Signs of potential recession popping up

Think of the “growth” that would happen if the Chinese allowed 250,000,000 Africans to settle in China.

 

I think China is more interested in building settlements and taking Africa's natural resources back to China.

 

kinda "Monday Morning Quarterbacking (MMQ), no?

here is my MMQ on your comment,

From the Job Report Released this AM, Dec job creation was ~312K vs estimate of 185K;
also the avg hr wage increased as well.
​

these lagging economic data corroborate, belatedly, J Powell's data-driven decision,

​

 

Larry Kudlow saying there won't be a recession now has me convinced there will be one.

 

A Recession will more than likely come from overseas. People forget how big the Eurozone is (~$20 trillion GDP). An economic bell weather like Fedex lowering its 2019 guidance is pretty telling. Time will tell if that’s revised upwards.

 

https://www.bloomberg.com/news/arti...e-312-000-wages-top-estimates-in-jobs-blowout

People need to stop thinking that share prices reflect the economy or are even a signal. There's a lot more nuance to this. The share price reflects profit estimates, and while that sometimes signal the greater economy, that tends to be when all other things are equal.

When you have higher than expected wage growth (wages reduce profits...), and tariffs (these taxes are also coming from profits right now, as there doesn't seem to be an impact on prices or wages, the other two parties who could be indirectly paying the tax), of course corporate profits will be down. Yes, when the distribution of the benefits are spread more evenly rather than entirely at the top, the profits and hence valuation of the top will go down.

What orange flags? Share price has been the only one, but its causation seems the cost of profits going elsewhere (workers and tax) than any real slowdown. Moderate tariffs should produce a welfare benefit for a country as large as the US mind you, that there isn't really loss to the consumer side as economic theory often predicted (i had an argument about this with a friend of mine from college who now works at the federal reserve that the US would respond differently, as when the US dollar depreciated several years back, consumer prices didn't really change, so it seemed like the US market was rather unreactive to input costs, something that seems to be staying consistent now).

Here's the part that gets me, a lot of these people who have been crying so vocally about inequality, are pretty much demonstrating that its a team sport, and its not actually inequality that they care about. Because how else other than a reduction in corporate profit projections, ergo share price, with an increase in wages and employment would a reduction in inequality actually look like?

One thing that helped me earlier in my career when i used to work with economic projection was i was told by the chief economist, that you need to break down markets into the bracket of their earnings, there's capital, economic rent (not housing rent etc) and labour. And tbh, that was one of the most eye opening things i got, they certainly didn't teach me that in either my undergrad or post grad.

Share price is the capital and economic rent class, bond markets are the capital class, employment markets are the wage class. When you're seeing growth with contradictory data across the groups, what you're seeing is which side is winning the current rewards of that growth. Ideally you want both, but a correction period where it leans towards the labor side after the decade of corporate plunder is probably in order.

 

I did, but i thought you answered your own question. The federal reserve is acting in the opposite direction to bond markets, generally speaking the federal reserve has better data and is a bit more objective (scalping bots aren't part of its business model), they might be wrong, but if you were betting which one would you pick? Which is i suspect why Warren Buffett is making that very bet.

As for China, I tend to just gloss over that because it's like reading a religious treatise that people think are facts.

Assume their growth is less than reported, and the impact of these tariffs is greater than reported. The data from China is completely unreliable, as its provided by their government, without any outside verification or any way to get a feel for it. So while the trends would be obvious (they have been growing by making all of America's crap, when they make less crap, they grow less as making America's crap is their current business model), they're trying to project greater power than they have.

Imagine if during the the GFC, the government just produced data that said "unemployment rate is 3%" all the way through, we'd all know something was off, there are noticeable things within the general society that would tell us, the UK government could do the same thing and people all over the world could see information showing something was off, now if the Chinese government does that, you have literally no way to know, there won't be people complaining about job losses, businesses closing down or any of the other outward signs we sort of take for granted.

Reminds me of a question i was once asked, "is their banking system insolvent?", most people will say yes because well, it hasn't collapsed? "if it is, how would you know?", the answer to that is they we have no idea, none at all, they're a communist dictatorship, they could keep an insolvent banking system afloat by pouring government money into it as long as they want and we'd never know, they could also fix it when its time to "liberalise" the banking system the way they solve everything (if you ever want that feeling of "what the hell is this ****?", read up on how their banking system functions, it only makes sense within the framework of "communist dictatorship, do what it likes, disappear you if inconvenient"). We tend to just accept it because we don't have a choice, which is how Madoff got away with what he did for so long, the data was there about Madoff though mind you, but people looked away, in this case the data just doesn't exist, ergo belief in China's data is faith that they aren't lying, i don't have that faith.

 

you need to stop cutting n pasting disjointed info and present it as being gospel

the danger of parroting.

earth to Aleron,

• AMZN raised the wages of their workers, as did McDonalds, their profits have increased.
• the tariff situation has hurt the stock price of co like ADM an other agri-companies

 

admission by one who chooses to be ill-informed

people who are better informed can work around that, using such analytical tools as trending, common size economic modeling, etc.;
you've chosen not to use these workarounds

imagine what your opinion would be had you chosen not bury your head in sand

 

Except inflation HAS shown itself to be an issue in recent months. The Fed has a dual mandate but Trump is working against them in both aspects. He's slowing the economy with his childish trade wars and endless threats, and he's causing inflation through his trade wars (higher prices for steel and other basic commodities which are flowing to retail prices) and through massively blowing up the deficit. The Fed can't stop both.

Now we add a government shutdown to also hurt the economy (and yes, it's on Trump - he's the one demanding policy changes to run the government; Democrats - and even Senate Republicans a few weeks ago - are fine with status-quo and negotiating things through regular appropriations as it should be).

 

This is nonsense - foreign companies sell products over there and they report sales and earnings here. If Apple and Ford and other companies report slowing Chinese sales, there's no way for China to hide that information. There is plenty of data to be able to track China trends these days.

 

Both of those companies are global companies, Amazon have been expanding a lot and their share price and profits have been reduced quite a bit from the early part of last year, so i'm unsure what you're trying to say? Are you trying to say that labor price doesn't effect profits? which would be insane or that companies can make profits above cost increases in said labor? which no one doubts.

McDonalds US operations is actually a real estate company (globally too, but they own a bit more in foreign markets), the few they run themselves aren't where their profits come from, so this one makes even less sense as companies whose profits come from land rental tend to be positively affected by wage prices (higher wages leading to higher land prices and all).

Noone is doubting the agricorp issues are there, China ordered that no soybeans could be bought, it wasn't tariffs, it was straight up denial of all sales, of course that's going to have an impact, but i've never heard someone suggest that there is such a thing as a costless trade war or that those companies aren't in a unique situation since they were targeted specifically, so apart from deliberate disinformation, i'm again not sure what your point is.

But yeah thanks for anecdotal straw men with no context.

Corporations aren't some abstract concepts, silly scotus ruling aside, they're things, a form of property, the earnings and costs (such as a tax like a tariff) will go to one of three groups, the owners, the workers or the consumers, if the workers are getting more (see wage rises), the consumers aren't paying more (see inflation), the cost imposition is being taken entirely by the owners, as they're the only ones left.

In terms of parroting information, producing anecdotal evidence with no point is pretty good at that mind you. Of course you used a particular phrase that I've seen consistently from chinese disinformation warbots, "disjointed info presented as gospel truth", you need to tell your handler you need new phrases.

 

u don't understand that

there are many other drivers, in additional to labor cost, that affect profitability of a co​

​

 

Sure, the 1.25 million imported in 2017 is verifiable as you can follow that info back to Ford, Audi, whomever, shareholder reports, etc, and pulling a ponzi in manufacturing is next to impossible, but would you point me to where the other purported 2.9m sold by their state owned companies can be verified. Now I'm not suggesting that they aren't making any, but how would one know if they were actually selling 2.9m and not 2.5m? Point me to where i can verify this outside of the data provided by their government, I'll be waiting. I get asking for evidence in the face of overwhelming rhetorical certainty might be unusual, but humour me please?

Is their cell phone industry any different? sort of, it's a mixture of foreign brands with the majority of sales being domestic brands, but at least its not all state owned (though state capitalism basically means state control anyway, so there's that, and as we found out earlier this year, that Jack Ma is a member of the party, we know they're willing to have companies run by the "party" under the guise of being "non party" to give an air of legitimacy).

And actually there is a way to fudge sales, they don't import to China to match demand (demand for foreign over local products is probably a bit higher than sales match, but we'd never know), they import because they tell them how many they're allowed to, it's not the western world where they can ship more because they can sell it. Their government determines how much you sell, when you sell and where you sell it, it's this control that anchors their theft of IP, ergo we'll let you sell X if you give us technology Y (which is technically closer to blackmail than theft for the pedants), which is also why the US demands are moreso in the form of "buy more of X" and "stop stealing our stuff" rather than the traditional trade type.

And again I'm not saying they can make X look like -X, I'm saying they're quite capable, and more than likely making X look like either 0.8X or 1.2X

This is a highly secretive, highly protective, tyrannical regime with complete control over all facets of its economy and again i'm not saying it's all fake, they're undoubtedly getting richer on the back of their trade surplus model (yes trade deficits and surpluses do actually matter), I'm saying the data is unreliable because the source is questionable and unverifiable.

 

earth to Aleron, if you abstain from convenient baseless claims, you don't have to keep on back-pedaling

 

Borders are racist.

 

Of course but some of these companies are economic bell weathers, like FedEx (a global logistics company) that give guidance on what they think the future will hold.

The tariffs are tricky because you had such a rush to front load them and less than two years of slowly increasing tariffs. It seems the uncertainty of whether or not the next round will go into effect is palpable. I think "moderate tariffs" and "shorter term" are the key to your assertion.