Disaster Dow tanks 800 points in worst day of 2019 after bond market sends recession warning - The Great Trumpression?

The Pink Panther

Think Like Pink
kiwifarms.net

Dow tanks 800 points in worst day of 2019 after bond market sends recession warning
PUBLISHED WED, AUG 14 2019 2:47 AM EDTUPDATED 3 HOURS AGO

Yun Li@YUNLI626



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Stocks plunged on recession fears—Six experts on what it means for markets

Stocks plunged Wednesday in the Dow Jones Industrial Average’s worst performance of 2019 after the bond market flashed a troubling signal about the U.S. economy.
The Dow dropped 800.49 points or 3.05% to 2,5479.42, its worst percentage drop of the year and fourth-largest point drop of all time. The S&P 500 fell 85.72 points or 2.93% to 2,840.6, while Nasdaq Composite declined 3.02% to 7,773.94. The Dow gave up the entire rebound from a sell-off earlier in August and fell to a two-month low.

The yield on the benchmark 10-year Treasury note on Wednesday briefly broke below the 2-year rate, an odd bond market phenomenon that has been a reliable indicator of economic recessions. Investors, worried about the state of the economy, rushed to long-term safe haven assets, pushing the yield on the benchmark 30-year Treasury bond to a new record low on Wednesday.
Bank stocks led the declines as it gets tougher for the group to make a profit lending money in such an environment. Bank of America and Citigroup fell 4.6% and 5.3% respectively, while J.P. Morgan dropped 4.2%. The financials sector dipped into correction territory, down more than 10% from a recent high.


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“The U.S. equity market is on borrowed time after the yield curve inverts,” said Bank of America technical strategist Stephen Suttmeier, in a note.
There have been five inversions of the 2-year and 10-year yields since 1978 and all were precursors to a recession, but there is a significant lag, according to data from Credit Suisse. A recession occurred, on average, 22 months after the inversion, Credit Suisse shows. And the S&P 500 actually enjoyed average returns of 15% 18 months after an inversion before it eventually turns.




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VIDEO07:56
Allianz chief economic advisor El-Erian on today’s market sell-off

Still, the signal spooked investors on Wednesday. The last time this key part of the yield curve inverted was during a period starting in December 2005, two years before the recession brought on by the financial crisis hit.
“Historically speaking the inversion of that benchmark yield curve measure means that we now must expect a recession anywhere from six-to-18 months from today which will drastically, and negatively, shift our medium-to-longer term outlook on the broader markets,” Tom Essaye, founder of The Sevens Report, said in a note on Wednesday.

President Donald Trump on Wednesday lashed out at the Federal Reserve and “clueless” Jerome Powell, blaming the central bank for “holding us back.” He also called the inverted yield curve phenomenon “crazy.”


Donald J. Trump
✔@realDonaldTrump

· 4h
We are winning, big time, against China. Companies & jobs are fleeing. Prices to us have not gone up, and in some cases, have come down. China is not our problem, though Hong Kong is not helping. Our problem is with the Fed. Raised too much & too fast. Now too slow to cut....

Donald J. Trump
✔@realDonaldTrump


..Spread is way too much as other countries say THANK YOU to clueless Jay Powell and the Federal Reserve. Germany, and many others, are playing the game! CRAZY INVERTED YIELD CURVE! We should easily be reaping big Rewards & Gains, but the Fed is holding us back. We will Win!
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August has been a volatile month for the stock market so far. Including Wednesday, the Dow has moved more than 200 points in either direction on seven occasions. On August 5, the Dow plunged 767 points, or 2.9%. It then recovered some of those losses until Wednesday’s shellacking.

Shares of Macy’s tanked more than 13% to their lowest level in a decade after the retailer posted second-quarter earnings way below analysts’ expectations as heavy markdowns used in spring to clear unsold merchandise weighed on profits.
Global slowdown
Investors are increasingly worried about a global economic slowdown as weaker-than-expected data in China deepened the gloom in the world’s second-largest economy. Official data published Wednesday showed growth of China’s industrial output slowed to 4.8% in July from a year earlier, the weakest growth in 17 years.
Adding to the fears on Wednesday was Germany’s negative GDP print, which raised the risk that Europe’s largest economy is on the verge of falling into a recession. Euro zone GDP also grew by just 0.2% quarter on quarter, a significant slowdown from the 0.4% growth in the first quarter.
The U.S. decided to delay tariffs on certain Chinese goods while outright removing some items from the tariff list, the United States Trade Representative announced Tuesday. Wall Street cheered the news, with the Dow jumping as much as 529 points before settling to finish the day 372 points higher.
President Donald Trump said Tuesday that the move was designed to avoid any potential impact on holiday shopping ahead of the Christmas season. He added China would very much like to make a trade deal.
There are still seven “structural issues” the U.S. needs to settle with China through negotiations, White House trade advisor Peter Navarro told Fox Business Network on Wednesday. These issues include cyber intrusion into U.S. business networks, forced technology transfer, intellectual property theft and currency manipulation, he added.
China’s Commerce Ministry said Vice Premier Liu He had spoken by phone with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Tuesday and they agreed to talk again in two weeks.
Hmmmm....trouble.
 

CumDumpster

camedei707, Evil Overlord of Xedo
kiwifarms.net
what are the chances this has to do with Epstein panic?
I'm sure this is more of the Federal Reserve being dumb Juden who know not what they're doing.
Epstein has more to do with the military/silent majority trying to ruin Americans who built a cult around their person [Obama, to name one] and Hollywood [remember that Disney had a snorkeling trip on St. James Island as part of their active cruise line], trying to get the people to turn on them as that pay-for-play that was exposed in academia didn't get everyone away.
 

Locomotive Derangement

Hardcore Velocity
kiwifarms.net
The fuck did I JUST get done saying?

I'm still surprised that people think a President that's only been in office for a few years can affect the economy so drastically one way or the other. The timeframes it takes for poor economic policies to show results are glacial. Its possible his trade war with China might be doing more harm than good, but even if it is it'll just be the cherry on top of our rotten to the core economic system. There is some serious Enron shit going on right now with bad loan practices. There's also TechBubble 2.0 convincing people that Big Data is actually valuable to anyone other than the surveilance industry. Corporate debt is also quite high which is fine normally but if anything disasterous happens companies can start collapsing left and right.

This one is my own theory backed up by minimal data, but I also suspect that the student loan market is going to implode at some point. Right now it appears to be kept salient by stiff government regulations that make it difficult for a jobless hipster to default but if anything changes it could lead to a run.

Marketing and Market Research as a field is also so disgusting and bloated that I can't comprehend how it still exists. In this age, the average intern fresh out of high school can do a marketing job in their sleep since the next generation is so enslaved by social media. Corporate entities are literally just throwing money away in this field, the costs for market research studies and materials are ENORMOUS and the results of them are usually so mundane and pedestrian that anyone on the street could have told you that in passing.
 

SmileyTimeDayCare

kiwifarms.net
There's a lot going on here. The Yield Curve is one aspect but a bigger aspect is the fact that the MSM has been actively rooting for a recession while suppressing any positive news. I mean look at the market's position vs the last five years. It lost 3% and I'm certain a lot of that is, as it always is, feeders who started selling the moment a slight decline was detected.

People will liquidate their future because of a 200 point loss. Bad advice and a media bent on promoting any perceived failure of an administration is a deadly combination for an uninformed investor.

Even conservative radio stations run frequent ads warning of a crash any day now!!!

I fully expected a 5% dip(minimum) with all the China shit going on*.

On a side note it still blows my mind that we are ignoring Hong Kong as a country that tended to back people trying to break free of totalitarian regimes. Also hurts my brain when I see leftist fucks talking about concentration camps and prison slave labor with what is going on in China. They are literally rounding up people based on religion and have what is tantamount to slave labor churning out goods that liberals gobble up.


*It is absolutely worth a short term downturn to get China out of our IP. They've been fucking us over for years.
 

Uncanny Valley

I really shouldn't be laughing
True & Honest Fan
kiwifarms.net
Welp this is it Trump has destroyed Obama's economy the only thing that can save us now is Biden and his Trans-hemisphere America economic plan which ties our GDP down to both Canada and Mexico and some parts of South America.

Essentially it's like the EU and people from other places can borrow however much they like just like Greece.
lemme guess, it involves trains and little girl hair.
 

Gar For Archer

kiwifarms.net
There's a lot going on here. The Yield Curve is one aspect but a bigger aspect is the fact that the MSM has been actively rooting for a recession while suppressing any positive news. I mean look at the market's position vs the last five years. It lost 3% and I'm certain a lot of that is, as it always is, feeders who started selling the moment a slight decline was detected.

People will liquidate their future because of a 200 point loss. Bad advice and a media bent on promoting any perceived failure of an administration is a deadly combination for an uninformed investor.

Even conservative radio stations run frequent ads warning of a crash any day now!!!

I fully expected a 5% dip(minimum) with all the China shit going on*.

On a side note it still blows my mind that we are ignoring Hong Kong as a country that tended to back people trying to break free of totalitarian regimes. Also hurts my brain when I see leftist fucks talking about concentration camps and prison slave labor with what is going on in China. They are literally rounding up people based on religion and have what is tantamount to slave labor churning out goods that liberals gobble up.


*It is absolutely worth a short term downturn to get China out of our IP. They've been fucking us over for years.
It’s worth a temporary dip in the economy to remove our dependence on China, and IMO it’s also worth the massive price increase (and likely drop in variety) of fresh produce if it means reforming our agriculture industry to remove the reliance on illegal labor.
 

Syaoran Li

Totally Radical Dude
kiwifarms.net
See, I'm not an economics expert and I honestly can't tell if this is just fear-mongering to talk the average American into not voting for Trump in 2020 or if we are seeing the earliest signs of another recession.

If it weren't for the rampant Trump Derangement Syndrome in the MSM and guys like Bill Maher hoping for a repeat of the 2008 Recession so Trump has a higher chance of losing the 2020 Election, I'd be a little worried but since we live in a completely unhinged clown world, I can't tell when the TDS-induced scaremongering ends and actual concern for the economy begins.

There were several economic experts who correctly predicted the 2008 Recession years before it happened.

Now, I was an adolescent back then, so my memory may be a little flawed but wasn't the Great Recession one of those things that was obviously going to happen in hindsight, but nobody realized it until after it happened?

IIRC, back in 2005 and 2006, several people could see the writing on the wall with the housing market bubble going bust but nobody was listening until mid-2007 when it became a lot more obvious and by then it was too late to do anything to prevent it.

I think we're probably going to head for another recession by the end of the 2020's since Big Tech is going through yet another bubble with a lot of the same problems that caused the Dot Com bubble of the late 90's. There's also the issue of a building student debt crisis as well.

I'm hoping that we can avoid another economic downturn or at least that it doesn't kick in until after the 2020 election and that it turns out to be a mild recession like when the Dot Com bubble burst back in 2001-2002.

But at the same time, I am worried that if we are in store for another tech-related recession, it's gonna be a major one like in 2008. We're a lot more wired in 2019 than we were in 2001.

Part of why the 2001 recession was so mild for the average American was because it was mostly confined to the tech sector, which was a lot less ubiquitous and employed a lot less people back then.

I don't think we're headed for a major recession in 2019 or 2020, but after that it's anyone's guess.
 
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