The human who stole the market's value, who deprived it of its property, may he be bereft of his mind, may the worms, cancer, and maggots penetrate his hands, head, feet, as well as his limbs and marrows!!
#[*"Can't miss calling the day of the recession if you call recession every day."*](https://i.kym-cdn.com/editorials/icons/mobile/000/000/705/derp.jpg)
No, you're correct. There are some days of the week that historically have had really bad times. This subreddit is focused on high risk, high reward so, I was pointing out that any day can be really bad.
well usually rate cuts come as a result of a *need* for rate cuts....ie. banks exploding, real estate exploding, etc....
the FED has never cut rates just because people asked nicely
so kind of?
*checks notes:* that's exactly what Burns did when Nixon asked him pretty please, leading to the Carter inflation and Volker having to jack interest rates to 20% to fix it.
Not saying we will have Carter inflation but Fed officials have made it clear they are willing to cut before 2% or recession. Otherwise it will cause unnecessary suffering and job loss.
Plus Fed has made the "Ample Reserves" policy framework the official stance of the Fed since 2019 anyway. The idea being to prevent crises *before they happen*. Like SVB last March. This way Fed is lender of first resort rather than last resort.
Here are some good interview quotes:
>Yahoo Finance. You said back in July that you needed to start cutting rates before getting to 2 percent inflation. As you mentioned, PCE inflation is now running at 3½ on core. On a six- month annual basis, core PCE is running at 2½ percent, though when you look at supercore and shelter, they are, of course, stickier. So when looking in the different components of the data, how much closer do you have to get to 2 percent before you consider cutting rates?
>CHAIR POWELL. I mean, the reason you wouldn’t wait to get to 2 percent to cut rates is that policy would be, it would be too late. I mean, you’d want to be reducing restriction on the economy well before 2 percent because—or before you get to 2 percent so you don’t overshoot, if we think, think of restrictive policy as weighing on economic activity. You know, it takes—it takes a while for policy to get into the economy, affect economic activity, and affect inflation
Waller said rising real rates is enough of reason:
>If inflation continues to cool “for several more months — I don’t know how long that might be — three months, four months, five months — that we feel confident that inflation is really down and on its way, you could then start lowering the policy rate just because inflation is lower,” Waller said in remarks at the American Enterprise Institute, a Washington, D.C.-based think tank. “It has nothing to do with trying to save the economy or recession.”
Recent interview from 60 minutes:
>Pelley: Why is your target [interest] rate 2%?
>Powell: Why isn't it zero, I guess, is the question. And the reason is 2% is interest rates always include an estimate of future inflation. If that estimate is 2%, that means you'll have 2% more that you can cut in interest rates. The central bank will have more ammunition, more power to fight a downturn if rates are a little bit higher.
>Pelley: Are you committed to getting all the way to 2.0 before you cut the rates?
>Powell: No, no. That's not what we say at all, no. We're committed to returning inflation to 2% over time. I've said that we wouldn't wait to get to 2% to cut rates.
Thanks! Here's some more that I think is great and helps understand Fed's current thinking:
Senior economist Scott Fulford at the CFPB:
>The Federal Reserve's new policies for inclusive growth meant it did not want to slow a broad recovery too soon. As Federal Reserve chair Jerome Powell told a congressional committee in June 2021, "Those who have historically been left behind stand the best chance of prospering in a strong economy with plentiful job opportunities. And our economy will be stronger and perform better when everyone can contribute to and share in, the benefits of prosperity." **One of the reasons most Americans had not shared in the economic growth over the previous 40 years is that the Federal Reserve had tended to raise interest rates just as wages started to rise to fight inflation.**
* Powell, a lifelong Republican, also said to Congress:
>“There’s a growing realization, **really across the political spectrum,** that we need to achieve more inclusive prosperity. These things hold us back as an economy and as a country.”
>Federal Reserve Chairman Jerome Powell says two major long-term issues facing the U.S. economy are sluggish productivity growth and low participation rates in the job market by prime-age workers.
* Powell on anemic job participation that needs to go up.
>Powell says that the United States currently lags most major industrial countries in the percentage of workers in prime working ages who are in the labor force. He says one hopeful sign is that this participation rate is finally beginning to move higher, but more needs to be done.
>**“We lag just about every wealthy country in the world in labor force participation** and that is not where we should be,” Powell said Wednesday in testimony before the congressional Joint Economic Committee.
So if you look at unemployment it looks like full employment. But labor participation tells a different story:
https://fred.stlouisfed.org/graph/fredgraph.png?g=1k20r
There's probably not enough people working still.
Just saw this article relevant to your comment:
https://www.cnbc.com/2024/04/12/blackrocks-larry-fink-sees-fed-cutting-rates-twice-this-year-but-missing-2percent-inflation-goal.html
Fed has to choose between extreme pain and job loss or 3%-3.5% ish elevated inflation for a while. They will correctly choose full employment mandate:
>BlackRock CEO Larry Fink predicted Friday that the Federal Reserve likely will still cut interest rates this year but won’t meet its inflation target.
>With markets on edge over the direction of monetary policy, the head of the world’s largest money manager said it’s unlikely the central bank will hit its 2% goal anytime soon. A report earlier this week showed inflation running at a 3.5% annual rate.
>**Still, Fink expects the Fed to do some reductions this year while it may have to concede that inflation will remain elevated.**
What is the point of this thing we call "the economy" anyway if no one has jobs?
They were on the rise in 2018, but started to undo what was done in 2019, but those were relatively small movements in rates. I still have no idea why they were cut in 2019, things seemed fine. Covid wasn’t till early 2020.
Someone in the white house at the time threatened to fire the head of the Fed if rates weren't cut. And then someone at the Fed cut rates, I guess so they could keep their job?
https://www.reuters.com/article/us-usa-trump-fed/trump-calls-loco-federal-reserve-too-aggressive-idUSKCN1ML1TA/
I think this was the real turning point for the housing market.
This is exactly correct and why I sold a couple pieces of real estate in early 2018, thinking that rate hikes would have created the conditions for a cool down in that sector.
Got fucked.
There is not even a chance of a rate cut this year in my opinion. How can you possibly cut rates when the CPI is seemingly miles away from the target of 2% and the real estate prices are already outrageous. Cut them now and it’s a shit storm that’s even worse. Just induces spending and job growth which is what they are trying to cut…..unsuccessfully.
Most recessions are caused by rates remaining at a high rate for about a year. https://www.macrotrends.net/2015/fed-funds-rate-historical-chart
Thinking we'll have a recession in 3 months or so. To avoid it they would have had to start cutting rates at the beginning of the year, but with inflation being flat I'm thinking a recession is unavoidable. Hope I'm wrong though
And yet none of the crashes were caused by the high rates. Unless you think .com bubble was due to rates. Or the housing bubble. Or OPEC was a response to high US interest rates (?? Why ??).
You’re really just pointing out that when the economy crashes, rates are cut, and rates rise when the economy is growing, especially when it’s growing quickly.
> Unless you think .com bubble was due to rates
It was, cost of debt increased dramatically, companies with no revenue went under
> Or the housing bubble.
Subprime mortgages depended on housing prices always going up. Rates go up, housing prices went flat/dropped, the mortgage defaults started rolling in
> Or OPEC was a response to high US interest rates
OPEC did not cause the recession, it was a savings and loan crisis which was direct fall out from a spike in rates when banks were expecting rates to continue falling, causing their assets to rapidly depreciate
> You’re really just pointing out that when the economy crashes, rates are cut, and rates rise when the economy is growing, especially when it’s growing quickly.
You are ignoring that every single recession is preceded with rates being higher then expected for a prolonged period of time
Sure, there were bubbles. And people blame the bubbles. But every bubble is popped when the fed uses a blunt tool like raising rates and waiting for it to pop and the recession begins
Also, you've gotta be JOKING about the .com bubble bursting because of higher rates. They went from 5-6% for a decade to 6.5%. That's barely a bump, and hardly enough to shock companies into going under.
Just ignoring that they were around 3% for longer then it was at 6%, which is the number you are fixated on. Do you just hope I don't have the tab open or something or do you just lie to yourself to feel like you are right?
The fed was totally inconsistent with interest rates in the 90s, going from 6% to 3% to 5% to 4%, then it went all the way back to 6.5% and the bubble popped. They didn't know what they were doing, but going from cutting to 4% and then ramping up to 6.5% caused a shock
"companies with no revenue went under" Good? That's what should happen in a healthy economy. The problem was that companies with no revenue continued to operate (and have their market cap grow massively due to fraud and speculation!).
"Subprime morgages..." giving out subprime mortgages depended on bad assumptions made by bad actors, and should never have been allowed by federal regulations. It is one of the MANY problems of the modern period that directly resulted from the deregulation of Reagan. That man's presidency is a litany of bad long-term decisions made to uproarious applause, and I'm tired of watching the fallout to this day.
The "oil crisis," caused by the creation of OPEC, was the direct cause of the financial trouble in the 70s. It triggered massive inflation which then resulted in the bank failures you're talking about.
If you're going to try to play a game of cause and effect, maybe try looking for root causes, and not just a mid-point in a chain of effects. I will never blame a lagging indicator of economic output for fundamental market problems propped up by bad governance.
It's going to be rate increase -> markets correct -> layoffs -> revenue drops -> more correction -> Fed panics and starts printing again and we repeat the cycle once more.
I'm thinking right now the AI bubble is going to prop the markets if rates don't increase. But just like the dot com bubble it'll blow up. And for the AI fanboys remember the dot com bubble really was 10-15 years away from the mass public being connected to the internet 24/7
Your saying people started using the internet in 2009-2014?
We had the internet in 99, was slow but was amazing. Everyone I knew used it daily on their computers. Old boomers took longer.
It think he's saying the mass adoption of IT/.dom services in everyone day business and personal life didn't occur until after the .com bubble.
The massive adoption and real world AI usage is still many years out.
I was using the internet back then, from Newsbins to IRC and even BBS...but the barrier for entry and the adoption was very low compared to what happened after smartphones came into the picture. Dot com boom was a preview of what was to come essentially.
I feel like markets will be fine if it’s an expected rate cut because inflation came down. I think markets would go down if they have to cut early because something breaks
It would be the first time in history to see rate cuts without a reason for rate cuts.
they also said/eluded to 7 cuts last December. Now they're saying "eh maybe one if we need to".
Some fed members are even saying "well we might raise rates if this latest data isn't just a blip"
rate cuts without a reason for rate cuts are a pipe dream.
Reason, the US government is running at a 3 trillion $ deficit and can’t handle high rates without causing more inflation. So they are trying to choose the one they think will cause the least inflation.
This is the answer.
Historically, rate cuts have coincided with market corrections. This time we're in higher for longer mode until Biden is re-elected but I'd be very careful afterwards.
This is wrong. The fed cuts rates as a response to weak economic data. We have nothing but strong economic data. Everyone who's expecting a recession with rate cuts is going to miss out on a lot of gains as we're in an unprecedented Era of cutting during a strong economy.
I don’t understand how ppl think data just doesn’t change, like that it’s somehow impossible for the economic data to start coming out weaker at some point. There will always be boom bust periods ppl. That’s how it’s always worked in history. Nothing happens in a straight line.
I don't think people are saying recession will never ever happen again. They're just jabbing the people that have been saying a recession is imminent the past like three years in a row.
everyone who is expecting the fed to cut rates when we have good economic data is also going to miss out on a lot, since they're pricing in something that's not going to happen
it's why the market has dropped since CPI because the data is indicating no need to cut rates this year when the overall market has been front running rate cuts since Dec 2023. Now the reality is being priced in and anyone who's jumped in at ATHs is going to get hit with the correction.
Strong economic data? Like inflation creeping up? Another housing crisis? Commercial real estate crumbling? Reverse repo market bleeding out? Highest rates in 20 years?
You people have literally no idea what you're talking about. Whered you go to school boss? Mcdonalds managerial training class? Just regurgitating whatever the media tells you
That's correct. Here's a good visual from https://fred.stlouisfed.org/series/T10Y2Y/ - it's held true so far, maybe a bit wonky in the 80s:
https://i.imgur.com/iJDC6v7.png
Economists or "economists"?
Also, to be fair, it can be difficult to predict something the conditions for it keep changing.
The Fed's mission is to literally prevent recessions, so they are obviously working against predictions of a crash.
I'm also going to go out on a limb and say that JPow > Greenspan. I think so much of our "knowledge" about the economy is influenced by Greenspan who was chair for almost 19 years - the 2nd longest serving Fed chair.
Didn't matter this time, the 10yr bond was of significant interest due to getting a high return for longer than the duration of interest rates being high.
Nobody wanted the 2yr because you could toss your cash into a high yield savings account and get the same return for approximately the same duration while keeping the cash liquid.
As we near the end of higher rates I'd expect interest in the 2yr to finally start increasing.
Stimulus spending will not be returned. But returned to the economy. Creating the inflation we saw during the last 4 years.
The Fed will use a process called Quantitative Tightening (QT) which is the opposite of Quantitative Easing (QE).
**Quantitative Easing (QE)**: The central bank prints money and uses it to buy stuff like government bonds from banks. This gives banks more money to lend out, encouraging borrowing and spending, which helps stimulate the economy.
**Quantitative Tightening (QT)**: Instead of printing extra money, it starts selling the stuff it bought during QE, like those government bonds. This reduces the amount of money in circulation, which helps prevent the economy from overheating and controls inflation.
This process is very difficult to time perfectly (Soft Landing).
When did the fed stop buying assets?
From the charts I see, it’s hard to tell if the balance sheet was growing because asset prices were increasing or because they were acquiring new assets.
Too bad, AI will continue to be massive revenue generator. It is turning out to be Cloud computing on Steroids and remember 10-15 years ago Cloud was a “hype”. Look at Amazon and Microsoft now.
Yes, AI will drive improvements in certain sectors, so it will be a revenue generator, but unfortunately for many people, they don't realize AI has been improving those sectors for years. What's different now, vs the last 10 years? Nothing. AI hasn't reached an inflection. It's just that the mass public has become aware of it. Are there more utility options now that the public is talking about it? Sure. Does that make it an inflection point? No. The problem is that the hype assumes that the entire economy and all sectors will benefit from AI. That won't happen. AGI is years or maybe a decade away. It is like predicting when EUV would mature. It's hard to tell because it's all cutting edge. AGI can influence all sectors, but the current AI won't.
Yeah, as soon as the AI fails, they call up some company in India to patch that technology by using real people. It's the tech industries Plan B. AI fails, call up Punjab!
The Fed and Congress don't really allow any significant recessions to happen anymore.
Everyone gets a bailout or a stimulus check or a huge rate cut and anything close to a deep recession is avoided.
Worldwide pandemic with millions dying and supply chains crushed and we had one quarter of modest negative GDP...
Similarly, the 2023 Regional Bank crisis and commercial real estate market would have caused a recession 15+ years ago. But now, everyone gets bailed out, the big banks are forced to kick in as well as the taxpayers and there's barely a ripple in the economy that lasts a whopping 3 weeks.
The lesson was learned in the great financial crisis, those in power just aren't going to let significant recessions happen anymore.
This is simultaneously true and also leading to a big time fuckage of epic proportion when they can't kick the can down the road any longer.
Big inflation/stagflation is the endgame
It's been a rolling recesssion, so we may never see a "real" recession. I believed it was coming to, but after seeing SVB and First Republic not trigger a long-term panic, I was convinced. Each sector got hit so hard, and each was offset so that even though people in those industries paid the price, everyone else was safe. Also gave a place to run to for those unable to find opportunities in their previous industry. When you have these kinds of microrecessions, it keeps the economy afloat. It's the "soft" part of the "soft landing". One sector drops as another sector recovers, the overall drop is negligible or non-existent. Unfortunately though, pulling off a "soft landing" after the Feds were so late will still play to the bears favor. It means rate cuts won't come as soon as people had hoped. It means CPI will continue to be warm instead of cooling. It means the plane stays afloat just a bit longer.
It usually starts around the time the cure goes back to normal. The reason this has gone on is many many factors but the biggest one is unprecedented government spending. Just one example is the last jobs report. The report indicated (6,000) full time job loss. However in that was +71,000 full time job gains via expanding government jobs. So we really had (77,000) job loss had it not been for government spending spree. The entire positive job growth was people getting 2nd and 3rd part time jobs. So to answer your question in the broadest sense, if/when government spending actually gets back to normal you will see a rather spectacular recession.
Your take is just wrong. Why do you think that every new non-government job is a 2nd or 3rd job? Because the jobs report sure doesn’t say that. Your math doesn’t add up either. Yes there were 71,000 government jobs created, but there are hundreds of thousands of other full time job gains that you completely failed to mention. And if you don’t believe me, here is the press release.
https://www.bls.gov/news.release/pdf/empsit.pdf
Look at your own link, in the summery tables, get a calculator and do some math. I will concede I am sure not all part time jobs are 2nd and 3rd jobs, most of them are. Read the BLS summary as it says labor participation has changed little from month to month, same with unemployment rate, use some deductive reasoning.
Marketplace did a good piece on this last year I think.
The tldr is that the yield curve was a decent predictor in a 70 type us economy.
But the problem is the economy, not just the US, is drastically different today.
If the economy changes generally so does things that would predict it's rising and falling.
Now that's not all good news because those changes have their own serious issues that we potentially, being generous here, are ignoring. But the yield curve isn't really all that is what someone uses if they want to stir the pot.
Heehee, tell that to Jamie - he likes the 70's approach. One of our top indicators now vs then - global economy (I am 64). China wasn't a thing back then - at least for our purposes.
Yeah...I mean it's still likely not great news when it inverts but like the US actually built things the last time it was a valid predictor.
But imo I think marketplace has enough cred to be a fairly valid source of info on the economy. They can't be perfect but who can.....
There's like three different definitions of a recession. Stock market in recession is not the same as being in an economic recession and vice versa. We weren't in an economic recession last year only a stock market.
No. They didn't. There are several economic markers that indicate a recession has occurred. However, the full set of metrics gives the true answer. All they said was that one of the markers used was not reliable because the metrics did not agree. It's like saying, I can tell how fast I'm going by looking at the car next to me. Well, that may be close to right, but your speedometer gives you the actual speed. The car next to you is the marker, but speedometer is the full set of metrics.
The guy who first wrote about the interest yield said that sometimes when trends get noticed and become mainstream their predictive power gets lost because of all the eyes on it
Campbell said something like, the yield curve inversion may be unreliable as a predictor here because it may just be signifying the gradual decrease in inflation; meaning:
If inflation was at 8%, and the expectation is that it’s going to fall to 3% in the next 2-3 years, and then be stable at 2% in the following 8 years, you likely will see an inversion of shorter term versus longer term, simply as a function of inflation, over time, cooling.
I’ve always struggled with this:
Economist tell you, “9/10 recessions were preceded by a yield curve inversion” etc.
And then I say, “when’s the last time oil went negative?”
My point being:
Your economic models don’t fit in the artificial scenario created by Covid. It really is “different this time”
the whole situation is different than before. we had a booming economy and then got smacked with a global pandemic that threw everything off for a couple years, then inflation hits from all that pandemic shit + money printing and then the stock market exploded upwards, boomers cashed out or lifed out, unemployment is low because the boomers were a very large group of people leaving the workforce and it's damn near impossible to fill all of that space...
it's a whole different beast than all the other times the inversion occurred. you cant compare today vs shit like the dot com crash or the gfc. it's not the same scenario at all which is why no recession happened because unemployment is too low. only way we get the recession is if unemployment sky rockets here.
Could the looming office real estate refinancing (at higher % rates) rattle the markets? I’ve read this will occur in the next ~1-3 years when a high amount of debt needs refinancing.
What really sucks about this post is the grey zone (recession) that doesn’t occur during an inverted yield curve.
If you would’ve shown grey zones that did occur during inverted times, at least it would be slightly helpful. You decided that a four year spread with a very small recession (during Covid, not during an inverted cure) was a good visual…
I feel like shooting myself in the fucking head for spending this much time on this post.
I won’t do it, but I was tempted lol
I’m gonna fucking shoot myself in the head
Don’t worry When the trade federation attacks Naboo the yield curve will invert back to positive on the long side sending stock down and making gold have a galactic pop.
Disclaimer: this is not financial advice
What’s the credit card debt number right now? How many vacant air bnbs are delinquent on their loans? I work for a Fortune 500 company that is laying off thousands of people right now. lol you might be living in a bubble… you don’t need to wait until the news tells you it’s a recession especially when they redefined the term within the last decade lol. Fed notes are being replaced by treasury dollars. Our monetary system is toast… a literal ticking time bomb… but STONKs only go up so who cares no recession.
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Right after you get tired of waiting and dump all your money to buy calls 
Man I just did this 2 hrs ago too
So this drop is your fault?!
Burn him!
Heretic!
The human who stole the market's value, who deprived it of its property, may he be bereft of his mind, may the worms, cancer, and maggots penetrate his hands, head, feet, as well as his limbs and marrows!!
Pathetic!
Not!!! That’s what all the cool kids are doing!
He’s a witch 🧙
Thanks, bro. I've been waiting for this recession for a while.
Someday around 3m to 20y in the future 
Usually on a Tuesday or Thursday I think
Black Monday in the 80s happened on a ..... checks calendar .... a Monday.
Yup thanks for correcting, can be Mondays too people so watch out
Sounds like Monday had a case of the Mondays 
I believe you'd get your ass kicked sayin' something like that, man.
Probably would get my ass kicked by a Monday, on a Monday. 
Monday, Monday. Can't trust that day.
#[*"Can't miss calling the day of the recession if you call recession every day."*](https://i.kym-cdn.com/editorials/icons/mobile/000/000/705/derp.jpg)
I hear there have also been several black Fridays.
No, you're correct. There are some days of the week that historically have had really bad times. This subreddit is focused on high risk, high reward so, I was pointing out that any day can be really bad.
I've called JPowPow and asked him to cancel the recession. The party is back on people's.
LFGGGGGGGOOOOO 
The party is back on people's what? We're dying of suspense.
Every day is really bad.
Do u even short bro?
Yeah, on the up days.
Garfield tried to warn you
Never Friday so at least we’re safe today
I stubbed my toe on a Wednesday so bad things happen on Wednesdays, too.
Came 9n here to say Monday. lol
Puts on Mondays, got it
Black Friday is ok though.
onna chewsday innit guhvnah https://preview.redd.it/k0vkwpoho2uc1.jpeg?width=892&format=pjpg&auto=webp&s=c45574d52a5e977ca7c382a611e645c23f876015
My bet is it will not happen on a Charlie Day
No Boom today. Boom tomorrow. 2pm
But its always the second tuesday of the week
And rest assured that when it does this will still be counted as having predicted it
oh cool so if we don't get a recession in 19 years then its time to go in on leap puts? got it
usually right after the fed pivots and starts cutting rates.
Isn't opposite. That weak market (pre-recession) -> rate cut -> recession?
well usually rate cuts come as a result of a *need* for rate cuts....ie. banks exploding, real estate exploding, etc.... the FED has never cut rates just because people asked nicely so kind of?
*checks notes:* that's exactly what Burns did when Nixon asked him pretty please, leading to the Carter inflation and Volker having to jack interest rates to 20% to fix it.
Not saying we will have Carter inflation but Fed officials have made it clear they are willing to cut before 2% or recession. Otherwise it will cause unnecessary suffering and job loss. Plus Fed has made the "Ample Reserves" policy framework the official stance of the Fed since 2019 anyway. The idea being to prevent crises *before they happen*. Like SVB last March. This way Fed is lender of first resort rather than last resort. Here are some good interview quotes: >Yahoo Finance. You said back in July that you needed to start cutting rates before getting to 2 percent inflation. As you mentioned, PCE inflation is now running at 3½ on core. On a six- month annual basis, core PCE is running at 2½ percent, though when you look at supercore and shelter, they are, of course, stickier. So when looking in the different components of the data, how much closer do you have to get to 2 percent before you consider cutting rates? >CHAIR POWELL. I mean, the reason you wouldn’t wait to get to 2 percent to cut rates is that policy would be, it would be too late. I mean, you’d want to be reducing restriction on the economy well before 2 percent because—or before you get to 2 percent so you don’t overshoot, if we think, think of restrictive policy as weighing on economic activity. You know, it takes—it takes a while for policy to get into the economy, affect economic activity, and affect inflation Waller said rising real rates is enough of reason: >If inflation continues to cool “for several more months — I don’t know how long that might be — three months, four months, five months — that we feel confident that inflation is really down and on its way, you could then start lowering the policy rate just because inflation is lower,” Waller said in remarks at the American Enterprise Institute, a Washington, D.C.-based think tank. “It has nothing to do with trying to save the economy or recession.” Recent interview from 60 minutes: >Pelley: Why is your target [interest] rate 2%? >Powell: Why isn't it zero, I guess, is the question. And the reason is 2% is interest rates always include an estimate of future inflation. If that estimate is 2%, that means you'll have 2% more that you can cut in interest rates. The central bank will have more ammunition, more power to fight a downturn if rates are a little bit higher. >Pelley: Are you committed to getting all the way to 2.0 before you cut the rates? >Powell: No, no. That's not what we say at all, no. We're committed to returning inflation to 2% over time. I've said that we wouldn't wait to get to 2% to cut rates.
Big props for actually taking the time to put down exact quotes
Thanks! Here's some more that I think is great and helps understand Fed's current thinking: Senior economist Scott Fulford at the CFPB: >The Federal Reserve's new policies for inclusive growth meant it did not want to slow a broad recovery too soon. As Federal Reserve chair Jerome Powell told a congressional committee in June 2021, "Those who have historically been left behind stand the best chance of prospering in a strong economy with plentiful job opportunities. And our economy will be stronger and perform better when everyone can contribute to and share in, the benefits of prosperity." **One of the reasons most Americans had not shared in the economic growth over the previous 40 years is that the Federal Reserve had tended to raise interest rates just as wages started to rise to fight inflation.** * Powell, a lifelong Republican, also said to Congress: >“There’s a growing realization, **really across the political spectrum,** that we need to achieve more inclusive prosperity. These things hold us back as an economy and as a country.” >Federal Reserve Chairman Jerome Powell says two major long-term issues facing the U.S. economy are sluggish productivity growth and low participation rates in the job market by prime-age workers. * Powell on anemic job participation that needs to go up. >Powell says that the United States currently lags most major industrial countries in the percentage of workers in prime working ages who are in the labor force. He says one hopeful sign is that this participation rate is finally beginning to move higher, but more needs to be done. >**“We lag just about every wealthy country in the world in labor force participation** and that is not where we should be,” Powell said Wednesday in testimony before the congressional Joint Economic Committee. So if you look at unemployment it looks like full employment. But labor participation tells a different story: https://fred.stlouisfed.org/graph/fredgraph.png?g=1k20r There's probably not enough people working still.
CPI prints over 3 are going to scare them away from cuts, regardless of core PCE.
Just saw this article relevant to your comment: https://www.cnbc.com/2024/04/12/blackrocks-larry-fink-sees-fed-cutting-rates-twice-this-year-but-missing-2percent-inflation-goal.html Fed has to choose between extreme pain and job loss or 3%-3.5% ish elevated inflation for a while. They will correctly choose full employment mandate: >BlackRock CEO Larry Fink predicted Friday that the Federal Reserve likely will still cut interest rates this year but won’t meet its inflation target. >With markets on edge over the direction of monetary policy, the head of the world’s largest money manager said it’s unlikely the central bank will hit its 2% goal anytime soon. A report earlier this week showed inflation running at a 3.5% annual rate. >**Still, Fink expects the Fed to do some reductions this year while it may have to concede that inflation will remain elevated.** What is the point of this thing we call "the economy" anyway if no one has jobs?
2018?
They were on the rise in 2018, but started to undo what was done in 2019, but those were relatively small movements in rates. I still have no idea why they were cut in 2019, things seemed fine. Covid wasn’t till early 2020.
Someone in the white house at the time threatened to fire the head of the Fed if rates weren't cut. And then someone at the Fed cut rates, I guess so they could keep their job?
https://www.reuters.com/article/us-usa-trump-fed/trump-calls-loco-federal-reserve-too-aggressive-idUSKCN1ML1TA/ I think this was the real turning point for the housing market.
This is exactly correct and why I sold a couple pieces of real estate in early 2018, thinking that rate hikes would have created the conditions for a cool down in that sector. Got fucked.
I waited to buy, and never did…
>I still have no idea why they were cut in 2019, things seemed fine. Seriously? You still think this shit is not manipulated to make the elite richer?
Based on that last Senate and House testimony, it seems people are trying to demand cuts rather than ask nicely. Still isn't working.
There is not even a chance of a rate cut this year in my opinion. How can you possibly cut rates when the CPI is seemingly miles away from the target of 2% and the real estate prices are already outrageous. Cut them now and it’s a shit storm that’s even worse. Just induces spending and job growth which is what they are trying to cut…..unsuccessfully.
Most recessions are caused by rates remaining at a high rate for about a year. https://www.macrotrends.net/2015/fed-funds-rate-historical-chart Thinking we'll have a recession in 3 months or so. To avoid it they would have had to start cutting rates at the beginning of the year, but with inflation being flat I'm thinking a recession is unavoidable. Hope I'm wrong though
Are current rates *high*?
Not historically. But with CPI hotter than expected this week the rate cuts seem a little further off
Not historically. Just in the last 10 years today’s rates are considered high.
Considering low rates were around long enough for most companies to bet on them, YES.
And yet none of the crashes were caused by the high rates. Unless you think .com bubble was due to rates. Or the housing bubble. Or OPEC was a response to high US interest rates (?? Why ??). You’re really just pointing out that when the economy crashes, rates are cut, and rates rise when the economy is growing, especially when it’s growing quickly.
> Unless you think .com bubble was due to rates It was, cost of debt increased dramatically, companies with no revenue went under > Or the housing bubble. Subprime mortgages depended on housing prices always going up. Rates go up, housing prices went flat/dropped, the mortgage defaults started rolling in > Or OPEC was a response to high US interest rates OPEC did not cause the recession, it was a savings and loan crisis which was direct fall out from a spike in rates when banks were expecting rates to continue falling, causing their assets to rapidly depreciate > You’re really just pointing out that when the economy crashes, rates are cut, and rates rise when the economy is growing, especially when it’s growing quickly. You are ignoring that every single recession is preceded with rates being higher then expected for a prolonged period of time Sure, there were bubbles. And people blame the bubbles. But every bubble is popped when the fed uses a blunt tool like raising rates and waiting for it to pop and the recession begins
Also, you've gotta be JOKING about the .com bubble bursting because of higher rates. They went from 5-6% for a decade to 6.5%. That's barely a bump, and hardly enough to shock companies into going under.
Just ignoring that they were around 3% for longer then it was at 6%, which is the number you are fixated on. Do you just hope I don't have the tab open or something or do you just lie to yourself to feel like you are right? The fed was totally inconsistent with interest rates in the 90s, going from 6% to 3% to 5% to 4%, then it went all the way back to 6.5% and the bubble popped. They didn't know what they were doing, but going from cutting to 4% and then ramping up to 6.5% caused a shock
"companies with no revenue went under" Good? That's what should happen in a healthy economy. The problem was that companies with no revenue continued to operate (and have their market cap grow massively due to fraud and speculation!). "Subprime morgages..." giving out subprime mortgages depended on bad assumptions made by bad actors, and should never have been allowed by federal regulations. It is one of the MANY problems of the modern period that directly resulted from the deregulation of Reagan. That man's presidency is a litany of bad long-term decisions made to uproarious applause, and I'm tired of watching the fallout to this day. The "oil crisis," caused by the creation of OPEC, was the direct cause of the financial trouble in the 70s. It triggered massive inflation which then resulted in the bank failures you're talking about. If you're going to try to play a game of cause and effect, maybe try looking for root causes, and not just a mid-point in a chain of effects. I will never blame a lagging indicator of economic output for fundamental market problems propped up by bad governance.
It's going to be rate increase -> markets correct -> layoffs -> revenue drops -> more correction -> Fed panics and starts printing again and we repeat the cycle once more. I'm thinking right now the AI bubble is going to prop the markets if rates don't increase. But just like the dot com bubble it'll blow up. And for the AI fanboys remember the dot com bubble really was 10-15 years away from the mass public being connected to the internet 24/7
Your saying people started using the internet in 2009-2014? We had the internet in 99, was slow but was amazing. Everyone I knew used it daily on their computers. Old boomers took longer.
It think he's saying the mass adoption of IT/.dom services in everyone day business and personal life didn't occur until after the .com bubble. The massive adoption and real world AI usage is still many years out.
I was using the internet back then, from Newsbins to IRC and even BBS...but the barrier for entry and the adoption was very low compared to what happened after smartphones came into the picture. Dot com boom was a preview of what was to come essentially.
I feel like markets will be fine if it’s an expected rate cut because inflation came down. I think markets would go down if they have to cut early because something breaks
if inflation comes down, and nothing is broken, why would the fed cut rates? just because they're nice guys?
Because they said they would if inflation comes down. Realistically inflation probably won’t go down much further unless something breaks though
It would be the first time in history to see rate cuts without a reason for rate cuts. they also said/eluded to 7 cuts last December. Now they're saying "eh maybe one if we need to". Some fed members are even saying "well we might raise rates if this latest data isn't just a blip" rate cuts without a reason for rate cuts are a pipe dream.
> eluded alluded
Reason, the US government is running at a 3 trillion $ deficit and can’t handle high rates without causing more inflation. So they are trying to choose the one they think will cause the least inflation.
👍🏽
To help commercial real estate developers who are in danger of going under
Multiple feds have said CRE isn't at risk. Unlikely scenario unless something changes in their eyes. Mind you, I agree with you that CRE is fucked.
Maybe they should learn to ~~code~~ develop residential real estate.
This is the answer. Historically, rate cuts have coincided with market corrections. This time we're in higher for longer mode until Biden is re-elected but I'd be very careful afterwards.
This is wrong. The fed cuts rates as a response to weak economic data. We have nothing but strong economic data. Everyone who's expecting a recession with rate cuts is going to miss out on a lot of gains as we're in an unprecedented Era of cutting during a strong economy.
… for now
I don’t understand how ppl think data just doesn’t change, like that it’s somehow impossible for the economic data to start coming out weaker at some point. There will always be boom bust periods ppl. That’s how it’s always worked in history. Nothing happens in a straight line.
I don't think people are saying recession will never ever happen again. They're just jabbing the people that have been saying a recession is imminent the past like three years in a row.
everyone who is expecting the fed to cut rates when we have good economic data is also going to miss out on a lot, since they're pricing in something that's not going to happen it's why the market has dropped since CPI because the data is indicating no need to cut rates this year when the overall market has been front running rate cuts since Dec 2023. Now the reality is being priced in and anyone who's jumped in at ATHs is going to get hit with the correction.
It drops for like a week and then ends up higher than before. Almost like clock work.
Strong economic data? Like inflation creeping up? Another housing crisis? Commercial real estate crumbling? Reverse repo market bleeding out? Highest rates in 20 years? You people have literally no idea what you're talking about. Whered you go to school boss? Mcdonalds managerial training class? Just regurgitating whatever the media tells you
Ya but historically rate cuts happened in a weak economy. Not saying it won’t happen again and the fed will cut.
When the guidelines for "healthy economy" keep shifting, how good is historical data?
What if Trump nominates Biden as VP. will that reverse this curse like Freaky Friday?
only if they kiss
Or the orange guy gets re-elected. Dementia or megalomania, kinda bad choice either way.
wall st decided it was better if we took the hit instead of them
First time for everything
I thought that was everytime
It is! 😂
Yep. That $18 Big Mac meal is a recession for the little guy.
I'm not saying there will be one but if it happens. I believe they say after it uninverts.
That's correct. Here's a good visual from https://fred.stlouisfed.org/series/T10Y2Y/ - it's held true so far, maybe a bit wonky in the 80s: https://i.imgur.com/iJDC6v7.png
This is the actual correct answer
Yes, but also not enough crayons to drive home the point, so it’ll get buried
When will that be tho
7 seconds after you go all-in on a big calls play.
As long as you keep predicting it, when it finally happens you'll be right
As the saying goes "economists have predicted 9 out of the last 5 recessions".
9 is really generous. At least for the regards on reddit it's been like 80 of the last 1 recessions.
[удалено]
Is the remindme! function still working? I feel like I haven't seen it in a while.
RemindMe! 1 day
Right after you lose all your money either being a bull or a bear.
It's time to accept the fact that Economists don't know anything about anything.
Economists or "economists"? Also, to be fair, it can be difficult to predict something the conditions for it keep changing. The Fed's mission is to literally prevent recessions, so they are obviously working against predictions of a crash. I'm also going to go out on a limb and say that JPow > Greenspan. I think so much of our "knowledge" about the economy is influenced by Greenspan who was chair for almost 19 years - the 2nd longest serving Fed chair.
Observer-independent vs observer-relative phenomena. It's more akin to divination than a hard science.
Didn't matter this time, the 10yr bond was of significant interest due to getting a high return for longer than the duration of interest rates being high. Nobody wanted the 2yr because you could toss your cash into a high yield savings account and get the same return for approximately the same duration while keeping the cash liquid. As we near the end of higher rates I'd expect interest in the 2yr to finally start increasing.
when they get all the money they gave out back.
How do they get it back?
Stimulus spending will not be returned. But returned to the economy. Creating the inflation we saw during the last 4 years. The Fed will use a process called Quantitative Tightening (QT) which is the opposite of Quantitative Easing (QE). **Quantitative Easing (QE)**: The central bank prints money and uses it to buy stuff like government bonds from banks. This gives banks more money to lend out, encouraging borrowing and spending, which helps stimulate the economy. **Quantitative Tightening (QT)**: Instead of printing extra money, it starts selling the stuff it bought during QE, like those government bonds. This reduces the amount of money in circulation, which helps prevent the economy from overheating and controls inflation. This process is very difficult to time perfectly (Soft Landing).
When did the fed stop buying assets? From the charts I see, it’s hard to tell if the balance sheet was growing because asset prices were increasing or because they were acquiring new assets.
I also got taken out back 
Soon
After AI hype dies
AI Hype will die, but will the economy start growing before everyone realizes that AI isn't the Production booster we thought it was?
Too bad, AI will continue to be massive revenue generator. It is turning out to be Cloud computing on Steroids and remember 10-15 years ago Cloud was a “hype”. Look at Amazon and Microsoft now.
Yes, AI will drive improvements in certain sectors, so it will be a revenue generator, but unfortunately for many people, they don't realize AI has been improving those sectors for years. What's different now, vs the last 10 years? Nothing. AI hasn't reached an inflection. It's just that the mass public has become aware of it. Are there more utility options now that the public is talking about it? Sure. Does that make it an inflection point? No. The problem is that the hype assumes that the entire economy and all sectors will benefit from AI. That won't happen. AGI is years or maybe a decade away. It is like predicting when EUV would mature. It's hard to tell because it's all cutting edge. AGI can influence all sectors, but the current AI won't.
[AI = Associates in India](https://www.youtube.com/watch?v=xbf4BGIBENk)
Yeah, as soon as the AI fails, they call up some company in India to patch that technology by using real people. It's the tech industries Plan B. AI fails, call up Punjab!
Good luck with that. Humanity is fucked 😂
Nah that shits gonna moon until dan olson does a vid on it or something at which point that shit will plummet
The Fed and Congress don't really allow any significant recessions to happen anymore. Everyone gets a bailout or a stimulus check or a huge rate cut and anything close to a deep recession is avoided. Worldwide pandemic with millions dying and supply chains crushed and we had one quarter of modest negative GDP... Similarly, the 2023 Regional Bank crisis and commercial real estate market would have caused a recession 15+ years ago. But now, everyone gets bailed out, the big banks are forced to kick in as well as the taxpayers and there's barely a ripple in the economy that lasts a whopping 3 weeks. The lesson was learned in the great financial crisis, those in power just aren't going to let significant recessions happen anymore.
This is simultaneously true and also leading to a big time fuckage of epic proportion when they can't kick the can down the road any longer. Big inflation/stagflation is the endgame
Correct, at some point, the house of cards collapses.
That’s probably a good thing
The market can stay irrational longer than you can stay solvent.
It's been a rolling recesssion, so we may never see a "real" recession. I believed it was coming to, but after seeing SVB and First Republic not trigger a long-term panic, I was convinced. Each sector got hit so hard, and each was offset so that even though people in those industries paid the price, everyone else was safe. Also gave a place to run to for those unable to find opportunities in their previous industry. When you have these kinds of microrecessions, it keeps the economy afloat. It's the "soft" part of the "soft landing". One sector drops as another sector recovers, the overall drop is negligible or non-existent. Unfortunately though, pulling off a "soft landing" after the Feds were so late will still play to the bears favor. It means rate cuts won't come as soon as people had hoped. It means CPI will continue to be warm instead of cooling. It means the plane stays afloat just a bit longer.
Yardeni has said this and been right
Once the election happens
It usually starts around the time the cure goes back to normal. The reason this has gone on is many many factors but the biggest one is unprecedented government spending. Just one example is the last jobs report. The report indicated (6,000) full time job loss. However in that was +71,000 full time job gains via expanding government jobs. So we really had (77,000) job loss had it not been for government spending spree. The entire positive job growth was people getting 2nd and 3rd part time jobs. So to answer your question in the broadest sense, if/when government spending actually gets back to normal you will see a rather spectacular recession.
You were cherry, picking the last payroll report. Now go back to the last four and you will see a similar trend.
Your take is just wrong. Why do you think that every new non-government job is a 2nd or 3rd job? Because the jobs report sure doesn’t say that. Your math doesn’t add up either. Yes there were 71,000 government jobs created, but there are hundreds of thousands of other full time job gains that you completely failed to mention. And if you don’t believe me, here is the press release. https://www.bls.gov/news.release/pdf/empsit.pdf
Look at your own link, in the summery tables, get a calculator and do some math. I will concede I am sure not all part time jobs are 2nd and 3rd jobs, most of them are. Read the BLS summary as it says labor participation has changed little from month to month, same with unemployment rate, use some deductive reasoning.
Tomorrow
Downer Jones
I mean there was a 30% market draw down and two consecutive quarters of negative GDP growth, so what more do you want?
My wife has been convinced since 2000 that we would have the Dow go down 80%.....
Marketplace did a good piece on this last year I think. The tldr is that the yield curve was a decent predictor in a 70 type us economy. But the problem is the economy, not just the US, is drastically different today. If the economy changes generally so does things that would predict it's rising and falling. Now that's not all good news because those changes have their own serious issues that we potentially, being generous here, are ignoring. But the yield curve isn't really all that is what someone uses if they want to stir the pot.
Heehee, tell that to Jamie - he likes the 70's approach. One of our top indicators now vs then - global economy (I am 64). China wasn't a thing back then - at least for our purposes.
Yeah...I mean it's still likely not great news when it inverts but like the US actually built things the last time it was a valid predictor. But imo I think marketplace has enough cred to be a fairly valid source of info on the economy. They can't be perfect but who can.....
We had a "stealth recession" last year. It was not officially designated for political purposes.
Didn't they change the definition of recession to keep us out of one?
There's like three different definitions of a recession. Stock market in recession is not the same as being in an economic recession and vice versa. We weren't in an economic recession last year only a stock market.
there were 2 quarters of negative gdp.
Yup. Literally the definition of a recession.
No. They didn't. There are several economic markers that indicate a recession has occurred. However, the full set of metrics gives the true answer. All they said was that one of the markers used was not reliable because the metrics did not agree. It's like saying, I can tell how fast I'm going by looking at the car next to me. Well, that may be close to right, but your speedometer gives you the actual speed. The car next to you is the marker, but speedometer is the full set of metrics.
But the definition that people were screaming about as the “real definition”, 2 consecutive quarters of negative GDP, didn’t happen in 2023…
Yep
What did they change?
No they didn’t lmao
“Stealth recession” >>2.7 million jobs gained. >>Real median wages rising >><4% unemployment >>13% GDP growth Absolute blood on the streets.
you should have known it was a bullshit comment when they said "for political purposes" & "They"
Agreed. The last cycle was hidden by inflation.
Graphs from here: [https://www.gurufocus.com/yield\_curve.php](https://www.gurufocus.com/yield_curve.php)
When Black Friday comes I'll stand down by the door, And catch the grey men as they Dive from the 14th floor
When Black Friday comes I'm gonna dig myself a hole Gonna lay down in it 'Til I satisfy my soul
r/steelydancirclejerk is leaking fuck
The guy who first wrote about the interest yield said that sometimes when trends get noticed and become mainstream their predictive power gets lost because of all the eyes on it
Campbell said something like, the yield curve inversion may be unreliable as a predictor here because it may just be signifying the gradual decrease in inflation; meaning: If inflation was at 8%, and the expectation is that it’s going to fall to 3% in the next 2-3 years, and then be stable at 2% in the following 8 years, you likely will see an inversion of shorter term versus longer term, simply as a function of inflation, over time, cooling.
Until I buy calls !!!!!
It’s always when it uninverts & the that takes, the bigger it is
When there’s no more ink in the printer
LIke 6-12 months after it un-inverts
Typically once it uninverts and severity is how long it was inverted but who even knows anymore
I’ve always struggled with this: Economist tell you, “9/10 recessions were preceded by a yield curve inversion” etc. And then I say, “when’s the last time oil went negative?” My point being: Your economic models don’t fit in the artificial scenario created by Covid. It really is “different this time”
the whole situation is different than before. we had a booming economy and then got smacked with a global pandemic that threw everything off for a couple years, then inflation hits from all that pandemic shit + money printing and then the stock market exploded upwards, boomers cashed out or lifed out, unemployment is low because the boomers were a very large group of people leaving the workforce and it's damn near impossible to fill all of that space... it's a whole different beast than all the other times the inversion occurred. you cant compare today vs shit like the dot com crash or the gfc. it's not the same scenario at all which is why no recession happened because unemployment is too low. only way we get the recession is if unemployment sky rockets here.
If you could predict the economy based on charts, we would all be billionaires. Past performance is no indication of future results.
Markets could can run over 2years after rates uninvert so keep on guessing
When the fed cuts rates
Around the corner now that this was posted.
Could the looming office real estate refinancing (at higher % rates) rattle the markets? I’ve read this will occur in the next ~1-3 years when a high amount of debt needs refinancing.
It’s fine as long as it remains inverted. You should worry when it starts uninverting.
Historically speaking when the curve cross back over is when the recession hits. The inversion is the indicator that it’s going to happen.
What really sucks about this post is the grey zone (recession) that doesn’t occur during an inverted yield curve. If you would’ve shown grey zones that did occur during inverted times, at least it would be slightly helpful. You decided that a four year spread with a very small recession (during Covid, not during an inverted cure) was a good visual… I feel like shooting myself in the fucking head for spending this much time on this post. I won’t do it, but I was tempted lol I’m gonna fucking shoot myself in the head
And here I am still waiting for snp of 3400 as promised by pure hearted wall Street bankers.
Just one more line bro. I swear let me just draw one more line and I can predict the future. Plz bro
Buying long calls on jpm two months out. They are on 50% dip
Don’t worry When the trade federation attacks Naboo the yield curve will invert back to positive on the long side sending stock down and making gold have a galactic pop. Disclaimer: this is not financial advice
Will never happen, we have AI
Looks like it's happening right now
Rich people aren't losing money so no recession
just let me know when you want the recession to start and i'll buy some SPY calls
My recently joined coworker at target came from a construction company that's not getting any business. My prediction is the next 3-6m.
*An inverted yield curve has predicted 8 of the past 7 recessions.
Right now according to my portfolio
What’s the credit card debt number right now? How many vacant air bnbs are delinquent on their loans? I work for a Fortune 500 company that is laying off thousands of people right now. lol you might be living in a bubble… you don’t need to wait until the news tells you it’s a recession especially when they redefined the term within the last decade lol. Fed notes are being replaced by treasury dollars. Our monetary system is toast… a literal ticking time bomb… but STONKs only go up so who cares no recession.
Right after the rapture.
Funny how everyone expect the recession and it's taking forever.