Bull Market officially over!! Year heading negative.

[Rasulis]

It is possible that the yield curve no longer works as a signal.

The reason is the following. It used to be that the Fed only controlled short term interest rates. Long term yields were left to the free market. So seeing long term yields fall below short term yields became a recession indicator because it usually meant smart money was locking in long term yields now at any cost because smart money knew a recession was on the way.

However, under the Obama administration we got something NEW called QE (quantitative easing). Basically, under Obama we drove short term interest rates to zero and held them there for YEARS (which never happened before). It was MAX stimulus to keep the economy going under Obama. And that wasn't enough. So they created this new program called QE. QE is where the Fed buys long term bonds and other securities for the express purpose of driving down interest rates on the long end and thus create liquidity. Furthermore, banks in the EU have been doing the same. So the ENTIRE yield curve now gets manipulated because the short term rate hit zero.

So that throws into question what the inverted yield curve really means anymore. The entire thing gets manipulated. The EU could manipulate its long term yields too low and that could drive buyers to devour US long term yields. That could invert the yield curve but it wouldn't signal a recession.

We're kinda in new territory. Linking to a study that says the inverted yield curve has been correct x number of times doesn't really apply because the rules changed under Obama.

Finally somebody got it.

There are no more German government bonds that trade with a positive yield. The German 30-year yield, for bonds due in 2048, the longest term available, is currently at negative -0.036%.

The Swiss 30-year yield has been negative since mid-2016 and is now at negative -0.322%. But the Japanese 30-year yield is still positive at +0.29%.

There are now 12 countries whose government debt sports negative 10-year yields. Switzerland is #1, with a 10-year yield of -0.92% followed by Germany, with a 10-year yield of -0.53%, down to Slovenia in 12th position with a 10-year yield barely in the negative of -0.04%. Japan is in 10th place. Worldwide, there are currently 15 trillion dollar of these negative yield bonds. BTW, it is growing.

That's why, the US, with its ridiculously low 10-year yield of 1.73% is right now the favorite place for people to park their money. That high demand for US bonds is the major factor that is driving the inverted yield curve.

Well, people could invest in bonds from countries like Russia (7.31%), Nigeria (13.69%), Turkey (15.1%), Egypt (15.6%) and Zambia (31.25%). The chances of them getting their money back is probably not good.

[Draco-Onis]

Finally somebody got it.

There are no more German government bonds that trade with a positive yield. The German 30-year yield, for bonds due in 2048, the longest term available, is currently at negative -0.036%.

The Swiss 30-year yield has been negative since mid-2016 and is now at negative -0.322%. But the Japanese 30-year yield is still positive at +0.29%.

There are now 12 countries whose government debt sports negative 10-year yields. Switzerland is #1, with a 10-year yield of -0.92% followed by Germany, with a 10-year yield of -0.53%, down to Slovenia in 12th position with a 10-year yield barely in the negative of -0.04%. Japan is in 10th place. Worldwide, there are currently 15 trillion dollar of these negative yield bonds. BTW, it is growing.

That's why, the US, with its ridiculously low 10-year yield of 1.73% is right now the favorite place for people to park their money. That high demand for US bonds is the major factor that is driving the inverted yield curve.

Well, people could invest in bonds from countries like Russia (7.31%), Nigeria (13.69%), Turkey (15.1%), Egypt (15.6%) and Zambia (31.25%). The chances of them getting their money back is probably not good.

Unfortunately for that theory other indicators are also flashing yellow or red all over the world, the trade war was always a gamble that good times would last forever they don't. The US is going at this alone all the while Brexit will take a huge chunk out of the market we will feel the ripples on an already weakening economy. The yield curve isn't a outlier (GDP, confidence indexes, average hours worked, NY Fed recession probably model, housing market). Feel free to take your pick it won't take much of a major event for the US to dip into a further slow down if not outright recession.

[Breccia]

U.S. stock futures weaken as tariffs go into effect

Yep, we're doing that again. Based on what happened last time, Trump has a few scant hours to blatantly lie to the American people to stop another selloff...one that would be happening right now, if the stock market was open (Federal holiday, for those who didn't know).

A professional, qualified expert investment group said the following:

Despite headlines that go back and forth, two facts have become more and more clear over time. First, the trend is toward escalation, not de-escalation. Second, the cost of the uncertainty accumulates as time goes on without resolution, weighing on both the domestic and global economies

As a reminder, I'm an asshole that likes to self-quote.

Every time China has agreed to a truce, Trump has broken it.

So the above-cited investment group has a solid point. Every lull has been followed by escalation. At best, Trump pushed off the strongest escalation till the week before Christmas. At worst, he's responsible for the trade war going this far and going this poorly. China isn't blameless at all, but at this point, they're more and more the grownups in the room.

[Draco-Onis]

U.S. stock futures weaken as tariffs go into effect

Yep, we're doing that again. Based on what happened last time, Trump has a few scant hours to blatantly lie to the American people to stop another selloff...one that would be happening right now, if the stock market was open (Federal holiday, for those who didn't know).

A professional, qualified expert investment group said the following:



As a reminder, I'm an asshole that likes to self-quote.



So the above-cited investment group has a solid point. Every lull has been followed by escalation. At best, Trump pushed off the strongest escalation till the week before Christmas. At worst, he's responsible for the trade war going this far and going this poorly. China isn't blameless at all, but at this point, they're more and more the grownups in the room.

All good points especially the last line China has used this to get major deals done "we are less crazy than Trump' is a good sales pitch. In the long run Trump has done more for China than anyone the next president cannot tackle them because of the damage his idiotic policy by tweet has done.

[Zan15]

All good points especially the last line China has used this to get major deals done "we are less crazy than Trump' is a good sales pitch. In the long run Trump has done more for China than anyone the next president cannot tackle them because of the damage his idiotic policy by tweet has done.

Exactly they have helped China diversify its customer base and its supply chain.

They are now less reliant on the US thanks to the moves of this administration and it only moves forward from here.

With his hate of "brown" Trump has made it much easier for China to move into south America. I can't wait till they go full tilt on the cheap labor in Africa next.

[Felya]

Exactly they have helped China diversify its customer base and its supply chain.

They are now less reliant on the US thanks to the moves of this administration and it only moves forward from here.

With his hate of "brown" Trump has made it much easier for China to move into south America. I can't wait till they go full tilt on the cheap labor in Africa next.

China was a buffer for cheap manufacturing, between US moving away from cheap labor jobs and reaching automation. It sucked for China, as soon as US automation took over. But, now we are fighting for the same thing to happen to manufacturing, as currently happening to coal, in just a few decades. Manual labor manufacturing has been on the outs since mass production became a thing...

[Gestopft]

September is traditionally the worst month for stocks. Given how August went this year...this would not appear to bode well.

[kaelleria]

September is traditionally the worst month for stocks. Given how August went this year...this would not appear to bode well.

Don't forget that the September 1st tariffs just hit too.

[Breccia]

Don't forget that the September 1st tariffs just hit too.

DOW immediately drops 400, bounces off, currently down 300.

I'm honestly legit surprised Trump hasn't tweeted good news. He threatened China, but that's not going to help the market. He had three days to find a lie to sell to give the market a reason not to drop so much. What was he doing all weekend, golfing?

(checks news)

Oh. He was.

[Kujako]

DOW immediately drops 400, bounces off, currently down 300.

I try to not pay attention to the DOW. It is designed to always go up, to stop people from killing themselves following the great crash of 1929. It's such a small number of stocks that it's hard to take it as an indication of the market as a whole, and if a stock starts to underperform they just swap it out for another.

[kaelleria]

Hey look... Manufacturing is contracting for the first time in 3 years.
https://www.marketwatch.com/story/is...=mw_latestnews

[Kujako]

Hey look... Manufacturing is contracting for the first time in 3 years.
https://www.marketwatch.com/story/is...=mw_latestnews

Pick one or more Trumpeter response.
[ ] It's a good thing because...
[ ] It's the Democrats fault.
[ ] Fake news.

[rda]

Pick one or more Trumpeter response.
[ ] It's a good thing because...
[ ] It's the Democrats fault.
[ ] Fake news.

It's temporary.

[Kujako]

It's temporary.

I believe that would be option three.

[ ] It's a good thing because...
[ ] It's the Democrats fault.
[X] Fake news.

[Belize]

It's temporary.

Yup, until Democrats take over the WH, and once again clean up the mess left by Republicans

[Breccia]

Hey look... Manufacturing is contracting for the first time in 3 years.

Yes, we already posted holy crap this is worse than last time.

The Institute for Supply Management (ISM) said that its manufacturing index dropped to 49.1 in August from 51.2 in July.

Any figure below 50 indicates a contraction of manufacturing activity, and August's dip below that level is the first since August 2016.

According to the association of purchasing managers, demand and consumption both contracted in August.

The survey data from ISM adds to an array of factors pointing toward manufacturing declining, including federal reserve data.

The slowdown has been attributed partially to growing trade tensions and slumping growth in foreign markets which has damaged manufacturing globally.

When we talked about this last time, it was 49.9

That was last week.

[Zan15]

Yes, we already posted holy crap this is worse than last time.



When we talked about this last time, it was 49.9

That was last week.

Gee remember when they said the NY index was not indicative of the whole country....lol oops

- - - Updated - - -

It's temporary.

isn't that what ya all keep saying about the stock market being flat?

[jeezusisacasual]

This sell off today is based on china related news and nothing more but to those that think an expansion can go on forever are horribly wrong. We are coming due for a reset in the market and when the FED even tries to clear just some of its balance sheet the market goes into a panic making that prospect even harder which tells you the overall strength of the market. The bigger tell is how many are holding on to cash which normally speaks to some cracks starting to show themselves.

We are currently down 300 points which is not as severe as i was thinking it would have been with about half an hour to go. Once the China deal is done regardless of how good / bad it is we will see a 700+ point swing for the DJIA. I am more worried about mid December then anything else at the current moment due to the increase in Tariffs and likely Trump tweeting something stupid about how American consumers will never pay for them or something along those lines. But we are looking at a recession regardless and something to follow will be the Global PMI.

https://www.bloomberg.com/graphics/global-pmi-tracker/

[Masark]

It is designed to always go up

Doesn't that make it stalling/going down a really bad sign? Because even something designed to go up can't go up with this idiot in office?

[Kujako]

Doesn't that make it stalling/going down a really bad sign? Because even something designed to go up can't go up with this idiot in office?

Naw, it just means they'll change the stocks that are in it before it gets too bad.