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Off-Topic Stock Market & Crypto Discussion

SpikeUM said:
I may have mentioned this a few times already, but you dont fight the Fed, especially if they are raising aggressively. Now when they slow down, maybe as soon as next month.....
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Overy the next 6 months what would your case be for a broad turn to the upside?
 
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GladeCane said:
Overy the next 6 months what would your case be for a broad turn to the upside?
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First of all, market timing is dangerous, it often leads to missing out on a broad rally. Second of all, you know what they say about opinions.

Seeing the ridiculous equity run in '21, the Fed at zero for way too long, the reckless spending of the government, the meme craze, the supply side shortages, etc etc etc. it was just too obvious that a serious correction was overdue. Then came the war, and all of those ramifications, adding to the risk.

So I personally took risk off the table starting in Q4 (go back in this thread, you guys probably thought I was nuts), and have added risk very selectively (energy and real estate, which have worked), defense stocks (surprised they havent skyrocketed) and gold/commodities (which have been mixed).

100 years of the Fed teaches you not add risk when they are trying to cut demand by raising rates. Today, they are additionally doing QT, so you have two strong headwinds against the market. PLUS Europe is already in recession, Japan is getting there, China has slowed dramatically and started to cut rates aggressively, etc etc. So at some point soon, we are likely to be in a recession too.

The big question mark is what the Fed will do - if they really want to concentrate on inflation, they are going to keep raising, bad for the market. If they slow down, maybe that is the beginning of a buy signal. Stopping is usually a buy signal. Personally, inflation "only" at 8.5% is WAY too high. Even if it comes down 2-3%, it would still be well above the Fed's target of 2%.

Last but not least, September is literally the worst month of the year for equities, so my best advice is, be patient.
 
SpikeUM said:
First of all, market timing is dangerous, it often leads to missing out on a broad rally. Second of all, you know what they say about opinions.

Seeing the ridiculous equity run in '21, the Fed at zero for way too long, the reckless spending of the government, the meme craze, the supply side shortages, etc etc etc. it was just too obvious that a serious correction was overdue. Then came the war, and all of those ramifications, adding to the risk.

So I personally took risk off the table starting in Q4 (go back in this thread, you guys probably thought I was nuts), and have added risk very selectively (energy and real estate, which have worked), defense stocks (surprised they havent skyrocketed) and gold/commodities (which have been mixed).

100 years of the Fed teaches you not add risk when they are trying to cut demand by raising rates. Today, they are additionally doing QT, so you have two strong headwinds against the market. PLUS Europe is already in recession, Japan is getting there, China has slowed dramatically and started to cut rates aggressively, etc etc. So at some point soon, we are likely to be in a recession too.

The big question mark is what the Fed will do - if they really want to concentrate on inflation, they are going to keep raising, bad for the market. If they slow down, maybe that is the beginning of a buy signal. Stopping is usually a buy signal. Personally, inflation "only" at 8.5% is WAY too high. Even if it comes down 2-3%, it would still be well above the Fed's target of 2%.

Last but not least, September is literally the worst month of the year for equities, so my best advice is, be patient.
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Thanks, value your opinion.
 
It’s a lose/lose situation. Higher interest rates slow demand, but public traded companies are lowering future earnings and revenue. There is no way around it. Hopefully we see signs of inflation slowing sooner rather than later, and the Fed cut rate hikes.
 
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Jackson hole symposium today and tomorrow.
Jobless claims
GDP
Personal consumption
No actual rate changes until September
 
Jobless claims down [incredible]
Price index unchanged
GDP revised down from .5% vs .6% [the economy is shrinking but less than anticipated]
It looks like it’s easy to leave a job and find another.
 
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Biden’s Student Loan Stimulus Gives Powell Another Reason to Be Hawkish​



President Biden’s plan to forgive $300 billion of student loans has one eye squarely on November’s midterms, although its effects could be felt sooner.
Canceling up to $10,000 in federal student loan debt for borrowers earning less than $125,000 a year, plus another $10,000 for those with needs-based Pell Grants, adds up to an economic stimulus just as consumers are feeling a financial squeeze.

However, the relief will be tempered by a resumption of student loan repayments in January after a near three-year pandemic pause.
The White House is anxious the policy is not viewed as divisive, with low-income workers who did not go to college subsidizing better-off taxpayers that did.

Former Treasury Secretary Larry Summers warns that student loan debt relief “is spending that raises demand and increases inflation.”
Federal Reserve Chairman Jerome Powell will be the judge of that. A more aggressive path for interest rates would wipe out the value of the forgiveness initiative.

As markets tread water ahead of what is expected to be a hawkish Jackson Hole speech on Friday, it is a reminder of the factors outside Powell’s control that he must consider if inflation is to be returned from 8.5% to its 2% target.

One of those is the oil price, back above $100 a barrel this week on comments from the Saudi Arabian energy minister that output could be cut. A group of Wall Street analysts believe it will end September at $115 a barrel as supply tightens.

Government policies can have unforeseen consequences. Trump’s 2017 corporation tax cut fed share buybacks, not hoped-for technology investment. Biden’s latest move looks clearer cut, with beneficiaries more likely to splurge in Nordstrom than stock up in Walmart.

Some may disagree with Summers’s readout. But the stimulus certainly does not make the Fed’s job any easier.
 
mr.h said:
Jobless claims down [incredible]
Price index unchanged
GDP revised down from .5% vs .6% [the economy is shrinking but less than anticipated]
It looks like it’s easy to leave a job and find another.
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All good news short term, but that also means Powell needs to keep raising, at least 50 if not 75 bps again, so bad news longer term.
 
I would expect Powell to raise until we hit 20th century levels which are the norm, historically.
 
mr.h said:
unfortunately yes..I'm expecting 75, but 50 would be a boost..
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My *guess* is that he will go 50, and the market will rally, but some later it will realize he should have done 75 and there will be another large downdraft.
 
SpikeUM said:
My *guess* is that he will go 50, and the market will rally, but some later it will realize he should have done 75 and there will be another large downdraft.
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The Fed wants inflation at 2%. Not doable in the short-term. They should be satisfied with 4% and let the economic cycles do their things naturally.
Supply is starting to catch up with demand. The college debt relief is inflationary, but we are lowering healthcare costs. We have more Nat Gas than the Saudis have oil. It's easily converted to LNG and we can also export it. End tariffs where we can, keep the dollar strong and find ways to bring in revenue. We have to keep being the world's police and need a large military or the world would be a clusterfuq.
but what do I know? Anything else to add?
 
mr.h said:
The Fed wants inflation at 2%. Not doable in the short-term. They should be satisfied with 4% and let the economic cycles do their things naturally.
Supply is starting to catch up with demand. The college debt relief is inflationary, but we are lowering healthcare costs. We have more Nat Gas than the Saudis have oil. It's easily converted to LNG and we can also export it. End tariffs where we can, keep the dollar strong and find ways to bring in revenue. We have to keep being the world's police and need a large military or the world would be a clusterfuq.
but what do I know? Anything else to add?
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Healthcare costs are not going down.
 
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mr.h said:
The Fed wants inflation at 2%. Not doable in the short-term. They should be satisfied with 4% and let the economic cycles do their things naturally.
Supply is starting to catch up with demand. The college debt relief is inflationary, but we are lowering healthcare costs. We have more Nat Gas than the Saudis have oil. It's easily converted to LNG and we can also export it. End tariffs where we can, keep the dollar strong and find ways to bring in revenue. We have to keep being the world's police and need a large military or the world would be a clusterfuq.
but what do I know? Anything else to add?
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2% is achievable, but not under this admin and Congress.

I am not a fan of a strong dollar, other countries artificially cheapen their currency to make their exports more attractive, but all we are doing is hurting our domestic industry and middle class. A stronger dollar also hurts our exporters.

Lastly, health care costs are not going down, they are skyrocketing.
 
SpikeUM said:
2% is achievable, but not under this admin and Congress.

I am not a fan of a strong dollar, other countries artificially cheapen their currency to make their exports more attractive, but all we are doing is hurting our domestic industry and middle class. A stronger dollar also hurts our exporters.

Lastly, health care costs are not going down, they are skyrocketing.
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We definitely have a trade deficit so we are importing more than we are exporting, so the strong dollar helps.
Drug prices should go down, but since covid, health care costs have suffered. I don’t know what we can do about that.
You are right, 2% is achievable but it takes a sledgehammer approach. We have lost the middle class since we started buying cheap imports decades ago.Most wage earners live week to week. “Made in America” makes sense with certain products, but not all. If we cut Medicare and Social Security we will drive the elderly into poverty. As much as I hate to say it, we need more revenue. Personally I would add a National Sales tax, just pennies on the dollar. Even illegals would pay in, but it won’t happen.
 
SpikeUM said:
2% is achievable, but not under this admin and Congress.

I am not a fan of a strong dollar, other countries artificially cheapen their currency to make their exports more attractive, but all we are doing is hurting our domestic industry and middle class. A stronger dollar also hurts our exporters.

Lastly, health care costs are not going down, they are skyrocketing.
Click to expand...
There have been new regulations involving Merit Incentive Payment System, and HCAHPS surveys that all add cost to the provider. So when you get a bill now, a few pennies of that goes toward paying for satisfaction surveys and reports to the government. that are supposedly going to help on the macro level, but I have no idea when or how.
 
mr.h said:
We definitely have a trade deficit so we are importing more than we are exporting, so the strong dollar helps.
Drug prices should go down, but since covid, health care costs have suffered. I don’t know what we can do about that.
You are right, 2% is achievable but it takes a sledgehammer approach. We have lost the middle class since we started buying cheap imports decades ago.Most wage earners live week to week. “Made in America” makes sense with certain products, but not all. If we cut Medicare and Social Security we will drive the elderly into poverty. As much as I hate to say it, we need more revenue. Personally I would add a National Sales tax, just pennies on the dollar. Even illegals would pay in, but it won’t happen.
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There are multiple reasons for our trade deficit, but it should be a national policy to reduce it, especially against a country like China.

Two of the biggest inflation components are oil and housing. Our Federal and many state governments have a war on oil. Regardless of how you feel about climate change, short and medium term we are economically killing ourselves. Other than through a severe recession, oil will only keep going up, year after year.

Housing is similar. The "reforms" passed after the Great Recession made it very difficult for banks to lend and mortgages to be made, etc. Couple that with all of the regulatory requirements at all levels, and its only generally profitable to build A housing in red states. So we have a severe shortage of housing, especially below A, which only gets worse year and year.

So to summarize, unless we change our policies/regulations on housing and fossil fuels, we are condemning ourselves to high inflation,
 
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