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Stocks Off Sharply as Market Upheaval Grows

nytimes.com

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Re: Stocks Off Sharply as Market Upheaval Grows

#221

Post by 6stringmerc »

rsmckinney wrote: post #196
cynicalkane wrote: post #186

Earlier quoted context omitted.

Interest rates are nominal; they only matter relative to some equilibrium. The equilibrium interest rate is somewhere close to zero.

On earth, a zero interest rate indicates a sick or at least stalled economy. The rate cannot be held at zero for much longer without risking a deeper debt via evermore unhealthy credit expansion, yet the consequences of raising it, even a little, will likely crush global markets as investors react etc. There is no question this economy is quite sick and has been breathing with aid of the Fed's iron lung so long that…

Also of note: US worker demographics do not substantiate the narrative that a recovery is going on. Jobs added are typically in the service industry, and a large percentage of those are part-time situations. Also the only age group that has added jobs since 2008 is the 55 and up cohort, which only further punishes the under-employed youth with significant student loan / other debt burdens and stalls the general progression into higher classes. I have my suspicions that the 55 and up group simply can't retire (no savings) or refuses to retire (standard of living).

Basically what I see are indicators the collapse will come around by way of massive defaults on student load debt. This will be combined with Federal Government idiocy promising Baby Boomers that the benefits will aways be there for them as a pandering for votes. Everybody knows full well the lower tiers of society and the working population are forced to make do with unapologetically low wages which aren't condusive to a healthy tax system, but there's no end to people voting against self-interest because they're clouded ideologically.

I'm not sure a total reset is this time or this year but probably next summer it'll be the focus of all the Presidential candidates.

Re: Stocks Off Sharply as Market Upheaval Grows

#222

Post by cryoshon »

acjohnson55 wrote: post #152

A whole lot of aphorisms in this commentary about falling knives and dead cats, but very little actual information. If you're trying to time the bottom you may as well take your money to the blackjack table. The quants are probably going to make a bunch of money, but if you're just a regular person, you should probably just continue making your regularly scheduled 401k contributions and diversified investments. Histo…

So the assumption is that stock prices increase on an infinite time scale?

Seems a bit naive...

Re: Stocks Off Sharply as Market Upheaval Grows

#223

Post by rm999 »

pyrrhotech wrote: post #215
acjohnson55 wrote: post #152

A whole lot of aphorisms in this commentary about falling knives and dead cats, but very little actual information. If you're trying to time the bottom you may as well take your money to the blackjack table. The quants are probably going to make a bunch of money, but if you're just a regular person, you should probably just continue making your regularly scheduled 401k contributions and diversified investments. Histo…

The only way quants can make money is from active traders on the other side. It's impossible for quants to make money off buy and hold index investors. If everyone took your advice (and I do), there'd be no such thing as quants

The typical self-described "buy and hold investor" I know is actually a "buy and hold then panic and sell" investor. Take a look at r/investing to see what I'm talking about. I'm not criticizing them per se; it's unnerving to imagine half your life savings or retirement being gone in a flash.

Re: Stocks Off Sharply as Market Upheaval Grows

#224

Post by 6stringmerc »

bunderbunder wrote: post #201
rsmckinney wrote: post #183

Earlier quoted context omitted.

"Historically speaking" Historically speaking, when has the Fed kept interest rates at ZERO for 7 years? After pumping QE full throttle at $80B/mo? The economy has been in continuous "recovery" mode since '08, but not much has actually recovered. The market is going to collapse my friend because, historically speaking, we are in dark, uncharted territory and have lost our way back.

Historically we've always been in dark, uncharted territory. There are only two things you can guarantee about the market: First, it will fluctuate. Second, those fluctuations will be unwittingly used as a Rorschach test by everyone with a political axe to grind.

Actually, I think it's fair to point out that the sophistication of the financial markets, vis-a-vis fiat currency, drastically outstrips the capabilities of regulators and financial decision makers to comprehend and/or manage with any believable outcome.

Re: Stocks Off Sharply as Market Upheaval Grows

#225

Post by dragonwriter »

dataker wrote: post #132
code4tee wrote: post #7

Broadly speaking the US economy is quite healthy and people were expecting a correction in the stock market for some time. Within tech, it will have some negative impact on the plans of some companies as it will be harder to get lofty valuations based on 'fluff'... during such times investors want to see hard facts and real results to back-up value--but that's a broader trend thats been slowly developing for some tim…

Regardless of your ideological background, you cannot possibly assert the U.S economy is healthy. 0% interest rate for several years is not healthy. QE is not healthy. 100+ % debt:GDP ration is not healthy. Inflating assets is not healthy. A vanishing middle-class is not healthy.

> Regardless of your ideological background, you cannot possibly assert the U.S economy is healthy.

Sure you can (note, I wouldn't, but that's a different issue); standards for "health" of an economy are deeply ideological.

Re: Stocks Off Sharply as Market Upheaval Grows

#226

Post by cryoshon »

golergka wrote: post #147
cryoshon wrote: post #138

Earlier quoted context omitted.

I keep trying to tell people, but they've drank the koolaid from the mainstream media, unfortunately... the facts as you have listed them are there for anyone to think about, but the rabid "EVERYTHING IS FINE, SHUT UP AND BUY MORE" crowd won't have the thought of weak fundamentals in their head. Many of the problems are "easy" to fix with government action, but the consequences of the easy fixes are problematic.

> they've drank the koolaid > the rabid ... crowd won't have the thought of weak fundamentals If you've been telling people using the same level of rhetoric and the same amount of facts as in this comment, I wouldn't be surprised if they don't listen to you, regardless of whether you're actually right or not.

The post that I replied to contains sufficient rhetorical talking points that are typically used in this kind of discussion. Do you have a refutation of them?

You can state the facts as impartially as you like; people will not hear them because it contradicts the "recovery is here and the economy is strong" narrative.

Re: Stocks Off Sharply as Market Upheaval Grows

#227

Post by sillygeese »

MCRed wrote: post #84
sillygeese wrote: post #55

Earlier quoted context omitted.

> when you look at the US economy as a whole things are doing quite well To be more accurate, when you look at the propaganda spewed by the mainstream media, everything seems to be fine, because they keep spinning everything in a positive light. In the US, for starters, there's a huge bubble in stocks, and an echo bubble in housing. There's a massive property bubble in Canada and Australia, and so on. With interest r…

We have a democrat who is president, and who took over after a crisis during the term of a republican. (never mind that he was part of the cause of the crisis with his 1990s era "not lending to people who can't repay is racist" lawsuit against banks)... so the liberals of HN are highly motivated to believe that democrats are "responsible" and that they have "fixed the economy" after republicans "wrecked it". So when…

Yeah, speaking the truth tends to get you downvoted. People are silly and emotional. But it's nice to see another independent thinker here. I've noticed you before.

Don't pay much attention to the political circus though, the false choice between "Demopublicans". That's all smoke and mirrors to make you think you have a say in how you're "governed" (i.e. coerced).

> The current mess of the US economy is due to the choices of many politicians, in congress and the presidency, from both parties.

It's much deeper than that. The dollar was detached from the gold standard in 1971, and that was the beginning of "the real end". Before that, the establishment of the Federal Reserve in 1913 set the scene for all the economic trouble to come, and so on. Check out: https://www.youtube.com/watch?v=5IJeemTQ7Vk

> This is why we need the government out of the economy, and let it work.

You're on the right track, but take it further. We need the government out of existence: https://www.youtube.com/watch?v=ngpsJKQR_ZE .. it is based on extortion, after all.

What maintains governments is the belief in political authority: http://spot.colorado.edu/~huemer/Contents.pdf

> Hell if it weren't for government the bad banks would have failed in 2008-- and we would have had a real recovery afterwards.

That's certainly true.

Re: Stocks Off Sharply as Market Upheaval Grows

#228

Post by merpnderp »

TheOtherHobbes wrote: post #199
maratd wrote: post #88

Earlier quoted context omitted.

> Capitalism at it's finest. The race to the bottom will eventually What are you going on about? If capitalism is a race to the bottom, we would have reached it a long time ago. Capitalism isn't new. It's been around for a while.

I'm amazed anyone can try to defend a system that has manic-depressive episodes built in as a feature.

Because it's the system that's pulled several billion people out of abject poverty in the last 30 years? I believe the system that was tried before that was called socialism, and didn't work as well as capitalism.

Re: Stocks Off Sharply as Market Upheaval Grows

#229

Post by tome »

ChuckMcM wrote: post #185

I find it fascinating how this discussion goes, Do we differentiate between "healthy" and "strong" ? The US economy is, as far as I can tell, tethered in a macroeconomic sense, to the bill of the very expensive land wars it recently fought. The cost to the economy both in terms of government spending and workforce depletion as national guard troops were mobilized for duty in Iraq and Afghanistan. American worker prod…

> So lets say someone like Apple contracts to buy 10 million iPhone 6 baseboards, in Rmb at an exchange rate of $100 per board, and now when it comes time to actually take delivery and buy the boards they cost Apple the equivalent of $150 each.

That sounds like it's the wrong way round.

Re: Stocks Off Sharply as Market Upheaval Grows

#230

Post by msandford »

cynicalkane wrote: post #186
rsmckinney wrote: post #183

Earlier quoted context omitted.

"Historically speaking" Historically speaking, when has the Fed kept interest rates at ZERO for 7 years? After pumping QE full throttle at $80B/mo? The economy has been in continuous "recovery" mode since '08, but not much has actually recovered. The market is going to collapse my friend because, historically speaking, we are in dark, uncharted territory and have lost our way back.

Interest rates are nominal; they only matter relative to some equilibrium. The equilibrium interest rate is somewhere close to zero.

> The equilibrium interest rate is somewhere close to zero

Really? Who are all these people who -- with their own money -- are willing to lend $100mm today for $100.05mm in a decade?

If there are people willing to lend OTHER PEOPLE's money for near-zero rates, that doesn't count. Because ostensibly all money has to be someone's money. And if it's not -- like say if it's the Fed's money -- then that's clearly some kind of forcing function that can totally disturb the natural equilibrium.

The only way that interest rates accurately reflect people's true time preference for money (which is what it's supposed to be, really) is if all money loaned is money owned by a real human being, somehow, somewhere, who has actual influence over what is being done with it. If there's money in the system that doesn't fit that criteria, you're screwing with the interest rate in a non-natural way and suggesting that this artifice is reflective of the aggregate time-preference for money is totally bonkers.

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