“There’s No Recession Alarm in the Collective Wisdom of Markets”

Comments

• gman57

  March 13 edited March 13

  Not yet... Wait until nobody is available to pick produce, tariffs hit the numbers, layoffs and fed cuts hit unemployment numbers and all those now unemployed start cutting back until they find another job and the auxiliary businesses that supported all those newly unemployed need to cut back due to loss of business. It's only been 1.5 months. That and what crazy ass move will be made today or tomorrow. It could snowball. Too much going on right now, I'll watch from a distance. Oh yeah, and boycotts by many former allies on most American products are just ramping up.
• hank

  March 13 edited March 13

  I think the term “the markets” as applied to the big U.S. stock indexes is misleading. These indexes are still very pricy. But I for one don’t think that is reason to hide out in cash or short term fixed income. Some reading and study may uncover some attractive valuations. Not a fan of gold, although it’s riding the wave and may go a lot higher before it breaks. Real assets, some commodities, real estate, foreign equities (and the extra kick from FX exchanges) may be attractive. There are also funds (OEF / ETF / CEF) that try to make lemonade out of lemons playing in the long-short area. The last I looked, oil was trading at $67. A few years ago it topped $100. There’s another thread on small caps’ relative value over large. But you might need to wait 2 or 3 years for the payoff - a time frame that seems very long by present day standards (including my own).
  
  Far be it from me to offer investment advice. But I don’t buy the idea that there’s nowhere to invest except hiding out in cash.
  
  Recession? Looks like one may be in the works. But there’s no way to know for sure when it will start, how long or how severe it could be. Nor does a recession preclude making money in certain types of bonds, equities long-short or market neutral funds. . Likely, some foreign economies would hold up or prosper. And then you get into the potential “double-dip” scenario - recession / uptick / recession. You could drive yourself silly trying to predict where things might lead. Hedge funds try. Many do well at it, while others loose fortunes and shut down.
  
  A good motto: ”In inflation we trust.” Just as Chauncey Gardner trusted in the eventual regeneration of his garden come spring, we may trust that there will always be inflation. It’s characteristic of paper currencies. Protect your assets by investing to keep up with or outrun inflation.
• Junkster

  March 13 edited March 13

  Junk bonds are finally unraveling. Also YTD cash as in SNAXX is handily besting bank loan funds - the stars of the past couple years. Bank loan funds hold below investment grade debt. Cash is also besting the CLO ETFs both the higher rated ones such as JAAA with the lower rated ones such as JBBB which is negative on the year. JBBB had seen mid teen double digit gains in each of the past two years. Something is certainly afoot.
• hank

  March 13 edited March 13

  Junkster said:

  Junk bonds are finally unraveling. Also YTD cash as in SNAXX is handily besting bank loan funds - the stars of the past couple years. Bank loan funds hold below investment grade debt. Cash is also besting the CLO ETFs both the higher rated ones such as JAAA with the lower rated ones such as JBBB which is negative on the year. JBBB had seen mid teen double digit gains in each of the past two years. Something is certainly afoot.

  Thanks. I wondered about junk bonds. Don’t track them much. I do track FKIQX (OEF) and INCM (it’s sibling ETF). Both hold a lot of junk and a lot of income producing stocks. Both seem to be unwinding in recent days. My guess is that high dividend equities are turning south along with junk.
  
  I wouldn’t touch JBBB after the run it had in ‘24 - even before then …
• WABAC

  March 13

  At my age I'm not hanging my IRA on the Analogy of the Jelly Beans.
  
  When the people running the government are telling you that they are embarked on a fundamental remake of the world economy, don't give a damn about the markets, or the price of eggs, and wouldn't mind annexing other people's property, maybe it's time to pay attention to what they're saying.
• Mona

  March 13

  @WABAC, profound!
• WABAC

  March 13

  Mona said:

  @WABAC, profound!

  It ought not to be.
  
  
• BaluBalu

  March 13 edited March 13

  I rarely ever read articles but decided to read this one. I usually do not look at the author's name or credentials but this one made me look for those.
  
  https://www.linkedin.com/in/nir-kaissar-a1852851/
  
  That opinion piece gives me the impression the author is caught sucking his thumb and this is his sheepish letter to his clients.
  
  This is how the article ends, "For now, look for a softer job market, stable inflation, moderately lower mortgage rates and a less ebullient stock market. But stay tuned — whatever happens, markets are likely to know about it first."
  
  Who is paying this guy for portfolio advice / to manage money? I just hope he is a better money manager than reflected in the article.
  
  Would you invest with this author? If not, why read his writings?
  
  I would be more than happy to give my money to @Junkster.
• Old_Joe

  March 13

  Me too.
• hank

  March 13 edited March 13

  Me three.
  
  But unable to access the likendin piece. Have to be signed in to something.
  
  Looks like utilities and some commodity like funds held up today. RIO was up which is hardly a forecast of recession. If you don’t report income and want the IRS & FBI gutted for your own CYA, you really don’t care much about the state of the economy.
• BaluBalu

  March 13

  Below is the first two job experiences of the author on LinkedIn-
  
  Experience
  Founder and Portfolio Manager
  Unison Advisors LLC
  May 2005 - Present · 19 yrs 11 mos
  Quantitative multi-asset portfolio management for institutions and individuals.
  
  Columnist
  Bloomberg LP
  Nov 2015 - Present · 9 yrs 5 mos
  Write about markets, investing, economics and public policy for Bloomberg Opinion (formerly Gadfly).
• Level5

  9:32AM edited 9:59AM

  The author opened with this: “ President Donald Trump is attempting the most sweeping transformation of government and policy in decades. The White House is moving furiously to slash spending, expand tariffs, repeal regulations and rewrite tax rules. A lot of people are wondering what it all means for the economy, jobs, housing, inflation and the stock market.
  The truth is no one knows. But the best guess lies in the collective wisdom of markets — the countless independent buy and sell decisions manifested in stock and bond prices.”
  
  I found the quantitative argument by the author had merit. He listed his reasoning by looking at how slow downs to recessions show-up through treasury, credit, and stock earnings price, and inflation expectations.
  
  Still, I wish I had moved more of my (now) 35% equity in retirement funds to cash instruments. But I had not. My urge to sell was/is tempered by the previous recoveries from 2000, 2008, and 2020.
  
  The fear-factor in the current climate is real for me, so I’m looking for data that I can understand to offset any emotional high-jacking.
  
• JD_co

  9:55AM edited 9:55AM

  Level5 said:

  
  The fear-factor in the current climate is real for me, so I’m looking for data that I can understand to offset any emotional high-jacking.
  

  Not sure that data will be of much help as there is no playbook for dealing with this type of situation. Our best hope is that he will flinch soon enough and remove his damaging tariffs - unless his intention is to simply bring this country to its knees.
  
  
• larryB

  11:07AM

  At Level5. Speaking for myself,,,, how I responded to significant market events 18 or ten years before retirement has little in common with my response in 2025. Younger me was out to grow my nest egg and old me is out to preserve it. The fear factor is real and that doesn’t even factor in that this time really is different. The rule of law no longer applies. Maybe in six months the fog of war will lift but maybe in 20 months a national emergency will be declared and the mid terms will be called off. Nobody knows.
• Level5

  12:11PM edited 12:12PM

  @larryB - Yes, my younger self also responded differently from the current me. I was w*rking in 2000 and 2008 then and socking money into my retirement funds while they were cheaper. My equity position was approx 75% at the time. As I entered retirement 7 years ago, I reduced to 35% and then during the 2020 recession I timidly added to stocks.
  
  I agree, this time may be completely different as noted by previous posters and threads. I have kept a significant (for me) cash stash, to aid my wife and me through this *downturn.* Enough to cover 2-3 years even if social security is impacted.
  
  So my head isn’t in the sand regarding our nation, economy, and stock market; and I’m not looking to be *right* in this post. I am looking for direction just like everyone here, and find evaluating the data that the stock market is giving, even if it becomes stale immediately, that’s what I’ve got.
  
  I may be looking at the wrong data and would always appreciate additional information.
• Sven

  2:00PM edited 2:12PM

  Not to pile on the article above. The concluding statement is generalized with the aim at a broad audience. Everyone on this board is in different phases of investing. Some are working while other are retiring or in-retirement already. Thus, we have a diverse response to the conclusion above. For many retirees, their investment horizon is much shorter and there is little room for a 10 year recovery period as in 2008 GRC. I have been reducing stock allocation in order to reduce risk as I approach retirement. There are pockets of opportunities like @hank stated. Personally, actively managed bonds work for us. I am also okay with money market, stable value, and T bills as they yield over 4%.
  
  It is unknown risk caused by this trade war which we are about to embark upon, and their consequences on the market is most concerning.
  
  I may be wrong but I am learning fast.
• davidrmoran

  2:12PM

  listened in on a Fido presentation the other day
  
  among other things:
  
  https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/fidelity/election-party.pdf