[eru]

> China is falling into recession. Europe is falling into recession. A Federal Reserve governor(Kashkari) is now expressing doubt that inflation can be reined in without triggering a recession. Stonks have recovered from the initial drop, but that is a familiar pattern in many previous stock bubbles before the market really plummets.

You (nor anyone else) can forecast neither recessions nor 'stock bubbles'.

Otherwise they'd have already made a fortune in the financial markets.

Of course, a recession is always possible.

[baron816]

That theory doesn’t apply as strongly to recessions as it does financial markets.

Recessions just aren’t well defined, and you’re not going to know for sure if you’re in one/were in one until months or even years after it started because you need to collect a whole lot of data on the economy. But you do start getting early signs. It doesn’t have to come all at once in a huge market crash. That is actually pretty rare. It’s totally possible for an economy to slowly wither and then falter.

Both China and Europe are in trouble. Europe’s energy shock could be painful, but it has the potential to be short lived. China’s property market looks like a real mess, and could have huge political consequences that extend beyond its borders.

[eru]

> That theory doesn’t apply as strongly to recessions as it does financial markets.

You seem to suggest that financial markets are decoupled from the economy?

To be precise: my thesis is that you can not forecast recessions better than the market consensus. And not just in stocks:

For example, If you can forecast that industrial activity will be slowing, you can make a lot of money in commodities futures markets.

If you can forecast an increase in defaults, you can make a lot of money trading credit-default-swaps.

Slightly less finance-y: if it was easy to forecast recessions, wouldn't you expect to see that reflected in business inventories?

In general, if forecasting a recession was easy enough that you and me can do it, you'd expect businesses in general to anticipate the coming recession, and that anticipation would look exactly like a recession. Thus making the forecast a now-cast.