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Off-Topic Stock Market & Crypto Discussion

If the market is on an uptrend then we should expect more rate hikes. Core CPI is not dropping like many thought would happen. The debt ceiling agreement means rate hikes and banking issues are the two main factors holding inflation down. Even the debt ceiling agreement appears to allow for more spending but not above the rate of inflation. Not even sure how they implement that since inflation is backwards looking and budgets are forward looking.
 
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90scane said:
If the market is on an uptrend then we should expect more rate hikes. Core CPI is not dropping like many thought would happen. The debt ceiling agreement means rate hikes and banking issues are the two main factors holding inflation down. Even the debt ceiling agreement appears to allow for more spending but not above the rate of inflation. Not even sure how they implement that since inflation is backwards looking and budgets are forward looking.
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But we do know that rate hikes are now going to be looked at each session, considering all other economic indicators, so as to not cause a serious recession. Pauses and rate decreases are now on the table. Job numbers are decreasing.
Both Dems and Republicans are considering budgets that will decrease the debt, over time. I was hoping for some tax loopholes being closed, but that’s me. We need to generate revenue too.
 
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mr.h said:
But we do know that rate hikes are now going to be looked at each session, considering all other economic indicators, so as to not cause a serious recession. Pauses and rate decreases are now on the table. Job numbers are decreasing.
Both Dems and Republicans are considering budgets that will decrease the debt, over time. I was hoping for some tax loopholes being closed, but that’s me. We need to generate revenue too.
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We would need to eliminate the budget deficit before reducing the debt. That would mean a surplus so great it outperforms the interest on the debt. A lower debt certainly would go far to increasing the value of the dollar and eliminate inflation.
 
TheEye said:
A lower debt certainly would go far to increasing the value of the dollar and eliminate inflation.
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Actually, a strong US dollar causes asset inflation as foreign investors and central banks buy dollars and us assets to hedge against their own currencies. This is the price of being the world reserve currency.

To eliminate inflation, we would have to innovate our way to higher gdp with less input costs. Otherwise, we should always expect some level of inflation no matter what the FED and congress do with policy.
 
90scane said:
Actually, a strong US dollar causes asset inflation as foreign investors and central banks buy dollars and us assets to hedge against their own currencies. This is the price of being the world reserve currency.

To eliminate inflation, we would have to innovate our way to higher gdp with less input costs. Otherwise, we should always expect some level of inflation no matter what the FED and congress do with policy.
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Growth usually equals inflation, especially GDP growth
 
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mr.h said:
Growth usually equals inflation, especially GDP growth
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History says otherwise.

1. Improvements in productivity (see AI, robots, smart phones, computers, software, cars…)
2. Higher employment
3. Globalization thus cheaper imports while increasing demand for U.S. exports.
 
90scane said:
History says otherwise.

1. Improvements in productivity (see AI, robots, smart phones, computers, software, cars…)
2. Higher employment
3. Globalization thus cheaper imports while increasing demand for U.S. exports.
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Even growth in GDP can cause inflation, like you said earlier.
Higher employment means we spend more and can lead to inflation.
Globalization has caused a nationalist movement of “made in America “which is inflationary.
My point is that we are in an economic cycle where lowering inflation to your 2-3% range will cause a recession.
Maybe 4% is realistic, as long as we don’t see hyperinflation.
 
mr.h said:
Even growth in GDP can cause inflation, like you said earlier.
Higher employment means we spend more and can lead to inflation.
Globalization has caused a nationalist movement of “made in America “which is inflationary.
My point is that we are in an economic cycle where lowering inflation to your 2-3% range will cause a recession.
Maybe 4% is realistic, as long as we don’t see hyperinflation.
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The only countries remotely close to hyperinflation are Zimbabwe 230%, Venezuela 150%, and Argentina 100%. They are close to 10-20% per month with the defined threshold being 50% per month.

Glad your point is clear.
 
90scane said:
If the market is on an uptrend then we should expect more rate hikes. Core CPI is not dropping like many thought would happen. The debt ceiling agreement means rate hikes and banking issues are the two main factors holding inflation down. Even the debt ceiling agreement appears to allow for more spending but not above the rate of inflation. Not even sure how they implement that since inflation is backwards looking and budgets are forward looking.
Click to expand...

Citi came out that they expect two more 25 bp hikes.
 
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Don’t look now, but old, demented, stuttering Joe just bamboozled the Republican House on the debt ceiling negotiations.
Good evening gents.
 
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TheEye said:
Is the deal signed yet?
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No, but they are committed. Even if you take out the far left and far right, there are enough Dems and Republicans to pass it. Biden and McCarthy BOTH know that we cannot default. Biden looked like he gave Republicans what they wanted without giving them what they wanted. McCarthy needs 218 votes to keep his speakership and he will get it.
We are going to hear threats of defaulting that will spook the MKT’s until then.
 
Even signing the debt ceiling increase will create additional pressure on the markets. For the last 9 months, the Treasury has been burning through its funds to pay government bills. Once the ceiling is increased, the Treasury is going to flood the market with $1-1.5T of T-Bills to refill their coffers. This will mean fewer deposits at banks (additional liquidity/credit crunch) AND fewer investors in equities as T-Bills are less risky with the ceiling raised.

The irony, it looks like this bill is more likely to be the Inflation Reduction Act of 2023 compared to OLD Joe's Inflation Act of 2022.
 
When I first saw Citi's call on two more rate hikes, I thought they were being overly aggressive.....now I am not so sure.

WASHINGTON (Reuters) - U.S. job openings unexpectedly rose in April and data for the prior month was revised higher, pointing to persistent strength in the labor market that could compel the Federal Reserve to raise interest rates again in June.

Job openings, a measure of labor demand, increased by 358,000 to 10.1 million by the last day of April, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Wednesday. Data for March was revised higher to show 9.75 million job openings instead of the previously reported 9.59 million.

The April data ended three straight monthly decreases in job vacancies. Economists polled by Reuters had forecast 9.375 million job openings.
 
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SpikeUM said:
When I first saw Citi's call on two more rate hikes, I thought they were being overly aggressive.....now I am not so sure.

WASHINGTON (Reuters) - U.S. job openings unexpectedly rose in April and data for the prior month was revised higher, pointing to persistent strength in the labor market that could compel the Federal Reserve to raise interest rates again in June.

Job openings, a measure of labor demand, increased by 358,000 to 10.1 million by the last day of April, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Wednesday. Data for March was revised higher to show 9.75 million job openings instead of the previously reported 9.59 million.

The April data ended three straight monthly decreases in job vacancies. Economists polled by Reuters had forecast 9.375 million job openings.
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The big question IMO: what breaks first?

Regional Banks - Already have $500-600B of failures
Real Estate - Cooling in some markets but the Shiller report shows growth nationally
Unemployment - above report shows growth
Stock Market - Big Tech and AI seem to be keeping the indexes moving up
Inflation - Doesn't seem to be lowering like many expected

IMO:
$1T more in bank failures
$1T of CRE defaults
Unemployment may creep up 1-2% over the next 18 months
Stock Market will hold strong until the FED finally pivots too late
Inflation isn't going away
 
90scane said:
Even signing the debt ceiling increase will create additional pressure on the markets. For the last 9 months, the Treasury has been burning through its funds to pay government bills. Once the ceiling is increased, the Treasury is going to flood the market with $1-1.5T of T-Bills to refill their coffers. This will mean fewer deposits at banks (additional liquidity/credit crunch) AND fewer investors in equities as T-Bills are less risky with the ceiling raised.

The irony, it looks like this bill is more likely to be the Inflation Reduction Act of 2023 compared to OLD Joe's Inflation Act of 2022.
Click to expand...
Yesterday McConnell praised the agreement, so you know the fix is in…
The U.S. has more assets than debt, right?
And if we implemented a 5% national sales tax, wouldn’t that amount to trillions in a decade?
Tell me where I’m wrong.
 
The Easter bunny and tooth fairy exist!

The single best and potentially only way for us to get out of this pickle is actually via growth NOT higher taxes.

Are you saying we add 5% on top of the 21% average income taxes?
 
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