Wall Street sell-off turns 'ugly' as US recession fears grow
71–80 of 185 posts
Re: Wall Street sell-off turns 'ugly' as US recession fears grow
#72Hopefully this isn't a biased take: I think this is a unique situation because the recent moves (in my opinion) are largely a result of everyone's uncertainty around America's policies. In other words, the recent stock moves aren't because we're seeing a bunch of companies fail to miss quarterly targets. There are no major economic indicators flashing red. If stocks can drop that fast in a couple weeks, they can also…
It's surreal watching all the analysts stumble around trying to explain market behavior with half-baked explanations. One says it's tariffs, another says it's "uncertainty", a third worries about "recession", others say "inflation" or "stagflation". But none of them show logically or quantitatively how tariffs or "uncertainty" or vague, unsubstantiated worries about recession reduce the present value of future cash f…
> none of them show [how uncertainty etc.] reduce the present value of future cash flows.
They don't reduce the value of future cash flows, but they reduce the certainly of future cash flows that are discounted to present value. Additionally it's widely demonstrated that people will accept lower returns for lower risk/volatility. That's why T-bill have the lowest return, then bonds, then equities.
Re: Wall Street sell-off turns 'ugly' as US recession fears grow
#73Stock market bubble started slowly deflating. When is housing market bubble going to deflate?
I can tell you if you're talking about urban centers like NYC, Chicago, Washington etc. When the United States stops immigration from wealthy immigrants. Everyone buying in my area are Chinese, Arab or Indian immigrants with far more money than the native population. They are propping up home values. Would have popped by now.
Re: Wall Street sell-off turns 'ugly' as US recession fears grow
#74Earlier quoted context omitted.
Well the issue with housing doesn't seem to be a "bubble" in the same sense. It's moreso we aren't building enough housing so the supply is limited. With higher rates the monthly price is higher too which is contributing to un-affordability. But if rates go down then monthly payment prices would go down, which would cause prices to go up. If rates go down because there's a substantial recession home prices may go dow…
It becomes a bubble when suddenly people who paid a fortune for mortgages at sky high prices aren't able to pay them anymore. Or demand falls. The market is currently tight but on both supply and demand. No one with a 2% mortgage wants to move. No one wants to buy at 6% interest.
I personally think of a bubble has having a significant speculation component which I don't think applies wholly to the housing market in the same way it does today's stock market. The reasons that housing prices are so high, in my opinion, is primarily because of structural problems. But certainly others may feel differently or define a bubble differently.
Re: Wall Street sell-off turns 'ugly' as US recession fears grow
#75Earlier quoted context omitted.
It's potentially worse, as it points to a distrust of the system, not individual companies or industries. Presumably we'll bottom out, but unless there's a dramatic change in those policies, prices will reflect the "new normal", not the previous status quo.
so stocks are less related to individual company performance than they should be?
More that, almost all companies are expected to perform worse when you elect an economically incompetent government.
Re: Wall Street sell-off turns 'ugly' as US recession fears grow
#76Earlier quoted context omitted.
It's potentially worse, as it points to a distrust of the system, not individual companies or industries. Presumably we'll bottom out, but unless there's a dramatic change in those policies, prices will reflect the "new normal", not the previous status quo.
so stocks are less related to individual company performance than they should be?
There is no “should”
A big factor of stock performance is the r market’s assessment of risk and its risk tolerance.
Both of those can change, and have nothing to do with company performance.
Re: Wall Street sell-off turns 'ugly' as US recession fears grow
#77Hopefully this isn't a biased take: I think this is a unique situation because the recent moves (in my opinion) are largely a result of everyone's uncertainty around America's policies. In other words, the recent stock moves aren't because we're seeing a bunch of companies fail to miss quarterly targets. There are no major economic indicators flashing red. If stocks can drop that fast in a couple weeks, they can also…
It's potentially worse, as it points to a distrust of the system, not individual companies or industries. Presumably we'll bottom out, but unless there's a dramatic change in those policies, prices will reflect the "new normal", not the previous status quo.
Stock prices are one of the economic indicators people love to point to, but they're also a pretty bad indicator of how things are going.
Firstly, only a small percentage of people are directly invested. A larger group is tangentially invested (through retirement funds) but that isn't applicable in the short term.
Secondly, traders (as distinct from investors) make money on volatility. So there's always short-term movement going on.
For a long time now the market is largely driven by emotion not substance. Big news event, dock of some company drops 5%. By the end of the week it's out the news and back where it started.
So yeah, the market does what the market does. It'll trend upwards, because that's what its designed to do.
There are other, more concerning indicators in play, which are more important than the stock market. Employment (or the loss thereof) has a much more immediate impact. We cheer as tens of thousands are fired. Yay?
Re: Wall Street sell-off turns 'ugly' as US recession fears grow
#78Stock market bubble started slowly deflating. When is housing market bubble going to deflate?
Since 2009 banks have been able to ignore "mark to market" rules thus allowing them to keep unrealistically high valuations on deflating properties.
Re: Wall Street sell-off turns 'ugly' as US recession fears grow
#79Earlier quoted context omitted.
Wage growth for lower income percentiles has actually been quite good in recent years IIRC.
But they haven't kept up with inflation.
Not sure why you're being downvoted.
None of the wage growth has kept up with inflation, for any quartile of workers.
Wages are still down 0.5 to 1.5 % from pre-Covid times adjusted for inflation.
Re: Wall Street sell-off turns 'ugly' as US recession fears grow
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