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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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Chapo

Chapo 104

Posted
Posted
On 7/12/2019 at 7:19 PM, troph said:

But I’m also uninterested in the classic retirement. I’m 43 and working toward a part time schedule by the time I’m 55 without geographic constraints and possibly even outside client related work.

I'm with the same mindset but I dont want to be doing what I'm doing now (O&G sales). I want to do something completely different but havent found out what that is yet.

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Bozo_Casanova

Bozo_Casanova 26898

Posted
Posted
Ray Dalio posted a long screed on LinkedIn.  Food for thought...
https://www.linkedin.com/pulse/paradigm-shifts-ray-dalio/
tl;dr summary:
Spoiler

the dollar and markets are going to shit the bed sometime int eh next few years; buy gold

 


I won’t do that, but his book “Big Debt Crises” is one of my favorite reads in the last year.
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52-80

52-80 19377

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On 7/27/2019 at 6:08 PM, Chapo said:

I'm with the same mindset but I dont want to be doing what I'm doing now (O&G sales). I want to do something completely different but havent found out what that is yet.

Have you considered a career in shitposting?

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Sbbruin

Sbbruin 22145

Posted
Posted
2 minutes ago, jimmyjazz said:

Holy shit.  I'm not trading much the last month, so I was surprised when I saw a big up day turned into a big down day.  Hmmm, wonder what happened?

Yep, tariffs.  Good Christ.

Yep, my portfolio has swung wildly today.

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Bozo_Casanova

Bozo_Casanova 26898

Posted
Posted (edited)

Don't look now, but this market appears to be increasingly shallow. I'm not a bear (or a bull), but this week feels different to me, in light of three things:

  1. Disappointment in nothing more than a .25 rate cut, the first since 2008, during an expansion, 
  2. An essentially on-target jobs number and stable, technically full employment, and
  3. Broad concern about our ability to sustain growth against the headwinds caused by the trade war with China and a growing deficit.

A solid bond bond fund hedge held up my 401K this week, but the next few could be interesting.  Might be time to start selling premium again. 

Edited by Bozo_Casanova
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bernorange

bernorange 8385

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Quote

...
The yuan blew through the symbolic line of seven to the dollar for the first time since the global financial crisis, with the offshore rate in Hong Kong spiking to 7.07 in moves that stunned seasoned traders.

The calculated action by the People's Bank (PBoC) threatens to unleash a wave of deflation across the world and risks pushing East Asia and much of Europe into recession. It is certain to provoke a ferocious response from the White House.
...

 

http://gata.org/node/19308

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crash_davis

crash_davis 23470

Posted
Posted

let me be more specific with my questions.

what is the impact of china letting their currency devalue to this level vs the dollar?  is china trying to offset the tariffs (higher cost to their goods) by weakening the dollar (lower cost of their goods for US dollar) thereby mitigating the tariffs? 

what would this weakening of the yuan vs the dollar do to global markets?  why would europe feel the pain?  what does this mean long term?

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bernorange

bernorange 8385

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Did you click the link and read the article?  Most of that is explained.

1) currency devaluations affect economics of international trade (weak currency = export more)

2) yes, but weakening the yuan not the dollar.  Trump wants the dollar weaker, this move by China makes the dollar stronger

3) I'm not an expert on FX markets, carry trades and all that shit, but currency markets are all entangled.  A big move by a currency sets off dominoes.  The more significant the currency, the more significant the dominoes.  It seems the most important aspect of this move is the portend of things that could come, so it is signalling a flight to safety.

4) The Euro is apparently a beneficiary of the FX markets flight to safety.  But Europe (and Germany) doesn't want a strong currency any more that Trump/USA and China do.

5) If things continue escalating, historically, currency wars turn into shooting wars.  If things calm down, who knows.  The whole world (ie. global financial system) is fragile enough as it is.  Even without the China/USA trade issue, Brexit or other challenges, debt bubbles are gonna pop eventually.

 

 

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crash_davis

crash_davis 23470

Posted
Posted
13 minutes ago, bernorange said:

Did you click the link and read the article?  Most of that is explained.

1) currency devaluations affect economics of international trade (weak currency = export more)

2) yes, but weakening the yuan not the dollar.  Trump wants the dollar weaker, this move by China makes the dollar stronger

3) I'm not an expert on FX markets, carry trades and all that shit, but currency markets are all entangled.  A big move by a currency sets off dominoes.  The more significant the currency, the more significant the dominoes.  It seems the most important aspect of this move is the portend of things that could come, so it is signalling a flight to safety.

4) The Euro is apparently a beneficiary of the FX markets flight to safety.  But Europe (and Germany) doesn't want a strong currency any more that Trump/USA and China do.

5) If things continue escalating, historically, currency wars turn into shooting wars.  If things calm down, who knows.  The whole world (ie. global financial system) is fragile enough as it is.  Even without the China/USA trade issue, Brexit or other challenges, debt bubbles are gonna pop eventually.

 

 

thanks.  found a good article with real world examples.

https://www.investopedia.com/trading/chinese-devaluation-yuan/

Quote

Impact On Global Trade Markets

Currency devaluation is nothing new. From the European Union to developing nations, many countries have devalued their currency periodically to help cushion their economies. However, China's devaluations could be problematic for the global economy. Given that China is the world’s largest exporter and its second-largest economy, any change that such a large entity makes to the macroeconomic landscape has significant repercussions.

 

With Chinese goods becoming cheaper, many small- to medium-sized export-driven economies could see reduced trade revenues. If these nations are debt-ridden and have a heavy dependence on exports, their economies could suffer. For instance, Vietnam, Bangladesh, and Indonesia greatly rely on their footwear and textile exports. These countries could suffer if China's devaluations make its goods cheaper in the global marketplace.

 

Impact on India

For India in particular, a weaker Chinese currency had several implications. As a result of China’s decision to let the yuan fall against the dollar, demand for dollars surged around the globe, including in India, where investors bought into the safety of the greenback at the expense of the rupee. The Indian currency immediately plunged to a two-year low against the dollar and remained low throughout the latter half of 2015. The threat of greater emerging market risk as a result of the yuan devaluation led to increased volatility in Indian bond markets, which triggered further weakness for the rupee.

 

Usually, a declining rupee would aid domestic Indian manufacturers by making their products more affordable for international buyers. However, in the context of a weaker yuan and slowing demand in China, a more competitive rupee is unlikely to offset weaker demand going forward. Additionally, China and India compete in several industries, including textiles, apparels, chemicals, and metals. A weaker yuan meant more competition and lower margins for Indian exporters; it also meant that Chinese producers could dump goods into the Indian market thereby undercutting domestic manufacturers. India had already seen its trade deficit with China nearly double between 2008 to 2009 and 2014 to 2015.

 

As the world’s largest energy consumer, China plays a significant role in how crude oil is priced. The PBOC’s decision to devalue the yuan signaled to investors that Chinese demand for the commodity, which had already been slowing, would continue to decline. The global benchmark Brent crude fell more than 20% after China devalued its currency in mid-August. For India, every $1 drop in oil prices resulted in a $1 billion decline in the country’s oil import bill, which stood at $139 billion in the fiscal year 2015.

 

On the flip side, falling commodity prices made it much more difficult for Indian producers to remain competitive, particularly highly leveraged companies operating in the steel, mining and chemical industries. Also, it was reasonable to expect the yuan depreciation would lead to further weakness in the price of other commodities that India imported from China making it all the more difficult for India to remain competitive both domestically and internationally.

 

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BradInATX

BradInATX 9208

Posted
Posted (edited)

For the smart guys in the room.. if you had pulled just about your entire retirement savings out of SPY two Fridays ago at 301 and change, would you start to pump a little back in today to grab some free extra shares? Or are we pot committed and waiting this thing out into the inevitable recession? 

Asking for a friend, because only stupid idiots time the market, and of course I'm not a stupid idiot.

Edited by BradInATX
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