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The Everything Bubble has burst & recession has started.

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The Everything Bubble has burst & recession has started.

Old 02-25-2019, 01:46 AM
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Exclamation The Everything Bubble has burst & recession has started.

according to one hedge fund anyway. What's most interesting is the cash positions smart money is taking.
https://seekingalpha.com/article/424...urce=propeller

schoolsout is going to love this. I may have to buy some NUGT.

Still holding some longs on pot stocks, added some exposure to FNMA & FMCC but besides those, mostly in cash now after taking a little profit from the recent rally.

if it does melt down, this might be a big one.

what do you think? Recession here, coming imminently, or we keep rallying and also why do you think what you do?

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Old 02-25-2019, 02:08 AM
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The last 5 recessions have been preceded by a spike in oil prices.

OR

Plunging oil prices signal investors are worried about a imminent recession.

Depends on who you ask/believe. Locally, our economy seems to be in good shape. Remodeling, new commercial construction, and new residential construction could not be going on any faster. The local cities and counties building departments are weeks and weeks out on new plans approvals. Architects (residential) are delivering weeks after the expected finish date, same with engineers. The local power company is 5 weeks out on new power line construction to a new residence (mine) AFTER the other department clears construction of it by getting right of way and whatever else they need. It's like pulling teeth to get surveyors (I talked with 5 different ones) to take on a job.

On the other hand, we might be heading for a recession because nobody is at work. They are on the roads at all daylight hours driving any and everywhere clogging everything up. Traffic any time of day is ridiculous. GO TO WORK AND QUIT GETTING IN THE WAY OF MY PROGRESS

S
aturday we went to Texas Roadhouse and we know they are always crowded so we got there at 4 pm. Parking lot was packed but we found a spot and got seated quickly but the restaurant was full. By the time we left it was shoulder to shoulder blocking the entrance and dozens were outside waiting to get in. We had to push and squeeze past to get out. It was almost as if they didn't realize if we leave it makes room for them. Their food (steaks and everything) is awesome so we put up with the crowds but always go early.

No recession or slowdown here in building nor eating.

There are a lot of people on Wall St, in Washington, and in the media that would like little more in life than to have a massive recession and blame it on a certain person. I think they want it so much they are buzzing about it but their way is lying and deceit so you can't believe them. It's kind of like the weather. Look out your window at your economy. Do you see a slowdown where you are or do you just see it on your TV?

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Old 02-25-2019, 02:40 AM
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Originally Posted by baypro21 View Post
.......
On the other hand, we might be heading for a recession because nobody is at work. They are on the roads at all daylight hours driving any and everywhere clogging everything up. Traffic any time of day is ridiculous. GO TO WORK AND QUIT GETTING IN THE WAY OF MY PROGRESS.....
Around me, I don't think anyone works on Fridays and Mondays, everybody has a 4 day weekend. I'm retired and can fish pretty much anytime I want, but limit it to Tuesday, Wednesday, Thursday (which is starting to get ridiculous, too) because of the crowds.

So I don't know if the bubble is about to burst or not, but things must really be going great because nobody seems to work much anymore, they're always at the boat landing or on the water. I worked my ass off to get to this point in life and I just don't understand how so many others can not work at such a young age.
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Old 02-25-2019, 03:34 AM
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Originally Posted by crazybeard View Post
according to one hedge fund anyway. What's most interesting is the cash positions smart money is taking.
https://seekingalpha.com/article/424...urce=propeller

schoolsout is going to love this. I may have to buy some NUGT.

Still holding some longs on pot stocks, added some exposure to FNMA & FMCC but besides those, mostly in cash now after taking a little profit from the recent rally.

if it does melt down, this might be a big one.

what do you think? Recession here, coming imminently, or we keep rallying and also why do you think what you do?

What I have seen in my industry is telling and concerning. Too many 0% down programs lately, including for jumbo loans. Behind the scenes am seeing mortgage brokers have contests to see who can get the people with the lowest credit score (thus far lowest was around 515) to get them approved. Housing market is getting there. I'd say a year.
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Old 02-25-2019, 03:48 AM
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Originally Posted by crazybeard View Post
according to one hedge fund anyway. What's most interesting is the cash positions smart money is taking.
https://seekingalpha.com/article/424...urce=propeller

schoolsout is going to love this. I may have to buy some NUGT.

Still holding some longs on pot stocks, added some exposure to FNMA & FMCC but besides those, mostly in cash now after taking a little profit from the recent rally.

if it does melt down, this might be a big one.

what do you think? Recession here, coming imminently, or we keep rallying and also why do you think what you do?

You can't time the market. When every indicator is pointing toward continued growth and jobs are being added quicker than they can hire why would you think the "big one is coming". Now I don't think that a recession is far away, a year minimum, probably 2-3 years out is more realistic, but to think one is coming in the near future is being pessimistic. Unless it comes tomorrow
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Old 02-25-2019, 04:09 AM
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Don't forget that the mid-terms took place late last year and, true to form, things slowed down for fear of the Democrats taking both the house and the senate. The economy doesn't pick up over-night but one of the key economic indicators, real estate, has definitely improved as of late.
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Old 02-25-2019, 04:12 AM
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Originally Posted by FishLife View Post
Around me, I don't think anyone works on Fridays and Mondays, everybody has a 4 day weekend. I'm retired and can fish pretty much anytime I want, but limit it to Tuesday, Wednesday, Thursday (which is starting to get ridiculous, too) because of the crowds.

So I don't know if the bubble is about to burst or not, but things must really be going great because nobody seems to work much anymore, they're always at the boat landing or on the water. I worked my ass off to get to this point in life and I just don't understand how so many others can not work at such a young age.
Most employers view work life balance as a benefit and measure productivity based on output not time in a chair. Hell most tech companies and startups don’t even have vacation time anymore. You just manage your own time.
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Old 02-25-2019, 05:40 AM
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Futures are up 152 on the Dow, so there's that.
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Old 02-25-2019, 05:45 AM
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I'm investing in hardhats; when the sky starts falling demand will skyrocket.
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Old 02-25-2019, 05:56 AM
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Fundemental indicators are good. The economy is strong. No reason for the hysteria

The media starts this stuff and they realize that if they repeat it enough it becomes a self-fulfilling prophecy
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Last edited by Elusive; 02-25-2019 at 06:08 AM.
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Old 02-25-2019, 05:59 AM
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This is why (among other things) I think short term there is some strong market potential before the sky falls.

Hong Kong (CNN Business)Shanghai stocks just had their best day in more than three years after comments from the leaders of China and the United States brought investors piling back into the market.
The benchmark Shanghai Composite (SHCOMP) leaped 5.6% on Monday, its biggest daily percentage gain since July 2015, according to Reuters. That lifted it into a bull market, which is defined as a rise of at least 20% from a recent low.
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Old 02-25-2019, 06:08 AM
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futures are up!
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Old 02-25-2019, 06:11 AM
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Originally Posted by Clamdigger II View Post
You can't time the market. When every indicator is pointing toward continued growth and jobs are being added quicker than they can hire why would you think the "big one is coming". Now I don't think that a recession is far away, a year minimum, probably 2-3 years out is more realistic, but to think one is coming in the near future is being pessimistic. Unless it comes tomorrow
why do I think that? Here's some reasons. I wouldn't agree with "every indicator pointing toward continued growth"

- some european countries already in recession
- china has slowed significantly
- housing market slowing
- large amounts of corporate debt, and other debt, has now been affected by increased rates.
- there is a ton of "subprime" corporate debt. More than double that of what the subprime mortgage debt was in 08. If defaults in these start picking up, it's going to a big hit for financial institutions.
- read up on auto loan defaults and see the direction it's heading
- wage growth is flat when you compare it to true inflation
- true inflation, which is no longer published in the index so they can make it sound nice, is increasing
​​​​​​- taxes are going up for most
- consumer debt is increasing

the combination of the last 4 is a big one for a consumer driven economy. Combined with corporate debts, the financial institutions may take a huge hit if things derail, which will in turn dry up lending and the fed has little room to play with rates, and ECB is already negative.

I get that some have interest in a bear market if not full recession and always question whether what is being said by someone is self serving. I read a lot of financial market stuff, and it feels like there is a shift happening. How much, when, etc is not something I can predict. No one can. All we can do is look at historical data to see what patterns there may have been that could be indicators. Even those aren't always right and don't provide insight into the potential severity and mostly they are trailing data indicators.

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Old 02-25-2019, 06:14 AM
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Originally Posted by Elusive View Post
Fundemental indicators are good. The economy is strong. No reason for the hysteria

The media starts this stuff and they realize that if they repeat it enough it becomes a self-fulfilling prophecy
And with the election coming up you will see more and more articles talking down the economy. When it crashed under Bush I said how could it not crash with all of the negative news on the economy.
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Old 02-25-2019, 06:14 AM
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There will be a recession at some point. This is my job/career everyday, btw. China is a problem. There's a reason Xi has come to the table lately. The trade war is bad for both the USA and China. It's more directly problematic for China. However, and this was said the better part of 8 months ago, we can't afford to have China fail.

I see more problems here on the home front from all the juicy, fat, leveraged corporate debt...TBH.
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Old 02-25-2019, 06:18 AM
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In general, hedge funds are wrong more often than right. I certainly wouldn't follow anything a hedge fund manager says publicly. I've read many articles showing they underperform the market as a group.
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Old 02-25-2019, 06:23 AM
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Originally Posted by crazybeard View Post


why do I think that? Here's some reasons. I wouldn't agree with "every indicator pointing toward continued growth"

- some european countries already in recession
- china has slowed significantly
- housing market slowing
- large amounts of corporate debt, and other debt, has now been affected by increased rates.
- there is a ton of "subprime" corporate debt. More than double that of what the subprime mortgage debt was in 08. If defaults in these start picking up, it's going to a big hit for financial institutions.
- read up on auto loan defaults and see the direction it's heading
- wage growth is flat when you compare it to true inflation
- true inflation, which is no longer published in the index so they can make it sound nice, is increasing
​​​​​​- taxes are going up for most
- consumer debt is increasing

the combination of the last 4 is a big one for a consumer driven economy. Combined with corporate debts, the financial institutions may take a huge hit if things derail, which will in turn dry up lending and the fed has little room to play with rates, and ECB is already negative.

I get that some have interest in a bear market if not full recession and always question whether what is being said by someone is self serving. I read a lot of financial market stuff, and it feels like there is a shift happening. How much, when, etc is not something I can predict. No one can. All we can do is look at historical data to see what patterns there may have been that could be indicators. Even those aren't always right and don't provide insight into the potential severity and mostly they are trailing data indicators.

- some european countries already in recession
>>Like which ones? So what if Greece is in recession?

- china has slowed significantly
>>Good. Notice the news in last two days.

- housing market slowing
>>Depends on where you are.

- large amounts of corporate debt, and other debt, has now been affected by increased rates.
>>True

- there is a ton of "subprime" corporate debt. More than double that of what the subprime mortgage debt was in 08. If defaults in these start picking up, it's going to a big hit for financial institutions.
>>True. Not sure about the double, but OK.

- read up on auto loan defaults and see the direction it's heading
>>Lenders didn't learn their lesson. OR did they? The lesson was that the taxpayer will bail them out.

- wage growth is flat when you compare it to true inflation
>>over longer term, yes. Recently wages are getting better. Wages are a trailing indicator, right?

- true inflation, which is no longer published in the index so they can make it sound nice, is increasing
>>Agree. Data manipulation. Housing in many areas is a killer.

​​​​​​- taxes are going up for most
>>Huh?


- consumer debt is increasing
>>Lessons not learned.
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Old 02-25-2019, 06:27 AM
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Originally Posted by Sprockets View Post
In general, hedge funds are wrong more often than right. I certainly wouldn't follow anything a hedge fund manager says publicly. I've read many articles showing they underperform the market as a group.
I have a client with a sizeable hedge fund portfolio and asked them last year if they have actually evaluated its performance against other investment options as it didn't seem like they were getting the returns I would have expected. They apparently never have. Its not like the funds are low risk either and they have to be spending at least 75 basis points for compliance (outside of the funds management fees).
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Old 02-25-2019, 06:33 AM
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A few charts that put some of the comments in better perspective:

Total debt:

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Household debt to GDP:

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Debt service payaments as % of disposable income

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Size:  66.3 KB
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Old 02-25-2019, 06:41 AM
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Originally Posted by HookMeUpII View Post
There will be a recession at some point. This is my job/career everyday, btw. China is a problem. There's a reason Xi has come to the table lately. The trade war is bad for both the USA and China. It's more directly problematic for China. However, and this was said the better part of 8 months ago, we can't afford to have China fail.

I see more problems here on the home front from all the juicy, fat, leveraged corporate debt...TBH.
I agree. Many companies issuing corp debt for stock buybacks and eventually this may be the biggest problem in the next 2-3 years. My question is what does this look like? Cant finance operations? etc?
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