@@agentsmith2798 I really hope not, I'm 70% in cash in the UK waiting for good entry point to the global market. Might be better iff just going all in now but my luck would be markets go down and pound recovers leaving me 50% down lmfao.
@@FlyingFun. the only thing that really is beginning to look cheap are bonds, but of course they could still have a lot lower to go. Maybe you drip feed your money into the markets and have done bond exposure. You could just put money into a vanguard lifestrategy fund, feed it into the 60% equity version, and then you'll get done bond exposure at lower prices. At the end of the day nobody really knows what's going to happen in the economy or the markets, bonds or equities.
Best overview i have seen on the net period. No gobbly gook phrases to appear to be clever. Great use of common sense english. This guy is clever in his simplicity. Very well done. Hats off toyou.
This is a very level headed analysis, thank you. But it is also important to observe that the analysis relies on forecasts that have been occasionally wrong and revised downward, especially recently. For example US GDP from the Atlanta Fed from several quarters out did not forecast two negative quarters of growth in 1H22, but we got them. So these things can change rapidly. There is a lot of "fear porn" out there and the expert projections may be correct, but the experts have also been wrong in the recent past (e.g. transitory inflation). Given this is a period of upheaval and disruption, the experts being wrong seems more possible.
While this content is insightful and very interesting, I think a major reason as to why people gravitate towards the idea that a depression is likely is because they are seeing their standards of living drastically diminishing over the course of months to a year and it subjectively feels to an increasing number of people like the economy is going down a path that is legitimately scary where they own nothing and everything is owned by big corporations making all the profit and increasing the economic prosperity ''on paper'' only for a few. It may not appear as though there is a depression on economic data like GDP and such because they don't deal with granularity, these numbers deal with entire economies, but the reality on the ground is that most people are living in a time where housing is unaffordable to a shocking degree, where salaries do not keep up with the increases on the bills and where the household economic situation is so bad that we live in an era with the lowest fertility rate in recorded history for most advanced economies. This is unsustainable and this is why, in many cases, people are somewhat hoping for a depression, because it would reflect accurately what their eveyday life is telling them which is that they are getting poorer rapidly.
You seem to have explained 5% wage gains and 9% inflation increases, pretty well. I was around and studied Economics before the advent of the Fiat Dollar. I watched the US Highway system deteriorate into a scary pile of crap. I have had the discussion with people in all areas of North America. Most seem to understand the reality you present. Jamie Diamon recently said, get ready for an "Ecvonomic Hurricane", He was there when they delayed the last one. It seems like good advice?
Back in 2018 societal collapse was predicted to happen by 2040 if we kept going the way we did. Personally I think that prediction was wrong and we are in a collapse now. The collapse is slow and gradual. I think This is why everything seems to be getting worse and i hope im wrong
@@samoke4527 As a person reviews the homeless problems that seem to be present in every town in the Nation, you begin to understand that the economic depression began years ago? They just have found methods of disguising it wit clever euphemisms and catchy phrases. The Wealthy have been defended from exposure as long as possible to allow them to inject more "Liquidity" into the Cash stream. The use of ideas like Supply Chain Interruptions are just snappy ways of keeping the elimination of Producers from the market from looking like legitimate Providers. The greed that enables Wall Street to continue without actual panic is insured by media for the sake of providing a stream of Commercial support.......
@@sciagurrato1831 David Rockefeller seemed to assume that running Grandad's Bank was just some Birthright. Diamon treats it like it is the US Government. I assume that Capitalism is facing a struggle that even seem to make $5 billion fines seem insignificant?
No one ever seems to talk about the interest payments on the US national debt. If you raise interest rates to 5%, your interest payment a loan is 1.5 trillion on the current debt per year. No one ever talks about the 30 trillion, because everyone knows the United States can’t pay that off. I would say is that this is the fog before the storm. And because of that debt, the storm is going to last a very long time.
If inflation and gdp growth is greater than treasury rates, then it’s inflating away the debt owe by the government relative to the revenue they collect
I really appreciate your thoughtful analysis and admire you for going against the trend of RU-vid to state you don't expect a full blown depression. I'm not sure I agree with you, but it takes a lot of guts to go against the trend on that one and I hope you're right.
Thank you Ramin, great content as usual. Actually, your final remark: "It is unlikely we are going to have a depression" makes me think it is even more likely :) As you already said the following in the past: In 2020 - I don't think the money printing will cause massive inflation in 2021 - I don't think we are going to have a recession We all know it is impossible to foresee the future, but actually the signals all points towards a depression triggered by the primary and secondary order effects you described.
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Great point. Ramin is also not factoring in that high energy prices are putting companies on the verge of closure! Even if EU gets the gas that will be at much higher prices than the original Russian supply & European products will not be competitive in the world market.
@@supermash1 Everyone has some idea, Mine is to abandon Capitalism as a measure of value. It seems to create corruption and War. We can live a long and fruitful existence without it...... How is that for a Heart?
The longer a recession is avoided the worse it is when it does come . Recessions are a natural and needed part of the cycle in the economy . Without them waste spirals and innovation is stifled
Chart at 9:00 is out of date. FED is at 3.0% after raising 0.75% BoE is at 2.25% after raising 0.5% So the gap is widening further and the £ XE is getting punished.
Hi @TDubya true! I made the video at the start of the week but things move quickly at the moment. I covered the Fed meeting in a LiveStream immediately afterwards so please forgive me! Thanks, Ramin.
Thanks for the balanced information once more. The positive side is that when you have a combination of negative factors for the economy there is a chance that some of them get solved which would improve the situation. Like covid restrictions being lifted in China or Fed rate hikes actually start working to lower the inflation.
I doubt many "rich" people care about a small decrease in income tax. I doubt many truly rich people actually have jobs. What's actually happened is that high earning middle-class people (the sort of people who hold highly skilled jobs in banks and IT firms) now get to keep more of the money they have legally earned. Which sounds like a pretty good outcome to me. After all, these people already pay for the vast majority of this country's welfare programs, maybe it's time we said "thank you" instead of sneering at them ?
True. During a great depression, many people tend to be happier with what they have rather than craving for more stupid stuff nobody really needs. Maybe mankind just needs a great depression to focus on the important things in life
Brilliant analysis as ever. In my view the bad news hasn’t kicked in. Corporate profits need to tank next which they will and then I wouldn’t be surprised if we see 2000 in the SP500. Previous crashes have always dropped 50% from peak. There’s a lot of pain to come yet.
Diamon was in the room when Bernanke and Paulson delayed the effects of the 2008 event. That is not happening this time...... "Prepare for an Economic Hurricane." .....Jamie Diamon
THIS is why the internet was created-- a free platform for detailed, informed, and nuanced analysis. Incredible work that I wish would be highlighted by the algorithm. You may prove to be wildly incorrect about the future (I hope you're not), but the reasoning is sound and gives us a platform for honest and productive discussion.
The 1930's depression unemployment are measured differently than modern unemployment, so that would be more equivalent to a ~15% unemployment rate by today's standards. What was horrible about the 1930s unemployment though was that it was closer to 50-60% in cities. Which really is bonkers to think about. It wasn't that only you lost your job, but everyone who may be in your support structure of family, church, and neighborhood were likely all taking turns being jobless and struggling. Another thing that I think is interesting about today vs the 1930s is just how much more technology we have at our disposal. I don't believe this makes us immune from depression, but I think this will increasingly decouple the business and financial markets from the job market. If covid taught businesses anything, it is that people are unreliable. They get sick, they quiet quit, they run off at the drop of a hat to the highest bidder, or straight-up quit without notifying anyone. Machines have their problems, and are expensive to deploy, but once they start working, they work 24/7 with less and less down-time as the tech has improved. So the short-term play has been to over-hire to make up for the unreliability, and start deploying automation as quickly as possible. So then what happens as this crisis persists? Will the over-hiring of workers overcorrect as recession/depression sets in... but then will it be a largely jobless recovery replacing a lot of workers with automation of one sort or another? We are already seeing a huge push to bring a lot of manufacturing back to the US right now with completely unreasonable job estimates for when our new chip fabs come online. Amazon has been pushing commercials like crazy essentially implying that if you don't want to move up into a programming position then you need not apply. And then how do the government and financial sectors react to that kind of change? Do we go through a deflationary cycle? Do we even know what that looks like in a modern world? Do we see a massive increase in taxes and government support to jobless individuals? Honestly, I don't think any of this will be horrible long-term... but it will be some weird times ahead.
How do you create profits when you have no consumers? Tech makes communication easier. It can not create wealth. that takes the Consumers and they need jobs to remain capable of buying. Keynes told us that shit long ago. Economies do not serve the people when the People are forced to serve the economy. Capitalism now seems to fail to meet the needs of 70% of the planets population.
The over-riding problem is DEBT, both national and global, along with increasing interest rates. The US and the world cannot support $300 trillion of global debt. The US debt is about to go to $40 trillion in 5 years while interest rates continue to rise putting more pressure on debt. The debt bubble cannot be addressed as we have bypassed every opportunity to do so. It will now get out of hand and ruin the economy forcing many financial institutions that hold debt to go bankrupt. It is going to get ugly and there will not be a recovery from this over a decade. Many people and institutions will be ruined by it. Does anyone see it coming?
Thanks Ramin and your take on matters is far more settling than some would have you believe. I must say I always look to you for balanced reasoning as opposed to the cherry pickers who wish to create their own doom-laden forecasts based on one fact they think represents the entire economic situation.
With markets crashing, inflation soaring, and the Fed imposing a large interest-rate hike, treasury yields are rapidly rising, implying more losses for portfolios this quarter. How can I profit from the current volatile market? I'm still at a crossroads deciding if to liquidate my $125k bond/stock portfolio.
My pension pot has gone down by £1000 in 6 wks, will that come back or do I cash it in and do something else with it. I'm relying on this NOW as I am 68 and retired. That's money Out of My pocket, so the government should increase the savings and investment threshold.
in the early 90s the US bureau of labor redid unemployment calculations so you cant comepare the great depression vs now as Bush sr cooked the books for political gain
I was hoping you might have mentioned banks (Nat West LLOyds,Barclays). Do they suffer in a recession? I thought higher interest rates favoured the banks but they are not doing very well.
There was a time when we " made it here", we had jobs for everyone and the products were of high quality, then the 1% wanted everything. Now Inflation drives prices up and if Inflation is high and jobs disappear by the millions we are in a recession and maybe headed for a Depression…So be careful with your money. It may take decades to get back on pay again. Luck to all.. I've seen folks make huge 7 figure profit in a crashing market and pull it off much easily in a bull market Unequivocally the crash/recession is getting somebody somewhere rich...
On occasion you can beat the market with blind luck, but I wouldn't depend on it. Having a science background there is a saying, 'Luck favors the informed', I've found it to be true, allowed me in great part to retire early...
I’ve been on both end of the spectrum, I was lnvesting on my own for about 3years, did my own study and analysis before actually buying, things became rather difficult after the pandemic which was right about when I reached out to a portfoIio-advisor for guidance, It’s been over 2 years and I’ve scaled up a stagnant reserve of $280K to $700k in just about 24months.
Thanks very much Ramin! I'm quite disheartened by the recent drop in the pound vs USD. Though the S&P is near June lows, the purchase price is now significantly higher for UK investors. Do you have any thoughts/insight into this?
Hi @G Tor I think the sterling weakness may recover once we see what the Bank of England is going to do and if the UK government gives some explanation of their plan and addresses some of the concerns that investors have. Saying that markets can be ignored or that you don't comment on markets is a huge mistake. Let's hope the government spends a bit of time appeasing investors... Thanks, Ramin.
Incredible video, thank you. In 2009 I had no cash to invest, as was buying a home. Would love your thoughts on how to maximise potential for any cash we can put into the market, esp with the pound so low against USD.
This video provides a lot of information and interacts with a lot of issues. However, in my judgment one factor may have been missed and that is long term interest rates. Inflation is going to force interest rates higher which will lead to a significant decline in the stock markets and assets. This will lead to loss of jobs. The big question is, where will interest rates go? They will end up at zero and this time round, the evidence suggests that quantitative easing has run its course. Worse, there is evidence that the fed is going to undertake quantitative tightening. How the West has existed for the last 10 years is unsustainable. The fact is that the current existence is unsustainable and something has to break. If the Fed does not continue the trend of injecting liquidity into the markets surely the end result must be a depression.
Not a big deal … but I would like to understand why in the graph at 1:48 the red line peaks at about 21% or 22% yet the text says 24.9% (and oral description says 25%)
the last time we had a pandemic we didnt avoid a depression and back then we didnt have record asset prices inflation and record debt a deep historic non depression but memorable recession like 2008 is almost doubling back conservative because it could also arguably be worse then any downturn in the 20th and 21st century dude needs to make money on youtube so i get it
Basically, if this continues as is, if your average successful 'business' which requires lots of cheap, reliable energy to stay that way suddenly can't access that vital energy then things could go t*ts pretty quickly without state support. Countries are far more complex and diverse of course than companies, but it doesn't exactly paint a rosy picture does it?
Great analysis - although I'm holding the position that we have price inflation and monetary deflation, with the price inflation directly correlated with supply chain issues. The Fed is fighting inflation by tightening, which isn't needed. In fact, it will further harm the global economy by making a moderate recession much, much deeper.
I disagree. The inflation is a result of the money printng in the pandemic. The supply chain issues is the cherry on top. We need a hawkish fed to cool inflation down. Increasing inflation over many years is way worse than a recession. The worst case would be: Still high inflation AND recession
@@etakarinae248 - then why is monetary velocity destroyed right now? The Fed can print all it wants, and carry most of it on its $9 trillion balance sheet - but without velocity in the market we have MAJOR monetary deflation.
I don't think you mentioned that unemployment (and also inflation) are measured very differently now than they were in the 1930's. Real unemployment, as well as real inflation, would have larger numbers if they were measured the same today as in the 1930's. To really understand these things we need to compare apples to apples, as difficult as that may be.
S&P 500 is down by 23% yet GBP denominated VUSA is down barely by 5% because of the weakening Sterling. What UK investors shall do amid Sterling's collapse? L. Summers talks about Sterling going below parity. If UK investors pile their money in the US stocks now, with Sterling strengthening during risk on all their gains may evaporate. GBP crashed on Friday by 3% yet nobody notices an elephant in the room?
Thanks Ramin(@pensioncraft) could you do (or point to if you already have) a comparison of types of bond funds. I am thinking of switching from lifestrategy 100 to lifestrategy 60 for next year but don’t understand the pros and cons of the different bond funds/trackers.
Brilliant to have a balanced view of where we are at the moment. Looking forward to analysis of the UK gov latest policies on tax cuts v. interest rates rising, and what the Bank of England may be forced to do.
The outdated unemployment analysis does not take into account, people that aren’t seeking work & yet ARE in fact unemployed. The real number is about 14%, a lot closer to the 22% of the 1929 depression.
Thank you for the video. The "black swan" in this global downturn is likely China's real estate crash. I don't think a depression is likely, but I do think that a very large economic downturn in China is the most likely scenario to trigger it given my limited understanding of their real estate ponzi scheme and banking issues.
The see a recession as the economy shrinking in productivity. I see a depression as a country losing its ability to produce. The difference is the former situation is an economic set-back whilst the later is economic destruction.
I think there is an increasing risk of unprecedented de-coupling of the BRICS+ group and the developed economies where energy and resources return to be fundemental drivers of economic success. Inflation caused by increasing resource costs and hardening BRICS currencies will continue to hit developed economies. The petrodollar paradygm will evaporate and give way to a resource backed currency.
I believe there will be depression. Might not happen just yet if it is played again off with some monetary tools, but only means push back couple years forward for even bigger crash.
The deepest, darkest cynic in me would say that these events represent quite an opportunity and excuse to start to unwind the huge amounts of debt in the bloated Western monetary systems, but luckily I'm not that cynical. 'To infinity and beyond!'🚀
Wonder if you saw Jeremy Siegel ("Stock for the Long Run") on CNBC commenting on Fed for their policies not being based on data, upset is an understatement, can be found on Twitter.
Isn't this a great opportunity to buy a UK Gilts ETF? prices are rock bottom historically speaking. In the end it's a developed government bond not some overpriced tech company.
A. G. Smith The BOE is, supposed to be independent of the government. The last Labour government gave back power to the bank of England, so polititions couldn't meddle, to stop them playing politics with the BOE interest rate. Just look at what happened when john major whacked up interest rates in the 1990's, up to 15% or more and left them up until a lot of businesses shut down, many people lost their jobs, homes, everything they had worked for
Hi @A.G. Smith ultimately the government can do whatever it wants e.g. scrap central bank independence altogether. But at the moment the Bank of England's independence is all that's holding yields down and maintaining the UK's credibility so that's unlikely to change. Legally it's the monarch who chooses the BoE governor with advice from the Prime Minister but in practice it's the Prime Minister. It's a civil service job so they do the first round interviews and the job is advertised e.g. in the Economist. You can see the process in this Reuters article www.reuters.com/article/uk-britain-boe-appointment-factbox-idUKKCN1IM1F8 Thanks, Ramin.
Tight labour market? Participation rate is only 62 percent. Back in 2000 the participation rate was closer to 68 percent. That makes an unemployment rate of 9% when compared to the year 2000.
