Name: The U.S. Could be Headed Towards a Recession
Uploaded: 2016-07-08
Duration: 4 min 38 s
Description: According to Deutsche Bank

So you have Deutsche Bank this week, coming out saying there's now a 60 % chance that's there a recession in 2017 in the US. The New York Fed said there's only 8 % chance. [ LAUGH ] And who's more credible, Deutsche Bank or the new York Fed? So I mean, I gotta go with the New York Fed. Deutsche Bank, the last two recessions have been using this metric. Deutsche Bank had a 70 % chance, so I don't think we're in Even if you're looking at [ UNKNOWN ] Bank, I don't think we're in the red quite yet. So I would go with [ UNKNOWN ] Bank. [ LAUGH ] Listen, I know we're not into [ INAUDIBLE ] yet but I think the feds talking its book right? The fed doesn't want a recession. If the fed comes out and says there's a 60 % chance of recession. You know, all heck's gonna break loose! Right? No. No- So the Fed is talking its book, it wants people to, not wants, but generally, listen, it's not cutting interest rates. If the Fed really saw a 60 % chance of recession or higher, hopefully it would be cutting interest rates. So clearly the Fed thinks that the recession's unlikely. Right. And let's be honest, the Fed, and not just New York Fed, has a terrible track record of predicting this economy. I don't know about Deutsche Bank specifically, but I think the question is, this has been a slow sluggish recovery, a lot of people think we never got out of recession after 2008, is there anything new here, is there anything that [ INAUDIBLE ] is it the Brexit vote that's changing them to say, wait a minute, something's changed here that maybe that [ INAUDIBLE ] recession are rising in America? See but their model looks at is where people are placing their bets and what they're saying is that more and more people are placing their bets on long- term bonds and that's the kind of thing you buy when you're really scared. And so that's what they're seeing. And Brexit and you know The market took a big dive at the beginning of the year but then recovered and things seem like they're okay when you look at the stock market. But what they're saying is when you look at the bond market which have been pretty big, a good indicator, people are still running for safety, people are scared. We're also here With Raphael Garcia, our social video guru. He's taking questions from Facebook. Raphael, any questions about anything we've been discussing? Yes, yes. I want to tell everybody on Facebook to comment on the comments section below. Share your thoughts, your question. I'll be taking the question. And tell them to you guys. We are seeing that people are starting to like the video, for example Herman Lee and July Carrier was one of the first people to like us on Facebook. Thank you. And we have a question. [ LAUGH ] From From Lucinda Shen, and she asks, are there any economic indicators that suggest that the US economy will be just over the next 12 months, or any reason to feel even bullish about Where the is economy is going considering all the Brexit Presidential election uncertainty. That is a good question. All right. So there's so much about the negativity. What could go wrong? What could go right? What gives you Mr. Frowny Face? What gives you optimism about the US economy here? Well, I mean, I think that Brexit makes it harder for the Fed to raise interest rates. Right. And I think that was a concern for a while, that we'd have a rising interest rate environment where the economy is kinda weak. So I think it's the Feds on hold. That's generally pretty good. It's slow lending growth, but certainly companies and individuals are still borrowing. I think we had a record refinance rate or something recently, and so I think that the lending markets seem good, and that's usually good for the economy. All right, and you edit the macro sections of the magazine. So what makes you optimistic about the US economy? You know, I think there are a lot of reasons you'll received. I don't know maybe corporate profits are down but you don't stops so pretty Pretty strong. The economy has been growing for years, it's- Yeah, we're going on seven plus years here. The P in the stock market is a pretty good indicator, right? It's relatively high. Usually you don't see recessions when people are paying this much for stocks. Yes, but again the bond market, rates are very low so the relative valuations is [ CROSSTALK ] And the market's not efficient right? Yes, the market's not efficient, Elon Musk. Rafael. We have any other questions? We have more questions about the recession. For example, Rodolfo [ UNKNOWN ] says, when exactly did we get out of the recession? That is a great question, cuz I was talking with our producer before we came in here, that there have been polls consistently, That a lot of Americans, at some point the majority of Americans feel like we never got out of recession in the first place. So officially when did we get out of recession? December 2009. December 2009. So we're approaching seven years of official recovery and yet a lot of people don't feel it. Which is why I think somebody like Deutsch Bank is saying 60 % recession. It resonates with people cuz they feel like this economy has never really been on strong ground since the crisis. I think we've had a wage growth recession, right? Right. That's continued throughout the way. It's been the wageless recovery. So I think the average person doesn't see in their bank account of their paycheck and you feel like you're still in recession. Right. And so again this brings us to tomorrows job number. We're all gonna look at the headline number, payroll growth, and what the employment rate is, wages up or down. That could be the real indicator for the Fed. Sure. [ BLANK_AUDIO ]