Is recession looming?

[Hallucigenia]

Another kicker - the Freeport plant which exports about 20% of US LNG has announced that a fire has caused more damage than first thought, it will be out of action til September. UK wholesale gas prices have spiked 20% in response, they're currently at 6x the price of a year ago.

Anecdotally, energy prices are causing small business a lot of stress - like shutting down amounts of stress - at a time when balance sheets are stretched due to loans taken out to ride the pandemic.

[monabri]

So only a 0.25% increase yet the UK market drops ~3%. What would have happened if the increase had been by 0.5% or even 0.75%?

[Dod101]

The economy contracted by 0.3% in April after it shrank by 0.1% the month before, official figures showed. - BBC News.

Seems a recession is definitely looming.

It looks like there's some considerable effects of the recent large-scale drop-off in COVID testing being played out in these recent GDP numbers -

End of mass Covid testing largely explains figures showing economy shrinking in April, No 10 says -

• No 10 says the shrinking of the economy in April was largely explained by the end of mass Covid testing. That “significantly impacted” on the GDP figures.

• When we exclude the falling numbers of Covid tests, the rest of the economy saw positive growth of 0.1% in April.

https://www.theguardian.com/politics/live/2022/jun/13/boris-johnson-conservatives-brexit-northern-ireland-protocol-uk-politics-latest


The ONS report on the growth figures backs up this claim. It says:

Human health and social work activities fell by 5.6% in April 2022, and this was the main negative contributor to April’s fall in services (detracting 0.5 percentage points as shown in figure 3). The driver of this fall was human health activities, which fell by 7.6%.

This largely reflects the significant reduction in the coronavirus (Covid-19) NHS Test and Trace activity following changes to testing policies across the UK, particularly the changes to the Covid-19 testing policy in England from April.

https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/april2022

Cheers,

Itsallaguess

I confess not to understand how GDP is calculated but if stopping mass testing for Covid reduces GDP (and yet we set so much store by it) then it is time the definition was changed. At a time of big labour shortages, in my naive view of life I would have thought releasing people from non productive jobs would have been a positive. Instead it seems to be a sign of a looming recession.

Dod

[Dod101]

So only a 0.25% increase yet the UK market drops ~3%. What would have happened if the increase had been by 0.5% or even 0.75%?

I suspect the market is looking for any excuse to drop.

Dod

[pje16]

So only a 0.25% increase yet the UK market drops ~3%. What would have happened if the increase had been by 0.5% or even 0.75%?

I suspect the market is looking for any excuse to drop.
Dod

Wrong...
the rate was widely predicted at .25% so was already factored in
The market has dropped all week
It may have been more if it was 0.5 or 0.75

[Dod101]

So only a 0.25% increase yet the UK market drops ~3%. What would have happened if the increase had been by 0.5% or even 0.75%?

I suspect the market is looking for any excuse to drop.
Dod

Wrong...
the rate was widely predicted at .25% so was already factored in
The market has dropped all week
It may have been more if it was 0.5 or 0.75

I have followed the stockmarket for upwards of 30 years and it is my experience anyway, that it always catches us unawares. I do not think therefore that, unless you have an inside track on the mind of Mr Market, you can be so categorical. I was in any case referring to the much bigger drop today than for most other days, and I do think that it was seeking any excuse to drop even further.

One day of course, Mr Market will decide that it has been overdone and will at least stabilise.

Dod

[BT63]

One day of course, Mr Market will decide that it has been overdone and will at least stabilise.
Dod

A bear market rally seems likely soon.
The current selloff is looking and feeling a bit overdone. Various squiggles on charts suggest a bounce soon.
Bears don't go down all at once - big bear market rallies often occur and catch a lot of bulls.

[monabri]

So only a 0.25% increase yet the UK market drops ~3%. What would have happened if the increase had been by 0.5% or even 0.75%?

I suspect the market is looking for any excuse to drop.
Dod

Wrong...
the rate was widely predicted at .25% so was already factored in
The market has dropped all week
It may have been more if it was 0.5 or 0.75

I have followed the stockmarket for upwards of 30 years and it is my experience anyway, that it always catches us unawares. I do not think therefore that, unless you have an inside track on the mind of Mr Market, you can be so categorical. I was in any case referring to the much bigger drop today than for most other days, and I do think that it was seeking any excuse to drop even further.

One day of course, Mr Market will decide that it has been overdone and will at least stabilise.

Dod

That's the question, a 0.25% increase was on the cards and we got a 0.25% increase. The US rate increase of 0.75% was already "news" before close of the UK market yesterday. Lloyds shareprice also dropped quite a bit (3.8%) on a rates increase. All strange.

[pje16]

I have followed the stockmarket for upwards of 30 years and it is my experience anyway, that it always catches us unawares.
Dod

The interest to which I referred was very widely predicted - 0.25 was the lowest, so its effect on today market is minimal
It is an appalling day so I cannot prove that, but markets only get spooked by unexpected events not known ones
does 30 years not tell you that ?

[Dod101]

I have followed the stockmarket for upwards of 30 years and it is my experience anyway, that it always catches us unawares.
Dod

The interest to which I referred was very widely predicted - 0.25 was the lowest, so its effect on today market is minimal
It is an appalling day so I cannot prove that, but markets only get spooked by unexpected events not known ones
does 30 years not tell you that ?

I am not going to argue this one way or the other and will leave it there. I have no superior knowledge.

Dod

[AWOL]

One day of course, Mr Market will decide that it has been overdone and will at least stabilise.
Dod

A bear market rally seems likely soon.
The current selloff is looking and feeling a bit overdone. Various squiggles on charts suggest a bounce soon.
Bears don't go down all at once - big bear market rallies often occur and catch a lot of bulls.

A crash tends to be more like falling down stairs than falling off a cliff and I am feeling very bearish so I also suspect a bear market rally which will be followed by another downward fall. However I have never had any confidence in my ability to predict market moves!

[pje16]

However I have never had any confidence in my ability to predict market moves!

You, me and most....Oh if ONLY we had that crystal ball

[BT63]

One day of course, Mr Market will decide that it has been overdone and will at least stabilise.
Dod

A bear market rally seems likely soon.
The current selloff is looking and feeling a bit overdone. Various squiggles on charts suggest a bounce soon.
Bears don't go down all at once - big bear market rallies often occur and catch a lot of bulls.

A crash tends to be more like falling down stairs than falling off a cliff and I am feeling very bearish so I also suspect a bear market rally which will be followed by another downward fall. However I have never had any confidence in my ability to predict market moves!

I agree.
I expect a bear market rally to begin soon, probably amounting to between +10% and +15% on the S&P500, then a renewed decline.
As I have hinted on other topics over the last several months, I think this bear will be a nasty one because it began after one of the longest and biggest bull runs in history.

FTSE 100 and FTSE 250 are in an unusual situation. They didn't start out anywhere near as expensive as the US and have a very different mix of companies to the S&P500.
I think it's possible that UK indices could turn out to be some of the least bad choices but I can still envisage them declining 35-40% from their peaks, pulled down by a probable 50-55% decline in US shares.

[Dod101]

One day of course, Mr Market will decide that it has been overdone and will at least stabilise.
Dod

A bear market rally seems likely soon.
The current selloff is looking and feeling a bit overdone. Various squiggles on charts suggest a bounce soon.
Bears don't go down all at once - big bear market rallies often occur and catch a lot of bulls.

A crash tends to be more like falling down stairs than falling off a cliff and I am feeling very bearish so I also suspect a bear market rally which will be followed by another downward fall. However I have never had any confidence in my ability to predict market moves!

I agree.
I expect a bear market rally to begin soon, probably amounting to between +10% and +15% on the S&P500, then a renewed decline.
As I have hinted on other topics over the last several months, I think this bear will be a nasty one because it began after one of the longest and biggest bull runs in history.

FTSE 100 and FTSE 250 are in an unusual situation. They didn't start out anywhere near as expensive as the US and have a very different mix of companies to the S&P500.
I think it's possible that UK indices could turn out to be some of the least bad choices but I can still envisage them declining 35-40% from their peaks, pulled down by a probable 50-55% decline in US shares.

Nothing quite like good old speculation. Simple answer is 'Who knows?'

Dod

[Tara]

One day of course, Mr Market will decide that it has been overdone and will at least stabilise.
Dod

A bear market rally seems likely soon.
The current selloff is looking and feeling a bit overdone. Various squiggles on charts suggest a bounce soon.
Bears don't go down all at once - big bear market rallies often occur and catch a lot of bulls.

A crash tends to be more like falling down stairs than falling off a cliff and I am feeling very bearish so I also suspect a bear market rally which will be followed by another downward fall. However I have never had any confidence in my ability to predict market moves!

I agree.
I expect a bear market rally to begin soon, probably amounting to between +10% and +15% on the S&P500, then a renewed decline.
As I have hinted on other topics over the last several months, I think this bear will be a nasty one because it began after one of the longest and biggest bull runs in history.

FTSE 100 and FTSE 250 are in an unusual situation. They didn't start out anywhere near as expensive as the US and have a very different mix of companies to the S&P500.
I think it's possible that UK indices could turn out to be some of the least bad choices but I can still envisage them declining 35-40% from their peaks, pulled down by a probable 50-55% decline in US shares.

Down 35%-40% for the UK market does not seem unreasonable.

And I would not be surprised to see UK house prices heading in the same direction.

[vand]

One day of course, Mr Market will decide that it has been overdone and will at least stabilise.
Dod

A bear market rally seems likely soon.
The current selloff is looking and feeling a bit overdone. Various squiggles on charts suggest a bounce soon.
Bears don't go down all at once - big bear market rallies often occur and catch a lot of bulls.

A crash tends to be more like falling down stairs than falling off a cliff and I am feeling very bearish so I also suspect a bear market rally which will be followed by another downward fall. However I have never had any confidence in my ability to predict market moves!

I agree.
I expect a bear market rally to begin soon, probably amounting to between +10% and +15% on the S&P500, then a renewed decline.
As I have hinted on other topics over the last several months, I think this bear will be a nasty one because it began after one of the longest and biggest bull runs in history.

FTSE 100 and FTSE 250 are in an unusual situation. They didn't start out anywhere near as expensive as the US and have a very different mix of companies to the S&P500.
I think it's possible that UK indices could turn out to be some of the least bad choices but I can still envisage them declining 35-40% from their peaks, pulled down by a probable 50-55% decline in US shares.

I don't see a one and done bear market and then back off to the races - I think we're entering a secular period of sideways adjustment, but made up of a couple of shorter term cyclical bear/bulls similar to the 1970s and the 2000s.

[vand]

Should probably change the title of the thread to "Is Recession Nailed On?"

Bloomberg now say there's a 72% chance of the US going into official recession. The likelihood is that we are already in one imo.

https://www.youtube.com/watch?v=jwPpZsvryy4

[Dod101]

One day of course, Mr Market will decide that it has been overdone and will at least stabilise.
Dod

A bear market rally seems likely soon.
The current selloff is looking and feeling a bit overdone. Various squiggles on charts suggest a bounce soon.
Bears don't go down all at once - big bear market rallies often occur and catch a lot of bulls.

A crash tends to be more like falling down stairs than falling off a cliff and I am feeling very bearish so I also suspect a bear market rally which will be followed by another downward fall. However I have never had any confidence in my ability to predict market moves!

I agree.
I expect a bear market rally to begin soon, probably amounting to between +10% and +15% on the S&P500, then a renewed decline.
As I have hinted on other topics over the last several months, I think this bear will be a nasty one because it began after one of the longest and biggest bull runs in history.

FTSE 100 and FTSE 250 are in an unusual situation. They didn't start out anywhere near as expensive as the US and have a very different mix of companies to the S&P500.
I think it's possible that UK indices could turn out to be some of the least bad choices but I can still envisage them declining 35-40% from their peaks, pulled down by a probable 50-55% decline in US shares.

I don't see a one and done bear market and then back off to the races - I think we're entering a secular period of sideways adjustment, but made up of a couple of shorter term cyclical bear/bulls similar to the 1970s and the 2000s.

That I think seems quite likely. We have had a surprising number of 'doing nothing' for a long time, often for years on end. It is then that you can occasionally find a gem which bucks the trend.

Currently I am doing nothing and will just take it as it comes.

Dod

[AWOL]

Sadly i was toying with the idea of moving from an adventurous all equity portfolio to a balanced one when this all kicked off. I am now wondering if i await a rally or reduce my equities before the next leg of the bear market. I am not smart enough to be able to market time so i end up spending a lot of time thinking but not acting.

[tjh290633]

I have stayed fully invested ever since 1958, regardless of the state of the market. Only in 2008-9 was it necessary to make major changes to the portfolio. That was to replace some companies that stopped paying dividends with others that continued.

There has always been a market recovery and keeping investing through the falls has always been the best policy for me. I have never switched into cash or fixed interest. There has always been a better option

TJH