Stock declines signal a bear market; here’s what that means (1 Viewer)

[Renae]

To be clear, there's not yet a sign that we're in a recession. The NBER certainly hasn't called one, unemployment (which is one thing the NBER factors in) hasn't been rising, and second-quarter GDP seems to be positive (currently projected at 0.9% by the Atlanta Fed, and just under 3% according to the Blue Chip Consensus). Stocks are in bear territory, but that doesn't necessarily mean recession.

WE're in a recession. We're going down the hell hole, so I'm telling my kids to look for that bottom to invest so in 30 years they can retire.

 

[The Work Outing]

That ride back up can come so abruptly and happen so incredibly fast, that it's tough to spot those bottoms in time - before they get away from you.

I agree...and thanks.

My problem was I did not realize the Fed was going to 'run the show' like they did.
I assumed they would not start 'turning Japanese' and have the central bank take over the economy.
And by the time I finally realized what was going on - I had missed a lot of the profits to be had.
My fault.
I had a closed mind.
I refused to consider that the Fed truly was 'all in'.
My bad.
But I learned.

Overall?
The thing about the top and the bottom is the top is fairly, easy to spot...imho.
As long as you have an open mind and see what caused the top in the first place - you can see where the power behind the bull market has ended.

The '07 top was all about housing.
And it was that old Wall Street story - when the shoe shine boy is buying stocks...you know it's time to get out.
Because everyone who can buy stocks - has bought them.
And bull markets only continue so long as new money enters them.
So, in late Summer, 2007, when I heard stories that mortgage firms were desperately looking for ANYONE to get into a house?
I knew the top must be near...so I dumped EVERYTHING.

Like this LOOOOONG, bull market since '09?
It was almost entirely driven by the Fed (and central banks all over the world).
So, it was probably going to keep going until the one thing that would force the Fed out, rose it's ugly head...inflation.
Almost nothing else would stop them.

So, when I saw in the new year that inflation was not 'transitory'.
It was obvious that the Fed would HAVE to stop QE and raise rates.
And that would kill this ridiculous, debt-fueled, stock-buyback, screw-fundamentals party.
At least for now.

(I realize you probably know all this. But this is for anyone who doesn't.)

The thing is though.
Most people still do not understand the Fed and the power it has.
Or that the Fed is running the show.
Too many people still believe that it is Washington that runs the economy.
Or Main Street.
Not this time.

That is probably why - even on this site - SO many people are completely missing what is going on.
They think it is about Trump or Biden or Covid or Ukraine or oil.
No...it is the Federal Reserve.
And since this is the first bull market, almost completely run by the Fed, most people are naturally not seeing it.
Just like I refused to see it back in '09.

So long as the Fed has to fight inflation - the markets will almost certainly go down until they hit bottom.
Or until inflation turns around and the Fed can jump back in and prop up the markets again.

If you got this far...thanks for reading.

Later.

 

[The Work Outing]

If I recall correctly we rebalanced in 2020...maybe 2019. Although we discuss things and come to a shared decision my DH deals with the minutia. I think we are 60/40 stocks to bonds. The cash level fluctuates depending on dividends, sells etc but we usually keep about 25K in cash. We own individual, blue chip, dividend paying stocks.....zero high or even medium risk. I am not at all concerned about the markets..it ebbs and it flows and we are in no way dependent upon our stock portfolio for our retirement. It feels good to be in a place where the daily hype is of no concern to me....or even my kids as their horizon is decades out.

Thanks for the details.
It's not what I would do.
But you are happy so - go for it.

Assuming 'DH' refers to Financial Analyst or something similar?
I have one piece of advice for you?

Make sure he/she is not buying and selling lots of stocks every month to 'manage/adjust/fine tune' your portfolio.
This is a cheap trick and not professional...though it is VERY common.
Even big firms like Royal Bank Wealth Management investments did it when I was with them long ago.
All it does is rack up his/her companies, commission fees.
While hurting your capital gains tax rates.

Especially if your stocks are all 'blue chip'?
There is no practical/logical reason for him/her to be doing this.

 

[Torus34]

Two pieces of data for a stock are its selling price and its annual dividend. For a stock purchaser, it's how much he gets back for what he's paid. It's a ratio called the price/earnings ratio. It's shown as p/e ratio.

The p/e ratio can also be calculated for groups of stocks such as those that compose the Dow Jones Industrials.

The long term average p/e ratio for the DJI is about 16.8. As of this writing, the DJI p/e ratio is 17.3.

Regards, stay safe 'n well.

 

[The Work Outing]

To be clear, there's not yet a sign that we're in a recession. The NBER certainly hasn't called one, unemployment (which is one thing the NBER factors in) hasn't been rising, and second-quarter GDP seems to be positive (currently projected at 0.9% by the Atlanta Fed, and just under 3% according to the Blue Chip Consensus). Stocks are in bear territory, but that doesn't necessarily mean recession.

Just because a private, Massachusetts think tank (like NBER) says what a recession is - does not mean they are right.

Also, the U-3 means almost NOTHING as it completely ignores millions of 'discouraged workers' - which it started doing in 1994.
The reason they changed the formula in 1994 was obvious.
To make the U-3 look better than it really is.

So the fact that NBER takes the U-3 into account (among other things) to determine recessions proves to me that they are erroneous in their assumptions.

And please save the - 'but they are full of smart, well-educated people' - line.
So is the Fed.
They are LOADED with lots of brilliant people with TONS of mega-degrees.
And they were clueless about the recession hitting back in 2007.

Fed missed warning signs in 2007 as crisis gained steam

Top policymakers at the Federal Reserve felt for most of 2007 that problems in housing and banking were isolated and unlikely to tear down the U.S. economy as they ultimately did.

www.reuters.com

Education has little/NOTHING to do with economics, imo.

 

[The Work Outing]

S&P down again today.

I am NOT saying the markets will 'collapse'.
Not for a few more years at least, imo.

But the equity markets have NOT hit bottom until inflation has topped out AND the Fed stops raising rates/reducing it's balance sheet.
(barring something unforeseen)

 

[Callen]

Thanks for the details.
It's not what I would do.
But you are happy so - go for it.

Assuming 'DH' refers to Financial Analyst or something similar?
I have one piece of advice for you?

Make sure he/she is not buying and selling lots of stocks every month to 'manage/adjust/fine tune' your portfolio.
This is a cheap trick and not professional...though it is VERY common.
Even big firms like Royal Bank Wealth Management investments did it when I was with them long ago.
All it does is rack up his/her companies, commission fees.
While hurting your capital gains tax rates.

Especially if your stocks are all 'blue chip'?
There is no practical/logical reason for him/her to be doing this.

No, DH is my Dear Husband....we do have a financial advisor, the same one for many years, she is very attuned to our investment style as it has evolved from our more high-risk years to our low/medium risk years. We have very few buys and sells only do it when there is an opportunity we feel is worth the commission. Usually higher growth or higher dividend. Our portfolio is very stable.

PS: DH corrected me we are now 50/50 stocks to bonds.

 

[Helix]

The far right will get the recession that they want eventually.

 

[Mina]

Just because a private, Massachusetts think tank (like NBER) says what a recession is - does not mean they are right.

Also, the U-3 means almost NOTHING as it completely ignores millions of 'discouraged workers' - which it started doing in 1994.
The reason they changed the formula in 1994 was obvious.
To make the U-3 look better than it really is.

So the fact that NBER takes the U-3 into account (among other things) to determine recessions proves to me that they are erroneous in their assumptions.

And please save the - 'but they are full of smart, well-educated people' - line.
So is the Fed.
They are LOADED with lots of brilliant people with TONS of mega-degrees.
And they were clueless about the recession hitting back in 2007.

Fed missed warning signs in 2007 as crisis gained steam

Top policymakers at the Federal Reserve felt for most of 2007 that problems in housing and banking were isolated and unlikely to tear down the U.S. economy as they ultimately did.

www.reuters.com

Education has little/NOTHING to do with economics, imo.

OK, several points to unpack there:

Yes, you can offer your own personal definition of what a recession is, if you'd like. What would it be?

Regardless, pretty much all economists, business people, major politicians, bureaucrats, and the financial press effectively defer to the NBER, whether explicitly attributing recession dates to them or just implicitly deferring to them by way of citing the dates they came up with. Google "the recession began in" or "the recession ended in," and the dates you'll find referenced, for recession after recession (in the US) will be the NBER dates, regardless of the politics of the outlet. CNN, Fox News, the Wall Street Journal, the Financial Times, the New York Times, Time Magazine, USA Today, the National Review -- right or left, pop journalism or technical coverage for financial professionals, they're all implicitly recognizing the NBER as the premiere authority on the question.

The US government implicitly defers to the NBER, too. Like if you look at the Federal Reserve's historical data, they will often have shaded areas in their graphs showing when recessions occurred. The start and end dates of those recessions are the ones announced by the NBER's Business Cycle Dating Committee:

They explicitly acknowledge they're using the NBER's dates for that:

What Dates Are Used for the U.S. Recession Bars? | Getting To Know FRED

fredhelp.stlouisfed.org

Before the NBER started to do business cycle dates, the traditional definition for recession was two consecutive quarters of GDP shrinkage. That's not a great definition, since we could have something that pretty much everyone would agree is a recession that didn't satisfy that definition. Like picture Q1 has 3% GDP shrinkage, Q2 has 0.1% growth, and Q3 has 4% shrinkage. The NBER's method would treat that as a period of significant economic shrinkage and define it as a recession, but that dead cat bounce in the middle would prevent it from being defined as a recession by the old-fashioned definition. That said, currently it doesn't look like we're in a recession using that definition, since although we had a little economic shrinkage in Q1, the Fed's GDPNow projection for Q2 (and the Blue Chip consensus, for that matter) says the economy is currently growing.

 

[Mina]

Just because a private, Massachusetts think tank (like NBER) says what a recession is - does not mean they are right.

Also, the U-3 means almost NOTHING as it completely ignores millions of 'discouraged workers' - which it started doing in 1994.
The reason they changed the formula in 1994 was obvious.
To make the U-3 look better than it really is.

So the fact that NBER takes the U-3 into account (among other things) to determine recessions proves to me that they are erroneous in their assumptions.

And please save the - 'but they are full of smart, well-educated people' - line.
So is the Fed.
They are LOADED with lots of brilliant people with TONS of mega-degrees.
And they were clueless about the recession hitting back in 2007.

Fed missed warning signs in 2007 as crisis gained steam

Top policymakers at the Federal Reserve felt for most of 2007 that problems in housing and banking were isolated and unlikely to tear down the U.S. economy as they ultimately did.

www.reuters.com

Education has little/NOTHING to do with economics, imo.

As for "discouraged workers," right-wingers are fond of bringing those up when there's a Democratic president (and only then), so that they can suggest that the "real" unemployment rate is much higher than the official one. But the irony is that the labor market improvement we see in Democratic presidencies is generally even better when you factor discouraged workers in. Like U-3 is down 2.8 points on Biden's watch, which is very impressive, but U-6 (the alternate measure of labor-underutilization which factors in "discouraged workers) is down four full points, which is even more impressive. In essence, the huge decrease in the unemployment rate under Biden's leadership would be even bigger if a lot of people who'd given up even looking for work when Trump was president hadn't been encouraged enough by the economic improvement to return to the job hunt, such that they start counting into unemployment rate calculation, where they hadn't before.


Anyway, U-6 is DOWN 0.2 points so far this year, so it doesn't suggest we're in a recession.

The reason they changed the formula in 1994 was obvious.
To make the U-3 look better than it really is.

You'll notice this kind of argument appears like clockwork among the conservative drones every time we have a Democratic president, and then immediately disappears the moment we have a Republican one. For example, back before the economy fell apart on Trump's watch, right-wingers were crowing endlessly about Trump's economic numbers, including the unemployment rate. They crowed that the Black unemployment rate had never been lower than in 2019. Care to guess how many of them then caveated with "however, they changed the formula in 1994 to make U-3 look better than it really is, so we can't really compare to before that."? The answer, of course, is none. These kinds of technical quibbles are deployed if, and only if, needed to try to explain away a strong economy during a Democratic presidency. Strong numbers are treated as unquestionable gospel when Republicans are president.

But whether you like the U-3 or not, doesn't really play into whether there's a recession right now, since the same definition has been used for a long time, and thus the change in that indicator would still point to whether or not we're experiencing economic weakness. Right now the unemployment rate is the lowest it's been at any point in this business cycle, and the same definition has been used throughout the business cycle, so the lack of any evidence of weakening isn't an artifact of a changing definition. It's simply a matter that there hasn't yet been any sign of net layoffs. Last month we added 390,000 more jobs, which is FAR more than what's needed to account for population growth. Over the last decade, the labor force has grown by an average of 951,000 people per year. So, if we stay on that same pace, then to keep those newcomers employed at the same rate as current members of the labor force, we need 916,764 new jobs per year, or 76,397 each month. So, adding 390,000 in a month is not even close to recessionary -- it's a number that should easily soak up ALL the new members of the labor force, at the normal pace of expansion, plus a whole lot more.

Anyway, if you're worried about "discouraged workers" and think the U-3 understates the true unemployment problem, then you had much more cause to complain about that during the Trump years. Back in April 2019, for example, the U-6 was about 2.06 times the U-3 (i.e.., once you factor in discouraged workers and other measures of labor-underutilization, the problem was 2.06 times as large as the U-3 would say). By comparison, that multiplier is just 1.97 today. So, if U-3 is understating labor market problems today, it was understating them significantly more back when Trump was president, but right-wingers were conspicuously silent on that point.

 

[Ahlevah]

Clearly, you have no idea why the oil companies are choosing not to drill, not to expand production, but it suits your preferred narrative so that's where you will roost.

Biden and his green minions hate “Big Oil.” They don’t want pipelines, refineries, or drilling. They want to tax the industry into oblivion. And now they’re crying about a lack of investment. What else do you want us to know?

 

[The Old Soul]

Simple person's take on gauging the Market; watch the price of Gold. Gold has been following the market ups and down for a long time now, which indicated than stocks are and have been overvalued - PM speculation rather than hedging. When gold starts doing the opposite of market trends, then we are probably entering recession mode. Right now, stock prices seem to be in adjustment mode - a solid bottom is difficult until inflation stabilizes at a manageable level.

 

[Hypothetical]

Stupid question time: how much of the stock market becoming a bear market is people talking about a bear market?

if it effects buying , which enough talk always eventually does, a whole lot.

 

[Mina]

Simple person's take on gauging the Market; watch the price of Gold. Gold has been following the market ups and down for a long time now, which indicated than stocks are and have been overvalued - PM speculation rather than hedging. When gold starts doing the opposite of market trends, then we are probably entering recession mode. Right now, stock prices seem to be in adjustment mode - a solid bottom is difficult until inflation stabilizes at a manageable level.

I'm not following. It sounds like, with your analysis, there are only two options: stocks are overvalued or we're entering recession mode: If gold and stocks move the same way, stocks are overvalued, and if they go opposite ways, we're entering recession mode. Isn't there ever a possibility that stocks are undervalued, or properly valued, without that meaning we're entering a recession?

 

[Outlook]

I think we're to the decided point in the market now. Up until now, there have been a lot of buyers of dips. Now, it appears to have nowhere to go but down and the volatility index is finally making a notable move up. The question is how bad will this bear market be and how long will the recession (which many think we're already in) last. History provides quite a wide variety of answers/options to that question.

The S&P 500 is in a bear market; here’s what that means

Wall Street opened the week with heavy losses that put the benchmark S&P 500 at a level considered to be a so-called bear market. Rising interest rates, the war in Ukraine and China’s economic slowdown are leading investors to reconsider what they’re willing to pay for a wide range of stocks...

apnews.com

Hopefully, it's just a recession. Personally, I think it could be worse in the next couple of years if we don't start to change energy policy.
I believe the restaurant industry is next. People can't afford to eat out.
Hotel business will follow.
People can't afford big ticket items like appliances and vehicles. Inventories will mount and others will be laid off.
This is all on Joe.

Tech Layoffs: US Companies With Job Cuts In and 2023 and 2024

Tech layoffs: More than 300,000 workers at US-based tech companies have been laid off in mass job cuts since the start of 2022, with the cuts continuing in 2024.

news.crunchbase.com

Real estate firms Compass and Redfin announce layoffs as housing market slows

In filings with the Securities and Exchange Commission, Compass announced a 10% cut to its workforce, and Redfin announced an 8% cut.

www.cnbc.com

 

[reflechissez]

WE're in a recession. We're going down the hell hole, so I'm telling my kids to look for that bottom to invest so in 30 years they can retire.

 

[Mina]

Hopefully, it's just a recession. Personally, I think it could be worse in the next couple of years if we don't start to change energy policy.
I believe the restaurant industry is next. People can't afford to eat out.
Hotel business will follow.
People can't afford big ticket items like appliances and vehicles. Inventories will mount and others will be laid off.
This is all on Joe.

Tech Layoffs: US Companies With Job Cuts In and 2023 and 2024

Tech layoffs: More than 300,000 workers at US-based tech companies have been laid off in mass job cuts since the start of 2022, with the cuts continuing in 2024.

news.crunchbase.com

Real estate firms Compass and Redfin announce layoffs as housing market slows

In filings with the Securities and Exchange Commission, Compass announced a 10% cut to its workforce, and Redfin announced an 8% cut.

www.cnbc.com

Well, the good thing is that so far there's no sign of a recession. Unemployment rates are at the lowest point they've been this business cycle, and last month's job creation was way above average. Most Wall Street analysts (and the Atlanta Fed) are projecting positive GDP growth for Q2, too.

Meanwhile, inflation levels suggest that people are not yet feeling the pinch enough to alter their spending habits. After all, the Fed's been raising rates, meaning there's less money supply than there was, and yet prices are still rising fairly quickly, which isn't what we'd expect to see if there were a drop in demand for goods and services.

I suppose the current price insensitivity makes sense when you factor in the fact that household debt levels are so very low right now. Right now household debt service payments are 9.34% of disposable personal income. To put that in perspective, during the entire period between 1980 and the start of the pandemic, the lowest they ever got was 9.80% (and they got as high as 13.17% in the Bush years). So, households are having a whole lot less income eaten up by debt payments than they were used to, which has them feeling flush. That sense of prosperity means that even with prices rising, people are more likely to just gripe about inflation, rather than actually cutting their spending to economize. That is allowing prices to go on rising even as money supply falls.

Is that "all on Joe"? No, I don't think so. Although there was a big decline in household debt in Q1 2021, associated with the emergency COVID funds Biden pushed for, there'd also been a big one in Q2 2020, based on that year's handouts. People took that money, both times, and paid down debt with it, making them less price sensitive. And it even predates that. There'd been a HUGE decline in household debt as a share of disposable income back during Obama's presidency, so the roots of consumers feeling so flush with money goes back quite a way. I think the big-picture story is that the financial collapse at the end of the Bush presidency scared people, and they were no longer comfortable carrying so much debt, and they spent years paying that down. Then, with a lot less debt overhang, they found themselves better able to absorb price increases, and less likely to economize in response.

Household Debt Service Payments as a Percent of Disposable Personal Income

Graph and download economic data for Household Debt Service Payments as a Percent of Disposable Personal Income (TDSP) from Q1 1980 to Q4 2023 about disposable, payments, debt, personal income, percent, personal, households, services, income, and USA.

fred.stlouisfed.org

 

[Chase Morgan]

Powell choked.

Only should've hiked 50 basis-points.

They're gunna throw this thing into recession...

 

[Mina]

Powell choked.

Only should've hiked 50 basis-points.

They're gunna throw this thing into recession...

I don't have any confidence in Powell's ability to stand up to political pressure from the right. In 2019, Trump and the wingnuts were demanding rate cuts at a time when standard Fed doctrine would have called for rate HIKES. Unemployment was near record lows, and monthly inflation rates had been peeking above the Fed's target, all while rates stood far below historical averages. So, naturally, anyone would expect a rate hike. But Trump was demanding a cut, and Powell caved and gave him three of them, in July, September, and October of 2019. Wingnuts wanted the Fed to pour fuel on the overheated economy, to help Trump win the next election, and so Powell obeyed. Naturally, now that wingnuts want Powell to push the economy into severe recession by way of a gigantic 3/4-point rate hike, in hopes it'll hand Republicans an election victory, Powell obeyed. He knows who he really works for.

 

[The Old Soul]

I'm not following. It sounds like, with your analysis, there are only two options: stocks are overvalued or we're entering recession mode: If gold and stocks move the same way, stocks are overvalued, and if they go opposite ways, we're entering recession mode. Isn't there ever a possibility that stocks are undervalued, or properly valued, without that meaning we're entering a recession?

Having been a numismatist since the early 1970's, I've always had some gold coins in the collection. Not being a Black Hole type collector, I would always take a profit when a coin went up over 25% of what I paid; I learned to focus on the Key Dates, and gave up on filling the coin books because the common dates stayed flat. But with gold, no matter the coin, the hinging on melt value made the weight, and not the date the determining factor. Watching for melt dips I would buy the Eagles and Double Eagles, and when the melt took off, was finding that I could wait for price doubles to cash out, and did very well riding the rollercoaaster.

As I grew older and started building retirement and investment accounts through jobs, I started to see a definite pattern between the price of gold, and the balances of investments - they most often went in opposite directions. By the 90's, I saw a cleaar pattern, and would time my buys and sells on market performance; I ended up doing 3 or4 buy and sell cycles per decade, and doubled my money every time. When the market and gold rose and fell together, I would sit pat until the breakout, and buy or sell accordingly. I remember one cycle in particular around Y2K; I bought every coin I could afford (even some bullion coins) when it was $300 and below. Within 3 years I actually tripled my money using market timing; my sell range was between $750 and the upper 800's. A lot of the heavy stock market investors I new at the time outright laughed at me when I was buying, and when I sold, there was only one laughing man. Me.

Like I said, it was a simplistic way for the market-dumb investor like me to see where the markets are headed, but the pattern has held; I'm in hold mode right now (I bought a pile around the '08 crash in the $700 to $800 range, and other than a few minor transactions, have kept the stack tall. When the market and gold go their own separate ways, I will either buy or sell. Long term, I have cleaned up big time; I'm basically out of the stock market now, and plan to stay that way - my coins will always have numismatic plus PM value unlike a piece of paper with a bunch (we hope) of zeros. Physical is the only way - if a war or something ever broke out, I can grab the stack and go anywhere in the world with a pocket full of real quantifiable value; the spot market knows no borders.

 

[The Work Outing]

OK, several points to unpack there:

Yes, you can offer your own personal definition of what a recession is, if you'd like. What would it be?

Regardless, pretty much all economists, business people, major politicians, bureaucrats, and the financial press effectively defer to the NBER, whether explicitly attributing recession dates to them or just implicitly deferring to them by way of citing the dates they came up with.

Come on now.
a) the first sentence you cannot prove.
And b) I could care less if people are 'citing' the NBER number.
Thus it means little to nothing.

Most people call a recession two consecutive quarters of negative GDP growth.
No...I cannot prove it.
But it is common knowledge.

And - once again - the U-3 is a JOKE.
You could have one person working in America. Just one. And if 250 million Americans all wanted jobs, were ready to take a job but had given up looking for a job because there literally were none available?
In the U-3's eyes...the unemployment rate would be 0.0%.
That is RIDICULOUS.
The U-3 is a joke.
And it has been a joke since 1994.

Anyone who uses it in ANY WAY to determine a recession is using highly-flawed data.
And thus, are a waste of time, imo, in that regard.

Now unless you have a link that is unbiased and proves that most of Main Street and Wall Street use the goofy, NBER method rather than the traditional one to determine a recession...we are done here.

Good day.

 

[The Work Outing]

As for "discouraged workers," right-wingers are fond of bringing those up when there's a Democratic president (and only then), so that they can suggest that the "real" unemployment rate is much higher than the official one. But the irony is that the labor market improvement we see in Democratic presidencies is generally even better when you factor discouraged workers in. Like U-3 is down 2.8 points on Biden's watch, which is very impressive, but U-6 (the alternate measure of labor-underutilization which factors in "discouraged workers) is down four full points, which is even more impressive. In essence, the huge decrease in the unemployment rate under Biden's leadership would be even bigger if a lot of people who'd given up even looking for work when Trump was president hadn't been encouraged enough by the economic improvement to return to the job hunt, such that they start counting into unemployment rate calculation, where they hadn't before.


Anyway, U-6 is DOWN 0.2 points so far this year, so it doesn't suggest we're in a recession.



You'll notice this kind of argument appears like clockwork among the conservative drones every time we have a Democratic president, and then immediately disappears the moment we have a Republican one. For example, back before the economy fell apart on Trump's watch, right-wingers were crowing endlessly about Trump's economic numbers, including the unemployment rate. They crowed that the Black unemployment rate had never been lower than in 2019. Care to guess how many of them then caveated with "however, they changed the formula in 1994 to make U-3 look better than it really is, so we can't really compare to before that."? The answer, of course, is none. These kinds of technical quibbles are deployed if, and only if, needed to try to explain away a strong economy during a Democratic presidency. Strong numbers are treated as unquestionable gospel when Republicans are president.

But whether you like the U-3 or not, doesn't really play into whether there's a recession right now, since the same definition has been used for a long time, and thus the change in that indicator would still point to whether or not we're experiencing economic weakness. Right now the unemployment rate is the lowest it's been at any point in this business cycle, and the same definition has been used throughout the business cycle, so the lack of any evidence of weakening isn't an artifact of a changing definition. It's simply a matter that there hasn't yet been any sign of net layoffs. Last month we added 390,000 more jobs, which is FAR more than what's needed to account for population growth. Over the last decade, the labor force has grown by an average of 951,000 people per year. So, if we stay on that same pace, then to keep those newcomers employed at the same rate as current members of the labor force, we need 916,764 new jobs per year, or 76,397 each month. So, adding 390,000 in a month is not even close to recessionary -- it's a number that should easily soak up ALL the new members of the labor force, at the normal pace of expansion, plus a whole lot more.

Anyway, if you're worried about "discouraged workers" and think the U-3 understates the true unemployment problem, then you had much more cause to complain about that during the Trump years. Back in April 2019, for example, the U-6 was about 2.06 times the U-3 (i.e.., once you factor in discouraged workers and other measures of labor-underutilization, the problem was 2.06 times as large as the U-3 would say). By comparison, that multiplier is just 1.97 today. So, if U-3 is understating labor market problems today, it was understating them significantly more back when Trump was president, but right-wingers were conspicuously silent on that point.

I have no idea why you are talking to me about this as I despise both the Reps and the Dems.
And I am not a communist or socialist or Libertarian.
I despise ALL political parties (that I am aware of).

I think Trump is a manchild and Biden was useless even before he started going senile.
And I think every POTUS since at least JFK were failures as POTUS's.
Though Clinton and Bush Senior were not too bad...but still not good enough.


As for measuring unemployment?
I am not gaga about any of them (that I am aware of).
But if I had to choose one - I would choose the employment to population ratio.
It is not perfect.
But it is straightforward and difficult to mess up (like Congress/the bls has messed up the U-3).

Employment–population ratio

www.bls.gov

Good day.

 

[The Work Outing]

No, DH is my Dear Husband....we do have a financial advisor, the same one for many years, she is very attuned to our investment style as it has evolved from our more high-risk years to our low/medium risk years. We have very few buys and sells only do it when there is an opportunity we feel is worth the commission. Usually higher growth or higher dividend. Our portfolio is very stable.

PS: DH corrected me we are now 50/50 stocks to bonds.

I see.
Just remember please, every time you sell a stock - you have to pay tax on the gains.
If your FA (financial advisor) is buying and selling dozens of stocks a month?
All she is doing is costing you greater tax liabilities and raising her companies commission fees.

You see, most large investment firms do not actually manage, individual portfolios.
They toss them into a big 'pile' with all their other, managed portfolios.
Some of them will be 'high risk'.
Some will be 'low risk'.
And so on.
But all of them in each 'pile' will probably have the exact, same breakdown of stocks and bonds.
They give you the impression that the portfolio is designed for your 'investment needs'.
But it's just BS.
They find out your level of risk tolerance and toss your portfolio in with all the other ones in that risk tolerance group.

Then, on top of the fees they charge you.
They will try and buy and sell as many stocks as they think they can get away with to raise their commission fees.
Like I said - Royal Bank Wealth Management (don't know what they are called now) even did it.
Every month I got a report from them with dozens of transactions.
Finally, I called them on it and realized what was going on (this is many years ago).

You are Canadian.
Surely you know that Canadian banks make their money off of charging all kinds of little fees TO DEATH.

Unless you are a millionaire OR you have a private broker?
I STRONGLY urge you and your husband to closely examine - every month - each and every transaction that your financial advisor is making for you.

And please forget the 'warm and fuzzy feeling' your FA gives you.
That is what they are supposed to do.
They are closer to salespeople than actual, financial experts.

 

[Luckyone]

I think we're to the decided point in the market now. Up until now, there have been a lot of buyers of dips. Now, it appears to have nowhere to go but down and the volatility index is finally making a notable move up. The question is how bad will this bear market be and how long will the recession (which many think we're already in) last. History provides quite a wide variety of answers/options to that question.

The S&P 500 is in a bear market; here’s what that means

Wall Street opened the week with heavy losses that put the benchmark S&P 500 at a level considered to be a so-called bear market. Rising interest rates, the war in Ukraine and China’s economic slowdown are leading investors to reconsider what they’re willing to pay for a wide range of stocks...

apnews.com

Here is my detailed take on today's action.

Overall Market Comment after today's Fed announcement - my view on it.​

Some questions were answered today. Now they have to be confirmed over the next 2 days.

1) the Fed did what they needed to do to begin to fight inflation but what they did is not going to help the index market for now. At least not until these decisions start to show that they are working.

The rally today did not accomplish anything though it may give some false hopes that a recovery is to occur. That is not likely to be the case. Using the SPX as the main index to watch, the announcement today did not surprise so the bears did not get any "new" ammunition but they are still in control. As such, the rally today is likely to become a retest of the 3838 level, which is the level that generated the signal that the trend had changed to a bear trend. Testing that level is normal and expected. The SPX closed today at 3789 and likely will close higher tomorrow and likely around the 3838 level (another 49 points higher above today's close. Nonetheless, on Friday, it is likely to generate a red day and a close below 3811, would would be a signal that the downtrend continues with the 3500 level as the objective, to be reached over the next 1-3 weeks.

Based on today's news, the likelihood of a bounce from that line occurring has now increased but the market will likely continue lower thereafter if these Fed measures do not work out as the Fed expects them to work out. That will not be known for at least a couple of months.

2) the Fed decision today does put a brake on Gold for the time being but does not give new ammunition to the bears. The chart favors the bulls and now that the 75 point increase in rates is factored in, it is doubtful that Gold will continue lower. As such, Gold is likely to trade between $1810 (or a bit higher) and $1860 for the next few weeks. More chances of a breakout than a breakdown due to the fact that the 75 rate high announced today means that the Fed "is worried" about inflation and that will give the bulls some ammunition. I doubt Gold will show any further weakness below yesterday's low at $1805, at least not until it is seen if the Fed action is working successfully to stop inflation.

3) the action today has now given the traders new ammunition to cherry pick stocks to purchase and stocks to sell given that the index market is not going to do much unexpected action and that means that stocks that have a chart that suggests higher prices will actually get higher prices on their own.

 

[Callen]

I see.
Just remember please, every time you sell a stock - you have to pay tax on the gains.
If your FA (financial advisor) is buying and selling dozens of stocks a month?
All she is doing is costing you greater tax liabilities and raising her companies commission fees.

You see, most large investment firms do not actually manage, individual portfolios.
They toss them into a big 'pile' with all their other, managed portfolios.
Some of them will be 'high risk'.
Some will be 'low risk'.
And so on.
But all of them in each 'pile' will probably have the exact, same breakdown of stocks and bonds.
They give you the impression that the portfolio is designed for your 'investment needs'.
But it's just BS.
They find out your level of risk tolerance and toss your portfolio in with all the other ones in that risk tolerance group.

Then, on top of the fees they charge you.
They will try and buy and sell as many stocks as they think they can get away with to raise their commission fees.
Like I said - Royal Bank Wealth Management (don't know what they are called now) even did it.
Every month I got a report from them with dozens of transactions.
Finally, I called them on it and realized what was going on (this is many years ago).

You are Canadian.
Surely you know that Canadian banks make their money off of charging all kinds of little fees TO DEATH.

Unless you are a millionaire OR you have a private broker?
I STRONGLY urge you and your husband to closely examine - every month - each and every transaction that your financial advisor is making for you.

And please forget the 'warm and fuzzy feeling' your FA gives you.
That is what they are supposed to do.
They are closer to salespeople than actual, financial experts.

First of all as I said, we rarely buy or sell unless there is a very good reason. My husband approves or initiates every buy and sell.