Next US Recession/Market Correction?

Black Swan

The US form of capitalism has historically had many recessions/market corrections.

It's been several years since the Great Recession that began in 2007-2008 during the end of the GW Bush Administration. The DJIA lost half its value falling from the 14,000s to below 7,000s, along with the greatest bank failure in US history (Washington Mutual), huge investment bank failures (Bear Stearns, etc.), and millions of home foreclosures.

The US has recovered from the Great Recession, and has demonstrated growth, with national unemployment percentages at 5.6 percent (normal for US during non-recessionary times), and GDP growth reported at an extraordinary 5 percent. Banks have consolidated and recovered, the DJIA has bounced above an historic 18,000, and housing has stabilized.

Is it time for another US recession/market correction? If it occurs before November 2016, how will this affect the Republican controlled Congress, or the Democrat controlled Executive during the general elections? If it occurs after November 2016?

Amerika

Billionaires (like Warren Buffett, John Paulson, and George Soros) are dumping their US stocks at an alarming rate because their research points toward a massive market correction in the very near future.

Yeah, stock prices are up... but the real underemployment rate is at 12%, wages are stagnant, personal debt levels are high, and 15% of Americans are on food stamps, and most Americans (76% worth) are still living paycheck to paycheck.

And if you believe Warren Buffett is a guru of stock indicators, the “Warren Buffett Indicator” (Total Market Cap to GDP Ratio) is currently saying "Danger Will Robinson, Danger!."

Black Swan

Amerika wrote: »

Billionaires (like Warren Buffett, John Paulson, and George Soros) are dumping their US stocks at an alarming rate because their research points toward a massive market correction in the very near future.

Yes, that's my guess too, although I do not see that it will be "massive" as occurred during the GW Bush administration Great Recession. The Great Recession beginning 2007-2008 was the perfect financial storm, with millions of housing foreclosures, massive federal deficit, the largest bank failure in US history, some of the largest investment bank failures in history, combined with the non-value-added and wasteful expenses of what became the 2 longest wars in US history. Rather in the next two years or so, I see more of a market correction typical of past market recessions as occurred under Reagan, etc. But when? Before or after November 2016? And what would be the consequences if it occurred before or after November 2016 for Republican and Democrat seats in Congress, as well as the Executive?

As for Buffett, he predicted in The Economist that a recession was due and started making adjustments to his portfolio accordingly beginning 2004, and made one of the largest purchases of silver for one year in US history during the GW Bush Administration era. Many analysts thought the aging investor had lost his market acumen, then the Great Recession hit 2007-2008 and he made a killing on silver price. Before someone says gold, Buffett is not a gold bug, rather he prefers silver because of its growing demand in electronics. Buffett sees no investment interest in gold, regardless of the world historical fascination with its nature.

Amerika wrote: »

Yeah, stock prices are up... but the real underemployment rate is at 12%,

I believe that the reported 5.6 percent unemployment rate by the Bureau was understated too, but I also believe that it has ALWAYS been understated in the past, regardless if it fell under Democrat or Republican administrations. If unemployment stats have always been under reported, then a drop from the Great Recession double digit reported unemployment to single digit reported unemployment still is one very significant indicator of economic improvement.

The economic growth indicator that's extraordinary (and hard to believe) is the recently reported 5 percent GDP growth rate. A 5 percent growth rate for the largest economy in the world is "massive" and cannot be sustained indefinitely.

Amerika

Black Swan wrote: »

Yes, that's my guess too, although I do not see that it will be "massive" as occurred during the GW Bush administration Great Recession. The Great Recession beginning 2007-2008 was the perfect financial storm, with millions of housing foreclosures, massive federal deficit, the largest bank failure in US history, some of the largest investment bank failures in history, combined with the non-value-added and wasteful expenses of what became the 2 longest wars in US history. Rather in the next two years or so, I see more of a market correction typical of past market recessions as occurred under Reagan, etc. But when? Before or after November 2016? And what would be the consequences if it occurred before or after November 2016 for Republican and Democrat seats in Congress, as well as the Executive?

I’ve read with alarm of a market correction of up to 90%. If it is a drastic reduction, worse than was realized in 2008, and happens before 20, January 2017, I wonder if we will be referring to it as the Barack Obama administration Great Destruction.

If it happens before the November 2016 election, I think people will be looking for a leader with proven executive experience who has the best economic plan for getting the nation to move forward and out of a terrible circumstance. Mitt Romney or Jeb Bush would probably be the best bet IMO.

Black Swan

Amerika wrote: »

I’ve read with alarm of a market correction of up to 90%.

This does not seem credible. Do you have a reliable source for this 90% market correction? Link?

Brian?

Amerika wrote: »

I’ve read with alarm of a market correction of up to 90%. If it is a drastic reduction, worse than was realized in 2008, and happens before 20, January 2017, I wonder if we will be referring to it as the Barack Obama administration Great Destruction.

If it happens before the November 2016 election, I think people will be looking for a leader with proven executive experience who has the best economic plan for getting the nation to move forward and out of a terrible circumstance. Mitt Romney or Jeb Bush would probably be the best bet IMO.

What nonsense is this based on?

maxpower82

Check the labour participation rate and the money printing that has gone on.

The US is on dying as an empire. We are living through the end of America.

Closing military bases and losing the reserve currency status.

Once it dawns on everyone that the money printing and low interest rates will never end then the currency will die.

The next official recession may be the nail in the coffin.

edward2222

Black Swan wrote: »

This does not seem credible. Do you have a reliable source for this 90% market correction? Link?

I read the article and found out that it is not a 90%.....
Its only 9%.. sorry but I cant post the URL because
I'm just a new user...

Amerika

Black Swan wrote: »

This does not seem credible. Do you have a reliable source for this 90% market correction? Link?

Sorry, just saw this. Is it credible? Don’t know. The link to the article could just be a cleverly construed ad. And I wouldn’t bet the farm on a 90% reduction. But it does give some alarming information which indicates a large market correction is possible in the near term, and if true that billionaires like Warren Buffett are dumping stocks, it might be a good decision to stand up and take notice.

I did find it interesting that the article mentioned the disappointing performance in companies like Johnson & Johnson, Procter & Gamble, and Kraft Foods. I put a large part of my portfolio is into these three companies after 2008. Yeah, they don’t produce much in dividends or stock growth, but I feel they are good hedge bets against a severe market correction. I figure no matter how bad things get, people will still be buying products like toilet paper, Tampax, tooth past, Tyenol, and Mac & Cheese.

http://www.newsmax.com/Finance/MKTNews/billionaires-dump-economist-stocks/2012/08/29/id/450265/

Black Swan

Amerika wrote: »

Sorry, just saw this. Is it credible? Don’t know. The link to the article could just be a cleverly construed ad. And I wouldn’t bet the farm on a 90% reduction. But it does give some alarming information which indicates a large market correction is possible in the near term, and if true that billionaires like Warren Buffett are dumping stocks, it might be a good decision to stand up and take notice.

A 90% market correction is not credible, nor is the source that claimed that such a correction was credible. It's alarmist rumour spreading without any real substance. Will there be corrections? Yes. There always have been in the US economy, and will continue to be so. The real question in terms of US Politics is when? Before or after the 2016 election may greatly affect the results, with a before GE correction favouring Republicans, and an after GE correction favouring Democrats. The old political cliche "It's the economy stupid" may hold merit in 2016 presidential elections.

arold10

Black Swan wrote: »

A 90% market correction is not credible, nor is the source that claimed that such a correction was credible. It's alarmist rumour spreading without any real substance. Will there be corrections? Yes. There always have been in the US economy, and will continue to be so. The real question in terms of US Politics is when? Before or after the 2016 election may greatly affect the results, with a before GE correction favouring Republicans, and an after GE correction favouring Democrats. The old political cliche "It's the economy stupid" may hold merit in 2016 presidential elections.

I wasn't expecting something like that to occur after such a long recovery. If such event takes place before the election, it'll be a victory for the Republicans since they'll use that as a weapon to push their agenda.

AbusesToilets

I'd question if there has been any change in the situation that led to the recession, has regulation on the financial industry been tightened and those responsible punished for their actions? Given recent Republican led efforts to ease regulation on financial institutions, it doesn't seem like it.

Amerika

Thanks to Dodd-Frank, now instead of 10 banks too big to fail, we now have 5 massively bigger banks too big to fail. I guess that's called progress.