It’s Probably Nothing

It's Probably Nothing 27 Comments

David Rosenberg;

I wish folks would stop asking why the market is going down and instead ponder what it was that took the major averages up so sharply from January to July — especially since we know for a fact that earnings and earnings forecasts have been going down all year long. A multiple-led market rally built on a set of assumptions that proved mistaken actually fully deserves to unwind. So when the bulls say that, “Hey, we’re still up 13 per cent for the year,” the bears will respond, “Exactly.” There is still a tremendous amount of air under this thing.

More here from David Murrell.

27 Replies to “It’s Probably Nothing”

  1. No recession coming. Slower growth is coming of 1 to 1.5 % but that is NOT a recession. A recession is consecutive quarters of negative growth.

    With the US at record full employment and more job vacancies than there are job seekers, US consumer purchasing power is higher than it has ever been. US consumer purchasing drives two thirds of the US economy.

    Furthermore, companies are pulling capital out of China and redeploying it into other Asian countries and even back into Mexco and the US (but not Canada).

    And there is room for interest rates to moderate to mitigate any stumbles.

    NO RECESSION.

    1. I found this CTH piece most informative about the (desperately wanted) Trump recession …

      https://theconservativetreehouse.com/2019/08/14/stunning-day-of-economic-gaslighting-despite-all-positive-data-corporate-media-cheering-for-recession/

      Re: the inverted yield curve … The long-term borrowing rate for return on investment dropped momentarily lower than the short-term borrowing rate of return on investment because massive numbers of foreign investors were rushing to buy long-term U.S. bonds

      Foreign investors DEMAND for positive returns via the US Treasuries outstripped the SUPPLY of those Bonds … Econ 101 … a class never attended by the leftist Press.

      Past events are not necessarily a guarantee of future occurrences. This inverted yield curve occurred for an entirely different set of conditions.

  4. David Rosenberg 2019. “The message from the long-bond yield is unmistakable that a recession is coming”… (link above).

    Calling for a recession is an easy call. We’ve had a very long bull market and it’s time for a correction.

    However, Rosenberg is using tired arguments to continue to make his case. Look at interest rates, for example. They have been dropping since the early 1980s. For over 30 years rates have dropped steadily. And why?

    As Rosenberg himself states. Too few people chasing too much money. In the 1980s the baby boomers were fighting each other over mortgages and car loans. Now they are dumping money into their 401Ks and RRSPs. With so much money chasing so few borrowers, rates have steadily dropped. This net savings will start to turn around in about 3-4 years as boomers move from contributing net to the system to taking net from the system. This will be as relentless as the 30 year drop in interest rates, only the other way.

  6. Unfortunately, a “Recession” is what the media and the politicians define it as. This isn’t a factual and pragmatic world any longer. They have absolutely not qualms about calling something like 4% growth a “recession” because they know the standard voter doesn’t understand the nuances of finance. The multi-nationals are toting the “recession card” because it attacks (directly) the one thing they can’t tolerate…US Consumer Confidence. It’s a major driving force. So, they throw out “recession” as a way to slow down the spending at the local level with the goal of getting some statistics of a decrease in spending, hiring and production (goods and services). That slight reduction is all the media will need to create their own false narrative. It will be plastered on every news show and media outlet. This has the added feature of retarding consumer confidence more. Then the Fed will do their part and raise rates. Someone made the decision that Trump will lose in 2020 if they can tank the economy before the election. More specifically, someone made the decision to deluge this falsehood into the media whether it’s true or not. So, this is all going to happen pretty fast. That’s the scary part. It should be interesting to watch the activity on the holdings of the usual suspects (the George Soros types).

    The thing is, there are a lot of balls in the air, and as soon as the first one drops (provided it’s the proper one)…the others soon follow. I see the tariffs on China as a direct relationship to the ongoing negotiations with NK. China has always been NK’s handler. North Korea is the lynch pin on a lot of this. They are an untapped, potentially massive new market. China is, eventually, going to need a new market as they lose trading power over the US (and control over their own citizenship). The US is currently negotiating a bi-lateral free trade agreement with Japan resulting from the pull out of the Pacific Rim Trade agreement. China is watching that closely, I’m sure (#1 economy and #3 economy in the world focused on their back yard). If the proper ball falls, and NK becomes a quickly growing new market…then the real negotiations begin. China will want NK as a new market. But, they will, also, want S. Korea as well. As it is now, we import about twice what we export to S. Korea.

    1. Capitalist Markets are cyclical. That … we all know. Problem is … The Fed can create the peaks and valleys on a whim. And they have … repeatedly.

  7. Clearly the Fed does not believe anything is happening. While barely raising interest under Obama, the have increased rates severely under Trump and have not backed off. Assuming they are not playing the FBI game of choosing presidents.

  8. Anyone who “knows” the future would not feel the need to broadcast it but simply become filthy rich. After what little inflation exists, even the US is at ZIRP in real terms.

    This is an environment where a lot of savers are chasing real potential yields to the point of absurdity in some equities (dope, tech, cult stocks,) and real estate. Meanwhile energy stocks (in the US as well as the Canadian leper colony) are hated by the market which have yields and earnings way beyond that of dope and tech. The TSX is barely above the level it was before the 2008 recession. The S&P 500 is where is was a year ago before the fall correction. It is correcting again and the volatility is high. One prognosticator figures it will be good for one more big run (after a correction) peaking in a couple of years.

    For the third time in 45 years we are seeing people significantly trade their fiat money in for Gold and Silver and related stocks and, while the route is never linear the destination could be much higher before they once again decline.

    My own thoughts of ZIRP and NIRP which have prolonged the business cycles (possibly into a form of low-growth stasis) is that bankrupt welfare states have no other option without crashing the ponzi scheme but it will happen eventually and if I had a clue about when, their could be money to be made.

  9. The trouble is that the media and many people (such as economists) are so compromised by their utter disdain for Donald Trump that we have NO IDEA WHATSOEVER whether anything is the truth or not anymore.

    Mr. Trump walked away from the plantation and the collective is absolutely furious with him.

    So they will do everything they can to undermine his Presidency, starting with this garbage called “Trump-Russia Collusion”.

    Since that make-believe has been revealed for what it is, the collective is now blabbing about a recession with the general belief that a recession will undermine Mr. Trump’s Presidency.

    Don’t forget. According to the collective, Mr. Trump’s candidacy for President didn’t have a snowball’s chance in you-know-where.

    Second, according to the collective, “the walls were closing in” on Mr. Trump vis-à-vis the “Trump-Russia Collusion”.

    My conclusion? As the “Trump-Russia Collusion” was make-believe, so is this whole “The Recession is Coming! The Recession” is Coming!” make-believe.

  10. Recessions that aren’t recessions and budget deficits that aren’t budget surpluses only happen to alt right PMs like Harper.
    In Gritland, modest deficits under $10b/year balloon to $30b in year one, always over promised $10b cap.
    Many had called for a recession in Q4/19 or next year, but the markets and consumers aren’t playing along.
    Inventories and consumer confidence remain high. Wages are rising, inflation remains muted, deflation the greater threat.
    Government action can take credit in some cases, like Trump tax cuts, but Trudeau tax increases don’t qualify.
    In fact these fools squandered an unanticipated tax windfall gratis our hard work, still running a deficit.
    What do we have to show for $100b in new debt, what crises, wars or economic shocks were averted or had to be dealt with?
    Don’t hope for a recession to get rid of Dustbin, just refuse to give him credit, that in spite of tax and spend, we’ve done well.
    So don’t worry but be unhappy as these statists and their cronies leave us vulnerable to inevitable downturns.
    Just like daddy Trudeau did, so Canada languished while the US and UK took off with their Reagan and Thatcher revolutions.

    1. Huh? Imagine that … and Kate hasn’t even SILENCED your filthy mouth. The difference between REAL Fascists (all the leftist Blogs, Tech. Titans, etc.) and the REAL lovers of FREEDOM and LIBERTY.

      Now run-along and go salivate over Justinian’s fluffy hair

    2. What a loser you are. You couldn’t carry Kate’s luggage, let alone her limited government tune.
      Like the real OBL you are a coward, and probably just as dead.

  12. The indicators are unmistakable. They have accurately predicted 9 of the last 5 recessions.

  14. Perma-Bears like David Rosenberg never go out of style in the MSM because fear sells (fake) news. Regarding all forecasts of the future direction of markets > “Being right too soon is the same as being wrong.”

  15. Years back I decided that i’ll burn the RRSP savings before I hand them over to the money changers who clip 1/3 of earnings (and losses). I resent having to hand over my savings because the central banks are bailing out the gov’t cuz the gov’ts have destroyed our economies.

    Central banks are back stopping the markets. Gov’t institutions own 1/3 of global equity markets. The markets slide, the plunge protection teams step in. There is no “market” but somehow we have “investors”. Normalize real interest rates and then let’s talk markets.

    What’s the problem with the gov’ts and central banks backstopping the markets with low interest rate policy? ZIRP amounts to a wealth transfer from savers to borrowers and ponzi scam artists. Plus it results in mal-investments. Plus it blows asset bubbles. Plus state, corporate and private debt has ballooned with the cheap money. Plus CPI doesn’t reflect real price inflation. Plus not everyone can get in in the free money, making life harder for some (while others can’t understand how there could be lefties who want wealth redistribution). Plus when (not if) she goes south, she is going to go down hard.

    Are times that bad that we have to consume future growth today and cannibalize the next generations? Are times that hard that we need ZIRP when people are lining up in gov’ liquor stores & all-you can eat prime rib feasts ?

    Collect your crumbs (after paying your fund manager) knowing that the 1% have made fortunes off the financial gimmickry while saddling the next generation with the debt.

    PS. If you going to hold gold & silver as insurance, hold the physical. As for the paper stuff, enjoy the ride.

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