Are we recession proof?

I've been seeing a lot of chatter especially on this forum, about how central banks today have instituted policies that make the global economy "Recession Proof". The Economist recently

that

says otherwise. How vulnerable to an economic downturn are we?

 

Hi GingerGuy, whoops, looks like nobody chimed in here.... maybe one of these discussions below is relevant:

If we're lucky, the following users may have something to say: deathTouch DG9 Mephistopheles

If those topics were completely useless, don't blame me, blame my programmers...

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 
Most Helpful

There is quite a bit of recession risk but no one wants to admit it. Part of it is cyclical and part of it is utter political incompetence.

Interest rates are going up faster than many would like, and later than I’d have liked. I think the Fed should have been cooling off the economy in 2014, but now it’s overheated. Debt is at all time highs, wages to expenses are at all time lows, and almost like America WANTS problems, it placed a buffoon brat in 1600 Pennsylvania Avenue.

It doesn’t help that the idiot in the White House has been hyping markets like it was 2009 (when it was actually a good time to buy stocks). Now we are well past what should have been the top of the market all wondering why it’s going down lately. Hoo hoo, there’s a mystery for you. Zoom all the way out in the S&P500 chart and tell me what you see.

Had wages gone up more quickly and prices stabilized somewhat then I could see the economy running smoothly. Which is a shame because there’s actually a lot more “real” economic activity these days, and it sucks that a screwed up capital markets dynamic will rain on that parade. There’s also no infrastructure plan. Remember that? The thing America needs most, the orange clown grandstanded....the one thing I’d have happily supported him on? Now? Nothing. Just a tax gift for rich folks and companies that will just focus on yet more buybacks to desperately cling to the idea that their shares are actually worth the current price.

Adding to this, apparently, it’s more important for the president of the United States to pick twitter fights with porn stars than run the country. Such is the order of priorities under herr fRump. Meanwhile something to the tune of several White House officials a month are indicted and increasing convicted of corruption: indicative of the crooks and scum trump has gathered to himself. So now rate hikes, trade wars, general policy incompetence and corruption, and a geometrically increasing deficit are beginning to catch up to the economy. Caterpillar just posted a gloomy outlook. Good luck.

The analogy to my mind is that had the economy/markets gotten some rest in 2013-4, figuratively it would have been like going to sleep on time. Markets and the economy wouldn’t have been glamorous during this time but at least we’re productive, and wake up the next day to embrace a federal infrastructure plan that helps revitalize the nation. Even by 2016, it would have been like going to bed 4-5 hours late. Push wages up, stop bidding wars, tighten rates. Unpleasant but a cup of coffee in the morning and you’ll be ok for the most part. Instead, the economy blew lines of coke and now it’s like 3 in the afternoon two days later and still no sleep....so at some point there’s going to be a crash.

I’m all cash waitin for the crash, and I’m frankly looking forward to bargain shopping. My inner cynic tells me that folks want to push up the S&P to 3,000 before admitting defeat, but this last couple of weeks has me even questioning that.

All I can say is hold on to your hat.

Good luck.

Get busy living
 
Ion26:
Why don’t you go short or load the boat with puts, instead of sitting in cash, if you’re so confident the market/earnings have peaked and a massive correction is immenent

I have some but will need dry powder for the gold "fear trade" coming up, so have to stay loose :)

Get busy living
 

I don't disagree with everything you said (we may very well be in for a 10-20%+ decline from here sometime in the next ~12 months). 1) Look at the S&P on a log scale going back to 1900 (slide 17 - https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-t…) and tell me what you see; additionally it's trading at like ~17x earnings when interest rates are still historically low - the earnings yield is almost 2x the 10-year. I will grant that an increase in interest rates or a deteriorating Chinese economy could easily lead to a double digit decline.

2) Trump likely focused on healthcare and taxes first as Democrats did not agree with his approach in those areas; while increasing Infra spend makes all the sense in the world, he had to have known this would be a bipartisan issue. They could certainly draft a big Infra bill in the near future.

 

Sed esse qui voluptatibus. Deleniti nulla sit velit quod aliquam. Quos est ducimus quia in. Atque odit provident sed quia atque minus. Vel et amet ut omnis et sit quidem. Explicabo enim deleniti ut. Facere ut veritatis ratione officiis repellat molestiae esse et.

WSO Content & Social Media. Follow us: Linkedin, IG, Facebook, Twitter.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Secyh62's picture
Secyh62
99.0
4
Betsy Massar's picture
Betsy Massar
99.0
5
dosk17's picture
dosk17
98.9
6
DrApeman's picture
DrApeman
98.9
7
GameTheory's picture
GameTheory
98.9
8
CompBanker's picture
CompBanker
98.9
9
kanon's picture
kanon
98.9
10
Linda Abraham's picture
Linda Abraham
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”