Are we headed for a recession? Depression?
As reported by CNBC Fed Survey.
* The chance of recession in the next 12 months rose to 23 percent in the CNBC Fed Survey.
* Twelve percent of respondents think the Fed, after hiking in December, would next move to reduce the Fed
Funds rate and do so by October.
* Fifty-two percent said they now approve of the president’s handling of the economy, down 14 points from
the prior survey in which his approval had hit an all-time high.
* The CNBC Fed Survey had 43 respondents, including economists, fund managers and strategists.
I recently spoke to my financial advisor who I hired about 18-years ago concerning this subject last week. She assured me that there is no recession as seen by her in the foreseeable future and what we are seeing in the stock market is just a "correction". A correction in the market is between 10-15% decline. YTD, we are at a 13% devaluation.
I have also been chatting with one of my best friends who is a financial advisor and a prepper. He wasn't so sure that what we are seeing is a correction. He thinks we might be in the foothills of a recession. He also believes that the Fed knows we are starting to climb those foot hills, hence the inching up of the Federal interest rate currently at 2.20%- Prime rate bank loans are in the 5.25%+ area.
He also went on to say that if we do not see a reasonable rebound from 2018's year end stock market close, lets say 5-8% in January & February, it is time to make some decisions.
Now my thoughts:
We currently have ~20% of our retirement in the stock market. Up a bit from our 15% two years ago but way down from our peak of ~45% in our youth. However, I am getting a funny feeling in my stomach not unlike I experienced in pre-2000 and 2008. Here are some thoughts that make me uneasy.
1) Because we (The Government) didn't allow the market to correct itself in 2009 we are feeling the affects in
a vastly over inflated market right now. Since 2009, the US market has increased by 400%. In comparison,
most countries stock markets, e.g. EU. UK, China, etc., only grew by 50%.
2) I wrote 2-3 years ago that the market was over inflated and I continue to have that opinion.
3) The only way to defeat Mr. Trump in 2020, is for the economy to take a tumble.
4) Foreign buyers for our debt is drying up
So the US Government is buying their own debt. Huh?
5)
US Debt, $21,875T at the time of this writing. Our estimated US GDP
for 2018 will be $20,400T so our debt is 7% over what the country produces. Very bad! In comparison,
Greece is at 180% debt to GDP, Japan, 220%, Italy 131% and USA 107% debt to GDP.
There are other indicators that we may be seeing that point to a recession. The few I listed was just to get the discussion going. What are your thoughts? Time table if any? What should we be looking for?
