“Fears have ticked up since Friday because the unemployment rate has risen enough in the past year to trigger a statistical threshold, known as the Sahm rule, that has historically been a sign that we’re in the early stages of recession.
But the U.S. economy actually still looks fine: Joblessness is at 4.3 percent, which is only bad by comparison to 3.4 percent, where it stood in early 2023. A higher percentage of people in their prime working years are employed than at any point since 2001, and the unemployment rate — which measures the number of people looking to be employed against the total number of people participating in the labor force — has risen largely because more people are seeking work, including immigrants.
U.S. GDP grew at a 2.8 percent pace in the second quarter of the year, which is faster than would be expected, especially given how high interest rates are. (Recessions are associated with an economy that is contracting, not expanding.)
Claudia Sahm, the creator of the Sahm rule, said that she doesn’t think we’re in a recession and that this time her rule might not hold.
But one thing seems clear: The economy is now slowing. The question is how much and how fast.”
https://www.politico.com/news/2024/08/05/how-to-make-sense-of-market-turbulence-00172647
“China promised to keep its stock markets stable and implement measures to boost its economy, according to a state-run media report of a meeting of the country’s financial stability and development committee. The committee also stressed that regulators should “actively introduce market-friendly policies.
Significantly for U.S. investors, the committee said China continues to support companies’ listing of shares overseas and has maintained “good communications” with U.S. regulators, with a cooperation plan in the works. That’s quite the development – just last week the Securities and Exchange Commission named five Chinese companies that could face delisting.
So what’s changed? The pressure on Chinese stocks had ramped up in the past week as regulatory concerns returned and surging Covid cases led Beijing to lock down millions of people. The country’s links to Russia also spooked investors as U.S. officials said the Russian government has asked China for military aid. If it did help Russia, sanctions would surely follow.”
“In a 662-page report analyzing the ’08 crash, the Financial Crisis Inquiry Commission identified a broad cast of villains that caused or contributed to the crisis. They include 5 investment banks that at the time fueled a surge of trading in “toxic” mortgage-backed securities, and derivatives of those securities: Bear Stearns, Citigroup, Goldman Sachs, Lehman Brothers and Merrill Lynch. AIG insured billions of dollars of overvalued securities without the reserves to cover losses. Horrible underwriting standards at mortgage issuers such as Countrywide and Wachovia produced millions of loans borrowers were doomed to default on.
Bond-rating agencies such as Moody’s and Standard & Poor’s failed to identify the risk and rated mortgage-backed securities destined to blow up as safe as US Treasuries. Fannie Mae and Freddie Mac, the government agencies that securitize mortgages, became insanely overleveraged and collapsed. Regulators such as the Federal Reserve and the Securities and Exchange Commission did nothing to intervene until it was far too late. Years of federal policy meant to encourage homeownership allowed some buyers to borrow far more than they could afford. And a 1999 law that eased bank regulations allowed banks to take risks that ultimately threatened the entire financial system.
Hedge funds had little to do with this. There were two hedge funds run inside investment bank Bear Stearns that bet heavily on mortgage-backed securities and collapsed in 2007. But those weren’t the types of hedge funds run by independent operators mostly working with wealthy individuals’ money. A 2012 Rand report found that hedge funds played little role in the housing bubble that caused the crash.”
https://www.vox.com/recode/22254270/robinhood-gamestop-amc-block-wallstreetbets-day-trading
“What we are realistically looking at now is not containment of a virus that is already on multiple continents, but efforts to mitigate the harm that it does by slowing its spread.”
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“Even with effective mitigation a lot of people get sick, but the caseload is spread out and society can continue to function.”
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“Mitigation is essentially what the world is doing now. We are slowing the spread of the disease, both from place to place and within the hardest-hit countries.”