The statistical forecasting models say: February thru July, 2023: +8% (Better than average) Next 3 Months: 1% (Ordinary.) Probability of at least breaking even: 98% (Excellent)
For the moment, the broad ‘value end’ of the stock market (as I measure it) is roughly 10% below where it “should” be. There is room to go up.
There are still plenty of worries..
Interest rates will continue to increase.
The full impact of interest rate increases takes about a year to appear.
Congressional Republicans clearly want a budget fight.
An unknown swarm of zombie companies could appear as pandemic aid finally drains away.
Workers have not all gone back to work. There are real fears for commercial real estate.
My standard models expect a significant stock market rebound, but models that consider Federal Reserve policy see a further downturn.
The statistical forecasting models say: January thru June, 2023: -2% (Wide model spread: -10% to +10%) Next 3 Months: ?% (0 to -16%.) Probability of at least breaking even: 26% to 99% (No clarity here.)
My simple market forecasting models like what they see. Stocks have gone down over 2022, so that makes a rebound likely. Stocks are near their long-term trend line – good! Gross Domestic Product is not overly inflated by pandemic stimulus – good! Interest rates are not so bad by historical standards. Inflation has receded some. The Federal Government will keep up deficit spending for at least most of 2023. Statistically, based on market experience since 1984, these models expect a rebound of +10%. Super!
Another group of forecasting models in my mix is fully aware the Federal Reserve has embarked on an inflation reduction campaign. These models see the stock market as being near very risky statistical situations during a rate hike process. These phase-attuned models are much more negative for the coming half-year, with forecasts ranging from -5% to -10% for the first half of the year. The related probabilities of at least breaking even are approximately 25% — quite low. We are getting nearer the point when market crashes can occur.
Making a decision difficult, the overall statistical accuracy of both models is equal. A market situation like we face now with rapidly rising interest rates is unusual — and the past examples (1987, 1998, 2000, 2007) had financial crises that became the focus of attention. I will be surprised if a crisis does not develop this year due to international financial instability, Congressional budget stalemate, or commercial real estate bankruptcies.
In the meantime, my best guess is that the U.S. stock market will try to stage some sort of rebound during January.
The Everything Bubble is deflating smoothly, and that’s the good news. The bad news is that inflation remains at about 7%, and the Federal Reserve will keep raising interest rates and tightening credit until inflation is in the vacinity of 2% to 4%. Some sort of stock market crash typically is part of this process.
Stocks fell last year by about 15% and they may/may not have further to go; that is what my economic models are supposed to figure out. My models, however, are not good about forecasting market effects of true economic surprises — black swans — that may appear as the bubble continues to go down. There may be a few on the horizon. I have no informed judgment on whether these birds will attack, or simply fly away. None appear to create immediate peril. I am a bit concerned about September….
No stock market bubble here. My long term trend line for the S&P 500 indicates that a stock market price bubble had inflated over the pandemic years. Massive government stimulus was the medicine the country needed to get through the economic chaos that the corona virus brought on. Thanks to that flood of money the economy survived and we all should be grateful. The stock market bubble and high inflation were two of the side effects of the massive economic stimulus.
Last year’s rapid interest rate increases by the Federal Reserve let the air out of the U.S. stock market bubble, now leaving the market right where it ‘should’ be based on interest rates and long term GDP projections. Stocks may need to a bit decline further if interest rates are going to remain higher. Higher rates would lower the long term trend line somewhat.
High government spending , lingering supply disruptions and a tight labor market may cause the Fed to overshoot. The massive omnibus federal spending package just signed into law means the Treasury remains in strong stimulus mode through September when the fiscal year ends. FY2022’s deficit will be roughly $1.71 trillion, about 7% of GDP, a major economic stimulus. That is much lower than the FY2021 deficit of $2.8 trillion, but it will still keep up employment in a number of areas (especially defense and energy) and push prices up for a variety of goods and services.
Wages and salaries are also staying quite strong. The chart below shows year-over-year percentage growth of wages and salaries. While down from the highs of the pandemic stimulus period, recent compensation increases remain at distinctly high levels.
The graph clearly shows that the pressure of rising wages has declined. But, about 3.5 million people are missing from the labor force, compared with what one might have expected based on pre-2020 trends, Jerome H. Powell, the Fed chair, said during a speech last month. Some commentators are concerned that retiring baby boomers may have caused a permanent decline in the labor supply. Others are concerned that even before covid, large numbers of people, especially men, have simply dropped out of the labor market.
The stock market concern here is that continuing economic strength, high energy prices, lingering covid-19 after-effects and worker shortages may force the Fed to raise interest rates more than otherwise and might send the economy into a significant recession — sparking a stock market sell-off.
Republican Congressional Brinksmanship The end of the Federal Government fiscal year September 30 could well bring on a classic display of sudden fiscal responsibility by House Rebublicans. Republican leader Kevin McCarthy is already raising cries against a gaping deficit. With the Presidential election cycle starting to gear up, it would be amazing if House Republicans did not stage one or more episodes of threatening to close, or actually closing the Federal Government. Wall Street has watched this theater act many times, but occasionally, as in 2011, fear grows enough to make the market plummet. Quickly cutting federal spending would guarantee a market crash.
Foreign Financial Disruption According to the International Monetary Fund, median global GDP dropped 3.9% from 2019 to 2020, the worst drop since the Great Depression, and that drop is beyond all government stimulus measures. While economies in most nations have recovered like the U.S., questions remain about the abilities of other nations to cope with the continuing economic fallout from covid-19. The strong position of the U.S. Dollar caused by the Fed’s rate hikes has put heavy strains on many other governments. Likewise the war in Ukraine puts a major question mark on the economies of Western Europe.
I have no idea how all of this will play out, and for a long term investor it shouldn’t really matter. Next year at this time the market will probably be fairly near its long term trend line again.
The “Everything Bubble” is starting to pop. Worldwide. It will take tiime, not be painless, and probably will include a stock panic of some sort.
First, there was The Great Recession Around the world, countries fought the economic collapse of the 2007-2010 “Great Recession” with massive economic stimulation, mainly in the form of historically low interest rates –near zero — and massive quantitative easing. There were also umprecedented government spending increases and tax cuts, but central bank actions were the prime movers.
Low interest rates are a stimulus technique for the ages. But, the near zero short term loan rates adopted during the Great Recession had never occurred before. Bank “Reserve Requirements” set by the Federal Reserve to promote responsible lending were eliminated as well.
Quantitative easing was a new addition to traditional government stimulus programs. Collapse of ‘subprime’ home finance loans in the housing speculation collapse of 2007 made trillions of dollars of supposedly safe bonds — mainly on the U.S. — either worthless or questionable. In the U.S. the Federal Reserve simply bought up all the bad debt. There was no other realistic option. As a result, Federal reserve holdings suddenly rose from around $900 billion dollars (not chump change) to $2.5 trillion in 2010, and to keep the ball rolling, Fed kept buying junk bonds until assets leveled off at $4.5 trillion in 2016.
Total U.S. Gross Domestic Product is now $23 trillion. So, all of a sudden, the Fed was holding highly questionable long term debt worth about a quarter of the U.S. economy annual output.
Ben Bernanke, chairman of the Federal Reserve at that time and a student of The Great Depression, fully supported the concept of dropping helicopter money — doing whatever was necessary — during extreme economic emergencies. To deal with the Great Recession both the Federal Reserve and the U.S. Congress, Republicans and all, shut their mouths, held their noses, bit their toungs, and, in short order, did what ever they had to do to get past an economic calamity that easily could have been worse than the Great Depression. They did what they did because there was no other option. Things were that bad.
By 2017 the Federal Reserve decided that it could start to reduce the stimulation of near-zero lending rates and to slowly, very slowly, start selling off the $4.5 trillion in long term bonds it had been forced to purchase. They probably waited too long — the Everything Bubble had started to inflate.
Then came the Covid Pandemic Within a couple of months beginning in December, 2019 the novel corona virus opened a worldwide pandemic. Much was unknown, but it became apparent that covid, with a mortality rate of about 2%, was a different beast than the annual influenza with its mortality rate of about 0.05%. Flu is th #9 killer in America. but it was, and remains, a joke compared to the early versions of the corona virus. Even today, covid has a mortality rate of nearly 1%.Total U.S. losses to covid are well above the total number of American soldiers lost to all U,S, wars from the Revolution to today.
In the first and second quarter of 2020, the U.S., and the rest of the world, suffered an econonomic collapse more sudden and severe than any ever before. Grocery stores were near empty of many staples from toilet paper to laundry bleach. Whole economic sectors like retail, tourism, airlines, instantly were not just suffering, but totally bankrupt. Airlines. for example, are highly leveraged businesses; compared to profits, their overhead expenditures are huge. With no prospects of flying again for months the airlines were immediately bankrupt. First, the airlines would collapse, then the firms that lent money to the airlines, then the owners and firms that lent money to them. Then…. It was a classic domino chain event.
Much like 2007. central banks and governments around the world pulled out all the stops, dropping interest rates — in a few cases even below zero — and dropped trillions of dollars in helecopter money unlike anything ever seen before. The Republican Trump administration was suddenly sending out checks for thousands of dollars to just about everyone. No strings attached. Trillions of dollars in spending programs. Helicopter money pure and simple. As shutdowns and cutbacks from covid continued, the new Democratic Biden administration kept the money flowing.
And thankfully, all that money falling from the sky did its job. Vaccines were developed. The new strains of the original virus were both weaker and more contageous. People changed how they interacted. People could get back to work. We survived.
We survived, but as in fighting all wars, there was a heavy debt that must be paid.
The Federal Reserve now owns roughly $9.5 trillion, half a year of U.S. GDP.
The “Everything Bubble” collapses. With interest rates incredibly low — unlike ever before in history — buying demand went up. But for things in limited supply (oil, housing, gold, labor, whatever) prices rose according. So, very suddenly, nearly everything was in bubble mode. Just like the Dot.Com Bubble, mere imaginary figments like crypto currencies and non-fungible tokens suddenly became prized assets. Real assets like stocks and housing spiraled in price as well. For a while an awful lot of people around the world got to feel like very smart investors. That is never a good sign.
Inflation is starting to fall because of tighter money supply, higher short and long-term interest rates, and easing of pandemic and Ukraine spurred shortages. As required by its charter, the Federal Reserve is using the few, but powerful tools it has to tamp down inflation, hopefully without destroying employment. Inflation had shot up to roughly 9% annually (now down to 7.1%). The Fed target is an ongoing inflation rate of roughly 2%, but the Fed would throw a staff party if it even got near 3%. The process has far to go. It took roughly two years for inflation to jump so it may well take two more years for it to decline and stabilize.
Short-term interest rates sharply up nearly 4%. This is already as much of an interest rate increase as the Fed typically has used in the past to damp down the economy, but it has never raised rates so fast. Another point up or so seems likely but in smaller increments.
Higher Long Term Interest Rates Mortgage rates have generally been falling since the highs of 1980, and then sank to unprecedented levels during the pandemic. Only recently have long term rates started to shoot up again.
Expect a slow motion train wreck. Though cooling, inflation remains near 7%. The Federal Reserve will not turn around until inflation nears the target or the economy goes in to a crisis. Knowing that interest rate changes have a time lag of about a year, the Federal Reserve will typically raise rates and then pause further action until the economy’s reaction becomes clear. But, the fed still expects a couple more interest rate increases before pausing this time..
In its most positive view, the Federal Reserve expects Real GDP growth of just 0.5% in 2023 — very near a recession. My back-of-the-envelope calculation is that, though the Case-Shiller U.S. National House Price Index has fallen a few percent, house prices still needs to drop 10% to 15% more. Job Openings have fallen a bit, but remain incredibly strong — for now. Unemployment, still rock bottom at 3.7%, will probably double.
Finally, corporate profits are still well above a solidly established long term trend. Profits margins will shrink and profits down. Price/earnings levels that seemed realistic through the pandemic years will start to look frothy.
In the words of Warren Buffet: “Only when the tide goes out do you discover who’s been swimming naked.”
One bit of good news is that it does not appear that the stock market requires a major contraction. My long-term trend line for the S&P 500 says that the market had been in a small bubble over the past couple of years, but the tough times of 2022 brought the market back to near the long term trend. In the Dot-Com era, prices were ridiculously above the long term trend and sadly years of major downturn and over-correction were required. This time, the market situation is much more like 1987 or 2007 — in those situations the stock market was near trend and other sectors — principally real estate — required major correction.
Though the U.S. economy is strong and the Federal Reserve is doing exactly what it is supposed to do, the next year will be difficult and filled with worry. Periods like this are ripe for stock market panic. Every time the Federal Reserve has campaigned against inflation a stock market crash has occurred.
My next post will look at likely triggers for stock market panic and discuss whether my models are likely to forecast correctly any market crack up. I have my doubts.
Next 6 Months: -3.3% (No big deal. Models vary from +2% to -9%) Probability of at least breaking even: 50% – 80% (Meh.)
Back to publishing
During the pandemic I felt it would be a disservice to publish any forecasts. My models are statistical, based on the assumption that what usually happens will usually happen again. At least sort of. But, the pandemic hacked apart the normal economy, and the intervention by the Federal Reserve and the U.S. Treasury was incredibly massive. The financial intervention saved us from immediate financial destruction, but it made a joke of my silly little econometric models.
We are now in something of a post-war situation, trying to get the economy back to a more normal footing. Certainly high inflation, rising interest rates, and residual supply chain questions are real problems, but they are things the economy has faced many times before.
Going forward, as far as I am concerned, something like what usually happens will usually happen again. Phew.
One administrative note: during the course of the pandemic Google dropped the Feedburner service that had sent out subscribers notice each time I sent out a new post. I am not sure whether the new subscriber widget with MailChimp works. Please feel free to email me in the meantime at TomTiedeman@gmail.com.
Stocks Near Long Term Trend
The first chart shows the S&P 500 plotted with a long term performance model based largely on interest rates and Real Potential Gross Domestic Product. It shows that after flying above normal during most of the pandemic it has returned to fairly near normal
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After bubbling a bit during the pandemic, the SP500 average is now rather near what I calculate as its long term trend.
Weak First Half Year
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The chart above displays six-month market forecasts since I started publishing in 2007. Note that each dot reflects the forecast for the 6 coming months, so the red negative forecasts from the peak of the pandemic months are really pretty good — the market did in fact go down. Six month forecasts have again started to turn negative, but my short term models expect the year to probably start out fine.
Next 6 Months: +11% (Flavors of the model vary from 7% to +15%) Probability of at least breaking even: 82%(Flavors vary from 59% to 97%)
Don’t fight the Fed.
My several stock market models are in basic agreement that the Federal Reserve and U.S. Treasury are controlling the path of the stock market. Massive deficit spending from the U.S. Treasury and never-before-seen liquidity and low interest rates from the Fed have been keeping the economy and the stock market alive and will keep doing so for the foreseeable future.
By analogy, the economy has been totally reliant on life support for the past covid-dominated year. Without all the stimulus the patient would have died. In the best case, the stimulus will gradually taper off and the patient will emerge from Intensive Care to hear cheers from all of us.
Continuing the Intensive Care analogy, only about 20% of covid patients on ventilators survived. Unfortunately, there will probably be areas of the economy that will have lingering damage — commercial real estate being a likely casualty. I remain concerned that a side effect of the stimulus and ‘seeing the end of the covid tunnel’ will be a major stock market bubble that eventually pops. But, for the moment, the market is likely to continue to increase. The odds of the market at least breaking even over the next six months is about average. I expect increasing volatility over the summer months.
Tracking the Long Term Trend
Both the S&P 500 and the Value Line Arithmetic Average remain somewhat more than 10% above their long term trend lines. (Trend based on a model that factors in Real Potential GDP and interest rates.) Likewise the Morningstar.com Fair Market Value Graph estimates that stocks as a whole are about 10% above fair market value.
In normal markets this 10% overvalued level signals that the market is due for some sort of correction. Breaking much above this level will confirm a true market bubble. So far, we are seeing froth, but not yet a major bubble.
Something very unusual has been happening over the past few months: the boring mainstays of the economy have been leading the way. For most of the past year glamorous tech stocks (Apple, Google, Facebook, Netflix, Amazon, etc.) have been shooting up like rockets. Now, the rest of the market that is catching up.
Next 6 Months: +10% (Flavors of the model vary from 0 to +20%) Probability of at least breaking even: 78%(Flavors vary from 40% to 99%)
It is very hard to forecast a volatile thing like the stock market even in a good year. We haven’t gone through a ‘good’ year; it was a horrible year on so many levels and in so many ways. When the primary adjective you hear in most news stories about just about any subject is the word “unprecedented” making a forecast about anything is hard.. Everything about 2020 seems to have been “unprecedented”. I am sick of that damn word. How about, “unpresidented”?
It is now a full year since the pandemic hit the U.S. like a giant sledge hammer. The world economy was knocked unconscious and was put on intensive financial life support through massive government financial intervention. Simultaneously, several of the respected data series that support my models were either discontinued, disappeared from publication, or became otherwise suspect.
The net effect of all of the pandemic-caused economic disruption was that several components of my economic forecasting models were essentially blown apart.
However, the major (the most powerful and statistically reliable) components of my forecasting models came though the storm surprisingly well, and I have finally finished with a series of repairs and work-arounds. It remains to be seen how well my modified forecasting models behave, but I am fairly confident that they will report “what usually happens” as financial and economic changes occur.
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Bubble in progress
The long term trend graphs for both the Standard & Poor’s 500 and the Value Line Arithmetic Index are both about 10% above normal. If you scan the graphs below it is clear that markets seldom stay this far above trend for long. The glaring exception, of course, was the DotCom Bubble of 1998-2001. I think that sort of market bubble is happening again.
Some flavors of my models are already fretting about the frothy market and are turning more and more negative. However, given the $1.9 trillion recovery package that has been signed into law (about 10% of GDP) and also given the dovish stance of the Federal Reserve, I highly doubt that the stock market will crack any time soon. To me it appears that we are in the early stages of a major stock market bubble.
Forecast September thru February 2021: +23% Probability of at least breaking even: 99%+
Since March, Coronavirus abruptly turned the economic world upside down. As that happened, I concluded that the forecasts coming from my statistical models would amount to no more than nonsense and rubbish. Rather than publish forecasts that might send my few readers astray, I thought it better to just not issue any projections. The economic world is still bizarre and nothing is normal, but at least there is starting to be new economic data that begins to reflect our new reality.
But, please don’t rely on what these economic models say now. This blog is written to document the results of these forecasting models in real time. The blog is not written as stock market advice.
It turns out that despite economic data that bore little relation to reality, the models did an amazingly good job of predicting the stock market during this crazy period. My April forecast, posted as the stock market was still crashing, was for a spectacular 38% rebound by the end of September for the Value Line Arithmetic Average (VALUA), my chosen measure of the U.S. stock market. As of September 1 the VALUA has jumped up 42%. and the S&P 500 has gone up 35%. I should be jumping for joy — the models made an audacious major market call and even turned out to be accurate!
Events, of course, could have turned out differently. The only reason that the market rebounded and why things seem at all normal is that the federal government dumped roughly $2.5 trillion of economic stimulus on the economy. Likewise, the Federal Reserve System has reduced interest rates to near nothing, and committed to injecting $4 trillion into the financial system, in part through massive purchases of government bonds and also nearly worthless corporate bonds (airlines, car rental companies, etc.) All of this support was added in just about half a year! Even with all of this Helicopter Money, U.S. GDP dropped at an annual rate of 33%! That is the worst quarterly drop in the economy ever. Even with a partial economic rebound, more than 14 million people are still claiming unemployment benefits and new weekly unemployment claims are running at approximately 1 million. But, without all the massive and historic emergency economic aid all aspects of the economy would have been much much worse.
Things may still get much much worse. At least 180,000 people have died from this disease in the U.S., and the count is steadily increasing despite what our President says. Federal emergency spending has run out. Incredibly high unemployment benefits have expired and the Paycheck Protection Program that dumped free money on small businesses and their workers is over. The country is in the midst of a vicious presidential election. Congress is nowhere near an agreement on new stimulus, And wide availability of a coronavirus vaccine is still far away. When parents are afraid to simply send their kids to school, and any sensible older person is justifiably afraid to even go to a restaurant, visit with friends, or ride a bus, things are definitely still not normal. The situation could quickly get much worse, and it certainly will get much worse without additional federal intervention.
But, as I have said many times, my forecasting models are based not on what should happen, but on what usually happens. In the United States, what usually happens is that reluctantly, and a bit late, the federal government responds to any major crisis by dumping massive amounts of financial stimulus on the economy. As Winston Churchill was quoted as saying: “You can always count on Americans to do the right thing – after they’ve tried everything else.” For that reason, despite all the horrible economic possibilities, my models expect further increases for the stock market for the next half year. Will that happen? I don’t know.
Something to start worrying about.
If the stock market rallies further, the high fliers in the market will be moving into bubble territory. Stocks that have profited from the economic disruption of the pandemic have shot up to stratospheric levels. Stocks like Amazon, Apple, Netflix, Google and Facebook have benefited from incredible growth that might not continue.
For years I have followed historical trend lines for of the Value Line Arithmetic Average and the S&P 500. Currently, VALUA is about 10% below its long term trend which makes sense given how rotten the economy is. Personally, I am surprised it is doing so well. The S&P 500, however, is about 10% above its historic trend line. When I graph the trend line divergence of these two indexes a scary picture emerges.
Since the market crash of the Great Recession the S&P 500 has been performing steadily better and better in comparison to VALUA. Now, the divergence has started to shoot up. The last time that happened was during the Dot Com Bubble.
I feel that, despite the favorable forecasts produced by my models, it is time to be a bit worried. The market has already priced in a lot of good news that has not yet occurred. A temporary stumble seems probable with so many loose ends. I believe there will be another buying opportunity before too long.
The coronavirus pandemic is not ‘business as usual’ for humanity or the economy. I have no idea if these forecasts have any validity. Forecast April thru September 2020: +38% Probably of at least breaking even: 99%+ I have no special knowledge that says whether the current stock market crash and economic recession is actually different from human and economic disasters of the past. The basic premise of the computer models I track here is that the market will do in the future roughly what it has done in the past — concentrating on a handful of key business and economic variables tracked since 1984. But, at this point no one really knows what will happen next. Maybe the economy will commence a somewhat typical recovery, or maybe not. What I think the forecasting models are saying is that six months is a very long time from now. A lot of surprises can and will happen. There is a tremendously powerful driving force for the economy to ‘revert to the mean’, to regain its long term path. Already governments around the world have shown that they will do ‘all that is necessary’ to support the economy and return things back to normal. People are clambering to get back to work and restart their normal lives. Eventually things will get better. I did not believe how positive the models’ current predictions were when I first ran the calculations this month. News of the pandemic is horribly grim. We have really just started the economic quarantine process. Most of the economic harm from shutting down much of the economy has yet to occur. Things WILL get worse. I doubted the data that drive the models. Most of the economic variables that form the basis of the models are still highly positive and don’t reflect the sudden economic damage that is happening right now. For example, the data I use still see a very low probability of a near term economic recession — that is obviously wrong. Similarly, leading economic indicators are still basically quite positive — wrong. So, I ran the calculations again, but substituted drastically worse numbers for several economic variables. This time the forecasts from the models were even more positive! Not what I was expecting. What the models seemed to say is that in ‘usual’ stock market crashes, by the time economic data can reflect just how much devastation has occurred, the stock market is already looking ahead to the coming recovery. Good luck to all is getting through the near future. Stay safe.
TED will tell you day by day if the world economic system is in severe crisis. TED is really worried today.
A week ago, TED said the world economy was scared, but not yet in full panic mode. TED, the world bankers’ fear gauge, was at 0.15% in mid-February and 0.57% last week. Then everything hit the fan. It now appears to be about 0.90%, a major warning signal.
The TED rate, or TED spread, is the difference between the interest rate of a 30-day U.S. Treasury Bill and the 3-month LIBOR, the rate charged to borrow U.S. dollars overseas among major banks. Here is a link for the current 1-month LIBOR. (The data on the FRED charts that I link below are one week out of date. Right now, that one-week time lag matters.)
In normal economic times the 3-month U.S. Treasury is just about the world’s safest and most liquid asset, and therefore the lowest interest rate in the financial world. LIBOR (London Interbank Offered Rate) is generally the next best thing, a slight premium usually about 1/4 percent above the 3-month Treasury Bill. The TED rate is simply the difference between these two major short term interest rates. When TED is high, it means that major world bankers don’t trust each other, even for short term loans.
The world’s major bankers, like stock market speculators, are a nervous lot. Things fluctuate daily A 5-year view of the TED spread (below) shows lots of volatility, even in good times. Most recently TED shows a sharp spike. Undeniably, bankers are getting scared about worldwide recession and possibly financial market breakdowns. The TED premium, even a week ago, was three times as high as it was in mid-February. Now it is 6 times the February level. (link)
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But, it’s all relative. In a 30-year view, the current TED spread is worrisome but not catastrophic. (link Gray areas show recessions.) The message is clear: the world’s central bankers have good reason to be pulling out all the stops to try to keep the world financial system from collapsing. There is a lot of doubt that all major players in the game are going to survive intact.
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Lest anyone actually feel cheerful, looking at the long term plot of LIBOR shows that the world interest rates have been falling for about a year, behaving like a major recession was on its way. (link) And that was long before the novel coronavirus hit the world. Ulp.
Six Month Stock Market Forecast 