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Is a Recession Coming? 3 Signs of a Stock Market Crash in 2019/2020

Is a Recession Coming? 3 Signs of a Stock Market Crash in 2019/2020


Hi, and welcome to The Motley Fool’s Bottom
Line series! In this episode, we’re going to take a look at a few signs that indicate
that the U.S. may be headed for a recession, and what that means for the U.S.
economy and the stock market. A decade ago, things were looking pretty dire.
In October 2009, the U.S. unemployment rate peaked at 10%. The Federal Reserve was scrambling
to incite calm in a very jittery stock market and U.S. economy. Just seven months earlier,
the Dow Jones Industrial Average, NASDAQ Composite, and broad-based S&P 500
all hit multi-year lows. But things have rebounded in a big way over
the past decade. We’re currently in the midst of the longest expansionary period for the
U.S. economy in recorded history. The unemployment rate is at a nearly 50-year low, and the Dow,
NASDAQ and S&P 500 have all hit record highs since the Great Recession. Unfortunately,
all good things must come to an end. Right now, there are a few red flags indicating
that there could be trouble ahead for the U.S. economy and the stock market. 
The first red flag is the inverted yield curve. A yield curve and version happens when longer-maturing
bonds have a lower yield than shorter-maturing bonds. Generally speaking, short-term bonds
should have lower yields than long-term bonds. After all, if you’re giving up your money
for a longer period of time, you expect to be paid more for doing so. But over the past
couple of months, the two-year and 10-year Treasury note swapped places a few times,
with the two-year note bearing a higher yield than the 10-year, which is known as an inversion.
Every single recession in the U.S. economy since World War Two has been preceded by an
inversion of the yield curve — although, it’s important to note that not all yield
inversions have necessarily been followed by a recession. Nevertheless, inversions don’t
come about unless there’s some serious concern about the health of the U.S. economy. 
A second concern for the economy is the current contraction in U.S. manufacturing. The Institute for
Supply Management releases its Purchasing Managers’ Index every month, which is a gauge
for how the manufacturing sector is doing in the U.S. In September, the PMI fell to
47.8%. That’s the lowest percentage it’s been since June 2009, and any reading
below 50 signals a contraction. There’s little doubt that the ongoing trade
war between the U.S. and China is the biggest headwind in this confidence collapse in manufacturing.
Peter Boockvar, the chief investment officer at Bleakley Advisory Group, recently said
that we have now tariffed our way into a manufacturing recession in the U.S. and globally. The U.S.
and China have been trying to work out a long-term trade deal for more than a year now,
with tariffs being imposed on and off for the past 15 months. There’s simply no quick fix to
the trade war, and the longer it lingers, the more U.S. manufacturing may suffer. 
Lastly, history would suggest that the stock market and U.S. economy are primed for a recession.
Despite more than 10 years of expansion, there’s a good probability that a recession will happen
sooner rather than later. The U.S. has had 14 recessions over the past 90 years, or about
one every six and a half years. Even though the U.S. economy doesn’t stick to averages,
this long-term data is pretty clear that recessions are a natural and unavoidable part of the
economic cycle. We also know that stock market corrections are perfectly normal. In fact,
the S&P 500 has had 37 corrections of at least 10% since 1950. The bottom
line is that no matter what the U.S. economy has historically thrown at the
Dow, NASDAQ, or S&P 500, they’ve always bounced back stronger than they were before.
That’s why long-term investors continue to be rewarded for their patience. 
Thanks for watching this video! Do you think the U.S. economy is headed for a recession
in 2020? Let us know in the comments below. If you liked this video, click the thumbs
up button and hit subscribe. It helps us to reach more people, which allows us
to make more awesome content.

Comments (100)

  1. In the last Rule Breaker podcast David Gardner said if he ever said the phrase "long term investor" you are free to give him a dead arm. Investing by definition is "long term" So I know this is not his voice and he did not write this but since this is a Motley Fool employee you should edit that last part out when you said Long Term Investor before your boss hears it. Thumbs up though on the video. It was the best and most simple explanation of inverted yield curve I have heard so far. Cheers.

  2. president Trump should say we are not gonna get a trade deal with china , and all investors will have a clear position and move their investments out of china hopefully back to the US , then china will crash and burn , and at that point the US could go back to them from a stronger position

  3. All the indicators are signaling recession. Sadly, Trump destroyed our economy with his trade war.

  4. Yield curve is stupid because it's not a fundamental, trade war is because of trump, and basing a recession based on not having 1 for 10 years is also stupid. Look at EARNINGS!!!!

  5. So far markets look rosy. Hard to time. I just stay invested

  6. When people say there is a stock market coming, its not coming

  7. One of the problems with using unemployment data as they are now collected, is that only people who are looking for jobs are included. If an individual has given up hope for finding a job, they are not included in unemployment statistics. However, we can see by the number of homeless people encamping in our larger cities (and smaller ones, too) that there are many hundreds of thousands of Americans who have given up hope for employment and are not counted in the unemployment statistics. Yet, these individuals need services and other financial benefits that effect the economy. It will be interesting to see if financial models that do not take the full count of unemployment can be predictive when one of the factors is as under reported as unemployment is now.

  8. Nahhh when every youtubers and media talking about recession it will never come dont miss out on the last bull run!!

  9. To be honest I think it makes stock picking easier when the market goes down because some companies still grow even as the stock tanks like Google kept growing at 30% the stock went down 50% in the great recession

  10. If trump is not going to be the president for 2020, all you guys in US are fuckedup and the recession starts like anything, your country will be fuckedup like anything with immigrants and jobless people

  11. Another sign is that coke prices have been collapsing for the past months now while meth is skyrocketing.

  12. Wait and look for when tech and big companies start laying off their employees in big droves. Uber, Cisco, HP may have already gotten started trimming some of the fat.

  13. Lol what i want to know is what stock $20 dollars or under that u think could be a giant 10 Years from Now ?🤔

  14. It's funny all the propaganda coming out now about "recession," "investors should short the market", et al. Methinks the Big Banks are trying to sell us something. Or maybe they are hiding/trying to cover more genius stuff like what caused the 2008 crash.

  15. Aren't y'all a little late?

  16. I think we are, but how should be adjust our portfolios to protect our gains over the past decade? Bonds??

  17. The real story is not about market technical charting or about historical cycles. The elephant in the economy is the daily dose of chaos dished out in Washington DC by people who are totally clueless. Until we get that fixed the rest of it is just reacting to the chaos. A "Foolish" investor is one with a 5-year outlook which is long enough to ride out whatever happens in the markets unless we fail to deal with the elephant running wild and disrupting virtually everything it touches.

  18. I believe that we will have a recession in 2020 and 2021

  19. There won’t be one if Trump starts to lead in the Polls!

  20. i love the positivity, but know this. many poor will die each recession. thats sad.

  21. Bull, the real unemployment rate is much higher.

  22. The commentator said nothing about how the national debt has increased steadily for the past 80 years, allowing for continuing marginal economic expansion. This along with unprecedented personal debt since the 80's fuels this fraudulent "pseudo" expansion, which one day soon, will cause irreparable economic damage to most of us living in US.

  23. I'm hoping to retire in 2026 or sooner. I am thinking of moving out of the stock market for a while. Thoughts?

  24. The big sign that a recession is coming is that history shows that it will happen.
    To think that whoever / whatever is control of this mega cluster Fu#* has got it under control is NUTS!

  25. Within 18 months the Dow will hit 30.000 the doom Sayers come and go. The bottom line is all economic indicators are green, and with the landslide Trump victory next year, we are going to have assured at least an additional 4 years of economic expansion.

  26. Oddly, I hope there is a recession in time to take the hot air out of Trump's strong economy sales. Reelection would be a complete disaster.

  27. Republicans always leave office with a crash and/or a recession on their hands and Democrats always clean up their mess.

  28. unemployment rate is propped up by part time, low wage and gig economy.

  29. I don't know the facts for sure, but wasn't 2018 an outstanding year for manufacturing? So, yes, compared to only last year, 2019 looks like a slowdown but isn't manufacturing still relatively strong? Geopolitics is the wildcard, but I'm still staying invested but moving just a little more to cash for safety.

  30. Ok what do I suppose to do with mine 401k , it only give me stocks, short term bonds and long term bonds..??? Does not give basically any save options

  31. I’m in California, Construction has came to a hard abrupt stop, talked to home advisor on leads, they say it’s very strange leads went fro 570 per month to 8 leads in just 3 months, a buddy of mine works at a trucking company says the place went dead all of a sudden, another buddy has a autobody shop buffing and wrapping cars says wtf is going on, all of a sudden no business….. shits about to hit the fan again.

  32. Indeed heading for recession

  33. Mark Mobius, the founding partner of Mobius Capital Partners, appeared on CNBC earlier this week and recommended that investors hold 10% of their portfolios in physical gold.

  34. 4. The President is a Republican. Since WW2, Gerald Ford is the only Republican President who didn't have a recession start under his term. There has been 11 recessions. Only 2 started with Democrat Presidents.

  35. The Federal Reserve operates as China in regards to printing money.
    Banks having trouble covering there REPO DEBT.
    Did I mention runway inflation. ….

    Baby Boomers are retiring …..less demand for stocks….. (401 k). Baby boomers will be spending less money when they retire….. I have only listed a small number of concerns.

  36. Market should be crashed a long time ago because all these Wall Street's "great" numbers are not true!!!
    Look at ordinary Americans after Obama become a president – we got more people in poverty than Ever before Obama….
    Obama left this great country in 20 TRILLION $$$$$ debt and no one can tell where the money went!!!!
    No new bridges, schools, roads and many more Obama promises to American people and in Any other country he would be in jail…..Trump is no better for ordinary Americans – just look how many more Americans in poverty and homeless now?!

  37. You guys almost always come wrong in your predictions.

  38. It is not a question, but when ….. ? US and global economy is at crash course. This is done on purpose by opposing deep state powers….. globalists against others. Started after the death of GWB sr….

  39. Not a Recession rather a Depression coming

  40. It's not a matter of if, but when. My favorite leading indicators are the Russell 2000 and the Dow Transports. They are both looking weak right now, similar to how they did in 2008, right before the big crash. I'm not suggesting a 60% bear market this time around though. I'm thinking more like 20-30%. But it could start crashing any day now. I'm already short the QQQ's (Nasdaq 100) and short junior gold mining stocks.

  41. We are in a recession now. The Dow means nothing.

  42. If I was in the predicting business I would tell you what I think but I’m not.

  43. We are already in a RECESSION.

  44. It really depends on people to support Democrats or Republicans. There will be a depression if most people support Dems. Otherwise, no worries.

  45. Yep! And I hope to get some bargains…somewhere

  46. i been in a recession since 2008, never recovered

  47. Every recession in the US since 1974 has been proceeded by an oil spike of 80% or more YoY that crushed consumer spending.

  48. Yes I do and its going to happen just after Trump gets re-elected in Nov 3/ 2020. Stock market will crash, dollar buying power drops, hyper inflation sets in as prices for everything rise, crop failures, food shortages, water shortages, more homeless, more jobs loses, then depression sets in, people are living beyond their means and some are going to lose everything that they own because of that. The smart money only has physical gold and has sold all their other investments, they also have cash set aside and hold no debt, they have stocked piled food, water, dry goods, propane and gas and are ready for this bad period that is about to come, are you?

  49. The Rothschild have set all this up, it's meant and contrived, the elitists, are going beserk, trying to figure out how to maintain dominance, in an overcrowded world, which can no longer sustain their requirements and expectations, as they once had,they want this world for themselves, with enough slaves to keep things as they desire, but now,their plans don't include us, so they'll suffer us out of existence, starting with a super depression and so on, we have to find another way, curtain call is upon us!

  50. One of the seriously present and growing tendency amongst young folks, is to spend like idiots on nothing serious, all to escape the emerging sense of Global Moral Bankruptcy, in the face of the rising tide of discontent over Environmental issues…and then, declare Personal Bankruptcy…and move on. My two daughters and i suspect some of their friends, went the Bankruptcy way and yet they already hold new credit cards !!! where do you think this is going ? One thing is becoming awfully obvious….money does not mean anything anymore. It is fast becoming an abstract value. Not linked to Natural Ressources anymore. It's fast becoming a thing to spend on credit and then default. The young simply do not believe in the system anymore…if they ever did. So where is this going ? Nowhere. As we advance on the path of Moral Bankruptcy in our relations with Nature, the next recessions will go from bad to deadly. We are not living an Era of plentiful…we are nearing the collapse of Money as a security…because we always thought to ourselves…hey ! there's plenty more where this is coming from…BUT NOT anymore. Anybody who ever watches or reads the news knows this…the writing on the wall has recently started to glow a nasty glow. Like little Greta Thunberg keeps reminding us…there is NOT enough MONEY on this planet to buy us a way out of DEEP trouble. The Stock Market ? Economic Recession ? Trade Wars ? Futures ? ETFs ? these might just loose all meanings when we have no more water to drink…for example. Only one example in a trunk full of them….The problem with Money is, it only ever was a Promise at best. However, nowadays that promise is paling rapidly in the face of what it actually can, repair out there.

  51. If a recession is what will get the usa out of the trillion dollar det were in then I say "do it" if it takes a long time for the USA to get things back together again then so be it.

  52. Lol. What are you guys some kind of “fortune-tellers” at the MOTLEY FOOL predicting the stock market or a recession? 🤷🏿‍♂️🤷🏿‍♂️🤷🏿‍♂️ Lol. GTFOH! Lol

  53. Monday October 28, 2019 Stock Market Crash

  54. The collapse of US is near. It will break into 50 different independent states for sure. This could be the last and most horrible economic collapse in the history of USA because afterwards there will be no USA but just 50 different states.

  55. America will be posibly the best off country across the globe should the world currency crashes; most sustainable agricultural location given current population, with an national infrastructure capable of operating independent of foreign imports. America remains the FOOD BASKET of the would.

  56. This stock market is fake the American people know it. Cheap FED money and share buybacks and fake EPS are pushing the market. Funny thing not a single political party figure mentioned about any major buyback scam in the last 6 years. The whole thing is corrupted and people is aware of this. After the 1929 huge share buyback scam it was illegal. with new bill law passed created a loophole. Long story short. basically both parries super rich made mega rich and rest are in much bigger debt and chaos. Worse thing to any politician can happen resign 99% of the time or few months jail with couple of millions dollars fine.

  57. We have been in a recession. Hearing about a depression since 2010. I do not think it will happen whatsoever. This has become like the second coming of Christ. 🤦🏻‍♂️

  58. The US has approaching 23 trillion of unpayable debt and now injecting 60 billion a month into the economy.
    That is 60 billion out of nowhere and backed by nothing. I cannot believe what is happening around the entire world. We have not come out of the 2007/8 crisis and I can only see deterioration in Europe where I reside.

  59. The worst recession in my life (am I'm 60)

  60. Luckily, some brave people were warning us to start preparing for a recession a few months ago.

  61. Been thinking about moving to the eastern asian countries rather than staying in the west. Which will help after my three years of getting stationed in germany ends. So i wont have to pay nearly as much to move over there.

  62. u don't have to worry about recession as long as there are new recession videos keep coming on utube

  63. There is one thing I know for sure: Nobody knows shit about what is going to happen. Nobody.

  64. If everyone's can predict and prepare for recession , that is not call recession!

  65. That's generally what 50% of the people are saying, and the other 50% says nope. So it's a 50/50 bet.

  66. As TMF has stated market crashes are corrections. Like volcano's it's not a matter of if but when. They are inevitable. They are not the same as recessions but painful none the less. Since we don't know if we are in a recession until it's almost over, one can sit on their hands and hope we aren't there yet or wake up to reality and plan for it. Thanks TMF for the great advice you always provide.

  67. Buy gold and go to holiday

  68. How do you prepare for the recession instead of warning

  69. thinking about survival plan from Cod Zombies.😅

  70. It's not just coming, it's going to be here sometime next year, and going to be at least as bad as the Bush recession.

  71. Sell your winners to prepare your portfolio for a down turn.

  72. Sell your winners to prepare your portfolio for a down turn.

  73. If Trump stays in and we get the Dems out we will be fine!

  74. I’ve been able to make a million dollars from my investment of $350,000 with Marilyn Su Thuyen, the market crash is Fugazi, the experts know better.

  75. Yes,it's obvious.2008 uusa used the last tools to rescue the system.Next time only china can rescue the economic system .Wait and see.

  76. very well could be,Trump gets reelected, ,let us presume, then with the election over ,the recession may start. of course, inflation expectations, full employment, credit ,commercial paper need to be in the cross hairs.

  77. I believe that we are now in a recession which may just deepen. Some of the signs are the ongoing trade war between USA and China. Then as a consumer you only need to go shopping and see how the prices of everything have gone up, then take a walk around home depot, lowes and stores and the sales are not good. Also, home depot and lowes have been cutting staff and leaving customers, the only few left without true assistance. I believe we are in a recession right now and it will only deepen, I hope I am wrong!!!

  78. If the Democrats get in we are going to become a socialist country sooner rather than later and hyperinflation will hit and our economy will never recover. If the Republicans retain control there will be a massive correction and a slow death spiral for the USD. Either way we are screwed because the USD is a worthless fiat currency that is backed by nothing. The problem is that there is no place to hide. The entire world economy will get pneumonia when the US catches a cold. A very few will become ultra-rich and everyone else will become poor.

  79. It's been a long time so it seems like it can't be that far off, although it seems we may be in a Goldilocks economy, at least for now. Good info. Thanks Motley Fool.

  80. Dude thanks for keeping it short and to the point, I can not stand a 30 minute video to say 3 minutes of SHIT !!!! thanks again 👍

  81. My libido is in recession

  82. I hope the us economy collapse I'd rather see the country fractured then the commies get it

  83. The chances of a recession are minimised by the fact that history has taught everyone (including all the banking sectors) that proper structures must be put in place, so as to defer the chances of another recession in modern times occurring again.

    Societies throughout the world suffered greatly from the 2008-09 recession that hit so suddenly. Better parameters have been constructed so as to detect oncoming signals of a major downturn once again. That’s not to say that there won’t be another recession, even next week, but preparedness will be the glowing factor next time. We may have an easier time to slide all our savings into ‘cash’ once the alarm bells ring. Let’s hope so.

  84. Alot of people say buy gold buy silver,I get it but where do I redeem it???Is a gas station gonna take it?A grocery store??Is nobody gonna take cash in a recession???

  85. If we enter another recession, will it affect housing prices like the 2008 recession? Are property values going to plummet again?

  86. Next one will be a crash called depression not a correction & the one making this video knows all about it.

  87. Dislike. There is an awful noise in the background.

  88. 3 signs
    1. Democrat party
    2. CNN
    3. MSNBC

  89. Now I don't think the US economy will be in a recession unless the world drag the stand cuz I've gotten too tied to foreign governments and all the corruption in Corporate America that is destroyed wages for the average worker and they're going to be the ones that won't suffer why you do if a recession should happen but I believe that it's most likely not the stock market my slow down and go down a little bit and that's mean recession

  90. Let's see now. One third of humanity living over in China and India who are willing to work for a few dollars an hour and can live on that and all us Americans over here needing to make about $15 per hour just to barely survive. The US National Debt shooting up by over $! trillion per year with no end in sight and the total debt now at about $23 trillion USD. The Chinese share of the world markets continuing to expand while the US' share continues to shrink. Recession in 2020? I'm worried about the US experiencing a complete economic meltdown that wipes out everyone's retirement investments, Social Security, salaries, savings, home value, and sanity. Can't happen, you say? The sub prime mortage meltdown back in 2009 wasn't supposed to happen either and all of the "experts" were assuring us back then that it couldn't happen. That mess almost sent the entire planet into a Great Depression that could have lasted for decades. Now we're on the verge of the same thing and, again, the "experts" are telling us not to worry about it. What's really changed since 2009? Actually nothing! 2020 promises to be a very interesting year, indeed!

  91. Before the 2008 recession kept reading or hearing don't buy into this suckers rally,not the case today

  92. us economy is rigged by owners of us

  93. Get out of this "Recession" mindset! Start thinking "Depression!". Learn from the 30s depression.

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