
horn4life
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Let's not forget the last time tariffs were involved heavily in a downward move on the markets Google Query: 1929 and tariffs. AI overview - In the midst of the 1929 stock market crash and the onset of the Great Depression, the Smoot-Hawley Tariff Act, signed into law in June 1930, raised tariffs on imported goods by about 20%, aiming to protect US industries, but instead, it triggered a global trade war and deepened the economic downturn.
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So how were Thursday and Friday for your portfolio? Using the "I am not worrying about understanding stuff yourself" methodology?
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I always tape all the Sunday News shows. I encourage you to listen to the people speaking for the administration, Mark Wayne Mullin on Fox, Scott Bessent on NBC and Kevin Hassett on ABC this morning. Maybe it will calm you, in a way it did not me.
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Well tariffs are Economics 101. Now I will also say that targeted tariffs can be beneficial. The main reason is that they can be used to protect home country industries that NEED protection. Int he US American farmers would be top line, as they can be more easily undercut by cheap labor than probably any other area. And farming I think we could all agree is key to any countries security. Correct? You can pick the industries, related to defense, ship building, plane building, and the raw materials like steel etc. One that that is fantastic for America is that our country is so large there is access somewhere to at least some supply of what we might need. Smaller countries geographically face much greater challenges to access goods and raw materials. So geography and proximity to trade (because of transportations costs) are what create the marketplace. Think of some of the earliest trade routes and the spice trade as a good example. Trade has always been about one thing. Finding a product farther away at a price cheaper, adding in the transportation costs, and stuffing your pockets with the extra cash. Simple. Or even better. You have a market for a scarce product, you find the same of very similar product far away at a much cheaper price. Then you have a market, with a potentially greatly expanded profit margin. As well as potential additional profit from expanding your existing market with a larger cheaper supply. In the country with the cheaper supply they now have a new market and oversupply in their home country that is depressing margins, can be negated via this new market far away. Prices rise in the home country because a more valuable buyer has been discovered via trade. Tariffs are usually to preserve some sort of local supply chain. In other words they are defensive. They do not want the merchant importer with the supply from a land far away to wipe out the local suppliers with the new lower price from the country with oversupply. So they use a tariff to try to level the playing field. This will cause inflation for both sides of the trade IF retaliation occurs. We have had tariff on foriegn steel forever And that is the rub, for tariffs to perform as initially asserted, is to also assume no retaliation. And that is where is gets tricky. The only way we can get our trade level with the rest of the world is to have them consume exactly as much US product as we consume. It's impossible to finnd a perfect trade balance with each individual country, AND still be the richest consuming the most. And if you are the wealthiest and richest by far? You will always make a sucking noise as ravenous US consumption drives the US, and the World economies. Tariffs are a tool to raise what is seen as an artificially low price, and raise it. That is what it is designed to do, period. So by definition the price increase burden on the consumer. Now as will be pointed out, there is a choice to consume or not. Higher prices hurt consumption. And if price inflation or economic fears related to tariffs markedly decrease the US consumption that drives both the US and the world economies? That is a very, very bad thing, from an economic growth perspective. From my economic perspective; the only tariffs that are truly effective, are targeted tariffs that still leave room fozr potential trading partner profit on both sides. AS WELL protect a niche vital industry on the tariff demanding side. In other word a tariff, that still allows the trading to happen. Do tariffs generate dollars? Yes they do. Do they add an additional cost to trade beyond transportation costs? Of course. The argument ultimately becomes who is paying? How do prices not rise? Do both parties to the trade split the tariff costs and deduct them from their profits? Highly unlikely. Who makes the most profits? The supply side, or the distribution and sales side in the consuming country? If you assume companies want to make money, they will simply split keep their profit and pass the cost on to the consumer via price increase. And to maintain their existing profit margin raise the price beyond the cost of the tariff by that percentage of profit for the rest of the money they are putting at risk. So that is an extra inflationary pressure to profit from every dollar spent in a business. Correct? The usual and most expected outcome of tariffs is the response of another tariff. And there is simply no way this does anything other than raise prices to reduce consumption of the tariffed product. That price rise to reduce local demand is what tariffs are all about. But as I pointed out, the US consumer is the big dog, and that's where the tariff price absorption always has to go. Because ask any salesman. Without sales there is not profit. And if you can't sell at a profitable price point, you no longer have sales. I believe that many companies will try to absorb some of the tariff shock because they believe the tariffs to be temporary. But time will force this temporary measure of price shock absorption, into price increases. Which ECO 101 says will have a demand decrease related to the price increase. Did I say the US is the big dog of consumption? This is where the costs are ultimately absorbed by the consumer. Or not consumed at all...
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I can also go into detail on gross profits and only US manufacturing as well later if you would like. Hint: it's not as profitable...
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Well let me help enlighten you. First and foremost think about transportation costs, first and foremost. Goods from the country of origin much be cheaper than the competing products of the country being shipped to, INCLUDING the additional costs of shipping. This shipping cost is an expense that is not incurred for non-imports. So by definition, whatere you ship out of country must have a competitive price advantage in production. Otherwise the product could not absorb the price of shipping. Agreed? Now let's take a rudimentary snapshot of what the US produces in country and ships overseas. US companies do not produce cheap products and ship them overseas much, beyond commodities like corn, beef, oil nat gas. Because our labor expenses are much high as they are in ALL developed nations. We do produce highly technical products with much larger profit margins from the US that we do ship to foreign countries. Think aerospace, complex manufacturing machinery, and biotech products. Now think about the US being the wealthiest country in the world. Think about having the richest corporate entities in the world looking at the world as a market to sell to. As a CEO so you 1) never seek out lower labor costs? 2) never seek out reduced transportation costs 3) never consider bottom line profitability 4) never consider increasing profit margins. 5) Don't worry about the stock price. This is the imaginary world that would repatriate all manufacturing to the US. It is a world that does not exist. Because the things I listed are exactly what every CEO thinks about all day long. And because of #2 transportation, and the ability to build factories closer to the point of sale, a LOT of US companies that profit overseas are not included in the trade deficit. Let me say this again for emphasis. US goods manufactured and sold, outside the United States, do not show up in the trade deficit. Does that mean that the overseas profits do not exist? Do not benefit US stockholders ? OF course not. And these numbers are HUGE! I could go on and on and on. But yes "However, my simple minded view would be, a person (country) can’t survive if they are consuming at a higher rate than they are producing. I can’t have a trade deficit with everyone I’m dealing with or I go bankrupt." Is indeed simple minded. Because it focuses on and gives much greater weight of value economically on the trade deficit. Which does not include a shit ton of US products, and shit ton of US corporate profits. So it is a very simplistic and inaccurate snapshot of what would or would not make America go bankrupt. It is the wealth and largesse of corporate America's ability to produce goods ANYWHERE is actually one of our greatest competitive advantages. Countries, the US included has always had some tariffs to protect certain aspects of local economies. Oftentimes this is on agricultural commodities to product in country food production from being wiped out by lower prices goods. You see... like a room full of people, countries have specific advantages and disadvantages. Access to oceans, clean water, rare minerals, cheap labor, highly educated labor, oil deposits, natural gas, clean manufacturing. Which ALL when you include shipping costs determine the costs of goods. It is NOT a one size fits all. And that is why using the trade deficit as so important is... well... stupid. But lets assume that trade deficits are indeed the holy grail of a countries well being. Then explain to me where in the trade deficit these profits are included in the trade deficit? ****** the numbers I am going to post are from Google's AI search and I am not footnoting the specific source ****** 1) Services revenue produced outside the US? ** In 2023, the United States generated $1,026.6 billion in foreign revenue from services, with financial services being a leading sector, and cloud services among the fastest-growing 2) Foriegn Energy production. ** US corporations generate significant revenue from foreign energy production, with the oil and gas industry alone reaching \$244.4 billion in 2023, though this was a decrease from the previous year's peak of \$330.8 billion 3) Heavy equipment manufacturing - US corporations see significant revenue from foreign heavy equipment manufacturing, with the global market estimated at $208.5 billion in 2023 and projected to reach $314.4 billion by 2030 The map above is the location of Caterpillar Tractor manufacturing plants. The revenue from this foreign plants is not included in the trade deficit.. every dot not in the USA. I can keep on adding numbers if you like on what's not included in a simplistic number like the trade deficit, BUT I need to go do some of my own stuff - but I can go on nearly endlessly. As to why economically and mathematically the very basic premises of causation for the actions the Administration regarding tariffs is simply not remotely correct, accurate, smart or any other word that implies fully informed. In other words when you basic premises are wrong, the only way you can get a decision correct is by blind luck. And I don't feel lucky right now, do you?
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1) the administration will not change course on a 1000 point dow drop 2) the administration will not change course on a 2000 point dow drop 3) the administration will not change course on a 3000 point dow drop 4) the administration will not change course on a 4000 point dow drop 5) the administration will not change course on a 5000 point dow drop Should I go on? I hope like fuck I am wrong. Please vilify the shit out of me when I am!!!!
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So no market or 401K suggestions? Musings maybe? I would love to hear what you would put money into right now? And I apologize in advance if asking you what you think are good stocks to bet on, or bet against in a post about the market, is somehow offensive. And... Bless your heart!
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Why don't you share your portfolio moves and suggestion Tony? Or you don't have a 401K? Please give us your market insight. And we can make fun of you for that! Plus then you don't have to go all snowflake on market moves that are so clearly only politically based? PS - thank you Tony. You and yours have made me so much money the last two days I feel guilty about it. You see, you can't pretend fake shit is real in the market, and I am feasting like a mofo on folks that are offended by political reality.
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Good to see a quick reaction from those that fucking hate America. Go fuck yourself. Of gag on mine BJ Johnson.
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I am having severe FOMO on having sold $50 UVIX calls for $5.80 for about half my holdings. Trying to be conservative and insure at least some profits. Usually I try to take half of things that have super steep run ups and sell out of the money calls for that half, to create some income, of 10% plus on that run up. Pull backs let me keep that 10%. Or close out and take it and be happy. I should be selling calls on half of the remaining half after another $19 run up. But I am trying to see what is going to happen to blunt a further blow to the markets on Monday. Jim Cramer had some very dark shit to say this morning and basically said there was not anything he could tell anyone to buy right now. He mentioned he was all cash in 1987, on Black Monday. Cut 401K stock exposure to 15% as a just in case. I am just trying to see how I/we are going to find a lot of good news this weekend. I don't see headlines of Trump blinks, or Trump retreats on tariffs. Do You? So where are my buyers coming from? Where is the good news going to come from? Perhaps the cure would be a Sunday TV blitz of Miller, Bessent and Ludwick explaining how genius the policy is? So UVIX is where I am gonna live at least until Monday. PS - how many trillion market cap has thus far been liberated here at the close?
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All Encompassing Mortgage and Real Estate Thread
horn4life replied to UTPhil2006's topic in Business and Markets
Unfortunately rates are falling in the exact manner I said the would, if they did. Apparently a 100 point decrease in the Dow roughly translates into a 1 basis point decrease in the 10 year. -
Just grab a bunch of towels and soak the blood up off the street...
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So sell everything now? And don't come back in until rates are down?
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Well I guess we can all agree that this year has been a very, very, very good year for Comrade Putin....
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Since China put on a tariff, there has to be a response of a higher tariff from Trump. Right? That's was the threat at the outset. Correct? That was what Bessent was saying. I know a few folks that work at Apple and a good buddy has more than a million in Apple stock. Watching a "safe haven" tech stock like Apple erode is heartbreaking. It's not like you can flip a supply chain in a day!?!? The bad news is Trump would rather see the Dow shed another 2, 4, 5 or 10,000 points... rather than admit he made a mistake. And that is what is truly terrifying to me.
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Yeah - at 5 am dow down 580, by 5:30 it was pushing down 800, at roughly 6 am. right at 1100 down... So yeah bloodbath.
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Let me explain something. And this is very fucking simple. The historical models and charts do not apply. Period. Once you understand that you will realize that the market crash today was not a big deal to this White House. What would have been a HUGE fuckng deal was if Trump had given his speech before closing and you could see the markets falling. That would was the only actual concern about anything yesterday. And if you think you can plug that kind of psychosis into some stock charts, you are as fucking looney as our President. So please, please , please... stop putting up historical charts that do not have any factoring in of the stupidity we are inflicting purposefully on ourselves.
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Yeah. But for me the cool thing about this correction is it was entirely made by one man, after hours yesterday. And THAT is what makes it not normal. Can you really not see this? The fantastic fucking thng for me is that this was very easy to see coming. You can make a shit ton of money in this environment. It's just not betting long right now. Predictable tariff stupidity. My UVIX is up 40% today for example. While market moves and corrections are indeed normal. This was the proud work of a man, and THAT is NOT fucking normal. While it would make me a killing, I just pray this push downward is at least somewhat muted in Asia and Europe tomorrow. If not, that could roll back around and cascade more downward pressure into US markets for another dose of US Economy the game Friday morning... Normal... wow...
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All Encompassing Mortgage and Real Estate Thread
horn4life replied to UTPhil2006's topic in Business and Markets
nice humble brag... -
The good news is this morning you will have Howard Lutnick explaining how marvelous this all is on CNBC. I am checking to see if Scott Bessent is going to go on Bloomberg. Last time Lutnick and Bessent did the rounds to calm markets I made some good coin on my UVIX. Those two just non-sensical stuff, that leaves the listener less rather than more confident. So is 1200 down on the Dow premarket today's bottom? Or does do we have further negative downward momentum. Have all the sellers bailed pre-market and the buyers are going to roll in? Listening to Jim Cramer last night he was showing an interesting chart saying that a lot of the options have a ton of volatility though this Friday and calm down going into next week. So maybe this week will be a bottom? Who the hell can predict anything at this point. Bessent explaining yesterday how other countries should just take in the tariffs and not retaliate. That utterance shows the complete lack of understanding on how tariffs have worked all though history. One tariff begets another tariff, which hurts both economies. Just basic fucking Economics.
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Apparently "Liberation Day" did give achieve one goal, it liberated a lot of those captive 401K dollars that you have been stacking the last few years, freedom! Those dollars are now free to leave the confines of your 401K and brokerage accounts...
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The cool thing is, normally the freshmen business majors are bored shitless with ECO101. As normally you have to look at how policy or economic pressures influence economies and indirectly stock prices. What might have normally taken several years of policy change to influence and economy now has been compressed into two months a semester. It would be fascinating to hear the arguments presented by freshmen as to what the economic impact may be? Just to hear as freshmen what their views are. Do they think that historical data regarding stumping economic growth is still the most likely outcome? The thing that is dumb to me, is that I understand the goals of the administration and how to get there. But from a logistics standpoint how does a CEO of any US company with a multi-million diversified supply chain know what is the smart thing to do? And how to do it in several weeks? Impossible. Assuming of course the policy does not reverse the moment you make a decision? To me it would be fun to be a freshman again, and argue what path you think different aspects of the economy might take. I had a good day after hours today, because of ECO101. HA! had to look it up because ECO 101 did not sound right, ECO 301... Forgot about the credit hour prefix. I would be very curious to hear if any freshmen thought there would not be large retaliatory tariffs?
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The only reasaon Trump did not announce this during market hours was because of...theatrics. Because seeing the market tank as Trump bloviates is too fucking easy a Campaign Ad for the Dems. Like I said, I only wish I had more money to bet against this administrations 1890's policies. I was shaking my head today as I saw the selloff turn into a positive day. And who knows, the same folks that shot Newsmax to the moon .Would have been a lot more fun for me to see the market tank as Trump spoke, but when you are playing US Economy the Game, the optics are more important than the substance. Listening to Kudlow (which I don't watch because of the lack of facts) it was fun to watch the stages of grief. Right now it's denial, with Steve Forbes moving onto anger... Tomorrow will be interesting
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I think there is one thing the Aggies really, really underestimate. That is that no matter how big your salary, you have to move your family and live in fucking College Station. THAT is what made Maryland so attractive to Buzz! Not living in a shit hole, is very, very attractive to most folks.
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