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Yield Curves Invert in U.S., U.K

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Re: Yield Curves Invert in U.S., U.K

#231

Post by roymurdock »

cestith wrote: post #218
roymurdock wrote: post #151

Earlier quoted context omitted.

My question is what is the point of the trade war. What does trump get from initiating/escalating it, or who is directing him to do it. Seems to be a net negative for all sectors of the economy.

There are two things China has been doing for years that the WTO hasn't put an end to. The stated goals of the trade war include stopping those, which I can - as anything but a fan of anything to do with Trump - actually agree need to stop. I'm far from certain the scale and breadth of tariffs involved are necessary to stop them, but I agree those two practices need to stop. One of those is outright IP theft. One esp…

These are good points. Not sure why Trump would care about the first one, but could see how enough businesspeople were leaning on him to get the second point done. This seems like the most likely explanation to me as well (opening China to further foreign investment by accelerating the country's slowdown in growth).

Re: Yield Curves Invert in U.S., U.K

#232

Post by gniv »

gniv wrote: post #169
neplus wrote: post #35

I find the general interest of the public in inversions - similar to their interest in negative yields - a bit surprising. I suppose it must be due to these concepts seeming counter-intuitive. Some brief notes, not all of which are meant to tie seamlessly together: 1. What's the lag time? Inversions in the past have had rather large lag times before recessions actually began (most recently they've been 24 months, 13…

> Because US auctions can't fail - primary dealers need to act as a back stop - you've had firms like JPM and BofA taking on huge amounts of treasuries. This has really clogged the o/n repo market and is beginning to distort bank balance sheets. I haven't heard about this. Any public reading material?

(Replying to myself)

I found this graphic: https://fingfx.thomsonreuters.com/gfx/mkt/12/4001/3971/U.S.%...

linked from this article: https://wkzo.com/news/articles/2019/jul/30/us-seen-ramping-u...

Funny thing is, given the recent trend in treasury yields, these banks are making good money on their holdings.

Re: Yield Curves Invert in U.S., U.K

#233

Post by chronotis »

strenholme wrote: post #221

I remember the dot-com crash of 2001 and seeing companies close so fast, they didn’t their employees a final paychecks; I remember one day, after the dot-com collapse a position I was qualified for got filled within three hours. As someone who has seen this before, things are looking ominous: The stock market drop of late 2018 reminded me of the stock market drop we had in 2000, about a year before everything fell ap…

I'm not sure whether to feel vindicated to see someone else echoing my own internal thoughts, or to feel nauseous about reliving those years. I was fortunate enough to have been at a company that was making money, but I still remember growing from 500 employees to 4000 or so in 2 years...and then dropping back down to 1500 two years later. We bought a small software company for the talent, and 3 months later was told to layoff the entire team.

Many great colleagues left tech at that point to become Realtors, landscapers, accountants. This is not to say that we are destined to relive exactly the same fate, but it's good to remember that rapid change is always a possibility.

Re: Yield Curves Invert in U.S., U.K

#234

Post by SkyBelow »

tempguy9999 wrote: post #225
polotics wrote: post #219

Earlier quoted context omitted.

It's not so easy to distinguish the drunken master from the drunk. They walk the same.

Nicely put, but a real drunken master doesn't get repeatedly decked. Look at trump's financial record, that should have been quite enough (6 bankruptcies was it?) Those who were fooled, were fooled because they chose to be.

Why should the number of bankruptcies matter if the person is still rich? It shows that they are using it as a tool, which might inform us we need to consider how bankruptcies work, but that doesn't make someone incompetent. If you want to see someone who is incompetent with money, look at lottery winners who within 5 years end up worse than before they won.

Re: Yield Curves Invert in U.S., U.K

#235

Post by cestith »

elicash wrote: post #50

Question: While I'm sure economists have been studying this effect for decades, or maybe even way longer for all I know, it seems like this metric has been popularized as the key thing everyone looks at just in the last decade -- after the last recession that we had. Given the popularization, any chance of an increased observer effect? In either direction, I mean, positive or negative.

I often wonder how many people are still using the peanut butter to beef ratio or the bare peanut butter price curve as indicators.

Re: Yield Curves Invert in U.S., U.K

#236

Post by asdf21 »

chronotis wrote: post #233
strenholme wrote: post #221

I remember the dot-com crash of 2001 and seeing companies close so fast, they didn’t their employees a final paychecks; I remember one day, after the dot-com collapse a position I was qualified for got filled within three hours. As someone who has seen this before, things are looking ominous: The stock market drop of late 2018 reminded me of the stock market drop we had in 2000, about a year before everything fell ap…

I'm not sure whether to feel vindicated to see someone else echoing my own internal thoughts, or to feel nauseous about reliving those years. I was fortunate enough to have been at a company that was making money, but I still remember growing from 500 employees to 4000 or so in 2 years...and then dropping back down to 1500 two years later. We bought a small software company for the talent, and 3 months later was told…

500 employees to 1,500 in 4 years is still extremely solid growth.

Markets have corrections, if your company is providing something of value I'm sure things will be okay.

Re: Yield Curves Invert in U.S., U.K

#237

Post by taude »

chronotis wrote: post #233
strenholme wrote: post #221

I remember the dot-com crash of 2001 and seeing companies close so fast, they didn’t their employees a final paychecks; I remember one day, after the dot-com collapse a position I was qualified for got filled within three hours. As someone who has seen this before, things are looking ominous: The stock market drop of late 2018 reminded me of the stock market drop we had in 2000, about a year before everything fell ap…

I'm not sure whether to feel vindicated to see someone else echoing my own internal thoughts, or to feel nauseous about reliving those years. I was fortunate enough to have been at a company that was making money, but I still remember growing from 500 employees to 4000 or so in 2 years...and then dropping back down to 1500 two years later. We bought a small software company for the talent, and 3 months later was told…

Most my friends went back to grad school and retrained for other professions, too, like attorneys and some optometrists.

I think what's a bigger risk these days is just how much tech talent if off-shored to other parts of the world, even at fast growing startups. Serious risk for engineers, likely in the Valley, where I don't know if you remember all of the billboards going from having ads on them, to pretty much being blank for several years.

Re: Yield Curves Invert in U.S., U.K

#238

Post by SkyBelow »

magduf wrote: post #188
roymurdock wrote: post #165

Earlier quoted context omitted.

I've heard that argument but it's wrecking parts of the ag sector, hurting manufacturing (big parts of his base), and will probably push all consumer prices up. I guess if his base can't put 2 and 2 together that prices are rising due to his tariffs it almost makes sense. But I don't think it's that simple, he's clearly a coin operated guy so which coin is operating him to escalate this trade war?

>I guess if his base can't put 2 and 2 together that prices are rising due to his tariffs it almost makes sense. His base really can't put 2 and 2 together. You seem to think it's obvious that tariffs will cause prices to rise, but you seriously underestimate just how stupid these people are.

If your explanation requires assuming that both very powerful politicians and their supports, constituting tens of millions of people, are all incompetent, then perhaps you need to consider an explanation that doesn't require such assumptions.

Re: Yield Curves Invert in U.S., U.K

#239

Post by neplus »

gniv wrote: post #232
gniv wrote: post #169

Earlier quoted context omitted.

> Because US auctions can't fail - primary dealers need to act as a back stop - you've had firms like JPM and BofA taking on huge amounts of treasuries. This has really clogged the o/n repo market and is beginning to distort bank balance sheets. I haven't heard about this. Any public reading material?

(Replying to myself) I found this graphic: https://fingfx.thomsonreuters.com/gfx/mkt/12/4001/3971/U.S.%... linked from this article: https://wkzo.com/news/articles/2019/jul/30/us-seen-ramping-u... Funny thing is, given the recent trend in treasury yields, these banks are making good money on their holdings.

You'll notice in this graphic the sharp jump in holdings that corresponds to around October. This is when - for foreign buyers - the yield curve really inverted for practical purposes, leading to primary dealers filling up their books, which I detailed a bit in my initial post.

Re: Yield Curves Invert in U.S., U.K

#240

Post by wil421 »

hylaride wrote: post #212
Retric wrote: post #55

Earlier quoted context omitted.

The hedge fund must have been doing a different strategy as I did much better than 7.1% from 2007 to 2017. Left at 1500 got back in at 930 and then ignored the market for 10 years.

The bet was for returns AFTER fees, though. S&P was its return minus 0.05%/yr (or whatever it is for vanguard). The hedge funds was their returns (which did suck compared to the S&P500 IIRC) minus 2%/yr plus 20% of final profits.

For the individual investor Buffetts advice was still right. Unless you have millions or billions to manage.
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