American Economics Thread


styx

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how you doing bro Eq. you didn't post much lately

anyway this is going to fit into recent posts here LOL
US yield curve sends strongest recession warning since 2007
Bond market indicator worsens as questions swirl about Federal Reserve’s next move
Thu, Aug 8, 2019, 08:38
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Ok this is Trump's Bloody Nose
 

Jura

General
Friday at 9:29 PM
...
US yield curve sends strongest recession warning since 2007
Bond market indicator worsens as questions swirl about Federal Reserve’s next move
Thu, Aug 8, 2019, 08:38
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now
Dow tumbles 700 points after bond market flashes a recession warning
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The Dow fell more than 700 points Wednesday after the bond market, for the first time in over a decade, flashed a warning signal that has an eerily accurate track record for predicting recessions.

Here's what happened: The 10-year Treasury bond yield fell below 1.6% Wednesday morning, dropping just below the yield of the 2-year Treasury bond. It marked the first time since 2007 that 10-year bond yields fell below 2-year yields.
US stocks fell as investors sold stock in companies and moved it into bonds. The Dow (INDU) was about 2.8% lower. The broader S&P 500 (SPX) was also down 2.8% and the Nasdaq (COMP) sank 3.1% Wednesday.

CNN Business' Fear and Greed Index signaled investors were fearful. The VIX (VIX) volatility index spiked 26%.
Investors are on edge because the German economy shrank in the second quarter, and the US-China trade war still looms large over markets despite the latest truce. Industrial production in China grew at the weakest rate in 17 years in July.
As the global economy sputters, investors are plowing money into long-term US bonds. The 30-year Treasury yield fell to 2.05%, the lowest rate on record.
Government bonds — particularly US Treasuries — are classic "safe-haven" assets that investors like to hold in their portfolios when they're nervous about the economy. Stocks, by contrast, are riskier assets that tend to be more volatile during economic slowdowns.
Gold, another safe-haven asset, rose 1% Wednesday.
Here's what this all means: Normally, long-term bonds pay out more than short-term bonds because investors demand to be paid more to tie up their money for a long time. But that key "yield curve" inverted on Wednesday. That means investors are nervous about the near-term prospects for the US economy. Bonds and yields trade in opposite directions, so yields sink when investors buy bonds.
Part of the yield curve has been inverted for several months. In March, the yield on the 3-month Treasury bill rose above the rate on the 10-year Treasury note for the first time since 2007. It inverted again on July 24 and has remained negative. But Wednesday marked the first time in over a decade that the "main" yield curve — the 2-year / 10-year ratio — had inverted.
That spooked Wall Street, because an inversion of the 2/10 curve has preceded every recession in modern history. That doesn't mean a recession is imminent, however: The Great Recession started nearly two years after the December 2005 yield-curve inversion.
William Foster, Moody's lead US analyst, predicts the US economy will avoid a recession in 2019 and in 2020, despite the yield curve inversion's warning sign. He expects growth to slow in the second half this year into 2020.
The US economy remains strong: Unemployment is historically low, consumer spending is booming, and the financial system is healthy.
"Even though we're discouraged by the yield curve's shape right now, we see few signs of danger ahead," said John Lynch, LPL Research chief investment strategist, in a blog post.

Stocks have grown volatile lately, with the Dow plunging and rising more than 350 points in each session this week. But the yield curve inversion doesn't mean the stock market is about to collapse. The S&P 500 has rallied 22% on average between the first time a yield curve inverts and the start of a recession, Lynch noted.
Following the last yield curve inversion in 2005, stocks rose for 12 straight months.
 

styx

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Lehman moment?

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GE’s financials targeted by Madoff whistleblower Shares plunge on Harry Markopolos allegations that company calls ‘false and misleading’ Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save to myFT Gregory Meyer and Mamta Badkar in New York 57 minutes ago Print this page 3 An accounting fraud “bigger than Enron and WorldCom combined” lurks inside General Electric, according to a whistleblower who raised flags about the Madoff Ponzi scheme, driving the industrial conglomerate’s shares down sharply. Harry Markopolos and colleagues released a 170-page report on Thursday alleging a $38bn fraud centred in GE’s insurance and oilfield services businesses. “I think that they’re a bankruptcy waiting to happen,” Mr Markopolos told CNBC. Mr Markopolos is known for his — largely unheeded —warnings about Bernard Madoff’s massive Ponzi scheme in the years before it imploded in 2008. His team provided an advance copy of the report on GE to a hedge fund and will share profits from any market moves it set off, it said in a disclosure. GE fell more than 14 per cent in New York to $7.68 following the release of the report. “While we can’t comment on the detailed content of a report that we haven’t seen, the allegations we have heard are entirely false and misleading,” GE said in a statement. “GE stands behind its financials. We operate to the highest level of integrity in our financial reporting and we have clearly laid out our financial obligations in great detail.” Mr Markopolos is also seeking compensation from the government, having submitted his report to whistleblower programmes of the US Securities and Exchange Commission and the US Department of Justice, which share any financial penalties that arise from investigations launched because of tip-offs. The report argued that GE has understated its liabilities in its insurance business, said its cash situation is worse than disclosed in its filings and that it has not properly accounted for its acquisition of a stake in oilfield services provider Baker Hughes, which was completed in 2017. GE began to sell down that stake in 2018. By referencing Enron and WorldCom, Mr Markopolos invoked two of the most notorious accounting frauds of the early 21st century, both of which resulted in criminal penalties against top executives.

B
 

Jura

General
here's the CNN story of
How Trump's tax cuts and the trade war have set the stage for a self-inflicted recession
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:

Cracks are
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in the American economy, threatening to tip the country into recession. And at least some of those cracks are self-inflicted.
The biggest problem facing the United States economy is a
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that has struck China,
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, South Korea and other manufacturing powerhouses.
President Donald Trump's
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has only amplified the pre-existing global growth slowdown. That overseas trouble has started to infect American factories, which are contracting for the first time in a decade.
"This could be the straw that breaks the camel's back," Gus Faucher, chief economist at PNC, said of the ongoing trade war. "I am more concerned about the US economy now than I have been throughout this expansion."
The United States is also coming off the 2018 sugar high of Trump's tax cuts and the bipartisan surge in government spending. There was always a risk that stimulating an already-healthy economy would
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"You aren't supposed to do stimulus until you're in a recession — when you need it," said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. "We pulled demand forward before there was a recession, meaning we may in fact have caused the recession."
Recession signal flashes
Shalett said the United States will likely enter a recession in 2020 and warned the global economy may already be there.
"It is highly, highly likely that the US economy will continue to slow down," she said.
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in the bond market, where the yield curve has inverted. Such inversions, where the 10-year Treasury yield dips below the two-year Treasury rate, have been reliable recession indicators in the past.
"The bond market already gets the joke. The stock market still doesn't," Shalett said, predicting a 10% tumble for stocks over time.
Although Trump said on Thursday that the
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the reality is more mixed and the outlook has darkened considerably.
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, the main driver of growth. Boosted by low unemployment, households continue to shop.
However, corporate spending has been soft. That's despite the fact that the
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on job-creating items like factories, software and equipment.
"Unfortunately, we saw a minimal short-term bump," said Lindsey Piegza, chief economist at Stifel.
Piegza estimates there is at least a 50% chance of a 2020 recession in the United States.
Trade war dings factories
Manufacturing has emerged as the problem child of the economy. Factory activity declined in August for the first time since September 2009,
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.
"The trade war is exacerbating it," said Jeffrey Sherman, co-portfolio manager of the DoubleLine Core Fixed Income Fund. "A lot of it is self-inflicted."
DoubleLine Capital CEO Jeffrey Gundlach sees a
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earlier this month by announcing plans to impose a 10% tariff on $300 billion of Chinese consumer goods, including TVs, smartphones and footwear.
"At the heart of the weakness is deteriorating trade relations," said Stifel's Piegza.
Manufacturing makes up a small portion of the overall US economy. But the risk is that the factory turmoil spills over into the rest of the economy.
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would hurt consumer spending.
Unemployment claims have climbed by an average of 5% in key manufacturing states such as Michigan, Pennsylvania, Ohio and Wisconsin since US tariffs on China were imposed in September 2018, according to Bank of America. Iowa's jobless claims have jumped 16% over that span.
"Right now, we're not looking at recession conditions," Liz Ann Sonders, chief investment strategist at Charles Schwab, told CNN Business' "Markets Now." "But if that manufacturing malaise moves into consumer malaise, then the chances we're going to go in one or may already be in one go higher."
What if the trade war goes away?
Many still have confidence the United States will avert a downturn.
"The underlying economy is still doing okay. The chance of a recession in the near term is still relatively low,"
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A strong rebound in manufacturing would certainly lower the odds of a downturn. And that could come from powerful stimulus by China or a thaw in the trade war.
"We can reverse this," DoubleLine's Sherman said, "if the president turned around and got rid of the tariffs overnight."
Although Trump's trade war is causing trouble for the global economy, many have defended the desire to get China to play fair on trade. China's alleged intellectual property theft and forced technology transfers have real costs.
"I'm not a fan of tariffs, but we need to find a way to push," Solomon said.
$1 trillion budget deficit looms
Likewise, many viewed the decision to lower the corporate tax rates as a way to make American business more competitive globally.
However, the $1.5 trillion tax law wasn't paid for, causing government revenue to decline. And Trump has enacted bipartisan agreements to ramp up government spending.
That one-two combination amounted to a strong dose of fiscal stimulus normally reserved for a recession or severe slowdown.
The Congressional Budget Office now projects the deficit will
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, two years earlier than previously estimated. Surging deficits could leave Washington with less ammo to fight an actual recession.
"It's not the legislation I take issue with. It's the timing of the legislation," Piegza said of the tax law. "We were already on a tremendously dangerous trajectory."
Trump has sought to shift the blame for a potential recession to the Federal Reserve. The president has repeatedly slammed Jerome Powell, his handpicked Fed chief, for raising interest rates. Trump now wants the Fed to slash rates.
Although Powell may want to
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on the Fed's final rate hike, the central bank was trying to prevent Trump's tax cuts from causing the economy to overheat. And despite those rate hikes, borrowing costs are not elevated.
"Lowering rates isn't really going to solve what ails this economy," said Morgan Stanley's Shalett.
'Garden-variety recession'
The good news is that even those who see a potential recession on the horizon don't fear a repeat of the last downturn, which was the worst in a generation.
"It's still going to cause pain but not nearly as bad as the Great Recession," said Faucher.
He noted that US GDP plunged by 4% from peak-to-trough during that crisis, or roughly twice as much as a "normal" recession.
Of course, few saw just how disastrous the Great Recession would be until it was already too late.
One major difference is that economists don't see an epic bubble ready to burst like the real estate and tech bubbles that popped during last decade's recessions.
"It's going to be a garden-variety recession. It's not a crisis or Armageddon," said Shalett.
Although recessions can be painful, they are also a natural part of the business cycle. Downturns
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, setting the stage for longer-term growth.
"Recessions aren't bad. We've lived through many recessions. There is cleansing that happens," Shalett said.
And this cleansing may at least partially be self-inflicted.
it's indeed interesting to make 1t deficit during a supposed economic boom
 

styx

Junior Member
Registered Member
Bad news for the almigthy dollar!!!!

Mark Carney, the Bank of England governor, has said that the world’s reliance on the US dollar “won’t hold” and needs to be replaced by a new international monetary and financial system based on many more global currencies. In a speech at the annual Jackson Hole gathering of central bankers in the US, he called for the IMF to take charge of a new system of currencies, insuring emerging economies from destructive capital outflows in dollars and removing their need to hoard US currency. In the longer term the IMF could “chang[e] the game” by building a multipolar system, he said. Having served as the leading central banker of Canada and the UK over the past decade, Mr Carney has significant influence and is well-regarded by other policymakers. His speech, delivered to other central bankers, will be seen as an attempt to burnish his credentials as a possible future IMF managing director, appealing to emerging economies in particular. Mr Carney will leave the BoE at the end of January but, lacking support from Europe or the US, currently has little chance of securing the top job at the fund. He used his speech on Friday to lay out the problems of an over-mighty dollar for the global economy. The deficiencies of the international monetary and financial system have become increasingly potent. Even a passing acquaintance with monetary history suggests that this centre won’t hold Mark Carney The US accounts for only 10 per cent of global trade and 15 per cent of global GDP but half of trade invoices and two-thirds of global securities issuance, the BoE governor said. As a result, “while the world economy is being reordered, the US dollar remains as important as when Bretton Woods collapsed” in 1971. Movements in the US dollar are therefore fundamentally important to other economies even if they have few direct trade links with the US, he said. This means countries are forced to self-insure and hoard dollars to guard against potential capital flight, leading to excess savings and lower global growth. In turn, he said, this dysfunctional international monetary system contributes to lower global interest rates and has amplified the difficulties central bankers face in addressing downturns. In the short term, Mr Carney said that countries could do little more than “play the cards they have been dealt as best they can”, incorporating potential international spillovers into their monetary policy decisions and reacting to global risks. But this would not continue to work if the US becomes an ever smaller part of the global economy while the dollar remains dominant in the currency markets. He therefore suggested that in the medium term — alongside all countries seeking to reduce their reliance on hot money flows denominated in dollars — the IMF should set up a global fund to deal with capital flight. “Pooling resources at the IMF, and thereby distributing the costs across all 189 member countries, is much more efficient than individual countries self-insuring,” he said, calling for a tripling of IMF resources over the next decade to $3tn. Recommended Adair Turner Central banks have lost much of their clout In the longer term, Mr Carney said the solution was to create a multipolar global economy rather than waiting for China’s renminbi to challenge the dollar. For this, he suggested more thought should be given to creating a global electronic currency that could act as “synthetic hegemonic currency . . . provided . . . perhaps through a network of central bank digital currencies”. This could “dampen the domineering influence of the US dollar on global trade”, he said, meaning that US shocks would not reverberate around the world as they do now. “The deficiencies of the international monetary and financial system have become increasingly potent,” Mr Carney said. “Even a passing acquaintance with monetary history suggests that this centre won’t hold.”
 

Hendrik_2000

Brigadier
Lat night I watch documentary "American Factory" On Netflix It tell the story of Chinese owned Glass manufacturer "Fuyao" based in Fuqing , Fujian province.
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It show the decline and devastating impact of plant closure on the community. Then come Fuyao to reopen the shutter GM factory and transformed into glass manufacture but with no Union and lower pay. But at least they get their job back. Chinese worker would just thanks for the food on the table But American demand all kind of wages rise and Union, contrasting attitude and culture toward work and loyalty. The film make no judgement or demonize the Chinese. Good film if you can catch it. I guess the good ole day when a high school graduate can work in factory and lead a middle class life is long gone. This is the one that give rise to Trump frustration. well welcome to globalize world. This film is made by Obama wow good for him
Near the end of American Factory, Chairman Cao strolls outside a glassy, pillared mansion that contains what looks like a shrine to himself. "The point of living is to work," he says. "Don't you think so?" It's hard to think of a sadder, or scarier, line in any movie this

Work Cultures Clash When A Chinese Company Reopens An 'American Factory'
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American workers Jill Lamantia and Bobby Allen struggle to adapt to the expectations of Chinese management in the documentary American Factory.

Steven Bognar /Netflix
In the 1960s, there was a
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in which a teenage Maoist scrawls a bit of graffiti that would become famous: "CHINA IS NEAR." Half a century on, China is here. It's here on our screens, where
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domination by the Communist mainland. It's here in the
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between President Trump and Chairman Xi. And, of course, it's here
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we all worship.

China's arrival in the American workplace is the subject of a fine new Netflix documentary American Factory by Julia Reichert and Steven Bognar, who've spent years chronicling blue-collar lives. Set on the outskirts of their home city of Dayton, Ohio, this measured, deeply moving film takes a familiar idea — the notion of an American factory — and shows how tricky that concept has become in today's globalized economy.

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The story begins with a 2008 prologue in which General Motors shutters its Moraine, Ohio, plant, chucking 2,400 union workers out of work and into years of desperate struggle. Then, in 2015, comes hope. The Chinese company Fuyao, which makes glass for automobiles, decides to reopen the plant and hire 1,000 locals. Led by its self-made billionaire owner, Chairman Cao Dewang, Fuyao brings along 200 experienced Chinese employees to oversee production.

At first, the film shows things going OK. True, a worker like Shawnea Rosser is making only $12.84 an hour, way down from the $28 she earned at GM. And true, the Chinese are frustrated that the Americans work so slowly — "They have fat fingers," one says. Still, everyone wants the factory to succeed. Furnace supervisors like Rob Haerr and Wong He become friends, while others seek to understand their cultural differences. When it comes to work, these are profound.

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polemic. It's an old-school observational documentary in the very best sense of the term. They don't approach the Fuyao story with a thesis, don't dehumanize the Chinese, don't tell us what to think. Working with 1,200 hours of footage — heroically edited by Lindsay Utz — they have amazing access to a complex economic reality that is touchingly hard on workers.

Eventually, many of Fuyao's American workers get fed up with the factory's cramped, hectoring conditions. I won't say what happens, but watching events play out is an education in the workings of the global economy. From the factory floor to the boardroom, everyone is caught in the logic of the market, which defines everything in terms of the bottom line. If you don't help maximize profit, you're gone. We're not surprised when Cao starts to replace his workers with robots.

Reichert and Bognar capture a reality facing millions of Americans. Even as their wages go down and they long for the comfortable lives folks like them once could afford, workers in China — whose low pay has driven down wages all over the Western world — enjoy a prosperity they've never known. Life's looking rosier for them. Their 12-hour work-day, without time off or benefits, represents the rising model of labor in 21st century capitalism.

Near the end of American Factory, Chairman Cao strolls outside a glassy, pillared mansion that contains what looks like a shrine to himself. "The point of living is to work," he says. "Don't you think so?" It's hard to think of a sadder, or scarier, line in any movie this
 
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styx

Junior Member
Registered Member
americans wants "la bella vita" (this is italian expression that signify being lazy and dump money in futile way) they are not hard workers ( most of them are very fat also) they are not prepared for war. My good friend has been in america for work, he said that the american factory worker he looked after are often overweight and very slow also for italian standars (we are quite fast but not very well organized) work organization in US doesn't match neither european standars
 
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