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The Economy and The Markets (where are we, where are we heading, and what does it mean for the QC...)

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Hong Kong is now in Recession. Trade and protests are destroying the economy. 

 

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The Federal Reserve's GDPNow model is also indicating a similar picture for the united states. Thankfully we are not in recession ... yet. 

 

gdpnow-forecast-evolution.gif?h=512&w=677&la=en

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5 hours ago, Dale said:

The Nikkei went straight up to almost 39,000, right before 1990 and it has never seen that mark since. It’s been in a decades long bear market. Not suggesting that is what the US market will do. However, I will say that the ONLY reason the markets are soaring is due to one thing: Money Printing.

As one who watches the markets daily and has his career tied directly to Finance, I have only one question to ask:

If the economy and markets are doing so well, why is the Fed adamant about continuing with their QE program and keeping rates at near all time lows.

My answer is they know that without their operation, the market would sink like a rock.

Again, I’m not trying to be a Bad News Bear, but when you see the actions being taken, you know that what is going on behind the scenes isn’t as Rosy as what is on the surface.

ps—-I’m super Bullish on Charlotte and it’s future, but I do realize that we are closer to the end of this cycle than the beginning or even the middle. 

A2 

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There is a recession coming. There is a recovery coming after that. Really nothing more for anyone to say.

2/3 of the economy is based on consumer spending. Let's stop scaring people so they won't stop spending, shall we?

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4 minutes ago, jednc said:

There is a recession coming. There is a recovery coming after that. Really nothing more for anyone to say.

2/3 of the economy is based on consumer spending. Let's stop scaring people so they won't stop spending, shall we?

Wallet doesn't scream "recovery"...

 

Student-Loans-Consumer-Debt-Outstanding.jpg

 

Industrials still struggling...

Industrial-Production-pch.jpg

 

Energy is plummeting also...

 

Industrial-Production-Oil-and-Gas-Well-Drilling-1.jpg

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7 minutes ago, mpretori said:

Wallet doesn't scream "recovery"...

 

Student-Loans-Consumer-Debt-Outstanding.jpg

 

Industrials still struggling...

Industrial-Production-pch.jpg

 

Energy is plummeting also...

 

Industrial-Production-Oil-and-Gas-Well-Drilling-1.jpg

And yet it happened two quarters after the recession if I remember correctly.

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To clarify so there is no misunderstanding. The recession this go will be something different than a typical garden variety manufacturing slowdown or 20% market correction over a year or so.

The issue is, and has been DEBT. Corporate, Personal, and Sovereign debt levels are at record heights never before witnessed in the modern era of Finance. The other BIG factor is the fact that when we have entered into prior slowdowns the FED had the ability to maneuver where rates weren’t near zero, like they currently are today. In other words, there aren’t a lot of bullets in the FEDs six shooter. Plus the FEDs balance sheet has yet to be unwound from the prior crisis, thus putting us in a never seen before situation. 

My goal isn’t to scare anyone,  just to educate. To be honest, I think the recent repo activity by the Central Bank as of late was to actually save a VERY BIG bank. I personally believe this to be a fact, and have evidence and data to know specifically who that one BIG entity is. Without getting into the weeds, the FEDs have pumped tens of Billions (hundreds actually) of dollars into the overnight lending market in the last three months. Three months! This was to ease the blowout that happened just recently in the overnight interbank lending operations to stop what would have otherwise been a Lehman moment (2008 repeat). And actually this one could be magnitudes greater in fallout than Lehman due to the ridiculous amounts of toxic CDO’s outstanding.

Now that said, the problem is they (The FED)  can’t continue these operations forever without creating a currency crisis and run-away inflation. The issue has been, and will be for the foreseeable future, Debt. The world is drowning in it, and these things don’t end well.  

While I am not trying to spread bad news, or even act that I know what the next trigger will be, or precisely when. I do know one thing, the Super affluent aren’t sticking around to watch the fireworks that are coming in the not so distant future. They will be watching from the sidelines. This is also a fact and not fear mongering. 

Insider stock selling is at Record Levels. This is fact. Sometimes it pays to watch what the Big money guys do and not what they say. Remember they want and need buyers of their assets and securities, so rosy language on your financial media outlets and printed  in your Financial Rags is a MUST.

In closing, what is true is Charlotte has been a huge beneficiary of corporate relo’s and a tight market with respect to Commercial Real Estate. I also believe we have been equally fortunate with migration from states with higher taxes and costs of living. I still believe that Charlotte will continue to make big strides in building its reputation as a city with a high quality of life and an incubator for business growth. That said, what happens in the mid term time frame (less than 24 months) will have an impact on the QC and growth cities around the country. My hope isn’t in being naive or willfully blind, but in my preparation to do something that doesn’t wreck my savings and future. It’s always prudent to be prepared and be wrong, than to be blissful in willful ignorance of the future that is racing towards the US and Global economy. 

A2

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9 hours ago, A2. said:

My goal isn’t to scare anyone,  just to educate. To be honest, I think the recent repo activity by the Central Bank as of late was to actually save a VERY BIG bank. I personally believe this to be a fact, and have evidence and data to know specifically who that one BIG entity is. 

I thought I read something about Chase doing something funky with their balance sheet that brought this about?

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3 hours ago, Vitamin_N said:

I thought I read something about Chase doing something funky with their balance sheet that brought this about?

I will give you a hint, it’s not Chase. But it starts with a D. I kind of just gave it away with that.

To be honest it’s not really new news, just didn’t want to disparage against another Financial firm.  

One more hint for the road, this is that firms Stock performance over the last many years. Clearly not a healthy looking chart, even to novice eyes:

 

A2

BC4E28BD-ED99-49A1-9242-219F3D509D66.jpeg

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Just now, A2. said:

I will give you a hint, it’s not Chase. But it starts with. D. I just gave it away. To be honest it’s not really new news, just didn’t want to disparage against another Financial firm. 

A2

All this turmoil in the financial markets makes me want to clear my accounts. Deutsche bank is about to collapse. Technology can't meet their 18K job cut demands and they don't understand the capital it takes to achieve that. This is how it started with the last recession.  Markets didn't catch on until Brothers collapsed. This time the markets are almost fully automated with zero liquidity.  Volumes are already decreasing. 

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24 minutes ago, tarhoosier said:

Deutsche

Winner, winner Chicken Dinner! 

A2

24 minutes ago, mpretori said:

All this turmoil in the financial markets makes me want to clear my accounts. Deutsche bank is about to collapse. Technology can't meet their 18K job cut demands and they don't understand the capital it takes to achieve that. This is how it started with the last recession.  Markets didn't catch on until Brothers collapsed. This time the markets are almost fully automated with zero liquidity.  Volumes are already decreasing. 

The first shot across the bow will be certainly swift, once it is triggered. Problem is timing. However,  sometimes being early to the fireworks show is better than trying to jump when the first fuse is lit. 

 That said, the other issue besides liquidity is weapons of Mass Financial Destruction with the new innovations in trading with ETF’s and Algorithmic trading (is Bots). 

When the sell orders hit, it will take the PPT (Plunge Protection Team) all they can throw at it to keep the panic from going parabolic. 

A2

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45 minutes ago, mpretori said:

All this turmoil in the financial markets makes me want to clear my accounts. Deutsche bank is about to collapse. Technology can't meet their 18K job cut demands and they don't understand the capital it takes to achieve that. This is how it started with the last recession.  Markets didn't catch on until Brothers collapsed. This time the markets are almost fully automated with zero liquidity.  Volumes are already decreasing. 

Consider a quality Credit Union. They have the same protections as a major Bank with NCUA (the equivalent of FDIC) and are considerably less tied to any contagion. Plus they offer that small town customer service for their Members that seems lost on the Mega Banks. I have multiple accounts spread around (and even one with a major Charlotte bank), but my CU account and relationship is by far my favorite. I’m almost tempted to pull my Mega Bank account just because of the service the CU offers. The only reason I haven’t is ATM access and some billing I have tied to my mega bank account. Really it’s me just being Lazy not going ahead and swinging it over. 

A2

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I abandoned my major bank 20 years ago for the Credit Union. The services they cannot offer are not relevant to me. Business loans, factoring, foreign exchange and such. They have a correspondent relationship with Wells Fargo for FX and it is handled promptly. When outside the US I use my credit union Visa card as the fee is 1/3 of my BofA Mastercard. Mortgages, I have had a few. Fewer papers and hoops to jump. They treat me as a MEMBER. Their rates beat every big bank, interest paid or received. Not just about credit rating as when I left Big Bank they made it clear they did not want me as I refused to increase my "wallet share" with them. Big Bank wanted it all and credit unions takes me as I am. 

I am an apostle.

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On 11/16/2019 at 8:58 AM, Dale said:

We are back where we were January 2018 and September 2018.  Not exactly "bonkers".

 5%  GDP? No where in sight.

Businesses are worried about uncertainty, anti-immigrant policies, exploding national debt,  trade and tariff chaos.  

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I should put this in picture of the day, but I dare not dirty that beautiful thread! But just so we are all on the SAME page, stocks can go ballistic to the upside for all the WRONG reasons in a economic collapse. Why? The currency it being trashed. Think Zimbabwe. Not to be outdone, our neighbors to the South in Venezuela are one of the most resource rich Nations on the planet and their Stock market is booming. BUT, the reason it’s flying high is because their currency is in Free fall and their people are eating trash. The bottom line is that the DOW and S&P are NOT the indicators we should focus on, but rather that piece of paper (dollars) in your wallet. Not to mention the Trillions in Sovereign paper our country is drowning in, Treasuries. 

Heres that chart of the day to explain why a picture is worth a thousand words. Without further delay I present to you the Bull Market of Venezuela:

 

D9D840ED-C02D-4C5D-8A16-97F366AFEB68.jpeg

 

Had I not said that this was Venezuela’s stock market, any person looking at this Index would assume that this is one raging Bull, but the reality is it’s an economy in its death throes. 

A2

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5 minutes ago, Dale said:

I predict a recession some time after November 2020. 

*runs away*

It's honestly amazing how long a major correction or recession has been avoided. So many indicators have been calling for it since like 2014, and those red flags just keep getting more numerous and concerning.

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Not that I want to dive into this conversation at all. I’m politically agnostic with markets and trading, but Trump has nothing to do with what will inevitably happen. This is something much bigger than the current or prior administrations. This has EVERYTHING to do with the Central Banks and the explosion in Debt.

Regarding the National debt, both Obama and Trump are equally guilty of pushing the limits with respect to this. 

Presidents are not as prominent of players as many would believe in macro economic trends, they are mere spectators just passing through.  

A2

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Just now, A2. said:

Not that I want to dive into this conversation at all. I’m politically agnostic with markets and trading, but Trump has nothing to do with what will inevitably happen. This is something much bigger than the current or prior administrations. This has EVERYTHING to do with the recklessness of the Central Banks and the explosion in Debt.

Presidents are just passing through.  

A2

People seem to have a hard time understanding that the economic cycle is not entirely controlled by the president. Obama didn't personally save us from the recession and Bush didn't solely cause it. And Trump isn't solely responsible for the current economic conditions good or bad.

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15 hours ago, A2. said:

Regarding the National debt, both Obama and Trump are equally guilty of pushing the limits with respect to this. 

Well that's absolutely not true. The Obama administration reduced deficit spending while during one of the worst recessions faced in the US and Trump has ballooned deceit spending during  the longest stretch of growth in history. 

15 hours ago, A2. said:

Presidents are not as prominent of players as many would believe in macro economic trends, they are mere spectators just passing through.  

I definitely agree with this point about economics in general, much more determined by congressional changes than the President, but still highly influential on budget focuses. 

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