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Markets still falling like whoa

Llano Estacado

By Llano Estacado
in Business and Markets

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Eastwood
Eastwood

That's why I'm out. There is no end game, IMO. This has to be fixed outside of the market and I got too nervous about what that entails for retail investors. They will always be last on the list, if o

Rusty Shackelford
Rusty Shackelford
Eastwood
Eastwood

I'm not a financial advisor. This is not financial advise. I don't work in finance. I do not have a degree in finance. Actually, I have a BA and I'm bad at math past Cal I. I won't apologize for the l

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Snake Diggity

Snake Diggity 4,614

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It has sure seemed backward as fuck to me that the market falls every time there is good economic news (I.e positive job reports) simply because people assume that means rates will rise or stay higher longer.  But one thing I hadn’t thought of that I saw in the news this morning is that falling asset prices are causing quite a few older Americans (55+) to re-enter the workforce.  Something like half a million people are expected to come back to work.  That’s one way the supply side labor issues might be somewhat relieved without a lot of economic pain (except of course to the middle class olds who are having to go back to work).

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bernorange

bernorange 8,348

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Quote

...
"Restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy," Powell said during a panel discussion hosted by the Swedish central bank Tuesday. "The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors."
...

https://www.kitco.com/news/2023-01-10/Fed-Chair-Powell-on-central-bank-independence-Getting-inflation-under-control-can-require-measures-that-are-not-popular.html

Prepare thy anus.  Powell going to bring the pain.

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Cheeseweasel

Cheeseweasel 26,437

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1 hour ago, Snake Diggity said:

It has sure seemed backward as fuck to me that the market falls every time there is good economic news (I.e positive job reports) simply because people assume that means rates will rise or stay higher longer.  But one thing I hadn’t thought of that I saw in the news this morning is that falling asset prices are causing quite a few older Americans (55+) to re-enter the workforce.  Something like half a million people are expected to come back to work.  That’s one way the supply side labor issues might be somewhat relieved without a lot of economic pain (except of course to the middle class olds who are having to go back to work).

Fed doesn't like it. Fed has one tool. FED SMASH!

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HamsterHookah

HamsterHookah 112

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The problem as I've read it and understand it (which may be wrong), is that job growth is still strong and employment is too strong, which is impeding the cooling of inflation. We actually need all these tech layoffs and other layoffs in the news to make an impact and dent on those numbers, it seems, but we have stubborn inflation (bad) coupled with a stubborn good labor market (which is usually great news, but actually a negative thing in trying to cool inflation).

So feds will keep pounding the interest rate to stop people from earning and spending until we are right sized, I guess?

Edited by HamsterHookah
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Snake Diggity

Snake Diggity 4,614

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2 hours ago, Cheeseweasel said:

Fed doesn't like it. Fed has one tool. FED SMASH!

If inflation comes down because 500k people are added to the labor supply because their retirement evaporated because the Fed raised rates, is that the Fed "working"?  My assumption is that the Fed's ultimate goal in this scenario is to have inflation come down (<4%???) without having unemployment get too high (<7%???), since the Fed's mandate only involves those 2 factors and no others.  Having a bunch of olds go back to work is one thing that could help that happen.  I'm not saying it's necessarily a likely outcome, just that it is an interesting idea that I hadn't thought of before.  ETA: for now I do not think it is a likely outcome because I think the labor supply is short far more than 500k workers, so my current guess is that there will still be further pain.

 

Edited by Snake Diggity
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Snake Diggity

Snake Diggity 4,614

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10 minutes ago, Snake Diggity said:

If inflation comes down because 500k people are added to the labor supply because their retirement evaporated because the Fed raised rates, is that the Fed "working"?  My assumption is that the Fed's ultimate goal in this scenario is to have inflation come down (<4%???) without having unemployment get too high (<7%???), since the Fed's mandate only involves those 2 factors and no others.  Having a bunch of olds go back to work is one thing that could help that happen.  I'm not saying it's necessarily a likely outcome, just that it is an interesting idea that I hadn't thought of before.  ETA: for now I do not think it is a likely outcome because I think the labor supply is short far more than 500k workers, so my current guess is that there will still be further pain.

 

Doing some VERY brief digging just now, I learned: the Fed's focus is always on inflation; they have defined price stability as 2% inflation or less, while target unemployment is purposefully undefined (or rather defined as a function of inflation) to allow it to be secondary to the inflation goal.  The median inflation rate since 1929 has been 2.7%.  The median unemployment rate since then has been 5.6%.  There are only 3 years since 1929 that inflation has been >4% while unemployment is over 8% (1941, 1975, 1981).  I guess it is incredibly likely that we get rate cuts before unemployment gets over 7% and that the Fed won't stop raising rates until inflation is below 3% YoY.

13 minutes ago, Cheeseweasel said:

They want the olds to stop buying, not go back to work. 

whynotboth.gif

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gurt

gurt 736

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1 hour ago, B00M said:

The thing is, interest rates at these modest levels shouldn’t slow “the economy”. They will discourage malinvestment and encourage investment in productive ventures. If that slows your economy, perhaps your economy was shitty…

isn't it just due to the percent increase?  If we were already at 4% before these hikes a 12.5% increase wouldn't have been felt.  But going from .5% to 4.5% is impossible to not have ramifications.

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txduck87

txduck87 982

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Feels premature (that’s what she said!) .  The economic news still is mixed.
Some oversold stocks should have a decent January but I’m keeping my powder dry for now.
A lot of layoffs in homebuilders are now happening which means unemployment going to get another kick.

And it’s so much nicer, and easier, when “ powder” is earning over 4%!
  • Hook 'Em 2
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Trey3216

Trey3216 15,325

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5 minutes ago, Hefeweizen said:

Yeah 6 month cds at 4.6 percent is tough to beat right now.

I’ve got an SMA for some clients that we’re using as a cash management acct.  it’s a short duration muni portfolio (all maturities in 18-30 months) that is currently yielding 4.13 with a YTM of 5.37.  That’s pretty much untouchable as a cash stash.   We’re DCAing the coupon payments and maturities back into equities.  Gonna be a nice combo.  

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BehoId, The Underminer!

BehoId, The Underminer! 11,668

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Anyone going to react to  all the predictions of recession?  All major banks say it’s the most likely scenario. 
 

Im thinking of moving about half of everything into VDE.  Downside is that it was a little overheated the last 18 months imo and it was a little too easy to make money with it, although it has come down from 134 to 120 recently.  Upside is I stay in the market generally but I feel like energy consumption won’t be as sensitive to slow downs as other sectors.  

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Royalfan5

Royalfan5 2,348

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26 minutes ago, BehoId, The Underminer! said:

Anyone going to react to  all the predictions of recession?  All major banks say it’s the most likely scenario. 
 

Im thinking of moving about half of everything into VDE.  Downside is that it was a little overheated the last 18 months imo and it was a little too easy to make money with it, although it has come down from 134 to 120 recently.  Upside is I stay in the market generally but I feel like energy consumption won’t be as sensitive to slow downs as other sectors.  

Do the major banks collectively know shit about fuck, though?

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Posted (edited)
On 1/14/2023 at 10:18 AM, Royalfan5 said:

Do the major banks collectively know shit about fuck, though?

https://www.forbes.com/sites/sergeiklebnikov/2021/12/01/heres-what-wall-streets-biggest-banks-predict-for-stocks-in-2022-and-what-to-watch-for/?sh=13abcf506b31

Bank predictions for 2022, as of the end of 2021:

BMO CAPITAL MARKETS: 5,300
WELLS FARGO: 5,100-5,300
GOLDMAN SACHS: 5,100
JPMORGAN: 5,050
RBC CAPITAL MARKETS: 5,050
UBS: 4,850
BANK OF AMERICA: 4,600
MORGAN STANLEY: 4,400

Juuuuust a bit outside.

 

Edited by FirstTimeCaller
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For my BS prediction, I'm actually thinking we're entering a decent rally.

The market seems to have bounced back nicely at the start of the year, the lows of October weren't anywhere near being hit in the December swoon, inflation coming down, and still a lot of negativity in the market. 

 

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47 minutes ago, jdhorn92 said:

AMC is running.  18% today. 

Yeah seems like speculative stuff has been on fire in 2023. One of the reasons I'm thinking we might get a bit of a run. 

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Storm the Field

Storm the Field 5,273

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27 minutes ago, Lurch said:

If you didn’t have “good inflation news so stocks tank” in your forecast, that’s on you

I swear Fed Governors get instant alerts the second any encouraging data comes out and sprint to the nearest interviewer to "let's not overreact to these single data points, we're still more concerned about not hiking enough than too much, still need to get more restrictive through the end of 2023. Maybe we can allow ourselves the luxury to even imagine backing off next year...."

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Cheeseweasel

Cheeseweasel 26,437

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4 minutes ago, Storm the Field said:

I swear Fed Governors get instant alerts the second any encouraging data comes out and sprint to the nearest interviewer to "let's not overreact to these single data points, we're still more concerned about not hiking enough than too much, still need to get more restrictive through the end of 2023. Maybe we can allow ourselves the luxury to even imagine backing off next year...."

They are obviously full of short positions. 

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52-80

52-80 19,090

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7 hours ago, 52-80 said:

For the charting technical analysis bois, SPX is just touching a topping trendline thats been hit 4 times already. 
 

If it reverts, nows a pretty good time. If not…steaks all around

the line foretold the prophesy... and the prophesy foretold the truth

image.thumb.png.794616340e88032cb21845ad945c1b59.png

 

 

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  • Fuck Around and Find Out 2
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Interesting with all the tech layoffs. I wonder how much is overhiring during the pandemic and how much is "holy shit Twitter bled their staff and they are still running. Maybe we have too much bloat as well."

Seeing Google is cutting 12,000 workers. Assume they average $100,000 in comp and that's $1.2 billion a year off the headcount. 
 

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