Global Financial Crisis 2019?

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tdgeek

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#255511 15-Aug-2019 11:45

This article isn't a doom and gloom clickbait, it mentions some key indicators that have preceded a recession, one of which has preceded every global recession, short and long term US bonds

https://www.stuff.co.nz/business/world/115015190/recession-warning-flashes-for-first-time-since-financial-crisis-stocks-plunge

Varkk

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#2299719 15-Aug-2019 12:03

Analysts have been warning of a coming downturn for a while now. I think most people will not be surprised by this news. The big problem will be how much capacity the big economies will have to take action to mitigate the effects or kick off a recovery. In a lot of ways it still seems places haven't really recovered from 2008. Given the state of political leadership in the US and UK along with the self inflicted damage they have caused I don't hold out much hope for meaningful action this time around.

tdgeek

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#2299721 15-Aug-2019 12:07

Agree, no surprise. As you say, there are many issue such as Trump, UK politics, that are not helping and will ensure little proactive global efforts will occur. Now, whether the indicators are real or large or not, people will desert the markets, and more or less guarantee a continuation of stock market decline, self feeding

tdgeek

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#2299729 15-Aug-2019 12:21

And while what happens to our stock market is not relevant, this NZ article paints a less harsh view. Is that accurate or wishful thinking?

https://www.stuff.co.nz/business/115017819/kiwi-investors-react-to-fear-of-us-recession

floydbloke

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#2299770 15-Aug-2019 13:23

tdgeek:

This article isn't a doom and gloom clickbait, it mentions some key indicators that have preceded a recession, one of which has preceded every global recession, short and long term US bonds

https://www.stuff.co.nz/business/world/115015190/recession-warning-flashes-for-first-time-since-financial-crisis-stocks-plunge

Agreed, ti does look a bit ominous.

What it doesn't say is how often, if anytime, those key indicators have 'flashed red' and it wasn't followed by a global recession.

Have we had inverted yield curves in the past and everything turned out fine?

Did Eric Clapton really think she looked wonderful...or was it after the 15th outfit she tried on and he just wanted to get to the party and get a drink?

tdgeek

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#2299776 15-Aug-2019 13:32

floydbloke:

Have we had inverted yield curves in the past and everything turned out fine?

It just says often

"inverted yield curve," that often foreshadows a recession.

And it also states This phenomenon, which suggests investor faith in the economy is faltering, has preceded every recession in the past 50 years.

Fred99

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#2299778 15-Aug-2019 13:33

tdgeek:

And while what happens to our stock market is not relevant, this NZ article paints a less harsh view. Is that accurate or wishful thinking?

https://www.stuff.co.nz/business/115017819/kiwi-investors-react-to-fear-of-us-recession

Possibly a few factors to that, one being that these large-ish one day dips on Wall St have been followed by rebounds over recent months/years. Stock futures on all major US markets are up at the moment from close this morning (our time), so if that holds, then at close of local trading the NZ market will reflect a response to US futures levels at that time, not the ~3% dip when their market closed.

PE ratios on the local market aren't at the atmospheric levels the US markets are at.

The NZD has fallen quite sharply, so buying NZ shares is cheaper if you're using USD etc.

Anyway, I wouldn't be too concerned about the NZ market. While say a 10% drop wouldn't be very nice, you'd still be well ahead year on year. And whatcha going to do anyway? Most kiwis are invested in the local market through their kiwisaver, I can't see panic (like 1987) ensuing, as then much of the market fluff was from individuals leveraging themselves to the hilt - people aren't borrowing money to invest in Kiwisaver (except indirectly, by taking out whacking great mortgages over recent times - that could still be millstones around their necks when they turn 65).

Fred99

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#2299781 15-Aug-2019 13:40

floydbloke:

Have we had inverted yield curves in the past and everything turned out fine?

Here's a good graphic representation of the US yield curve historic correlation with US recessions:

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tdgeek

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#2299789 15-Aug-2019 13:47

This period is quite new to us? Trump, Trade Wars, Brexit? All new things, plus you expect some lessons learned from 2008, so it seems almost impossible to ponder what may or may not happen. Plus with interest rates globally low, no room to drop rates to boost spending by consumers in the economies.