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Wall Street sell-off turns 'ugly' as US recession fears grow

independent.co.uk

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Re: Wall Street sell-off turns 'ugly' as US recession fears grow

#111

Post by Yoric »

cj wrote: post #2

Hopefully 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…

Well, the fact that Trump is breaking all the treaties one after the other are certainly not encouraging for markets, but there are also many signs that suggest that:

1. Trump is planning to deflate the dollar (not the least of which being that this his Secretary of Treasury wrote a plan to do this); 2. Trump might be planning to re-negotiate the US debt, for what I believe is the first time in history.

Neither is the kind of thing that the markets enjoy seeing. After all, if the dollar is deflated by 50% (I'm inventing that number), all the money invested in Wall Street suddenly loses 50% of its value.

Also, I've read a few economists, and they seem to agree that the prosperity of the US is largely a bubble based on the (artificially) strong dollar, but that the same strong dollar is killing US exports. By these accounts, Trump's maneuvers are an attempt to pop that bubble, which might be good, but will destroy the prosperity bubble, which nobody really wants. Whether it's true or not, that hypothesis is a good reason to not invest in US economy.

And none of these three points can be fixed easily.

Re: Wall Street sell-off turns 'ugly' as US recession fears grow

#112

Post by LittleTimothy »

thry1231296 wrote: post #80

[flagged]

I have some sympathy for the view that we've just handed back some of the gains, but I don't understand the attitude about sanctions. Russia is a small economy. A small economy who primarily exports gas & oil to eastern europe. If there really is a peace deal and sanctions are lifted, I don't see how that positively impacts the US? It means cheaper oil for eastern europe (pricing out some of the US nat gas exports), almost certainly higher deficit defence spending across Europe (on local heroes, no one is trusting the US for security). Other than "good news markets go up" is the logic behind thinking a peace deal would drive US markets? A laughably theoretical deal for minerals?

Re: Wall Street sell-off turns 'ugly' as US recession fears grow

#113

Post by Yoric »

stvltvs wrote: post #91
klipt wrote: post #75

Earlier quoted context omitted.

More that, almost all companies are expected to perform worse when you elect an economically incompetent government.

What's the opposite of "a rising tide floats all boats"?

A rising flood drowns all swimmers?

Re: Wall Street sell-off turns 'ugly' as US recession fears grow

#114

Post by tombert »

sampton wrote: post #87

Back paddling on the tariffs without any concessions is more damaging the tariffs themselves. It shows the leadership is uninformed and the economy is very weak. Way to flash your weak hand in the first round.

He's a pretty objectively terrible businessman.

Like, that's the part that annoys me about him more than anything else, how he's convinced a lot of people that he's "good at business". He's not; if he had just dumped the money his father left him into basically any index fund between the 1970's until 2016, he would have made more money than he had in 2016.

Any idiot can basically match the S&P500, just buy VOO or SPY or something, so I don't consider you a "good" businessman if you don't beat the S&P.

So it doesn't surprise me that he is uninformed and doesn't know how to negotiate.

Re: Wall Street sell-off turns 'ugly' as US recession fears grow

#115

Post by danaris »

ren_engineer wrote: post #26
cj wrote: post #2

Hopefully 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…

just cutting government spending would automatically put the US into recession, deficit spending is the only thing that has kept things going. Huge amount of job growth is either direct government hiring or indirect through businesses hiring off revenue from government contracts

It wouldn't have to be deficit spending if we raised taxes on the highest earners to levels more like what they were before Reagan.

Re: Wall Street sell-off turns 'ugly' as US recession fears grow

#116

Post by ben_w »

darth_avocado wrote: post #63
ren_engineer wrote: post #26

Earlier quoted context omitted.

just cutting government spending would automatically put the US into recession, deficit spending is the only thing that has kept things going. Huge amount of job growth is either direct government hiring or indirect through businesses hiring off revenue from government contracts

Historic job growth means nothing if everyone needs 3 jobs to earn median household income.

Tautologically, everyone taking three jobs is what causes median hosehold income to be at that level.

Re: Wall Street sell-off turns 'ugly' as US recession fears grow

#117

Post by TulliusCicero »

echelon wrote: post #84
DonnyV wrote: post #52

Earlier quoted context omitted.

But they haven't kept up with inflation.

Inflation was totally self-inflicted. Both the Trump 2020 and Biden admins went crazy over stimulus when the worst of Covid had already been behind us. Pumping that much free energy into the economy cannot be undone with the simple wave of the austerity wand.

Some of it was stimulus, but some of it was logistical interruptions caused by covid. You can't just wave away how hard China shut down. Automakers struggling to source chips was not caused by too much stimulus.

Re: Wall Street sell-off turns 'ugly' as US recession fears grow

#118

Post by danaris »

echelon wrote: post #84
DonnyV wrote: post #52

Earlier quoted context omitted.

But they haven't kept up with inflation.

Inflation was totally self-inflicted. Both the Trump 2020 and Biden admins went crazy over stimulus when the worst of Covid had already been behind us. Pumping that much free energy into the economy cannot be undone with the simple wave of the austerity wand.

This has been repeatedly debunked.

Yes, there was a small amount of money pumped into the consumer economy ($2000/household). Yes, there were some supply shocks during the height of the lockdowns.

No, those do not explain the persistent high prices.

Unprecedented consolidation across all sectors made it easy for a much smaller group of people at the top to respond to a zeitgeist that expected inflation by keeping prices high after the supply shocks were over, and pocketing the difference. It didn't even require active collusion (though it wouldn't surprise me if there was at least a little).

Re: Wall Street sell-off turns 'ugly' as US recession fears grow

#119

Post by danaris »

aetherson wrote: post #67
simonsarris wrote: post #43

Earlier quoted context omitted.

> and low to no wage growth Huh? There was "low to no wage growth" in the 80's and 90's. We do have wage growth now. https://fred.stlouisfed.org/series/LES1252881600Q Wage growth for over 25 no-college earners has been even better. > high levels of stock buybacks There's nothing economically dire, or even weird, about choosing buybacks over dividends in returning profits to shareholders. It just lets shareholders cho…

We've propagandized a generation of people into believing that there has been no wage growth for 40 years when the deal was actually that there were falling wages in the 80s, stagnant wages in the 90s, and growth since then (with a recession after 2008 that has been fully caught back up to since).

And is that wage growth consistent across all quintiles of earners?

Or is it primarily concentrated in the upper quintiles?

(I actually genuinely do not know the answer to this offhand.)

Re: Wall Street sell-off turns 'ugly' as US recession fears grow

#120

Post by rat87 »

hnpolicestate wrote: post #61

Is it possible that wall streets economic interests were not aligned with the interests of U.S citizens? One could argue we are now so down the road of globalization that any attempt to pull back would cause economic disaster. I think probably yes. The wealthy make their money in the market, while the poor rely on wages whose dollar keeps decreasing in value. I get the 401k angle too. But for too long the wealthy hav…

> Is it possible that wall streets economic interests were not aligned with the interests of U.S citizens?

Yes

but current administration and policy is terrible for almost everyone. Globalization has in general benefited poor and rich countries very broadly while hurting a few workers in certain industries. Trying to reverse that is largely futile and will double down on the bad sides of protectionism while not doing much to "bring back" jobs that moved abroad or became more automated.

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