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Markets still falling like whoa


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Fed commitment to QT to battle inflation was always going to cause pain (destroy wealth). PE ratios are quite bubbly and earnings taking hits. Inflation and supply chain probs are worldwide. China’s Covid strategy exacerbates and aggregates preexisting poor conditions. The world is not as efficient as it was pre-Covid and pre-Ukraine invasion. Add in an inflation hawk Fed Reserve and you have today’s market. 

I am still “Follow the Fed” plus watch out for major Apple sell off. YMMV. Good luck. A lot of wealth destruction out there. 

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32 minutes ago, LTtxfan said:

Some think supply chain problem won't be as bad in the fall, plus controlled 50pt rate hikes for awhile... May be optimistic that China will be getting better soon too ??

The people saying those things are going to convince you to buy the shares they are hoping to sell

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I think the only thing keeping the market from going off a cliff is the pent-up consumer demand after two years of Covid (see airlines). But, that is going to be put to the test between now and July 4th as gas will go over $5 in parts of the country that aren’t used to seeing that. You get the double whammy of higher costs for businesses at the exact same time the average consumer becomes much more price conscious. 

I do think it gets somewhat sorted out in the next 6 months though. China isn’t going to stay offline forever, gas prices drift back down in the fall, and people will have made their peace with the higher interest rate environment. Should be a rough summer though.

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16 minutes ago, Larry T. Spider said:

I think the only thing keeping the market from going off a cliff is the pent-up consumer demand after two years of Covid (see airlines). But, that is going to be put to the test between now and July 4th as gas will go over $5 in parts of the country that aren’t used to seeing that. You get the double whammy of higher costs for businesses at the exact same time the average consumer becomes much more price conscious. 

I do think it gets somewhat sorted out in the next 6 months though. China isn’t going to stay offline forever, gas prices drift back down in the fall, and people will have made their peace with the higher interest rate environment. Should be a rough summer though.

Just remember there's an elasticity effect on it as well.  Good times seem to last 3-4 months longer than they should and bad seem to last 6-8 months longer.  Consumer Euphoria is slow to react at the beginning of a downturn and is slower to get back to full-bore after things start improving.   

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1 hour ago, washparkhorn said:

Fed commitment to QT to battle inflation was always going to cause pain (destroy wealth). PE ratios are quite bubbly and earnings taking hits. Inflation and supply chain probs are worldwide. China’s Covid strategy exacerbates and aggregates preexisting poor conditions. The world is not as efficient as it was pre-Covid and pre-Ukraine invasion. Add in an inflation hawk Fed Reserve and you have today’s market. 

I am still “Follow the Fed” plus watch out for major Apple sell off. YMMV. Good luck. A lot of wealth destruction out there. 

Yup. The fed giveth and now the fed taketh away. They also artificially created a ridiculous amount of wealth with years of 0% interest rates and QE policy. Even with the last 6 months, the S&P is still up 66% from 5 years ago. The historical annual return of the S&P since its inception is 10.5%. My guess is that 66% over 5 years is pretty damn close to 10.5% annually. Considering Covid and all of the other bullshit we've endured over the last 2 years, that aint terrible. It sure as fuck beats this period:

image.png.a1754609b9c94a967157e71175a6294a.png

Hopefully we dont repeat that lost decade. 

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6 minutes ago, Blotto said:

Yup. The fed giveth and now the fed taketh away. They also artificially created a ridiculous amount of wealth with years of 0% interest rates and QE policy. Even with the last 6 months, the S&P is still up 66% from 5 years ago. The historical annual return of the S&P since its inception is 10.5%. My guess is that 66% over 5 years is pretty damn close to 10.5% annually. Considering Covid and all of the other bullshit we've endured over the last 2 years, that aint terrible. It sure as fuck beats this period:

image.png.a1754609b9c94a967157e71175a6294a.png

Hopefully we dont repeat that lost decade. 

We'll be lucky to repeat that lost decade

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My wife's Apple RSU's are starting to turn into PU's. Fortunately she has a bunch that were granted very low. But now it looks like a pipe dream that Apple can even get back to $160 by the end of the summer (it was over $175 just 3 weeks ago). I can easily see $120 down the short-term pike.

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2 minutes ago, phdhorn said:

My wife's Apple RSU's are starting to turn into PU's. Fortunately she has a bunch that were granted very low. But now it looks like a pipe dream and apple can even get back to $160 by the end of the summer. I can easily see $120 down the short-term pike.

Wouldn't be surprised to see a test of the previous breakout from the 100-106 level.  Remember back in '08-09 when AAPL (pre-splits) dropped to an intraday low of 80 before closing at 84 in an horrific wipeout.   It rebounded very quickly from there 

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I see pain.  But then again I am always the conservative one, except in my stonk account.  By the way that one is severely shrunken these days.

 

 But this kind of sucks, and I don’t see how overall things don’t keep getting worse until total capitulation.

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37 minutes ago, Snake Diggity said:

Non-zero chance that by 8/31: China has opened up and ironed out, Russia has fallen back, Fed has said they’ve raised enough, and the Saudis play ball.  There’s plenty of reason for optimism.  Just not in the very short term.

But when the market peels off another 15-25% before then, even though I don’t believe all the things you listed, what’s going to motivate the consumer?   

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But when the market peels off another 15-25% before then, even though I don’t believe all the things you listed, what’s going to motivate the consumer?   

Assuming that’s not rhetorical…I would posit that a bunch of new stimulus and loan programs will be launched with midterms in mind
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17 minutes ago, Muny_Tex said:


Assuming that’s not rhetorical…I would posit that a bunch of new stimulus and loan programs will be launched with midterms in mind

Stimulus is a big part of the inflation we're seeing.  Adding 10% more cash to the system, inflation will rise by a similar amount.  Oversimplification, but essentially correct.

And take it from me, a failed econ major turned poli sci major.

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Stimulus is a big part of the inflation we're seeing.  Adding 10% more cash to the system, inflation will rise by a similar amount.  Oversimplification, but essentially correct.
And take it from me, a failed econ major turned poli sci major.

Absolutely true, and same principle applies to indirect measures such as student loan “forgiveness”….but adherence to sound fiscal policy is not necessarily gonna stop panicked efforts to remain in power when faced with horribad polling…can’t really elaborate further without taking the convo into the cloaky cesspool.

Edit: Fed/govt continues to operate a year behind the power curve, which is making this worse. Time to cut rates/soften demand was long ago…priority now should be boosting productivity through targeted expansionary action and removal of red tape…instead we are about start hemorrhaging jobs to go along with needless collapse of asset prices both of which will do absolutely zero to address the critical shortage of essential goods.
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24 minutes ago, Muny_Tex said:


Absolutely true, and same principle applies to indirect measures such as student loan “forgiveness”….but adherence to sound fiscal policy is not necessarily gonna stop panicked efforts to remain in power when faced with horribad polling…can’t really elaborate further without taking the convo into the cloaky cesspool.

Edit: Fed/govt continues to operate a year behind the power curve, which is making this worse. Time to cut rates/soften demand was long ago…priority now should be boosting productivity through targeted expansionary action and removal of red tape…instead we are about start hemorrhaging jobs to go along with needless collapse of asset prices both of which will do absolutely zero to address the critical shortage of essential goods.

We could shed 5M jobs and openings would still exceed unemployed.  This is going to be a very odd recession.

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6 hours ago, TonyTexas said:

 

I guess the question is how long can this go on until you get consumer resistance. 

Depends.  They've all cut the number of flights, which goes counter to their business model of flooding the market with shitty seats and having routes so crowded that a storm in Florida throws the entire county into a tailspin.  I've always secretly wished they would do what they're doing right now.  Fewer but better run flights and higher fares.  

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2 hours ago, Snake Diggity said:

We could shed 5M jobs and openings would still exceed unemployed.  This is going to be a very odd recession.

 

3 minutes ago, Trey3216 said:

It’s got a chance to be horrific 

Without the high unemployment aspect that normally comes with a recession, I don’t see how it will be horrific. 

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Shit will lock up because no one can afford anything. Then layoffs. Then even less people will be able to afford anything. Then prices will want to decrease. Then there will be more layoffs because margins. And they’ll tell two friends. And they’ll tell two friends. And so on. And so on.

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10 minutes ago, TonyTexas said:

 

Without the high unemployment aspect that normally comes with a recession, I don’t see how it will be horrific. 

I’ve never lived through inflation (most of us haven’t) as a 43 year old it’s something from history books or listening to the oldsters talk. I’ve always been of the opinion that if everyone has a job life will be just fine, but I’m starting to think that perhaps 4% unemployment and 8% inflation is worse than 8% unemployment and 2% inflation. 
we shall see. Rampant inflation is scary man. 

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18 minutes ago, TonyTexas said:

 

Without the high unemployment aspect that normally comes with a recession, I don’t see how it will be horrific. 

I just don’t see how so many don’t see the blood that’s gonna get dropped in the water.  There’s not a lot of room at all for any realm of soft landing here.  We have a housing bubble, historic inflation, declining productivity, an incoming food crisis, war, remnants of pandemic with fake money still floating around corporations and nations investing real and fake money into actual fake money, And so on and so on.  

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7 minutes ago, Wulaw Horn said:

I’ve never lived through inflation (most of us haven’t) as a 43 year old it’s something from history books or listening to the oldsters talk. I’ve always been of the opinion that if everyone has a job life will be just fine, but I’m starting to think that perhaps 4% unemployment and 8% inflation is worse than 8% unemployment and 2% inflation. 
we shall see. Rampant inflation is scary man. 

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34 minutes ago, Trey3216 said:

I just don’t see how so many don’t see the blood that’s gonna get dropped in the water.  There’s not a lot of room at all for any realm of soft landing here.  We have a housing bubble, historic inflation, declining productivity, an incoming food crisis, war, remnants of pandemic with fake money still floating around corporations and nations investing real and fake money into actual fake money, And so on and so on.  

You’re a real ray of sunshine.

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1 hour ago, Wulaw Horn said:

I’ve never lived through inflation (most of us haven’t) as a 43 year old it’s something from history books or listening to the oldsters talk. I’ve always been of the opinion that if everyone has a job life will be just fine, but I’m starting to think that perhaps 4% unemployment and 8% inflation is worse than 8% unemployment and 2% inflation. 
we shall see. Rampant inflation is scary man. 

@David Dennison

come own your barf

bitchass

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I'll go full on CR hard to the mother fucking paint.

When did conservatives become such gloom and doom people?  Reagan was an optimist.  Now, talk to any conservative and this is the worst economy ever.  (They said the same thing under Obama, BTW.)  I don't see how you can have a recession when everyone has a job and money to spend?  I know a dude who is a hard core Republican and is convinced all of the spending is due to government spending.  You know what he's doing in two months?  Dropping $20K taking his family to Disney.  When I ask him how he can do that in such a horrible economy, he says it's OK for him.  Yes, and everyone else taking their fuck face kids to Disney.  PM me when Disney goes to three days a week due to lack of demand.

"Everything is too expensive," we're told.  Well, shit, then someone will come along and offer a cheaper price.  It's called the Motherfucking Free Market.  I read about this thing called Supply and Demand once in a book.

No one ever got rich underestimating the power of the American consumer.

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2 hours ago, Moby Ric said:

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The problem with your stupid ass statement is that economics in this country is always 18-36 months behind the politics.   We're seeing exactly the same kind of thing that has happened multiple times in the past. 

Biden isnt doing this.   History is.

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9 hours ago, Aqua Buddha said:

I'll go full on CR hard to the mother fucking paint.

When did conservatives become such gloom and doom people?  Reagan was an optimist.  Now, talk to any conservative and this is the worst economy ever.  (They said the same thing under Obama, BTW.)  I don't see how you can have a recession when everyone has a job and money to spend?  I know a dude who is a hard core Republican and is convinced all of the spending is due to government spending.  You know what he's doing in two months?  Dropping $20K taking his family to Disney.  When I ask him how he can do that in such a horrible economy, he says it's OK for him.  Yes, and everyone else taking their fuck face kids to Disney.  PM me when Disney goes to three days a week due to lack of demand.

"Everything is too expensive," we're told.  Well, shit, then someone will come along and offer a cheaper price.  It's called the Motherfucking Free Market.  I read about this thing called Supply and Demand once in a book.

No one ever got rich underestimating the power of the American consumer.

This is a point I make whenever I hear people talking about China kicking our ass from the conservative side of the aisle… when did we become pussies and think we weren’t going to consign a bunch of commies to the ash heap of history?  Or when I hear people talking about buying gold bc the world is going to fall apart. Do you not understand the Dollar is the worlds reserve currency and how that works?  A couple coins as a small part of an overall strategy?  Sure. Betting on the disintegration of the American system? Cmon man. 

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7 hours ago, Macanudo said:

The problem with your stupid ass statement is that economics in this country is always 18-36 months behind the politics.   We're seeing exactly the same kind of thing that has happened multiple times in the past. 

Biden isnt doing this.   History is.

Lot of truth to this but you also cannot ignore him declaring war in fossil fuels and say that didn’t have an effect. I’m not arguing it’s good policy or bad policy- chasing renewals by making fossil fuels more expensive is a political decision that you can agree with or disagree with, but making gas more expensive at the pump does have inflationary effects down the line. So does elevated government spending. It’s not all creature of circumstance shit. Some of it is based upon decisions made. And that’s not even an argument that the decisions are wise or foolish, just that they exist and have practical effects. 

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