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Thread: Financial Jitters Escalate Quickly

  1. #1
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    Default Financial Jitters Escalate Quickly

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    Markets Are Shaken by New Signs of Global Economic Trouble


    https://www.nytimes.com/2019/08/14/b...sultPosition=1


    The global economy is under increasing stress as growth cools and trade tensions take a mounting toll. On Wednesday, the tremors were felt worldwide.

    Shares on Wall Street were off sharply, only a day after they had rallied as President Trump narrowed the scope of his next round of tariffs. The S&P 500 was down 2.9 percent. And bond markets offered an ominous warning on American growth prospects, with yields falling to levels not seen in years.
    The financial jitters, which continued Thursday as markets in Asia were down in early trading, came after new data showed the German economy hurtling toward a recession and factory output in China growing at its slowest pace in 17 years.

    The trouble in two of the world’s manufacturing powerhouses indicated, in part, how hard both have been hit by Mr. Trump’s tariffs. And it increased concern that the United States, too, is headed for an economic reckoning.

    “The global backdrop has slowed more than anticipated,” said Kathy Bostjancic, chief United States financial economist at Oxford Economics. “We’re not immune to the slowdown.”

    Bank of America Merrill Lynch has put the odds of a recession in the United States in the coming year at one in three, citing factors like weaker industrial production and auto sales.

    “Economic data have softened and are increasingly sending recession signals, particularly from the industrial side,” said Michelle Meyer, head of United States economics at Bank of America Merrill Lynch. “Trade is a huge part of it.”

    The shock waves not only are a measure of the trade war’s impact, but also could complicate Mr. Trump’s ability to wage it.

    Since the beginning of his trade battle with Beijing, the president has had a powerful ally: the United States economy. The first tariffs aimed solely at China, in the spring of 2018, coincided with the best economic showing of his presidency, with quarterly growth running at a 3.5 percent pace.

    But growth is slowing, hitting 2.1 percent in the most recent quarter, and estimates for the current quarter are even lower. The president’s decision Tuesday to delay some duties on Chinese imports was meant to soften the blow to American consumers, easing the economic headwinds.

    The Federal Reserve cut interest rates in July for the first time in more than a decade, a move that its chair, Jerome H. Powell, said was “intended to ensure against downside risks from weak global growth and trade tensions.” Another rate cut next month looks likely.


    Hours after the markets closed Wednesday, Mr. Trump took to Twitter, suggesting there was room for compromise in the escalating trade war. “Of course China wants to make a deal,” he wrote. “Let them work humanely with Hong Kong first!” In a subsequent tweet, after praising China’s president, Xi Jinping, he wrote “Personal meeting?”

    Mr. Trump has pointed to the economy’s performance as a benchmark of his success and an argument for his re-election in 2020. And many indicators remain vibrant. At 3.7 percent, unemployment is low by historical standards, while consumer confidence is high. Even with Wall Street’s recent volatility, major stock indexes are close to record levels.

    The United States is also more cushioned against economic turmoil than other big countries because exports account for just 12 percent of its gross domestic product. Germany, with its automaking prowess, and China, with its vast factories for consumer goods, are more dependent on international trade.
    Exports are responsible for nearly half of Germany’s economic output and almost a fifth of China’s.

    Still, there are nagging warning signs that the resilient American economic expansion that began a decade ago is running out of steam.



    When investors are confident in the economy, they demand higher bond rates, partly to offset the risk that sustained growth could produce inflation and dilute the bonds’ effective returns. For that reason, rates on long-term bonds are typically higher.
    But on Wednesday, for the first time since 2007, yields on two-year Treasury notes briefly exceeded the interest rate on the benchmark 10-year note. This pattern, called an inverted yield curve, is frequently cited as a harbinger of recession, although it can take quite some time to be proved right.
    Earnings growth, which has helped drive Wall Street’s remarkable gains in recent years, is also showing signs of petering out.......



  2. #2
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    Default Re: Financial Jitters Escalate Quickly

    The bad news: signs of an impending recession (likely to be world-wide, in fact) are strengthening.

    The good news: it might come soon enough to resoundingly defeat Trump in 2020. A terrible price to pay, for ejecting a moron.... but the moron in the oval office was a far higher price we had to pay.
    "Reason and facts are sacrificed to opinion and myth. Demonstrable falsehoods are circulated and recycled as fact. Narrow minded opinion refuses to be subjected to thought and analysis. Too many now subject events to a prefabricated set of interpretations, usually provided by a biased media source. The myth is more comfortable than the often difficult search for truth."







  3. #3
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    Default Re: Financial Jitters Escalate Quickly

    Quote Originally Posted by bobbys View Post
    What happened to Obama's economy?.

    LOL.
    The Idiot in the Oval Office. That's what happened.
    "The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails."
    -William A. Ward



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    Default Re: Financial Jitters Escalate Quickly

    Quote Originally Posted by bobbys View Post
    What happened to Obama's economy?.

    LOL.
    Trump is busy trying to wreck it.
    Like anything of Obama's.

  5. #5
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    Default Re: Financial Jitters Escalate Quickly

    Quote Originally Posted by bobbys View Post
    What happened to Obama's economy?.

    LOL.
    Two years in, Trump's tax giveaway to the 1%, his tarriff's, his constantly flip flops on trade issues, his calling into question long standing treaties, he owns it now.

  6. #6
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    Default Re: Financial Jitters Escalate Quickly

    I've never understood economics, so let me ask a question:

    Is there a basic dynamic that leads to the cycle of boom and bust? Is it an unavoidable reality of the nonlinear dynamics behind a world-wide economy, or is it just a result of greed first fueling and then withdrawing from the market?

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    Default Re: Financial Jitters Escalate Quickly

    Quote Originally Posted by CWSmith View Post
    I've never understood economics, so let me ask a question:

    Is there a basic dynamic that leads to the cycle of boom and bust? Is it an unavoidable reality of the nonlinear dynamics behind a world-wide economy, or is it just a result of greed first fueling and then withdrawing from the market?
    There are several inter-related factors that shape the size and timing of the expansions and contractions that make up The Business Cycle. Some of the primary influences are outlined here --

    https://www.thebalance.com/causes-of...-cycle-3305804

  8. #8
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    Default Re: Financial Jitters Escalate Quickly

    Quote Originally Posted by bobbys View Post
    It was Obama's great econemy until the first down turn LOL.

    Liberals are praying to mother earth for a recession .

    No matter any pain on Americans the political victory is all that matters to them.

    They are gleefully absorbing this news.
    Nobody wants a recession. Nobody that I know of is gleeful about the thought.

    The thing that you've got to keep in mind is that everybody will suffer. All of us. Especially Trump's supporters.
    "The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails."
    -William A. Ward



  9. #9
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    Default Re: Financial Jitters Escalate Quickly

    Quote Originally Posted by CWSmith View Post
    I've never understood economics, so let me ask a question:

    Is there a basic dynamic that leads to the cycle of boom and bust? Is it an unavoidable reality of the nonlinear dynamics behind a world-wide economy, or is it just a result of greed first fueling and then withdrawing from the market?
    Australia went a long time without a recession. So they are avoidable.

    I did not participate in the last several down turns. I do not intend to participate in the one that is forecast and certainly coming. My wife and I will continue to take frequent vacations and spend what money we can.

    From David G's post we can all benefit from knowing that coincident with a contraction (recession) is fear and panic replacing confidence. The direction of the causal arrow - if there is one, is important. Many think that fear and panic cause the recession. I am in that camp.
    Last edited by Too Little Time; 08-15-2019 at 11:51 AM.
    Life is complex.

  10. #10
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    Default Re: Financial Jitters Escalate Quickly

    Quote Originally Posted by Too Little Time View Post
    Australia went a long time without a recession. So they are avoidable.
    You may go a long time without being shot, even in war. Doesn't mean you avoided it. You just never got hit. Circumstances as to which you had little input, let alone control.[/QUOTE]
    Trust me to defend the Constitution just as soon as I'm sure you're going to vote for me again.

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