Dow tumbles 700 points after bond market flashes a recession warning

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.

I'm blinded by all this winning going on left and right.

Recession warning?

So much winning

I just reallocated my 401K - basically all to low risk...

Fuck this shit.

In 2008 People lost about 1/3- 1/2 of their 401K, I figure this recession will not be as bad, but I anticipate a 15-20% loss..

I reallocated at the beginning of the year to low risk as well, because we are absolutely due for a recession. It's going to be a bumpy few years ahead, I'm sure of it.

#TrumpRecession now trending on Twitter.

There's always a fucking tweet.

Gird your loins ....

What is.....girding.....exactly?

Dear Lord in Heaven!

Who cares, we still own the libs !

The sky is falling!

At the close, the S&P 500 index is off 85 points; the Dow down 800, today! Both about 3%. It’s been a shitty week, with a few 2% drops, IIRC, so the cumulative effect is not good.

Germany is in recession, I saw reported.

Germany is not there yet; it will enter technical recession if it experiences one more quarter of negative GDP growth. Which is likely.

I don't have any stocks or retirement, so I don't give a fuck.

Biding my time to buy soon . . .

Here's hoping for a brief recession that peaks around the election.

Here’s the s&p. If I copied the link well, it’s for the year to date. It’s still up by quite a bit. Of course, it all depends on when you invested, but if you’ve been in for a while, you’re still good.

Of course, this recent trend is not good, and we do have an ignorant moron at the helm.

Yeah Mr. Trump, everything is hunky dory.

I like the line in “Too Big to Fail”, where Hank Paulson says that no one will buy Leiman because “...the dumb money is already in...” meaning, the dumb investors were already fully invested with no spare cash to spend more. That cracks me up, and he was right.

That’s like now.

Bitcoin, bitches!

Trump already railed against the Fed for the stock market drop. I think it was in a tweet. He also claimed that he wasn’t responsible for it, and his trade policy was just fine. In reality, our farmers are having a second year of losses, and that’s not to mention the others affected by Trump ‘s Trade policy. Aren’t steel workers affected? And others?

I occasionally watch Million Dollar Listing on BRAVO, and they keep going on and on and on about how the NY real estate market is in the toilet, and that the stock market is tanking.

I don't know if the rest of the country feels it, but these guys certainly do.

To be honest, this is the only place that I'm hearing about sinking real estate prices. Everywhere else is through the roof.

But these NY real estate guys seem to think that the world is ending.

In 2009 Obama pulled us out of the deepest recession of our lifetimes and gave us a decade of economic growth.

Mr Deflection aka Tax cutting, trade warring, treaty tearing trump is doing to the US what he did with the multi-millions his father gifted him.

I’m trying to buy a house in Michigan. I think I’ll wait.

Washington Post:

Trump’s decision to tie his performance to the markets isn’t looking so hot

r27 Doesn't get much more damning than that.

[quote] I think it was in a tweet.

Ya think?

The fundamental weakness cannot be discounted, but the FED capital structure is still in place and expanding.

Money supply growth has increased this summer, whereas it has decreased in almost every summer for the last decade.

With money supply growth continuing to expand, the chances of a stock market crash are almost nil.

So, how far do we let it drop before we start buying?

Anyone here invested in stocks and planning to ride it out? I invested early in the year, I'm still up and don't want to panic and dump it all.

My 401k is 50% stocks 50% bonds. Will I be safe if I ride this out? Not retiring for another 12 years.

They were reading this idiot’s tweets on the air at CNBC during their walk-to-wall coverage of the stock market’s dive today. The looks on the anchor’s and reporters’ faces as they tried to figure out what in holy hell he was going on about were priceless.

[quote]We are winning, big time, against China. Companies & jobs are fleeing. Prices to us have not gone up, and in some cases, have come down. China is not our problem, though Hong Kong is not helping. Our problem is with the Fed. Raised too much & too fast. Now too slow to cut....

[quote]Spread is way too much as other countries say THANK YOU to clueless Jay Powell and the Federal Reserve. Germany, and many others, are playing the game! CRAZY INVERTED YIELD CURVE! We should easily be reaping big Rewards & Gains, but the Fed is holding us back. We will Win!

“clueless Jay Powell” What the actual fuck. He’s going totally off the rails.

More:

[quote]Good things were stated on the call with China the other day. They are eating the Tariffs with the devaluation of their currency and “pouring” money into their system. The American consumer is fine with or without the September date, but much good will come from the short.....

[quote]..deferral to December. It actually helps China more than us, but will be reciprocated. Millions of jobs are being lost in China to other non-Tariffed countries. Thousands of companies are leaving. Of course China wants to make a deal. Let them work humanely with Hong Kong first!

R33 Absolutely ride it out with a 12 year time horizon. Never sell based on emotion or fear, you’ll regret it later.

As usual, Trump is blaming everyone else but himself.

He lashed out on Twitter earlier against Reserve Chairman Jerome Powell.

Here’s a good primer on the inverted yield curve. Three tweets in and I guarantee you you will know vastly more about the subject than Trump.

GE is in trouble.

GEE, so is trump

That stuff is so sensitive. Someone sneezes and it dips.

Save your $, don't be buying triple mocha lattes!

And I thought the Repugs are about the reduction of the fed budget deficit!!! Sad, isn't it? What say you, Log Cabin deficit hawk bitches?

Deficit Will Reach $1 Trillion Next Year, Budget Office Predicts

The federal budget deficit is growing faster than expected, even as President Trump openly considers more tax cuts and other ideas that would add to government debt.

The deficit will reach $960 billion for the 2019 fiscal year, which ends Sept. 30, and $1 trillion for the 2020 fiscal year, the Congressional Budget Office said in updated forecasts released on Wednesday. Previously, it had projected an $896 billion deficit for 2019 and $892 billion for 2020. Those numbers would be even higher, if not for lower-than-expected interest rates, which are reducing the cost of servicing the national debt.

He has not pushed Congress to enact any of the major cuts to federal spending that he lays out each year in his official budget proposal. His tax cuts have not come close to paying for themselves via faster economic growth, as Republicans promised they would. The budget office said on Wednesday that it expects growth of 2.6 percent this year and 2.1 percent in 2020, well below the more than 3 percent growth the Trump administration has promised for those years.

Time to invest in bitcoin!

r33

No, the recession will hit by Nov of 2020 at the latest. If you're ahead, get out NOW. If you're behind, work to minimize your losses, then get out gradually. You can use this money to buy back in to whatever you sold (and get a tax deduction if you wait 30 days or more), at a cheaper rate.

Trump cannot deal with a recession bc he is stupid, and also putin's bitch. So this will make a recession worse. This is deeply concerning.

Burn, Baby, Burn!

WTF!!!! Has the Turd ever thought about the cost of relocation, new factories, new bribes, new labor training in alternative countries?

Dow drops 400 points after Trump orders US companies to look for ‘alternative to China’

The Dow Jones Industrial Average traded 400 points lower, or 1.5%. The S&P 500 and Nasdaq Composite slid 1.5 and 1.7%, respectively.

Trump tweeted on Friday: “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing..your companies HOME and making your products in the USA.”

“The threats always been out there but there’s been no need to provoke that,” said Art Hogan, chief market strategist at National Securities. “It’s almost like the administration was expecting the Fed to announce a rate cut at the Jackson hole meeting. And since Powell did not deliver, he went to defcon 5.”

Jesus. Does this fucker not understand that China owns over $1 TRILLION of the National debt? Of course not, he’s just proving yet again what a horrible and incompetent “businessman” he is.

[quote] So, how far do we let it drop before we start buying?

Look at an S&P graph. We are still “up” considerably during the Trump reign.

[quote] r35: “clueless Jay Powell” What the actual fuck. He’s going totally off the rails.

And he appointed Powell!

He has become the Mad King

I don't believe this recession will be as bad as the last, but I'm riding it out as my portfolio is up by quite a large amount from gains this year, so the losses so far still have me up.

The market is weird. If they cut rates, the market might drop, thinking the cut signals weakness.

The uncertainty is killing the market...

Trump is tweeting himself out of the job...I hope everyone sees how fucking mental and out of control he is.

Good Job Trump! Keep tweeting! You ain't gonna be in office next term!

His fight with China is out of control. And weird, like it’s personal for him.

what a great "deal maker" he claims to be! LOL!!!

I know, R60. I can’t think of a deal he’s made in office. Except NAFTA 2., which is not much of an accomplishment.

He’s cancelled a lot of agreements, which is easy to do, but he hasn’t built much.

Oh, wait, he actually is building part of his wall.

R59 he knows China hates him

I really don’t know if the market can be manipulated but I really don’t see this market crashing while this Orange turd is in the office. I feel he and TPTB cohorts in Wall st will do everything they can to keep it up. The high stock market is the one thing he always boast of and without it, he’s nothing.

Wow, bad day at Black Rock!

Trump described the head of the Fed, and the Chinese President, as “enemies” yesterday.

He hasn’t learned that his words matter.

Some announcement from Trump coming this afternoon.

Jesus. Does this fucker not understand that China owns over $1 TRILLION of the National debt? Of course not, he’s just proving yet again what a horrible and incompetent “businessman” he is.

There’s an old saying: When you owe the bank $10,000 and can’t pay it back, YOU have a problem. When you owe the bank $10,000,000 and can’t pay it back, THE BANK has a problem.

China could very well be left holding the bag if the US decides to default on its debt.

America is Trump Taj Mahal 2.0

What ISN'T personal for the Flatulent Orange Gasbag, R59?

R66, could Trump choose to default? It would be a disaster, as we couldn’t borrow again for years, if ever.

The Republicans would love it, as we’d have to chop spending as a result.

China is gonna sink his reelection. He’s already compared it to the Russian interference in the last election.

I lost my shirt in the dot-com crash of 2000-2003. It was a disaster for me. I don’t want to go though anything like that again.

This is interesting as the market is closing . Anything can happen over the weekend. Do you gamble that the clown will tweet/do something even worse and sell. Or bet that he’ll do some damage control and buy now. For some short term trading.

Heres a tip, if you want to transfer money from a 401k to a Roth, do the transfer when the market is down. The reason being:

401k withdrawals are taxed like regular income.

Roth withdrawals are not taxed at all

Assuming the market rebounds.

This way, the rebound happens in the tax-free Roth account. You have to do this via a rollover IRA. It’s called a backdoor ROTH conversion. Whoever manages your account can help you with this. Personally, I think it’s too early, as I expect the market to go lower, but I wouldn’t tell you what to do.

My Fidelity 401k used to prohibit partial withdrawals. It was all or nothing. They changed that in my plan, about a year ago, so now I can do withdrawals of partial sums to do the backdoor ROTH conversion on smaller sums. FYI.

Obama repaired the economy after the Bush disaster and then Trump got it. And he broke it.

Clearly Trump knows no History.

In the book/movie, [italic] “Too Big to Fail”, [/italic] during the Great Recession, the Chinese counterpart tells the Treasury Secrecy that Russia approached them, and suggested they coordinate their sale of US Treasury bonds. They noted it would be a disaster. Even Russia would greatly suffer. They should know that.

Trump would not know what to do, it would be a disaster. US money would become worthless, right?

BREAKING: Stocks plunge after Trump tweets that he will respond to new China tariffs today and says "American companies are hereby ordered to immediately start looking for an alternative to China"

I like the quote "Trump will tweet himself out of a job."

[quote] DJT: “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”

Webster’s definition of fascism:

[quote] A political philosophy, movement, or regime (such as that of the Fascisti) that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, [bold] severe economic and social regimentation, [/bold] and forcible suppression of opposition.

So, Trump is making progress.

Lol at the people who think this will make him look bad to deplorables who support him.

When are you idiots gonna get it? His supporters could see him raping babies in person and still support him as long as he claims brown people are abusing food stamps.

R81 is hideously funny.

I bet the nearby countries in Asia are very happy...like Vietnam...

I believe Trump is purposely manipulating the market with all his tweets. I guarantee he is buying and selling based on what he tweets and making a fortune for himself and his friends/family. It's easy to say "Trump's an idiot", but he has a lot of very rich friends and wouldn't do this to piss them off, unless they are benefitting.

R84 that’s been suspected on Datalounge for awhile

I’m sure he has associates but I don’t believe he has any friends.

One of his good friends is Bob Kraft. Owner of the cheating Patriots. They both love to cheat, what a pair!

R81, well, whatever. Go hump your cow in a cave if you can't stand our insult being hurled at your beloved president.

Chat away, people

Sad and horrible days for farmers with no end in sight.

Farmers’ Frustration With Trump Grows as U.S. Escalates China Fight

“We’re not starting to do great again,” Brian Thalmann, the president of the Minnesota Corn Growers Association, told Mr. Perdue at the event. “Things are going downhill and downhill quickly.”

On Monday, after a 72-hour period during which Mr. Trump twice escalated his trade war with China, Mr. Thalmann said he could no longer support the president as he did in 2016.

“At some point we have to quit playing games and get back to the table and figure this out,” Mr. Thalmann said. “There’s no certainty to any of this.”

Losing the world’s most populous country as an export market has been a major blow to the agriculture industry. Total American agricultural exports to China were $24 billion in 2014 and fell to $9.1 billion last year, according to the American Farm Bureau. Exports of farm products to China fell by $1.3 billion in the first half of the year, the agriculture group said this month.

A report from the Agriculture Department this month found that Canadian wheat exports to China have “rocketed” this year, while exports from the United States have plunged.

But as the trade fight gets uglier, farmers are beginning to panic. Last week, Mr. Trump said he would increase tariffs on $250 billion worth of Chinese imports to 30 percent and impose a 15 percent tax on another $300 billion worth later this year. China has already said it will no longer buy American agricultural products and announced on Friday that it would raise tariffs on $75 billion of exports from America.

That prompted Mr. Trump to describe Xi Jinping, China’s president, as an “enemy” and suggest that he wanted to raise tariffs even higher, before declaring on Monday that talks between the two nations continue.

The trade conflict’s toll on farmers is spreading to the manufacturers that serve them. Deere & Company, the maker of agricultural equipment, said this month that it was cutting its profit forecast for the second time this year. The company’s chief executive said farmers were delaying purchases because of concerns about access to export markets.

They did this to themselves.

Let me take this opportunity to not care.

This is beyond craziness, peril and pure delusion. Someone must do something now!!!

China Prepares for the Worst on Trade War After Trump’s Flip-Flops

Perhaps nobody was more surprised to hear that China had called President Donald Trump’s administration to restart trade talks than the government in Beijing itself.

After a weekend of confusing signals, Trump’s credibility has become a key obstacle for China to reach a lasting deal with the U.S., according to Chinese officials familiar with the talks who asked not to be identified. Only a few negotiators in Beijing see a deal as actually possible ahead of the 2020 U.S. election, they said, in part because it’s dangerous for any official to advise President Xi Jinping to sign a deal that Trump may eventually break.

In off-the-cuff remarks to reporters at the Group of Seven summit in France on Monday, Trump claimed that Chinese officials called “our top trade people” and said “let’s get back to the table.” In subsequent appearances he portrayed the outreach as evidence China was desperate to make a deal: “They’ve been hurt very badly, but they understand this is the right thing to do.”

It all made for splashy headlines and momentarily boosted stocks, but nobody in Beijing officialdom appeared to know what he was talking about. Even worse, his efforts to depict China as caving in negotiations actually confirmed some of their worst fears about Trump: that he can’t be trusted to cut a deal.

“Trump’s flip flop has further enlarged the distrust,” said Tao Dong, vice chairman for Greater China at Credit Suisse Private Banking in Hong Kong. “This makes a quick resolution nearly impossible.”

What do you buy in a Trump Factor economy? Nothing is making money right now because he's gaming the market so his own family can profit.

r93 Gold ETFs are doing well right now.

Farmers would rather force women to have kids they don't want than keep a roof over their own kids' heads.

Looks like they got what they voted for so they can just STFU.

[quote] R94: [R93] Gold ETFs are doing well right now.

Great! I have some collectible coins I’d like to unload. I “over-bought”.

This is a $50 US coin. Until a few years ago, I didn’t realize the mint was still making so many interesting coins. Click the picture to see the obverse.

They are going to release their first palladium coin soon. I might buy one of those.

[quote]Things are going downhill and downhill quickly.

The "radical libruls" told them this will be the result of Cheeto's "master negotiations". Did they listen? Fuck em.

Bitcoin is my pick!

[quote] Wow, bad day at Black Rock!

I just bought one of their iShares ETFs on Monday. So far it has been up. Now after reading this thread I'm all worried.

Hold me!

More tumbling today. Who's worried?

We last hit this level in Feb, 2019, so it’s still not a disaster. If I sold some holdings today, I would still consider it selling at the top, more or less.

IM0, the Dow should be @20K. It’s still too high at this level.

Wow, R102, that’s a 23% drop from today, and I think the market is already off ~5% already. It certain,ybwiukd t. E unusual. Even a 30% drop isn’t that unusual. It would

The attached has some interesting stats on economic performance in a recession. You’ll see that the stock market doesn’t always fall in a recession; however, today’s Market has been so hot for so long, a correction is due, I think.

The attached misses the 1987 market collapse because it wasn’t associated with a recession. IIRC, it recover quickly, maybe within ~2 years.

Here are some better stats for stock market performance as correlated with corrections and bear markets. The numbers are all over the place. A really bad bear might mean a 30% drop, and take 2-3 years to recover, easily.

I would expect:

The long market bull market may be over extended and not representative of underlying value, and due for a drop.

The Idiot-in-Chief is so incompetent that he will likely do the opposite of what is needed to stabilize the markets when needed. He’s also a real estate guy. I’ve heard him talk about real estate a lot, but never about any personal investment in stocks, so he might even understand it at all, and not care what happens to the market and the people reliant on a healthy market.

Still, if Trump reaches a “deal” with China before year end, it might extend the bull market. He would have to capitulate, since the Chinese are content to sit pat if that means a down-turn that would cause Trump to lose re-election.

Trump complained about Chinese attempts to undermine the upcoming election. After Trump spontaneously introduced new tariffs against China, they responded with their own tariffs, but also stopped or reduced doing business with American farmers and others. Their Chinese tariffs were targeted on Trump-voters’ country.

Trump thinks this is comparable, or worse, than Russian interference in our election by breaking into private US properties, stealing their data, then trafficking in that stolen data. Then lying about it and obstructing justice. It is not comparable.

You would think that the Chinese should be free to do business with whomever they care to. And why would they even want to deal with the US, when it’s President insults them regularly.

Besides, this is all of Trump ‘s doing. It’s pretty clear he didn’t think this through. He thought he could bully China, and, he can’t! He should have had a plan in place as to how to anticipate pushback by the Chinese, and he failed to do so.,

Some might remember when President Jimmy Carter halted grain deliveries to the USSR, in protest against their invasion of Afghanistan. So, it’s not a new concept that China is pursuing.

In 1980/1981, the Iranian government was looking for a face-saving way to release the US hostages. The hostages had became an albatross around the Iranian neck. They held the hostages until Carter lost his re-election to say FY to Carter, and as an olive branch to the new US government. I do not believe that Reagan worked with Iran to sabotage Carter’s re-election. There no evidence to support that.

So, it would not surprise me to hear that Russia, China, Iran, and others, were all using cyber tools to sabotage our election process. It would also not surprise me if China refuses to deal with Trump, and will wait until the 2020 election before making concessions, just like the Iranians did with Carter.

Isn't this turd is so dangerous and detrimental to the world? Time to put him in jail!!!!

One of the scariest aspects of the current national nightmare that is Donald Trump is that for as much of a dystopian hellscape as his presidency has turned out to be, we’re periodically reminded that if he got his way, it would be even worse. Over the past two and a half years we’ve learned that he had to be convinced not to invade Venezuela, or nuke hurricanes, or escalate tensions with Syria by assassinating Bashar al-Assad, or scrap a trade deal with South Korea, the latter of which was avoided when then-National Economic Council director Gary Cohn reportedly swiped a letter from the president’s desk that Trump didn’t even realize had gone missing. According to a new report, the president also wanted to shiv the U.S. economy in a characteristically self-defeating attempt to get back at China—a move that was only prevented by a chorus of staffers and CEOs begging him not to go through with it.

The Russell 3000 index is down about 3% from its all time high. Given that you can’t time the market, usually, it is “essentially” at its all time high. I don’t think 3% is really significant. So, if you want to “sell high”, I think now is a good time to do so. Especially if you’re just tinkering around the edges and not moving a very large percent of your investments.

I’m selling a little today.

The market is doing well today. Apparently the Chinese have come back to the table to negotiate.

The Turd will take us to a never-before-seen level of national debt!!!!

Real US debt levels could be 2,000% of economy, a Wall Street report suggests

Total potential debt for the U.S. by one all-encompassing measure is running close to 2,000% of GDP, according to an analysis that suggests danger but also cautions against reading too much into the level.

AB Bernstein came up with the calculation — 1,832%, to be exact — by including not only traditional levels of public debt like bonds but also financial debt and all its complexities as well as future obligations for so-called entitlement programs like Social Security, Medicare and public pensions.

Putting all that together paints a daunting picture but one that requires nuance to understand. Paramount is realizing that not all of the debt obligations are set in stone, and it’s important to know where the leeway is, particularly in the government programs that can be changed either by legislation or accounting.

Are we heading back into correction territory again? The Dow is down by 558 right now after a drop of 340 yesterday.

We’ve really had quite an increase this year, so I don’t think so, R111. The Russell 3000 index started the year at 1440, and is currently at 1688. That’s an increase of 17%, year to date! I think we’d really need to see some horrifying numbers to call it a correction.

A drop of 900 points in the Dow looks horrible, but it can get much worse, and not even be historic.

900-point drop every week until Christmas, it will be historical! Muhahahahahahaha!!!

It was doing great up until the Coronavirus hit.