we're heading rapidly into an economic downturn, and some believe it could be pretty severe.

The stock market is already down over 10% this year, and some believe it has a long way to go down. 

The housing market has seen record appreciation the past couple years, and now with rising interest rates homes have reached the upper levels of historic unaffordability. A lot of signals point to cooling and potentially a crash by end of the year.

With the mix of high inflation and rising interest rates in a highly leveraged environment, I think there it's very likely we're in for a rough ride overall economically the next couple years. A recession at minimum. 

Thoughts?

Thank you Joe

[Deweydog]

7 hours ago, Mr Marine Layer said:

Thank you Joe

I think his name is Jared.

[Andie]

8 hours ago, Mr Marine Layer said:

Thank you Joe

Last recession was 14 years ago. We’re due.  
Hard to say if it’s truly cyclical or if politics are at fault.  Either way, it sucks. (that’s a technical term) 

[Eujunga]

12 hours ago, Mr Marine Layer said:

Thank you Joe

I’m much more worried about the end result of rapidly worsening mindless echo-chamber polarization — as exemplified by pointless, childish sniping such as this — than I am any economic downturn.

[Iceresistance]

Gas Prices are posed to climb again.

[Mr Marine Layer]

4 hours ago, Deweydog said:

I think his name is Jared.

Actually it's Brandon 

[Deweydog]

16 hours ago, Front Ranger said:

A lot of very smart people think that we're heading rapidly into an economic downturn, and some believe it could be pretty severe.

The stock market is already down over 10% this year, and some believe it has a long way to go down. 

The housing market has seen record appreciation the past couple years, and now with rising interest rates homes have reached the upper levels of historic unaffordability. A lot of signals point to cooling and potentially a crash by end of the year.

With the mix of high inflation and rising interest rates in a highly leveraged environment, I think there it's very likely we're in for a rough ride overall economically the next couple years. A recession at minimum. 

Thoughts?

The threat of stagflation is definitely real, but far from settled at this point. This summer will be extremely pivotal, in my opinion, but things at this point are definitely not too far gone. Still a lot of positive growth signals right now that will need to do some unprecedented U-turns in order to put us on a clear path to recession.

It’s actually kind of refreshing at this point to see the Fed getting their comeuppance. I’m not much of an eternal optimist but it’s possible we come out this inflationary mess in better shape than we were when QE became the magic elixir.

[SilverFallsAndrew]

I think it will be interesting to see how policy makers respond to an economic downturn. Is printing as much money as possible the new normal in terms of a response. 

[Front Ranger]

45 minutes ago, Deweydog said:

The threat of stagflation is definitely real, but far from settled at this point. This summer will be extremely pivotal, in my opinion, but things at this point are definitely not too far gone. Still a lot of positive growth signals right now that will need to do some unprecedented U-turns in order to put us on a clear path to recession.

It’s actually kind of refreshing at this point to see the Fed getting their comeuppance. I’m not much of an eternal optimist but it’s possible we come out this inflationary mess in better shape than we were when QE became the magic elixir.

Yeah, I'm trying to see some way the Fed can land this thing softly as they think they can but just not seeing it. The only way they can probably tame inflation at this point is by crashing markets, which is almost certainly what will happen if they follow through on raising rates and QT.

I agree that the Fed deserves a ton of blame for putting the economy in this position by blowing QE bubbles that weren't necessary and distorted markets. I get that they had to step in and do something in March 2020, but the fact that they kept rates at zero all the way through 2021 was a grave error.

[Andie]

53 minutes ago, Deweydog said:

The threat of stagflation is definitely real, but far from settled at this point. This summer will be extremely pivotal, in my opinion, but things at this point are definitely not too far gone. Still a lot of positive growth signals right now that will need to do some unprecedented U-turns in order to put us on a clear path to recession.

It’s actually kind of refreshing at this point to see the Fed getting their comeuppance. I’m not much of an eternal optimist but it’s possible we come out this inflationary mess in better shape than we were when QE became the magic elixir.

The idea of depending on this White House to rescue this economy does not fill me with hope and optimism.  🫤

[Deweydog]

9 minutes ago, Andie said:

The idea of depending on this White House to rescue this economy does not fill me with hope and optimism.  🫤

The idea that any White House can rescue an economy is pretty unrealistic.

[SilverFallsAndrew]

20 minutes ago, Front Ranger said:

Yeah, I'm trying to see some way the Fed can land this thing softly as they think they can but just not seeing it. The only way they can probably tame inflation at this point is by crashing markets, which is almost certainly what will happen if they follow through on raising rates and QT.

I agree that the Fed deserves a ton of blame for putting the economy in this position by blowing QE bubbles that weren't necessary and distorted markets. I get that they had to step in and do something in March 2020, but the fact that they kept rates at zero all the way through 2021 was a grave error.

We were on the verge of a recession before the pandemic, and we did have the sharp downturn, but the massive injection of cash and low rates probably delayed the inevitable reckoning. 

[Andie]

23 minutes ago, Deweydog said:

The idea that any White House can rescue an economy is pretty unrealistic.

True, but they can do a lot to keep from flushing it down the pooper!   
Such as shooting itself in the foot by importing what will be a million people over the next year to feed and house.  
You know they all won’t be working, even at minimum wage.  These people will all be taxing the public medical services as well.  
 

When your household is struggling you don’t take in Aunt Peggy and her 6 kids.  Just sayin’.

[Deweydog]

41 minutes ago, Andie said:

True, but they can do a lot to keep from flushing it down the pooper!   
Such as shooting itself in the foot by importing what will be a million people over the next year to feed and house.  
You know they all won’t be working, even at minimum wage.  These people will all be taxing the public medical services as well.  
 

When your household is struggling you don’t take in Aunt Peggy and her 6 kids.  Just sayin’.

That’s definitely an issue, but from a macroeconomics standpoint it’s a very small drop in a very large bucket.

The easy target right now is what has been runaway money printing and debt-oriented economics of the last 13-14 years. Those years have been dominated by blue in the WH, but even Trump reveled in the Feds easy-money policies and even accelerated it in some ways via the tax cut. He knew the markets were his ace-in-the-hole for re-election. Biden’s first 15 months have been a disaster on lot of fronts, but saddling him with what has been a decade plus in the making is totally unfair.

[Iceresistance]

4 minutes ago, Deweydog said:

But saddling him with what has been a decade plus in the making is totally unfair.

They're trying to make him more popular with the people by bragging all the "Good" things he's done & downplaying ALL not do good things & it's threatening to unravel in the worst time possible, he's tanking really hard & his VP is even worse.

[Deweydog]

1 hour ago, Front Ranger said:

Yeah, I'm trying to see some way the Fed can land this thing softly as they think they can but just not seeing it. The only way they can probably tame inflation at this point is by crashing markets, which is almost certainly what will happen if they follow through on raising rates and QT.

I agree that the Fed deserves a ton of blame for putting the economy in this position by blowing QE bubbles that weren't necessary and distorted markets. I get that they had to step in and do something in March 2020, but the fact that they kept rates at zero all the way through 2021 was a grave error.

It’s gonna be choppy air for a while, but we’re missing some of the typical headwinds we see prior to going into a deep recession. That combined with the fact there is no clear bubble, save for MAYBE the commercial real estate market, has us in a position where conflicting signals leaves room for at least some optimism.

Rates are definitely gonna be ugly though. I’ve seen some shockcasts lately about 8-9% 30 year mortgages sometime in the next year.

 

[Deweydog]

3 minutes ago, Iceresistance said:

They're trying to make him more popular with the people by bragging all the "Good" things he's done & downplaying ALL not do good things & it's threatening to unravel in the worst time possible, he's tanking really hard & his VP is even worse.

This happens with any president, depending on the source. Obviously Biden has an advantage though with the MSM essentially in his back pocket.

Point is though, no single President is ever as responsible for economic successes/failures as the tribes would like to make us believe.

[Andie]

Biden could control an unforced error simply by returning to a sane immigration policy.  He could be a hero but his handlers have other plans.  Just wait till the bill is presented to house, feed, and care for people that have no employable skills other than the California produce market, already taken, and can not speak English.  

Texas knows these nightmares too well.  Now it will be experienced by all.

The drugs coming across haven’t even begun to be felt.  
There aren’t enough unskilled jobs in Texas, or the border States.  They’ll have to go farther afield.  And it will be costly.  90% or so don’t speak English.
Generally, Employers won’t hire them. 
Is anyone in DC on the Left really aware of what’s going on?  
Maybe they don’t care.  

[Front Ranger]

3 hours ago, Deweydog said:

It’s gonna be choppy air for a while, but we’re missing some of the typical headwinds we see prior to going into a deep recession. That combined with the fact there is no clear bubble, save for MAYBE the commercial real estate market, has us in a position where conflicting signals leaves room for at least some optimism.

Rates are definitely gonna be ugly though. I’ve seen some shockcasts lately about 8-9% 30 year mortgages sometime in the next year.

 

I think we definitely have some bubbles out there. The stock market, despite the correction its undergone this year, remains at very elevated price to earnings ratios, and has clearly been a huge beneficiary of all the money pumped into the economy since the last recession (and especially last couple years).

And as someone who works in real estate, I'm 100% convinced the residential real estate market has reached bubble status. The unprecedented rise in appreciation the past couple years has been driven by record low interest rates and increasing investor speculation. And now with rising rates we have this (which is actually outdated by a couple weeks, unaffordability is a bit higher now).

I think it's pretty likely we see home prices stall this summer in most markets, and start to drop some places by fall.

If we do see an "everything crash" similar to 2008, I think stocks go first then housing - sort of opposite to what happened with that recession.

[Deweydog]

2 hours ago, Front Ranger said:

I think we definitely have some bubbles out there. The stock market, despite the correction its undergone this year, remains at very elevated price to earnings ratios, and has clearly been a huge beneficiary of all the money pumped into the economy since the last recession (and especially last couple years).

And as someone who works in real estate, I'm 100% convinced the residential real estate market has reached bubble status. The unprecedented rise in appreciation the past couple years has been driven by record low interest rates and increasing investor speculation. And now with rising rates we have this (which is actually outdated by a couple weeks, unaffordability is a bit higher now).

I think it's pretty likely we see home prices stall this summer in most markets, and start to drop some places by fall.

If we do see an "everything crash" similar to 2008, I think stocks go first then housing - sort of opposite to what happened with that recession.

The stock market indeed has some downside room left in the tank, although I’d hedge on the bright side. Mainly as we see a lot of corporate earnings exceeding expectations thanks to increased profit margins. Inflation ain’t all bad, despite the somewhat questionable ethics driving it.

And I suppose it’s reasonable to call it a small bubble in the housing market, although there just isn’t nearly the explosive potential we saw back in 2007/2008. The lending ridiculousness of the early to mid 2000’s just isn’t there and even those who are essentially rendering themselves house-poor are not looking at automatic default  when balloon payments or rate variability kicks in unexpectedly. There’s plenty of bad money out there but there isn’t nearly as much as was around at that time.

[Front Ranger]

3 hours ago, Deweydog said:

The stock market indeed has some downside room left in the tank, although I’d hedge on the bright side. Mainly as we see a lot of corporate earnings exceeding expectations thanks to increased profit margins. Inflation ain’t all bad, despite the somewhat questionable ethics driving it.

And I suppose it’s reasonable to call it a small bubble in the housing market, although there just isn’t nearly the explosive potential we saw back in 2007/2008. The lending ridiculousness of the early to mid 2000’s just isn’t there and even those who are essentially rendering themselves house-poor are not looking at automatic default  when balloon payments or rate variability kicks in unexpectedly. There’s plenty of bad money out there but there isn’t nearly as much as was around at that time.

It's a different kind of bubble, but still I believe a bubble. That one was built on poor lending practices and over-leveraging (mostly, though other factors as well). This one is built on ridiculously low rates and mega QE. Which has led to overleveraging. 

Take those things away and I think we see a significant reversion towards the mean. Not to mention we're at the upper bounds of historic unaffordability, which has almost always preceded at the very least a correction.

Trust me, I have a lot of personal reasons to hope I'm wrong.

[Mr Marine Layer]

6 hours ago, Front Ranger said:

It's a different kind of bubble, but still I believe a bubble. That one was built on poor lending practices and over-leveraging (mostly, though other factors as well). This one is built on ridiculously low rates and mega QE. Which has led to overleveraging. 

Take those things away and I think we see a significant reversion towards the mean. Not to mention we're at the upper bounds of historic unaffordability, which has almost always preceded at the very least a correction.

Trust me, I have a lot of personal reasons to hope I'm wrong.

Well yes, interest rate on my bank account is something like 0.000000000000000000000000000000000000000000001%.

[SnarkyGoblin]

{sigh...}

A major recession is coming, Deutsche Bank warns - CNN

[Andie]

Totally agree on real estate bubble. Pretty insane.  
 

We’re due an economic recession. 
Kinda like taking out the garbage before it stinks the place up!  Maybe we won’t hit 2008 levels but there is a war on so who knows? 

[Front Ranger]

Nasdaq is now down over 20% YTD. Still well above where it was pre-covid, though.

I'm not sure many people realize just how insane the run-up from spring 2020 to fall 2021 was, once the Fed opened the debt floodgates and the government started sending free money to everyone. 

Nothing really comparable in history, that I'm aware of.

[Andie]

20%     That’s a correction.  
 

May as well get it over with. 
Congress will swing Right this fall and 2023 will look very different.  Good or bad depends on your politics.  But a healthy economy makes us all better and stronger until some bozo want to pass some big a** spending bill.  

[Iceresistance]

On 4/26/2022 at 7:17 PM, Front Ranger said:

Nasdaq is now down over 20% YTD. Still well above where it was pre-covid, though.

I'm not sure many people realize just how insane the run-up from spring 2020 to fall 2021 was, once the Fed opened the debt floodgates and the government started sending free money to everyone. 

Nothing really comparable in history, that I'm aware of.

Biden let the Democrats do the spending on TRILLIONS and look at the Inflation!

[Andie]

Do Presidents Create Recessions? Or Inherit them?   
Really  interesting article.  Not complicated  - just facts.  

https://amp.usatoday.com/amp/5235957002

Lag times for policies to kick in.Evidence pointing to better economic growth under Democrats is an illusion created by the timing of when presidents enter office, says Timothy Kane at the Hoover Institution think tank at Stanford University. "The main reason it’s nearly impossible to measure presidential economic performance is the long lag between policy and effect," he says.

The result: "No statistically significant advantage for either party in the White House."

[Front Ranger]

Mortgage rates over 5.5% now, home affordability nationally is nearing worst on record: https://www.cnbc.com/2022/05/02/mortgage-rates-surge-as-home-affordability-nears-record-worst.html

 

[hawkstwelve]

1 hour ago, Front Ranger said:

Mortgage rates over 5.5% now, home affordability nationally is nearing worst on record: https://www.cnbc.com/2022/05/02/mortgage-rates-surge-as-home-affordability-nears-record-worst.html

 

It's completely anecdotal but when we first applied for our mortgage at the start of our home search (mid/end March) our interest rate quote was 4.35%. It's now at 6.0% unless we buy it down. So that's great. 

[Andie]

That stinks.   Will mean you buy it down or refinance later when it drops.
Ours is 2.85%.   But we refinanced to cut it in half.  
 

 

[Front Ranger]

Nasdaq now down over 27% from its highs.

And if a pic is worth a thousand words...

[Andie]

It will be interesting to watch if it drops below its 2020 low.  

[Mr Marine Layer]

3 hours ago, Front Ranger said:

Nasdaq now down over 27% from its highs.

And if a pic is worth a thousand words...

Looks like a COVID surge.

[Rubus Leucodermis]

On 5/2/2022 at 6:39 AM, Andie said:

Do Presidents Create Recessions? Or Inherit them?  

They get blamed for them. Always been that way.

[Iceresistance]

4 hours ago, Front Ranger said:

Nasdaq now down over 27% from its highs.

And if a pic is worth a thousand words...

So is the Dow!

[Andie]

We’ll, that’s Recession.  
Curious how no one is uttering the word.  
Higher prices, lower Dow/NASDAQ can’t get any clearer.  But Biden sent billions to Ukraine and Russia threatens nukes.  
Riiiight.  
 

This reminds me of the Vietnam days.  

[IMoveALot_Weather]

I've lost $600!

[Iceresistance]

The DOW has already lost over 4000 points in the past month, and it won't stop dropping! It may get below 32,000 today at this rate, even though that it started at 32,730. It already lost over 600 points to 32,100.

[Iceresistance]

Inflation data is going to come out soon, and it's looking ugly.

 

Gas Prices are once again at a All-Time High, the state with the lowest average is just at $3.90.

Many Environmental groups have been pressuring the increase as well to force us to EV's, but they have poor mileage compared to ICE's (Internal Combustion Engine), more expensive per charge (Fill up), puts a strain on the power grid, drives up the Electricity Bill, and it sometimes refuses to charge!

[Andie]

No one stops to realize that all that electricity used petroleum to generate more electricity.   I’m all for it however we haven’t conquered to truckers issue. Our goods are still delivered by a massive trucking industry.  

We haven’t reached the age of George Jetson yet where stuff is flown in by a magically powered vehicle.  
We have to be real.  Big change takes adaptation and that takes time.  

[Iceresistance]

April 2022 Inflation is 8.3%, which is way higher than some expected. (Biden does not see it, he's tone-deaf)

[Front Ranger]

When Tesla, Apple, and Amazon are all down bigly for the year (as they are now), you know sh*t has gotten real.

[Iceresistance]

DOW is below 32,000

Gas is posed to be 100% over $4, with the National Average over $4.40

I'm seeing a massive economic meltdown that even China & Russia can't avoid, and Russia would be forced to either pull out, or go on WW1 style warfare.

 

And Biden with the Democrats are doing nothing, they think that this can resolve on it's own.

[IMoveALot_Weather]

I sold Amazon when it was at $3000 out of personal necessity.

 

Actually seems like that worked out well.

[IMoveALot_Weather]

On 5/11/2022 at 5:53 AM, Iceresistance said:

April 2022 Inflation is 8.3%, which is way higher than some expected. (Biden does not see it, he's tone-deaf)

Disinformation board!

[Iceresistance]

1 minute ago, IMoveALot_Weather said:

Disinformation board!

I'm being honest, the inflation rate is higher than they expected. They expected 8.1% Inflation rate.

[IMoveALot_Weather]

Just now, Iceresistance said:

I'm being honest, the inflation rate is higher than they expected. They expected 8.1% Inflation rate.

I know. And I'm saying where their priorities lie instead of potentially the biggest financial crisis of our lifetimes.

[Iceresistance]

1 minute ago, IMoveALot_Weather said:

I know. And I'm saying where their priorities lie instead of potentially the biggest financial crisis of our lifetimes.

I take things way too seriously.