Bond flash economic warning

[RandomGuy]

A stronger yield curve inversion than March. The stock market is not taking it well, with good reason, IMO.

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"The yield curve inversion between the 3-month Treasury bill and the 10-year note widened to its deepest level since the financial crisis, with investors now expecting a 10 basis point premium for holding 3-month bills over 10-year notes. The 3-month bill yield rose to 2.362% while the 10-year note yield dropped to 2.26%, off its lowest since September 2017 notched earlier in the session."


https://www.cnbc.com/2019/05/29/us-b...-auctions.html

[RandomGuy]

6:40 a.m. The Dow Jones Industrial Average looks set to tumble after President Donald Trump placed a 5% tariff on all Mexican goods beginning on June 10.

Dow futures have fallen 282 points, or 1.1%, while S&P 500 futures have dropped 1.2%, and Nasdaq Composite futures have slumped 1.5%.

Trump isn’t targeting unfair trade practices this time, as is the case in the trade war with China. In a tweet on Thursday, Trump said tariffs on all goods from Mexico would be hit with a 5% tariff “until such time as illegal migrants coming through Mexico, and into our Country, STOP.” Tariffs will keep rising until they hit 25%.

The yield on 10-year Treasuries has slumped nearly 0.07 percentage points to 2.157%, causing the yield curve to invert even more. That is a sign that risks of a recession are rising, and with these new tariffs, it is getting harder to explain it away.

Raise your hand if you saw this coming?

https://www.barrons.com/articles/dow...co-51559299926

Holy balls, Trump is going to push the US into a recession. The wider that spread, the greater the chance. Heard it was at 40% before it widened.

[boutons_deux]

Trash is betting on racism and the economy to get re-elected.

Racism is a safe bet, it's fundamental to The American Way of Life

But the economy is looking a lot less safe

[RandomGuy]

Ok... China is putting together a blacklist of companies:

https://www.oann.com/ex-china-centra...a-u-s-meeting/

BEIJING (Reuters) – China threatened on Friday to unveil an unprecedented hit-list of “unreliable” foreign firms, groups and individuals that harm the interests of Chinese companies, as a slate of retaliatory tariffs on imported U.S. goods was set to kick in at midnight.

The commerce ministry did not single out any country or company, but the threat could further heighten tensions after Washington this month put Huawei on a blacklist that effectively blocks U.S. firms from doing business with the Chinese telecoms equipment giant.

Beijing’s “unreliable en ies list” would apply to those who violate market rules and the spirit of contracts, block supplies to Chinese companies for non-commercial reasons, “seriously damage the legitimate rights and interests” of Chinese companies and harm China’s national security, the ministry said.

https://www.oann.com/ex-china-centra...a-u-s-meeting/

[RandomGuy]

Get Ready For Trump's Currency War

First, China Inc.’s huge and rising debt load. The roughly $1.3 trillion of dollar-denominated debt coming due over the next 12 months is greater than Beijing’s holdings of U.S. Treasury debt. The more that yuan slides, the more expensive that debt is to service, and the more likely big mainland companies are to default.

That leaves Chinese officials with a devilishly difficult decision. They can let companies fail and stomach the resulting chaos in markets–including big stock losses at the Shanghai and Shenzhen exchanges. Or they can bail out companies, denting Xi’s promise to let market forces play a "decisive" role in reform efforts. This would reward bad behavior, which investors call "moral hazard."


...
Count Kyle Bass among short sellers assuming Beijing will hold the line. Earlier this month, the Hayman Capital hedge-fund manager disclosed that he exited a long-held bet against the yuan. One possible reason: it’s gotten tougher to trade the yuan offshore. That makes shorting China very expensive. Bass also may see 7 as Xi’s limit for yuan weakness.

This currency war risk has Tokyo on guard. Though Abe and Trump just shared a glorious bromantic experience in Tokyo, Trump has zero tolerance for a weaker yen. That’s quite a downer to Abe. A 30% depreciation was the main driver behind Japan’s longest expansion since the 1980s. That run is now ending, thanks to Trump’s tariffs. Abe, like Xi, would risk a Trump tantrum as the dollar moves higher.

As Trump’s political and legal jeopardy increases at home, the odds of him lashing out abroad, wagging the proverbial dog, are increasing. Officials from Venezuela to Iran can attest to that. So can Xi’s China, which is loath to provoke a fresh Trumpian attack that shakes world markets.

https://www.forbes.com/sites/william.../#3855e29a4418

[RandomGuy]

Lone U.S. Rare-Earth Miner Is a Target of China Tariffs, CEO Says
https://www.bloomberg.com/news/artic...riffs-ceo-says

[RandomGuy]

https://www.cnbc.com/2019/05/31/us-b...ion-fears.html

Yield curve dipped again.

At 4:07 p.m. ET, the yield on the benchmark 10-year Treasury note was lower at around 2.135%, off a fresh 20-month low around 2.125% hit earlier in the session. A portion of the yield curve remained inverted as the yield on the 3-month Treasury bill held at 2.351%. The 2-year rate dropped 13 basis points to 1.926%, it’s lowest level since January 2018.

[phxspurfan]

Thing is, the inversion I think historically usually is in the middle of the recession, is it not? And then it reverts quite quickly. Plus most recessions only last like 2 quarters right? Not every recession is Great

IMO what it means is bond people predicting ty times ahead, problem is it may be a lagging indicator and we may already be in ty times. Or you may be already dead. Or looking at yourself in a parallel universe.

[RandomGuy]

Thing is, the inversion I think historically usually is in the middle of the recession, is it not? And then it reverts quite quickly. Plus most recessions only last like 2 quarters right? Not every recession is Great

IMO what it means is bond people predicting ty times ahead, problem is it may be a lagging indicator and we may already be in ty times. Or you may be already dead. Or looking at yourself in a parallel universe.

the inversion usually precedes recessions by a few months. The stronger the inversion, the greater the likelihood.

[Winehole23]

What's with the impromptu tariff on MEXICO? This could affect Texas big time.

Basically, Trump is making it a standoff on immigration policy. Mexico has to "take 'em back."

Will be interesting to see what AMLO does. NPR talking head said he'd cave to Trump, but his home approval rating is something like 80%.

[phxspurfan]

What's with the impromptu tariff on MEXICO? This could affect Texas big time.

Basically, Trump is making it a standoff on immigration policy. Mexico has to "take 'em back."

Will be interesting to see what AMLO does. NPR talking head said he'd cave to Trump, but his home approval rating is something like 80%.

Smells like a diversion / easy win / leveraging tool due to lack of progress with the China deal.

[RandomGuy]

What's with the impromptu tariff on MEXICO? This could affect Texas big time.

Basically, Trump is making it a standoff on immigration policy. Mexico has to "take 'em back."

Will be interesting to see what AMLO does. NPR talking head said he'd cave to Trump, but his home approval rating is something like 80%.

Amlo?

The impromptu tariff is Trump wanting to control the media's attention would be my guess. IT will make it really hard to pass NAFTA 2 though.

At this point, I think the House should simply say it, and play like Republicans did under Obama. Vote it down, because Trump negotiated it. No wins for T, consequences be damned.

[boutons_deux]

Amlo?

Andrés Manuel López Obrador

[RandomGuy]

Smells like a diversion / easy win / leveraging tool due to lack of progress with the China deal.

Not going to be an "easy win". He is going through with it, and alienating his rich donor class. Dude is using it to try and get a "win" on immigration to have something to show the racist base of the Trump party.

[Winehole23]

Thing is, the inversion I think historically usually is in the middle of the recession, is it not? And then it reverts quite quickly. Plus most recessions only last like 2 quarters right? Not every recession is Great

IMO what it means is bond people predicting ty times ahead, problem is it may be a lagging indicator and we may already be in ty times. Or you may be already dead. Or looking at yourself in a parallel universe.

An inverted yield curve has predicted nine of the last five recessions.

[DMC]

9 of the last 5? That's some turrible maths there stankhole.

[phxspurfan]

An inverted yield curve has predicted nine of the last five recessions.

Isn't Germany already in a recession (along with China, Russia and basically the rest of the world)? Their national bank is a disgrace

[rmt]

Isn't Germany already in a recession (along with China, Russia and basically the rest of the world)? Their national bank is a disgrace

Don't they have negative interest/interbank rates? And some here want to copy them?

[Winehole23]

9 of the last 5? That's some turrible maths there stankhole.

You read that right.

[Winehole23]

Don't they have negative interest/interbank rates? And some here want to copy them?

There's not much conventional ammo in the Fed Board's cupboard if we have a downturn here, public spending might have to take up the slack next time around.

[RandomGuy]

There's not much conventional ammo in the Fed Board's cupboard if we have a downturn here, public spending might have to take up the slack next time around.

Except that the US will have to be in the position of raising income taxes in the middle of the Trump recession.

I think the coming no-deal Brexit will curb-stomp the UK economy, with an attendant break up of the UK. This will, combined with German weakness drag the EU into recession, reducing its imports from China.

Knock on effect of reducing demand for Chinese goods from the EU at the same time US tarriffs start biting into demand for those same goods means a slowdown there.

It will ripple through to the US. Just in time for the election, a Trump-caused recession.

[DMC]

You read that right.

You cannot get 9 out of 5.

[Winehole23]

You cannot get 9 out of 5.

It's an old joke about financial forecasting, silly man

https://www.wsj.com/articles/SB126072304261489561

[Spurtacular]

Chumpettes wishing hard for a recession.

[Winehole23]

Chumpettes wishing hard for a recession.

I hope we don't have a recession, things are ed enough as it is without giving the financial sector the second chance in a decade to rip us off.


https://www.gsam.com/content/gsam/us...ture-fund.html