Stock Market Discussion, Chat About the Latest Market Action

[Dangerous Donna]

A long SPX option I bought for $85 is now worth $5,100 -- unfortunately I sold it when it was worth $600.

Ugh

 

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[loop101]

A successful trader has more wins than losses, that's the game.

They have more profits, but they might have more losing trades than winning trades. Trend Traders have lots of small losing trades as they try to get on the next big trend. Most trading is either "take a lot of little lumps and hope for a payday" or "take a lot of small profits and hope there are no black-swans". It's about how you like to handle your losses.

 

[loop101]

Markets usually bottom out when all the bad news is known, and new bad news doesn't drive the market lower. I don't think we've heard all the bad news yet. I don't think they've even gotten started. There are huge financial issues that simply are not discussed. Maybe they will now.

 

[GuestR401x3]

Inflate on purpose, trigger the mother of all crashes, then take it all.

Great Reset into Communism. Lol, just a whacky conspiracy theory, maybe.

I thought I was the only one who had this fear. I hope you're wrong.

 

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[socaldude]

Markets usually bottom out when all the bad news is known, and new bad news doesn't drive the market lower.

I do think heading forward the market will take bad news as bad news. If it really does look forward 1 or 1.5 years in time. Although I don’t think we will see a “V” type recovery or bottom. I do think we will see this drag on with some time. The Fed basically chose a recession over more inflation. Now, me personally I think we will see both. Stagflation of course.

 

[Andreas Thiel]

Something that I am trying to wrap my head around is that the dollar feels like the most stable asset right now (especially compared to metals this confuses me). Doesn't that indicate that investors expect a credit crunch (deflationary ... well, maybe not quite a shock ... but ...), where it is hard to get your hands on money?

On the other hand, we talk about the effects of easy money in the near past / too much liquidity creating inflation.

Sure, one argument is that it will be harder to get money at low interest rates, but even if we reach 5% for 10yr bonds ... is that a problem for companies with even just average profitability? Are there just too many unprofitable businesses and this is mostly a bet on banks getting in trouble with too many credits going bad?

But this is where my head explodes. Will these effects cancel each other out to some degree? Are the recession fears only justified when you look at the impediments for international growth? Won't domestic demand be okay because people have set aside money? It is mostly a lack of supply that drives prices up, right?

Shouldn't it be possible to predict what the herd will do, soon? I think everything is in place for some pump-and-dumps. Not sure what it will look like, but I would not be surprised if we saw some fomo asset class hyped in the news, soon.

 

[srodrigo]

Something that I am trying to wrap my head around is that the dollar feels like the most stable asset right now (especially compared to metals this confuses me). Doesn't that indicate that investors expect a credit crunch (deflationary ... well, maybe not quite a shock ... but ...), where it is hard to get your hands on money?

On the other hand, we talk about the effects of easy money in the near past / too much liquidity creating inflation.

Sure, one argument is that it will be harder to get money at low interest rates, but even if we reach 5% for 10yr bonds ... is that a problem for companies with even just average profitability? Are there just too many unprofitable businesses and this is mostly a bet on banks getting in trouble with too many credits going bad?

But this is where my head explodes. Will these effects cancel each other out to some degree? Are the recession fears only justified when you look at the impediments for international growth? Won't domestic demand be okay because people have set aside money? It is mostly a lack of supply that drives prices up, right?

Shouldn't it be possible to predict what the herd will do, soon? I think everything is in place for some pump-and-dumps. Not sure what it will look like, but I would not be surprised if we saw some fomo asset class hyped in the news, soon.

I'm trying to understand what's going on too. Wasn't high inflation supposed to pump markets up because there's more (worthless) money circulating that is better invested in stocks?

I clearly don't understand macroeconomics and the stock market

 

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[ZF Lee]

I'm trying to understand what's going on too. Wasn't high inflation supposed to pump markets up because there's more (worthless) money circulating that is better invested in stocks?

I clearly don't understand macroeconomics and the stock market

It depends where this inflation comes from.
If its demand-side inflation, then it is good.
If it is inflation from suffocated supply chain (ie cost side)...then bad.

But this is where my head explodes. Will these effects cancel each other out to some degree? Are the recession fears only justified when you look at the impediments for international growth? Won't domestic demand be okay because people have set aside money? It is mostly a lack of supply that drives prices up, right?

See how China does the supply chain part...it has kept a zero-covid policy for now.
Shanghai cases recently got close to nil so hopefully they open up soon. But who knows if they will do shutdowns again to stop the next spread?

Already folks are suspecting the Chinese are doing lockdowns to hurt foreign business in an act of financial warfare. But I think its shooting your foot too. Hence the recent split between Xi and Li Keqiang (a parallel of Deng and Mao?)

China’s Forgotten Premier Steps Out of Xi’s Shadow as Economic Fixer

Premier Li Keqiang is helping to press the president to dial back policies that have contributed to the economy’s slowdown. He also wants to influence the selection of his own successor.

www.wsj.com

 

[Kevin88660]

I'm trying to understand what's going on too. Wasn't high inflation supposed to pump markets up because there's more (worthless) money circulating that is better invested in stocks?

I clearly don't understand macroeconomics and the stock market

There are three markets in the economy, goods and service, financial market and labor market.

Each market has their own dynamic, they are also indirectly linked with one another.

Inflation this time is caused by the supply disruption globally by covid and Ukraine war. And there is nothing the U.S. gov could do much about it.

So the Fed is trying the indirect approach, tightening monetary supply in the financial market. When U.S. raises rate, global capital flows back to U.S. because there is a higher return on capital (savings and bonds)/new debt.

This will cause U.S. dollar to appreciate against foreign currencies. Foreign suppliers who provide your supermarket items based on their own domestic cost and hence they price it based on how much it cost them in local currencies. As a result from an American consumer point of view, imported goods are getting cheaper because of stronger US dollar.

But the side effect of this high interest on the financial market is that risk assets (stocks that pays no interest) and old debt that were issued at lower interest become less attractive in the financial market. Most people’s retirement money are in it. If rate hike is too aggressive it will wipe out the wealth of stocks investors.

 

[c4n]

Inflation this time is caused by the supply disruption globally by covid and Ukraine war. And there is nothing the U.S. gov could do much about it.

That's on the news alright. Thanks god for Putin, now we have someone to blame. It probably has nothing to do with trillions of USD printed in the last two years.

Besides, this thread is from April 2021, not sure if the Ukraine war was ongoing then?

HOT! - INVESTING - Hyperinflation starting? What's happening in your area? Post your ground reports.

I believe we are witnessing a massive hyperinflationary event underway as prices continue to skyrocket in all asset classes. Of course, this doesn't happen in 1 day or 1 week, but over the course of a year or two. Meanwhile, the Fed continues to say inflation is under control. :rofl: I've...

www.thefastlaneforum.com

 

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[Kevin88660]

That's on the news alright. Thanks god for Putin, now we have someone to blame. It probably has nothing to do with trillions of USD printed in the last two years.

Besides, this thread is from April 2021, not sure if the Ukraine war was ongoing then?

HOT! - INVESTING - Hyperinflation starting? What's happening in your area? Post your ground reports.

I believe we are witnessing a massive hyperinflationary event underway as prices continue to skyrocket in all asset classes. Of course, this doesn't happen in 1 day or 1 week, but over the course of a year or two. Meanwhile, the Fed continues to say inflation is under control. :rofl: I've...

www.thefastlaneforum.com

The government has always been printing money, but pre covid inflation was manageable because the money never flow into the goods and service market.

Low interest rate was capitalized by corporate debt issuance to buy back their own stocks, causing higher stock prices.

So the pre covid experience was high asset prices but inflation that was never so serious. The world is running at high production capacity. Shale oil lowered oil price. It doesn’t matter how much money Fed prints China can churn out low cost trinkets to fill up her own warehouse.

Covid changed the games in two ways first there is global supply disruption that is not yet recovered. Secondly because of Covid relief packages for the first time normal people get to enjoy the “benefit of money printing”. The downside is inflation on everyday goods.

If you hand money to rich people stocks and art prices go up. If you hand money to average people, bread and haircut prices go up.

Ukraine war is a factor that accelerated this.

 

[NeoDialectic]

Something that I am trying to wrap my head around is that the dollar feels like the most stable asset right now (especially compared to metals this confuses me). Doesn't that indicate that investors expect a credit crunch (deflationary ... well, maybe not quite a shock ... but ...), where it is hard to get your hands on money?

On the other hand, we talk about the effects of easy money in the near past / too much liquidity creating inflation.

Sure, one argument is that it will be harder to get money at low interest rates, but even if we reach 5% for 10yr bonds ... is that a problem for companies with even just average profitability? Are there just too many unprofitable businesses and this is mostly a bet on banks getting in trouble with too many credits going bad?

But this is where my head explodes. Will these effects cancel each other out to some degree? Are the recession fears only justified when you look at the impediments for international growth? Won't domestic demand be okay because people have set aside money? It is mostly a lack of supply that drives prices up, right?

Shouldn't it be possible to predict what the herd will do, soon? I think everything is in place for some pump-and-dumps. Not sure what it will look like, but I would not be surprised if we saw some fomo asset class hyped in the news, soon.

Dont forget... When you are talking about "the dollar", you are no longer looking at just the USA economy. The question becomes about comparing economies. Our inflation is high... but so is Europe's, so it's not a negative factor on the world stage.

It is not possible to predict what the herd will do. It may be possible to do so at a rate slightly better than random and if you have the skills to do that you can become a millionaire/billionaire with this skillset.

 

[MJ DeMarco]

More and more things are starting to resoundingly say "recession" -- layoffs, inflation, lowered earnings...

Netflix Lays Off Estimated 150 Staffers in New Round of Cuts

The majority of the cuts were made in the U.S.

www.hollywoodreporter.com

 

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[YanC]

I wonder until when the Fed will play the rates hike game before backing off and going BRRRRRRRR again. Having a recession on your hands is not good for politics, but hey maybe they'll convince people it's because of Putin.

 

[loop101]

I don't understand why Twitter hasn't crashed further, after these latest Project Veritas videos. Especially the one where the guy says their ideology support prevents them from being profitable, not to mention the one where the guy said he worked "4 hours last quarter". Maybe people expect Elon will take over and clean them up. Given how it is going, I wouldn't be completely surprised if they get destroyed during the verification phase, and Elon walks away and joins a competitor.

 

[socaldude]

More and more things are starting to resoundingly say "recession" -- layoffs, inflation, lowered earnings...

A lot of discretionary consumer stocks have been hit hard. The consumer regime has changed in that they no longer buy what they “want” but what they “need”. Target earnings were crap.

Not to mention oil prices are signaling a recession. Even in a recession, I don’t think we will see cheaper gas prices. Similar to 1973, 1991 or 2001.

The market I think has not priced in a recession even though there’s a preponderance of red flags(The 2-10 yield curve, consumer spending, low jobs growth but huge wage growth etc). Everyone is probably just waiting for that bottom so they can buy the dip it seems and not seeing the red flags.

 

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[loop101]

More and more things are starting to resoundingly say "recession" -- layoffs, inflation, lowered earnings...

Netflix Lays Off Estimated 150 Staffers in New Round of Cuts

The majority of the cuts were made in the U.S.

www.hollywoodreporter.com

I hope the government doesn't start printing and mailing out money again. With the 2022 and 2024 elections coming, I sorta expect it.

 

[GuestR401x3]

I hope the government doesn't start printing and mailing out money again. With the 2022 and 2024 elections coming, I sorta expect it.

Let's build the mountain higher that way we can fall harder *sarcasm*.

 

[socaldude]

A must read article.

Revisiting the Nifty Fifty

 

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[Matt33]

Just dropping a few interesting pictures into the thread

 

[socaldude]

Well, my guess is that we will see a rally here. Although I don’t think we will bottom until SPX forward PE matches that of NDX. Considering large tech is a big part of SPX.

 

[MJ DeMarco]

U.S. consumer credit rockets to new record-high in April

www.morningstar.com

 

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[Guest-5ty5s4]

U.S. consumer credit rockets to new record-high in April

www.morningstar.com

It’s definitely stress on consumers.

 

[socaldude]

One of my favorite risk indicators for credit markets is the “TED spread”. It’s basically the difference between the “risk-free rate” and the rate banks demand from each other. It’s been a good indicator for recessions once it starts acting funny. And it has been acting funny lately.

What Are Financial Market Stress Indexes Showing?

 

[Guest-5ty5s4]

One of my favorite risk indicators for credit markets is the “TED spread”. It’s basically the difference between the “risk-free rate” and the rate banks demand from each other. It’s been a good indicator for recessions once it starts acting funny. And it has been acting funny lately.

What Are Financial Market Stress Indexes Showing?

The FRED chart for this spread says "discontinued," any idea why?

 

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[YanC]

I guess the million dollar question is wether the Fed will back off and go BRRRRRRRR again or not.

My thesis is that they will, like they did at the end of 2018 when the S&P lost 25% after they hiked rates. Having a recession on their hands is politically unacceptable. Maybe by the end of the year ?

What do you guys think ?

 

[Guest-5ty5s4]

Having a recession on their hands is politically unacceptable.

Maybe I am too blackpilled, but I think it depends on who's in office.

If they like the people in power, they will prevent recession at all costs. Like if it's a typical establishment candidate...

If they hate the person in office, they will force recession on purpose with lockdowns and stuff... Just my opinion.

They're all partisan now.

 

[Andreas Thiel]

I guess the million dollar question is wether the Fed will back off and go BRRRRRRRR again or not.

My thesis is that they will, like they did at the end of 2018 when the S&P lost 25% after they hiked rates. Having a recession on their hands is politically unacceptable. Maybe by the end of the year ?

What do you guys think ?

My take is that this is about getting the China bubble to burst, so I don't think in terms of "will they" or "won't they".

Once they do open the floodgates again, then I will assume that they are pretty confident that they have landed the knockout blow.

I am sure the powers that be are willing to pay quite a price to make sure the USA stays at the economic top.

 

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[Matt33]

I guess the million dollar question is wether the Fed will back off and go BRRRRRRRR again or not.

My thesis is that they will, like they did at the end of 2018 when the S&P lost 25% after they hiked rates. Having a recession on their hands is politically unacceptable. Maybe by the end of the year ?

What do you guys think ?

Very high inflation can cause a recession. Looking at the charts, it is looking like quite the bubble, even without inflation being considered.

As far as the actual inflation rate, it is extremely high. It is not 8%, it is 16-18%. The total inflation since March 2020 is 30%. We are heading for recession either way. Why would we push ourselves closer to a Weimer-America scenario, when we could try to fight inflation?

Kicking the can down the road is the political choice of every politician, but I'm not sure if Weimar-America is a good way to kick that can.

One important thing to consider, is that we have lied about the actual inflation numbers for a very long time. Why? It is so that we can export our national debt to other countries, and pay a paltry interest rate on that debt, while it de-values at a much higher rate. A normal year's inflation will be "3%", yet the actual inflation is always closer to 7%.




Where does this inflation go, where does it come from? Most of it is money that is created from loans. Banks hold 10%, and create the other 90% out of thin air, every time you get a loan. Real estate, businesses (especially large ones), assets, etc. Assets have a bubble cycle because of this. Right now the stock market is historically over valued, and so is real estate.

They can keep the party going longer if they make the decision to pursue something between where we are now, and Weimar America. The dollar will be dramatically devalued, and people who hold fixed interest rate loans at rock bottom APRs will win. I'm not sure where that will come back to bite us, because things always balance out in some way. Will we have a dramatic real estate price correction?

There are a lot of people who have over leveraged themselves to grow their RE portfolio at these insanely high prices. A lot of baby boomers will have to downsize, or lose their houses. They might panic as the stock market devalues further. Fear, and emotions, will cause them to sell what they have left, so that they can still have something to retire on.



Recessions are like Dominos. Some things fall first, and others, like layoffs, company downsizings, bankruptcies, come next. When real estate foreclosures flood the market....
It took a few years for RE to bottom out from 2006.

I am not sure if the hurricane on the horizon is a category 3, 4 or, 5, but I am preparing for a storm. Gold, Silver, and ETF short positions, are the potential opportunities I have identified for now. Buying cheap long-term assets will be the big opportunity. Good luck timing the bottom, but good deals are good deals.

 

[MJ DeMarco]

Big inflation report tomorrow, I think I’m more interested in the “spin” that will be offered than the actual report. The markets, however, will speak the truth as money talks, bullshit talks to CNBC.