The great debt crash

[errolanderson]

errol, there are rumours swirling that all this is not by accident. That JP is fighting the great reset Davos CBDC crowd.

I never take anything at face value anymore. Something else going on here. Consumer might just be collateral damage in a bigger fight.

Right on the money Jazz . . . . But manipulation (for those in power) has become a much tougher game to play.

[Old Cowzilla]

Rich people like the way the rules are now and you have to be rich to get into politics. Won't be long before people will be bragging they borrowed money for only 14% ....... just like the 80's. Steel still selling very well at Auction sales this week so must be some good crops or old musty money still hanging around.

[biglentil]

Errol's great debt crash may be just around the corner. M2 growth is now nearing -5% this hasnt happened in 90 years.

[Old Cowzilla]

Few people starting to notice (wake up ) on the the little fuel tax present we are receiving on Canada day. Cheaper fuel was the only item that brought inflation under 4% last month so look for more int. rate increases in the future. It will be a lot more costly to fill the camper on labour day than now.

[biglentil]

Inversion of the yield curve is considered one of the best leading indicator of recession and has decended to levels not seen since the early 80's. Buckle up.

[furrowtickler]

The crazy thing is there are some who are literally cheering this on

[flea beetle]

Inversion of the yield curve is considered one of the best leading indicator of recession and has decended to levels not seen since the early 80's. Buckle up.

So the prudent thing to do would be to sit tight and pay down debt in the next few years?

Or are we gonna party on for another 5-10 years like we have been doing, before the hangover sets in?

[biglentil]

I don't think we are going to have to wait that long. A yield curve inversion - in which shorter-dated Treasuries trade at higher yields than longer-dated securities - has been a reliable signal of upcoming recessions. The 2/10 year yield curve has inverted six to 24 months before each recession since 1955, according to a 2018 report by researchers at the San Francisco Fed, offering only one false signal in that time.

The spread between 2 and 10-year Treasuries has been inverted since July 22.

[AlbertaFarmer5]

I don't think we are going to have to wait that long. A yield curve inversion - in which shorter-dated Treasuries trade at higher yields than longer-dated securities - has been a reliable signal of upcoming recessions. The 2/10 year yield curve has inverted six to 24 months before each recession since 1955, according to a 2018 report by researchers at the San Francisco Fed, offering only one false signal in that time.

The spread between 2 and 10-year Treasuries has been inverted since July 22.

How reliable is the relationship between recessions and falling interest rates?

[sumdumguy]

Can’t imagine the Bank of Canada hiking rates next week, but they will.

Markets are far faster than central bankers and their ability to respond. Inflation is now dead. Deflation is the new kid on the block. Asset prices are already tumbling. This has created a conundrum for bankers making their courageous battle with inflation, that is no longer there.

Now the tide has turned . . . and so have bank profits. An outcome not planned by the financial industry.
There is now a real possibility of rate cuts later this year.

Errol, please look at the date of your prediction. Exactly one year ago.

#1 Was inflation dead a year ago?
And #2 were bank rates cut or did they increase instead?

[errolanderson]

Mortgage rates stateside are now in-decline. Watch for bank fallout to intensify. Crude oil is a bear market. Global demand is dropping and Saudi power diminished. Base commodities are now deflationary.

As for rates, central bankers only react looking in the rearview-mirror. Fed has already paused, further hikes are now likely over (IMO). A central banker doesn’t typically pause rates and then continue hiking. Something has gone wrong with their policy. Maybe they should take a look a look at commodity and freight demand as an indicator?

Inflation is now dropping sharply. Deflation had taken hold of many asset classes. These games have just begun . . . . .

[LWeber]

Errol, please look at the date of your prediction. Exactly one year ago.

#1 Was inflation dead a year ago?
And #2 were bank rates cut or did they increase instead?