Keeping Cash Money Around

Americans are concerned about a market crash or impending recession, according to a new Allianz Life Quarterly Market Perceptions Study — and 54% say they’re keeping more money than they should in cash because of recession concerns.


That could be costly. “While you might not feel like you’re losing money by holding it in cash, over the long term you will lose out,” says Kelly LaVigne, vice president of consumer insights at Allianz Life. “Money kept in cash or in low interest bearing accounts isn’t keeping up with the rising cost of living,” says LaVigne. 

Plus, with some savings accounts paying 5% or more — see some of the best-paying savings accounts here — there’s no reason to have cash sitting in a low-paying vehicle.

How much should you have in cash?
You certainly need some money in cash in case of an emergency, pros say, and this MarketWatch Picks guide details how much. “At least 6 to 12 months of an emergency fund is adequate,” says certified financial planner Joe Favorito at Landmark Wealth Management. 

You might need less if you’re in a stable industry and not worried about job loss, or a two-income household where you could live on one income; you might need more if you’re in a single-income household or in an industry plagued by layoffs.

While it’s generally a good idea to have a liquid emergency fund as well as some cash on hand for other expenses, you don’t want to have a stash of cash tucked underneath your mattress. Especially not when many savings accounts are paying higher rates than they have in 15 or so years.

“Rates are high enough that with a little shopping around, people can often get more than a 5% return in a simple money market account and still have all the liquidity they need,” says certified financial planner Bobbi Rebell, founder of Financial Wellness Strategies.  READ MORE...

Guaranteed Recession in 2023

Federal Reserve Board Chair Jerome Powell testifies before the Senate Committee on Banking, Housing, and Urban Affairs on 'The Semiannual Monetary Policy Report to the Congress', at Capitol Hill in Washington on Tuesday, July 17, 2018. Jose Luis Magana/AP

From the central bank's latest rate hike to new developments in the ongoing bank crisis, a lot has happened in my absence.

Jerome Powell and co. indicated Wednesday that, financial turmoil or not, more rate hikes could be coming this year.

Markets, on the other hand, expect something else entirely. Futures are pricing in a minimal chance that the Fed's target rate will be the same or higher by 2024, according to CME's FedWatch tool.

This means the Fed and investors are on dramatically different pages (and only one can be correct).

And all the while, Jerome Powell's favorite bond-market indicator is quietly telling us that a recession is all but guaranteed this year.

1. Powell's preferred Treasury indicator is the spread between the yield on three-month Treasury bills and their expected yield in 18 months' time.

On Thursday, the spread inverted by a record 134 basis points. That's steeper than the previous record set in January 2001, two months before a recession struck, Bloomberg reports.

Talk of basis points, yield spreads, and other market jargon is obscuring the key message here: Markets think a recession is guaranteed in 2023.

Remember, an inverted yield curve suggests investors see more risk in the near term. It's a classic warning for a downturn.

Here's how Powell described the indicator last year:

"Frankly, there's good research by staff in the Federal Reserve system that really says to look at the short — the first 18 months — of the yield curve. That's really what has 100% of the explanatory power of the yield curve. It makes sense. Because if it's inverted, that means the Fed's going to cut, which means the economy is weak."  READ MORE...

A Bermuda Triangle of Financial Risks

The economy is headed into a "Bermuda Triangle" of danger, and markets should brace for a crisis that could rival the 2008, according to economist Nouriel Roubini.

In a recent interview on the McKinsey Global Institute's "Forward Thinking" podcast, the top economist warned that the economy was risking another financial crisis as central bankers continue to tighten monetary policy.

Federal Reserve officials raised interest rates another 25 basis-points this week, and have hiked rates 475 basis-points over the last year to control inflation. That marks one of the most aggressive Fed tightening cycles in history, and could place the economy under three different kinds of stress, Roubini warned.

First, high interest rates could easily overtighten the economy into a recession, experts say, which reduces income for households and corporations.

Second, high interest rates means firms are battling higher costs of borrowing and waning liquidity, which weighs on asset prices. Last year, US stocks plunged 20% amid the Fed's rate hikes, with warnings from other market commentators of an even steeper crash in equities this year.

Finally, high interest rates are pressuring the mountain of debt, both private and public, that was amassed during the years of low rates, Roubini said. He pointed to bankrupt "zombies", which include households, corporations, and governments.

"It's got like, a Bermuda Triangle. You have a hit to your income, to your asset values, and then to the burden of financing your liabilities. And then you end up in a situation of distress if you're a highly leveraged household or business firm. And when many of them are having these problems, then you have a systemic household debt crisis like [2008]," he warned.

Roubini, one of the experts who called the 2008 subprime mortgage crisis, has repeatedly sounded the alarm for another crisis to strike the US economy. The scenario he envisions combines the worst aspects of 70s-style stagflation with something like the 2008 crisis, with a severe recession, stubborn inflation, and mounting debt levels bludgeoning economic growth.   READ MORE...

What Will A Recession in 2023 Look Like?

Recessions, like unhappy families, are each painful in their own way.

And the next one -- which economists see as increasingly possible by the end of next year -- will probably bear that out. A US downturn may well be modest, but it might also be long.

Many observers expect any decline to be a lot less wrenching than the 2007-09 Great Financial Crisis and the back-to-back downturns seen in the 1980s, when inflation was last this high. The economy is simply not as far out of whack as it was in those earlier periods, they say.

While the recession may be moderate, it could end up lasting longer than the abbreviated, eight-month contractions of 1990-91 and 2001. That’s because elevated inflation may hold the Federal Reserve back from rushing to reverse the downturn. READ MORE...

Heading For A Recession

JPMorgan Chase CEO Jamie Dimon on Monday warned that a “very, very serious” mix of headwinds was likely to tip both the U.S. and global economy into recession by the middle of next year.

Dimon, chief executive of the largest bank in the U.S., said the U.S. economy was “actually still doing well” at present and consumers were likely to be in better shape compared with the 2008 global financial crisis.

“But you can’t talk about the economy without talking about stuff in the future — and this is serious stuff,” Dimon told CNBC’s Julianna Tatelbaum on Monday at the JPM Techstars conference in London.

Among the indicators ringing alarm bells, Dimon cited the impact of runaway inflation, interest rates going up more than expected, the unknown effects of quantitative easing and Russia’s war in Ukraine.

“These are very, very serious things which I think are likely to push the U.S. and the world — I mean, Europe is already in recession — and they’re likely to put the U.S. in some kind of recession six to nine months from now,” Dimon said.  READ MORE...

Most CEOs Planning for Recession

Most CEOs are already preparing for a recession, which they think will slash earnings and stunt growth, according to a new survey by KPMG.

Measures companies plan to take to weather the recession include cutting ESG spending and laying off staff, the survey, which canvassed the opinions of the CEOs of 400 American companies with annual revenues of at least $500 million, showed.

The vast majority of CEOs – 91% – said they thought there would be a recession within the next year, and only a third said it would be mild and short. 80% said they thought it would affect their organization's anticipated growth over the next three years.

Goldman Sachs analysts said in August that there was a 30% probability that the US would enter a recession over the next 12 months, but that a recession in the Euro area was twice as likely.  READ MORE...

The Wealthy Dump Luxury Properties

The rich are now paying attention to prices and their income, lament high-end agents in hotspots like Miami and San Francisco. "It's pretty sudden," one said.

After a decade of feeling invincible, the tech industry is suddenly facing something new: financial insecurity. Valuations are down, layoffs are up, startup funding no longer feels limitless, and an air of fear has started to permeate the sector, as bosses and workers alike adjust to a harsher version of reality.

In cities like San Francisco, New York, and Miami, luxury real estate agents are starting to notice the effects of the tech downturn on their business, they tell Motherboard, as wealthy tech clients grapple with the fact that raises, bonuses, and job offers no longer seem as inevitable as they did a few months ago.

“The elephant in the room these days is that there's a recession coming,” said Karley Chynces, a blockchain-focused real estate agent at Sotheby's International Realty in Miami.

Nationally, rising interest rates for home loans have combined with record home costs to price out potential homebuyers. But within the pockets of the country where tech workers tend to throw money down on housing, interest rates are less of a concern than the decline of tech stocks and the constant barrage of layoff announcements, according to conversations agents have had with their clients.  READ MORE...

Only One Way Out of Inflation

Jerome Powell - Bank of America

Severe recession needed to cool inflation, Bank of America analysts say

Bank of America: 'Sticky' inflation could take some time to come down

FOX BUSINESS REPORTS...

The only way to cool down inflation is with a recession...  economists define a recession as a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

In this case, SEVERE means intense and longer than normal...  whatever normal is because in an economic sense normal is a flexible variable and difficult to define when situations occur that are different than expectations...

This means a recession could last for the next two years of the Biden Administration...  and, if our recession is this severe then you should expect lots and lots of layoffs, a reduction of goods and services to the marketplace resulting in much higher prices.  The Fed will continue to raise interest rates making it rather difficult for individuals, families, businesses, and corporations to borrow money.  These higher rates will apply to ALL LOANS and MORTGAGES.

Our Gross Domestic Product (GDP) will decline which means our economy will decline...  and, as our economy declines then the value of our dollar will decline as well.

• Businesses will spend less
• Consumers will spend less
• Banks will loan less money
• Unemployment will increase
• The Govt might extend unemployment benefits
• If the govt spends more our debt will increase
• Businesses will not expand operations
• Businesses will not invest in future technology
• Businesses will not be globally competitive
• States will reduce services
• Cities will reduce services
• Illegal immigration will deplete resources
• Crime and violence will increase

REMEMBER:  it was not Trump's policies that caused this to happen...  it was Joe Biden's policies that caused this to happen, starting with his attack on the OIL INDUSTRY...

What we are experiencing are the UNINTENDED CONSEQUENCES OF THE DEMOCRATS...

A Recession Looms

The U.S. economy appears to be sliding into another recession based on declining consumer sentiment – even though employment and wage growth suggest otherwise, according to two academic economists.

New research published last week by David Blanchflower of Dartmouth College and Alex Bryson of the University College London suggests that consumer expectations indexes from the Conference Board and the University of Michigan tend to predict economic downturns up to 18 months in advance in the U.S.

BIDEN'S PROPOSED 39.6% TAX HIKE WOULD HIT THESE INDIVIDUALS, FAMILIES

Every recession since the 1980s has been precipitated by at least a 10-point drop in the expectations indices, they found. Other reliable indicators include a single monthly rise of at least 0.3 percentage points in unemployment and two consecutive months of employment rate declines.

"The economic situation in 2021 is exceptional, however, since unprecedented direct government intervention in the labor market through furlough-type arrangements has enabled employment rates to recover quickly from the huge downturn in 2020," Blanchflower and Bryson wrote. "However, downward movements in consumer expectations in the last six months suggest the economy in the United States is entering recession now (Autumn 2021)."

G-7 LEADERS HAMMER OUT A GLOBAL MINIMUM TAX FOR MULTINATIONAL COMPANIES

The Conference Board’s gauge of expectations declined in September to the lowest since November last year, marking the third consecutive month of declines. At the same time, the University of Michigan's gauge actually increased last month.

The economists highlighted data suggesting the Conference Board expectations peaked in March 2021 and then fell by 26 points through September 2021. The Michigan data, meanwhile, likely peaked in June 2021 and fell by 18 points by August, they found. 

TO READ MORE ABOUT THIS POTENTIAL RECESSION, CLICK HERE...