Recession predictions

This prediction thread is fairly lively now that a recession seems inevitable. I'm a child of the 2008 crash that seen deflation and my parents left with little money to take advantage of that, like many. What implications will an inflationary recession have? I've a bit of cash there and not a notion what to do with it but hate the thought of it losing value. Will it ever come down or do we just adjust and my devalued cash remains as such?

beware of the institutionals

rate rises will lead to some big valuation haircuts

Its not impossible....know many friends who have saved so much and are not keen on buying house in this mad market...they rather wait for 2-3 years or more and buy in cash when the fairytale is over ! May or may not happen but gives them that flexibility.

Being reported over the last couple of days that the GDPNow tracker (A 'Nowcasting' economical model produced by the Federal Reserve Bank of Atlanta) is now pointing to an annualised growth rate of 0.9% for the second quarter, down from an estimated 1.3% increase less than a week ago.

According to their website, GDPNow works as follows:

Essentially what this indicator is showing is that the US economy is now on the verge of a recession. Whilst this is no surprise to anyone here, we are now seeing the economic data feeding into these models to back it up.

Business confidence in the US is dropping and this is translating into a serious drop in business investment. Retail in particular is being hit hard with many of the majors reporting serious over-stocking levels, leading to a cancelling of orders and profit margins taking a dive.

The interesting point here is that consumer consumption, whilst lowering, still remains strong. But people have effectively stopped buying stuff after covid and are redirecting their spending on recreation like travel and dining. Inflation will also be starting to have an effect.

Jobs growth is still also still positive.

Remains to be seen if both these metrics will remain this way for much longer. IMHO, I suspect that when (not if!) they both drop, then the recession in the US will be in full swing.

Swap lines with who though? The majority of Western central banks are technically insolvent but no one wants to admit it.

this was inevitable, we cannot keep playing this game of using our financial resources to simply (re)inflate the value of pre-existing assets, we re clearly in desperate need of using it in creating new assets, property, infrastructure, health care needs etc etc, if we do, we ll keep ending up back in potentially serious financial sector crisis all the time......

enough is enough, we re seriously endangering ourselves by maintaining this status quo....

Ghana's situation also doesnt look good!

central banks can never truly run out of money, our problem still is with private sector financial institutions, as has always been the case, theres clearly something fundamentally wrong with their operations!

it will expand the money supply if used…but it’s for a short period to provide liquidity in times of stress and 9 times out of 10 just having the swap lines in place and not used calms the market.

The risk is that the liquidity is not in the market to settle the fx trades as was the case in march 2020 when central banks had to step in and introduce swap lines to ensure that liquidity existed and to settle…your Bis article even made reference to it!!!

Central banks will still provide liquidity they’re not going to stand back and let the markets freeze because of a lack of currency in circulation…especially when the shortage of currency is not in the domestic market. It’s not 20/30 year bonds they are buying to inject liquidity it’s currency they are buying via swap lines in the offshore market

What part don’t you get the risk highlighted by the bis report is that the fx swap market has grown to such an extent that in the event of a shortage of a currency such as USD the exchange rate would rocket and institutions/banks would be forced to buy at an inflated price to settle the trades on their books which would drive prices higher again. it’s the exact same scenario as the pension funds in the U.K. that had to buy bonds a few months back but instead of a shortage of bonds their would be a shortage of a currency such as USD in the offshore market. The bis report is very clear on this…

There is a reason that the BIS report is titled fx settlement risk. You should read it and understand what your talking about before posting an article about a report that you know nothing about.

The fact is you shared an article you clearly didn’t understand and followed up saying it has nothing to do with liquidity. And now all of sudden you’re commenting on non public info…. To be honest you come across as someone that’s getting there info off YouTube and don’t have a clue what you’re talking about because even if you bother to read a small bit of the report you would know it’s a liquidity issue and if it did arise and central banks didn’t intervene only then would be an issue with capital.

i think theyve already lost that, we have to accept the reality, central banks actually dont have as much abilities and control as they think they do, we have to accept realities such as, central banks dont have full control of critical economic elements such as inflation, and that inflation can be caused from a multitude of reasons, from excess credit created by the global financial system, and our current primary causes, i.e. significant global supply chain disruptions and global energy markets, central banks have little or no control over these causations....

we also have accept, another major failing from central banks has been their qe programs, it was well known before their implementation that this would more than likely only inflate the value of asset markets, which would only truly benefit certain sections of society, i.e. asset owners, when this became apparent, they continued, this has now failed, yielding a more significant problem, post 08, i.e. over valued, and over inflated asset markets. this all now has the potential to deflate very quickly, potentially bringing us back to a 08 type situation again, or worse.... it hasnt worked!