BlackRock says get ready for a recession unlike any other(markets.businessinsider.com)
markets.businessinsider.com
BlackRock says get ready for a recession unlike any other
https://markets.businessinsider.com/news/stocks/blackrock-recession-warning-stock-market-analysis-2023-economic-outlook-2022-12
19 comments
> In the end, it's a closed system. There is no true justification for a recession. It should balance out.
Not sure I follow your argument. You seem to imply that there's never a justification for recessions, yet recessions do happen from time to time.
Not sure I follow your argument. You seem to imply that there's never a justification for recessions, yet recessions do happen from time to time.
Not implying that. Implying that the strategies to smoothen things out are not applied correctly but too naively obviously (there are multiple correlated factors so I guess it's somewhat more difficult than it seems). They address symptoms and not the root causes.
Basically, a recession occurs when money has been pulled back from the economy, whether by a Central Bank that would hike interest rates or, in a more adhoc fashion, by a given sector being hyped (via a technological breakthrough perhaps) or even a single commodity (people had weird fetishes around tulips at some point).
These are not cash-flow generating assets nor ventures or they create too few new jobs in the immediate term. Now since money does not flow back instantly (some kind of hysteresis)... A recession.
A multi-participant tug of war...
Basically, a recession occurs when money has been pulled back from the economy, whether by a Central Bank that would hike interest rates or, in a more adhoc fashion, by a given sector being hyped (via a technological breakthrough perhaps) or even a single commodity (people had weird fetishes around tulips at some point).
These are not cash-flow generating assets nor ventures or they create too few new jobs in the immediate term. Now since money does not flow back instantly (some kind of hysteresis)... A recession.
A multi-participant tug of war...
I think large financial firms should be restricted on public commentary of any kind (internet, TV, whatever) after some threshold of AUM (assets under management). They have so many conflicts of interest and are holding tons of money from other people.
Agree with the ‘fear-mongering’ read BUT despite the click baiting… this is definitely the first time in my adult life where I have seen significant impact to the broad economy.
Yes, tech jobs were tough in 2000 but they came back pretty quickly. Sure my bank, Washington Mutual, went under in 2008, but FDIC, so shrug.
Clearly I have been lucky… wasn’t living month to month, didn’t buy a house in 06-07, my jobs continued on. My worst pain was having a company renege on the purchase of my business… but it worked out fine and I only ‘lost’ the feather in the cap.
Today, food, fuel and rent are all noticeably higher across the board. Everyone is seeing it wether they ‘feel it’ or not.
It is hard not the believe that Winter is coming…
Yes, tech jobs were tough in 2000 but they came back pretty quickly. Sure my bank, Washington Mutual, went under in 2008, but FDIC, so shrug.
Clearly I have been lucky… wasn’t living month to month, didn’t buy a house in 06-07, my jobs continued on. My worst pain was having a company renege on the purchase of my business… but it worked out fine and I only ‘lost’ the feather in the cap.
Today, food, fuel and rent are all noticeably higher across the board. Everyone is seeing it wether they ‘feel it’ or not.
It is hard not the believe that Winter is coming…
I am highly suspicious when firms like these say stuff like this. Like, the conflict of interest is insane.
But, is it that they have a lot of short positions and want to influence the markets?
It is hard to fathom they doing it out of anything but self-interest and stock price.
But, is it that they have a lot of short positions and want to influence the markets?
It is hard to fathom they doing it out of anything but self-interest and stock price.
Perhaps the self-interest in this case is "managing expectations".
If they tell everybody to prepare for a 20 percent drop but the market falls 10 percent, then everybody feels good about themselves and Blackrock.
If they tell people to expect flat markets but instead get the same 10 percent drop, then people panic. They withdraw their money. Move to a new broker. Because obviously Blackrock wasn't prepared for this. Or stuff it in a mattress. Because obviously something unexpectedly bad is happening.
If they tell everybody to prepare for a 20 percent drop but the market falls 10 percent, then everybody feels good about themselves and Blackrock.
If they tell people to expect flat markets but instead get the same 10 percent drop, then people panic. They withdraw their money. Move to a new broker. Because obviously Blackrock wasn't prepared for this. Or stuff it in a mattress. Because obviously something unexpectedly bad is happening.
It would be very difficult for blackrock to be net short on anything other than very specific companies. They own significant percentages of all major companies. To go from that to a global net short position would be very difficult without crashing the market outright
It's like a guy charging you $25 for a lecture on how to get rich. These guys don't talk if they can use the information for their own profit.
This reminds me of Bill Ackerman coming in cnbc at the start of Covid yelling the world was ended at the same time he was massively shorting the market. So I always ask what is black rock doing and how are they making money as they send out this information. In the past you could load up on metals and push the coming decline to push people into those.
I guess financial billionaires will forever be stuck between a rock and a hard place every time they speak: either they're "talking their book", or "hypocrites for not putting their money where their mouths are".
I've also noticed this dynamic in personal conversations related to anything financial, to the point where I've found it easier to simply excise this area of conversation from the smalltalk toolkit.
I've also noticed this dynamic in personal conversations related to anything financial, to the point where I've found it easier to simply excise this area of conversation from the smalltalk toolkit.
I think large firms like Blackrock should be arrested and jailed for their involvement in economic manipulation.
Where would one put the handcuffs?
Apply directly to the bank account and contracting officers' pens.
No money, no promises.
No money, no promises.
Isn't that just called a depression? Do words mean anything anymore? "The worst thing ever" pops up in headlines all the time and the world still chugs right along. Maybe I'm desensitized.
The Fed will not let lots of people lose jobs. Simply won’t happen.
I wonder if the pandemic->depression->worldwar cycle from the last century will repeat.
The truth being that Central Banks can dynamically adjust rates. That's actually expected.
The other thing is that just taming inflation by rising rates is too crude. It's almost a kneejerk reaction.
The problem is that monetary mass tends to concentrate into pools. With time money circulation is hindered because rich people get richer faster than average/poor people.
Inflation is more of a concern for average/poor people however.
When the economic policies were loose, it was time to introduce structural policies that would bolster money circulation and offset inflation.
Now, part of these policies are being introduced as there is a shift toward national productions (globalization makes monetary mass control harder since capital is distributed worldwide but Central Banks, globally, have different mandates that can only directly effect their own respective jurisdictions)
In the end, it's a closed system. There is no true justification for a recession. It should balance out. Rich peeps just don't want to see their dollar numbers dwindle. In that case, they should be incentivized to invest in cash flow generating ventures rather than storing it as interest bearing debt.
Otherwise, of course, the economy is going to contract... Duh!
(Money attracts money so the rich always win I guess, still rising rates was never the true cure, it's just a way to cleanup misallocations a little perhaps)