Existential Doc asked my macro view. I ran across this video that pretty well sums up where I’m at. I think we are on the precipice if not in recession. I’ve written about the moral hazard and over leverage based on the idea it’s now the FED’s policy to save the day, in lieu of unemployment and inflation. This video sets up a model of forward leaning indicators which in some respects describe the future. The model does not look at levels either absolute or relative it looks at first and second derivative data, i.e. the rate of change, change in direction of the rate of change, and acceleration in the rate of change (rate of change of the rate of change). The model looks at multiple descriptors of Economy mathematically and it looks at cycles in which these changes have happened before. So the video is a little mathematically dense and quantitative but is explained in a totally accessible way.
The speaker is clear the trigger has not been pulled yet on recession. He gets paid the big bucks to not over analyze or under analyze but to correctly analyze. I get paid no bucks and may be over analyzing a bit, but I’m concerned enough to make some changes to my risk profile toward risk off based on the economy, and I haven’t done that since 2007.
I’ve watched about 20 videos this past couple weeks and not one was rosy. Some non committal but cautionary to the down side, some flat out predicting recession 100% and some touting terror. Some have an agenda to support so I don’t take everything as truth, but when the happy talk disappears with the smartest players in the room, the diagnosis, natural history, and prognosis starts to become visible. Yes a 9 cm mass in your lung could be pneumonia or fungal but most likely it is what it is.
One thing to consider is the world was rolling over before the trade war. So trade wars are not a cause but a side bet that will be used as a scapegoat against Trump. If somebody like Warren or Sanders gets in, fergitaboutit.