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Recession indicators


UnconventionalWisdom

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UnconventionalWisdom

Mainly as a project for myself to learn about using python for financial analysis, I'm trying to map out stats to provide warning signs of a coming recession. We all know there has been stupid amounts of manipulation with QE/ ZIRP and it has to unravel at some point. Here are a few graphs that I'll update every few weeks or so. Would love to hear anyone's opinion on what else could be used to map the health of the economy.

Yields: 

10 year yield minus 2 year yield

image.png.e6ba8efd2bc65d0806ae3a99e9041f0a.png

10, 5, 3, 2 and 1 year yields over time:

image.png.badbdc78ae22249ac3b6af642831a893.png 

Yield curve for the past months:

image.png.f29204090f11070f02df1ed781b657a9.png

 

Money Bases:

US

image.png.e909a9d75d291054eeea1a31f43a1c73.png

UK

image.png.bb85297cf96cf54b60f97665f1e9c396.png

Equities:

image.png.ef1ec9ac4cd10715dbf743647ce3a446.png

image.png.b323037c96bb5d99c63adca611e203d2.png

image.png.c6a356966886c4d87c525efb98d7c1da.png

image.png.f526bbb3cbb34071032e47e5eaf4b143.png

 

image.png.1d3e84329a38effa3e02764fb8239308.png

image.png

 

 

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Using bond yields is use less at the best of times.

Totally useless after QE.

Ill put my neck out and say we wont see a traditional recession.

Demand is coming back to west as china crashes.

Debts are conctrated in a narrow age band - 45-65, and location London SE.

 

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The problem is sorting out cause/effect of 'state of the economy' vs QE -- without understanding which bits are doing what you're at risk of mapping out the wrong things.  

You've also got a timescale problem -- either stick to last 24 months, or last 24 years.  Anything in between is just mapping out the timescales of the different interventions.

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I've taken the view since 2008 that there are very few free markets any more, and thus very few financial indicators that can actually predict how things are moving, not least because the massive amount of government intervention in almost every asset class if things start to threaten the wealth of the 1%,

Examples include property, equities, bonds, gold.

So looking at all these graphs is like reading the tea leaves - you'll be right one day, but for another 99 days you'll be wrong.

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sancho panza
7 hours ago, wherebee said:

I've taken the view since 2008 that there are very few free markets any more, and thus very few financial indicators that can actually predict how things are moving, not least because the massive amount of government intervention in almost every asset class if things start to threaten the wealth of the 1%,

Examples include property, equities, bonds, gold.

So looking at all these graphs is like reading the tea leaves - you'll be right one day, but for another 99 days you'll be wrong.

point taken but lots of money managers are watching these inflection poiints

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UnconventionalWisdom
22 hours ago, spygirl said:

Demand is coming back to west as china crashes.

Good point. 

 

22 hours ago, spygirl said:

Debts are conctrated in a narrow age band - 45-65, and location London SE.

They have thrown young people under bus with monetary policy since 2008. Be interesting if they turn this on the 45-65 generation. 

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UnconventionalWisdom
18 hours ago, wherebee said:

I've taken the view since 2008 that there are very few free markets any more, and thus very few financial indicators that can actually predict how things are moving, not least because the massive amount of government intervention in almost every asset class if things start to threaten the wealth of the 1%,

Examples include property, equities, bonds, gold.

So looking at all these graphs is like reading the tea leaves - you'll be right one day, but for another 99 days you'll be wrong.

You might be right. The issue is can they manipulate forever. I'm in the SE and have these conversations with a colleague who is stretching himself to get a 1-bed place that needs work. My take is that it can't go on forever and the more they influence, the worst the bubbles get, leading to an even worst effect on the real economy 

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21 minutes ago, UnconventionalWisdom said:

Good point. 

 

They have thrown young people under bus with monetary policy since 2008. Be interesting if they turn this on the 45-65 generation. 

Sort of have with MMR.

The now 55+ are not gettign naywhere near what they think for their housing equity.

S24 will ruin any leveraged IO BTL loon.

 

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The chart in subutai80's post addresses a key issue with the OP's charts - that surely potential recession indicators need to include enough historical data to cover the past few recessions (or at the very least the last one!) in order to spot any relevant patterns.

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