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Feb 9 - The U.S. Is Getting Closer to a Recession, Data Show


 


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 2 months ago '15        #1
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BuyGold 3103 heat pts3103
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Feb 9 - The U.S. Is Getting Closer to a Recession, Data Show
 

 
March will mark the 10th anniversary of the bull market, and in June the economy will celebrate a decade of recovery from the Great Recession.

For years, people have been asking how long it can last. The old Wall Street adage says: “Bull markets (or economic booms) don’t die of old age.” Yet, somehow, they always do.

Some new research suggests we’re in the late innings of this expansion. The Fidelity a*set Allocation Research Team, which advises Fidelity’s fund managers, studies the business cycle, because they believe it helps determine the direction of stocks. In a recent report, it said the U.S. entered the late stage of the business cycle late last year.

We have plenty of company, as the chart below shows. Developed economies like Germany, France and Italy are much deeper into the late stage of the business cycle, as are Canada, South Korea and Australia. Emerging markets like Brazil, Mexico and India also just entered the late phase. The U.K., reeling from pre-Brexit chaos, is on the cusp of recession. China, the researchers say, is already there, although they define it as a “growth recession” because the Chinese economy has marked slowdowns, not actually negative growth.

This matters to investors because, although bear markets are only fair predictors of recessions (seven of 13 postwar bear markets were followed by economic downturns), bear markets that precede recessions tend to be longer and deeper, averaging declines of 37%. So if the economy is indeed in the final phase of its long recovery, that’s a warning sign to investors to get more defensive.

“We’ve just been through the best parts of the cycle for risky a*sets,” Dirk Hofschire, Fidelity’s senior vice president of a*set allocation research, told me in a phone interview. (His team’s views are not necessarily the official position of the Boston-based firm, which managed $2.5 trillion as of last March.) “Late cycle is sort of the transition phase. By the end of the cycle, when we move into recession, that’s when you would want to be a little more risk-off.”


In the early phase of the business cycle, economic activity rebounds sharply, and credit and profits grow again amid loose monetary policy. It lasts on average one year. The mid-cycle phase, which goes for about three years, is characterized by peak economic and profit growth and more neutral monetary policy. The late phase, whose average duration is a year and a half, shows slowing GDP and profit growth amid central bank tightening. After that comes recession, and then the whole party starts again.

Hofschire acknowledges the current business cycle has hardly been “average,” either in duration or depth. “We didn’t get as fast of a snapback. When you come out of a financial crisis, it is harder to [get] the economy back to prior growth levels right away,” he said. “You go through a deleveraging process … that is very, very painful and takes some time.”

That long, slow recovery has been accompanied by subdued inflation and extraordinary actions from the Federal Reserve and other central banks — massive bond purchases and, in Europe and Japan, negative interest rates. Also, in late 2017, President Trump signed the Tax Cuts and Jobs Act, which provided what looks like a temporary boost to earnings and GDP after eight years of recovery.

Those factors may have stretched out the business cycle, but Hofschire says they didn’t repeal it.

“When we go back and look at the actual patterns, they are more consistent with prior business cycles than might appear at first blush,” he said. The four increases in the federal funds rate last year and the shrinking of the Fed’s balance sheet, now both on hold, will likely be accompanied by a slowdown in earnings and economic growth this year.

That’s a classic sign of the business cycle’s last phase before recession sets in, and it’s reflected in recent stock performance. From the Dec. 24, 2018, closing low to the Feb. 5 closing high, the Industrial Select Sector SPDR ETF was the best performing of all the Sector SPDR ETFs, by my calculation, with a 21.7% gain. Energy Select Sector SPDR was second, followed by Communications Services.

Those classic, late-cycle stalwarts easily topped the S&P 500’s 15.1% gain, as well as beating early-cycle winners like consumer-discretionary and financial stocks and typical mid-cycle technology.

Hofschire thinks this phase is a good time to lighten up on economically cyclical a*sets and move toward high-quality bonds and defensive sectors such as consumer staples, health care and utilities, which outperform during recessions.

“You rein in your active risk, and you don’t take a lot of cyclical risk, for the simple reason that you don’t really know what’s coming next,” he says.

Almost 10 years into the recovery from the Great Recession, we don’t know when the end will come, but it’s certainly in sight.
visit this link https://www.barrons.com/a .. =bol-social-fb
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22 comments for "Feb 9 - The U.S. Is Getting Closer to a Recession, Data Show"

 2 months ago '15        #2
POTUS2045 4 heat pts
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Q4 2019 and Q1 2020 will be interesting.
+8   

 2 months ago '19        #3
Gold Face 1 heat pts
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Winter is coming

+12   

 2 months ago '17        #4
arms 21 heat pts21
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I can't wait.
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 2 months ago '19        #5
ABlackCosmos 
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Tax return going towards stocks I guess.
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 2 months ago '04        #6
jsmooth-117 14 heat pts14
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$13,961 | Props total: 15568 15568
Closer? Meaning we’re not already in one? Oh ok
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 2 months ago '18        #7
Kid Astronaut 9 heat pts
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*Getting closer to a worldwide digital currency system*
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 2 months ago '17        #8
dubsax 14 heat pts14
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For the last 100 years we have never gone longer than 10 years without a recession and every republican president has had at least one.
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 2 months ago '16        #9
Papi 614 heat pts614
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 jsmooth-117 said
Closer? Meaning we’re not already in one? Oh ok
We’re not in a recession

But we will be in one this decade.. it’s a cycle.. the media just exaggerates it for ratings

That’s why the people in the 1% are never in that percentage 20 years from now except the few

Buy stocks and houses by then
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 2 months ago '11        #10
Sin 1982 heat pts1982
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No were not

a recession is 2-3 straight quarters in decline and we've yet to have 1 bad quarter

 2 months ago '19        #11
ABlackCosmos 
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 Papi said
We’re not in a recession
That's the trick they don't see.
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 2 months ago '18        #12
lurk123 
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Yeah I like the first Recession Album you know if Jeezy bring the same kinda bars on this new Recession joint he plan on releasing than it's going to bang.
[pic - click to view]

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 2 months ago '15        #13
Hellmatic 2 heat pts
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 arms said
I can't wait.

 2 months ago '11        #14
Sin 1982 heat pts1982
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 Hellmatic said
buy disney

 2 months ago '18        #15
BradTheGreat 1 heat pts
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 dubsax said
For the last 100 years we have never gone longer than 10 years without a recession and every republican president has had at least one.
And yet, it amazes how people think they know how to run a damn economy. With the exception of Carter, Democrats have done a great job in not only bringing the economy back, but creating jobs. Republicans are given great economies when they start, but towards the end of their presidencies, we are always fu*ked. Trump won’t be an exception.

 2 months ago '15        #16
naledgestate 
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$221 | Props total: 1123 1123
I been paying off my debts and stacking this bread.



It's been a weak a*s earning season in stocks because a lot companies are showing weak guidance going forward like Amazon because they're anticipating a slow down.


I can't wait.



Last edited by naledgestate; 02-10-2019 at 09:20 AM..
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 2 months ago '15        #17
gemini8686 11 heat pts11
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if its true, all his base is gonna do is blame the "dems"

 2 months ago '15        #18
Minkscobar! 77 heat pts77
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Republicans aka Trumptards think the man that has filed for Bankruptcy over 100x's was going to help grow the economy


 2 months ago '07        #19
Bullseye 60 heat pts60
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Will pop off in 2020

 2 months ago '08        #20
GoldBluded 720 heat pts720
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[pic - click to view]

+2   

 2 months ago '04        #21
Skilllz 1 heat pts
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sh*t, now maybe a n*gga can invest in some sh*t. Last time I was a kid. Not this time

Prices outta control for real estate
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 2 months ago '15        #22
KARMA PROOF 22 
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 Papi said
We’re not in a recession

But we will be in one this decade.. it’s a cycle.. the media just exaggerates it for ratings

That’s why the people in the 1% are never in that percentage 20 years from now except the few

Buy stocks and houses by then
Correction fox new exaggerates it

 2 months ago '07        #23
MOTTAFOOKAH 5 heat pts
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 BradTheGreat said
And yet, it amazes how people think they know how to run a damn economy. With the exception of Carter, Democrats have done a great job in not only bringing the economy back, but creating jobs. Republicans are given great economies when they start, but towards the end of their presidencies, we are always fu*ked. Trump won’t be an exception.

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