DOW down another 522 pts

Lesgo_Brandon

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Nov 11, 2021
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St Louis
Donald Trump Thumbs Up GIF by Justin Gammon
 

KnightWhoSaysNit

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Jul 19, 2010
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This is just interest rate rise projections driving prices.

Wait until the strong dollar (relative to foreign currencies), a drag on export industries, truly impacts corporate earnings.

Wait until inflation squeezes domestic consumer spending and raises private debt.

Wait until the E in PE gets smaller.

This is going to be fun.

Remember this chart?

Or this one?

This site has a nice chart of what happens when the 2/10 yield curve is inverted more than 0.5%.

Now go look at the history that follows, keeping in mind that the Fed can't go QE any more because that's been broken by massive debt/GDP.

And there is no solution to break the back of stagflation because the solutions that worked in the 1970s and 80s are not feasible today.

We have a society that thinks government creates jobs, and that we will be better off for it. The people in those great jobs finance their jobs by paying the government who pays them their salaries. Voila !!!

Thanks Brandon. Thank you Dems for outstanding policies.
 

The Spin Meister

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Nov 27, 2012
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An altered state
This is just interest rate rise projections driving prices.

Wait until the strong dollar (relative to foreign currencies), a drag on export industries, truly impacts corporate earnings.

Wait until inflation squeezes domestic consumer spending and raises private debt.

Wait until the E in PE gets smaller.

This is going to be fun.

Remember this chart?

Or this one?

This site has a nice chart of what happens when the 2/10 yield curve is inverted more than 0.5%.

Now go look at the history that follows, keeping in mind that the Fed can't go QE any more because that's been broken by massive debt/GDP.

And there is no solution to break the back of stagflation because the solutions that worked in the 1970s and 80s are not feasible today.

We have a society that thinks government creates jobs, and that we will be better off for it. The people in those great jobs finance their jobs by paying the government who pays them their salaries. Voila !!!

Thanks Brandon. Thank you Dems for outstanding policies.
The biggest economic problem coming at us is the war I Europe and its affect on energy. Europe is shutting down lots of factories to save energy. That means a lot of stuff we get from there ain’t coming this winter. That means what we do have will get much more expensive. Takes all those Euro cars. Take them off the market and cars will be even harder to buy here than it is now. Same with all other Euro stuff we import.

And on the flip side, they will stop buying what we export to there. They will have no money for our products. People are posting monthly energy bills the equivalent of over $20,000! That’s will cause a deep recession here as companies lay off people. Combined with our very high energy costs and ever higher interest rates....it’s gonna be a long rough winter.

And Putin will be watching, studying, waiting. At then worst possible time....during a severe cold snap.....he will shut off all oil and gas for a few weeks. That will precipitate some very serious problems.

Tough times for the entire world ahead.
 
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KnightWhoSaysNit

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Jul 19, 2010
8,825
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The biggest economic problem coming at us is the war I Europe and its affect on energy. Europe is shutting down lots of factories to save energy. That means a lot of stuff we get from there ain’t coming this winter. That means what we do have will get much more expensive. Takes all those Euro cars. Take them off the market and cars will be even harder to buy here than it is now. Same with all other Euro stuff we import.

And on the flip side, they will stop buying what we export to there. They will have no money for our products. People are posting monthly energy bills the equivalent of over $20,000! That’s will cause a deep recession here as companies lay off people. Omni Ed with out very high energy costs and ever higher interest rates....it’s gonna be a long rough winter.

And Putin will be watching, studying, waiting. At then worst possible time....during a severe cold snap.....he will shut off all oil and gas for a few weeks. That will precipitate some very serious problems.

Tough times for the entire world ahead.

I could not agree more. Your average investor doesn't factor in what is going on outside of the USA. Your average Dem investor would not be able to find Europe on a map.

When the things you describe happen, it will be the perfect time to invade Taiwan. WW3 could be started over the incompetence of European leftwing leadership and the change to leftwing in the USA. Maybe even nuclear war.
 

PSUEngineer89

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Aug 14, 2021
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This is what 81 million people people voted for and now they have it
And they'll only learn if it is really painful.

If it weren't for the need to stop the FBI/DOJ corruption, I'd actually prefer to lose the midterms so the stupid voters would have more difficulty lying to themselves.
 

bdgan

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May 29, 2008
61,143
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And they'll only learn if it is really painful.
Most still won't learn.

Posts pop up on Facebook about the evils of capitalism. The comments are scary. People suggesting that workers do the bare minimum because the more you do the more employers demand from you with no reward.

I see a lot of posts about republicans wanting to outlaw books like Nazis which of course is absurd. Ironically the comments talk about the need to remove conservative comments from social media.
 

fairfaxlion2

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Oct 12, 2014
8,020
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Anyone who didn't move to mostly cash several months ago is an idiot. Pretty easy to see what was coming.
this is not wrong, especially if you are near retirement. if not, then be prepared to hold on for a long while

also it has hardly even started yet
 

KnightWhoSaysNit

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Jul 19, 2010
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this is not wrong, especially if you are near retirement. if not, then be prepared to hold on for a long while

also it has hardly even started yet

I was just looking at what the Shiller PE was the last time the Fed turned high inflation around. It was about a third of today's value.

That created a recession that would have been really deep had it not been for Reagan's tax cuts.

Problem today is that Reagan's solution is not feasible. Our debt/GDP is too high.

We get a very low return now for a public dollar spent, and it's getting worse. Interest on debt is already a sizable fraction of the budget. Add in the bureaucracies between collecting tax money and redistributing some of it back into the private sector, and frankly I don't have a nice word for the outcome. It's not a happy ending.

And Dems want to continue this direction. OUCH !!!
 

bdgan

Well-Known Member
May 29, 2008
61,143
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I was just looking at what the Shiller PE was the last time the Fed turned high inflation around. It was about a third of today's value.

That created a recession that would have been really deep had it not been for Reagan's tax cuts.

Problem today is that Reagan's solution is not feasible. Our debt/GDP is too high.

We get a very low return now for a public dollar spent, and it's getting worse. Interest on debt is already a sizable fraction of the budget. Add in the bureaucracies between collecting tax money and redistributing some of it back into the private sector, and frankly I don't have a nice word for the outcome. It's not a happy ending.

And Dems want to continue this direction. OUCH !!!
I agree with all that except for 2 things.
  1. We have a large backlog of job openings to work through and Biden has qued up the economy with an additional $4 trillion of spending.
  2. The fed will ease if job losses get too high.
Also, you never know what's going to happen. What if the situation in Ukraine gets resolved? On the other hand, what if we have WW3?
 

KnightWhoSaysNit

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Jul 19, 2010
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I agree with all that except for 2 things.
  1. We have a large backlog of job openings to work through and Biden has qued up the economy with an additional $4 trillion of spending.
  2. The fed will ease if job losses get too high.
Also, you never know what's going to happen. What if the situation in Ukraine gets resolved? On the other hand, what if we have WW3?

I look at this rather simply. There is no way we can have a 40% increase in productivity to match the 40% money supply increase, especially with anti-growth fiscal policies. We've already lost purchasing power to the tune of at least 10-20% in two years, so we've got another 20-30% to go unless Powell's QT is rapid, and that I think will create a depression. Dem energy policies are not going to help, and neither will their socialist spending. Budget deficits are going to balloon, then the system collapses.

There was enough incompetence to create this mess so I have no confidence that they can undo it without an even bigger mess.

There is certainly no political will to do what must be done. In fact they are doing the opposite of what must be done.
 

fairfaxlion2

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Oct 12, 2014
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Most people saw it coming in January 2021.
I was just looking at what the Shiller PE was the last time the Fed turned high inflation around. It was about a third of today's value.

That created a recession that would have been really deep had it not been for Reagan's tax cuts.

Problem today is that Reagan's solution is not feasible. Our debt/GDP is too high.

We get a very low return now for a public dollar spent, and it's getting worse. Interest on debt is already a sizable fraction of the budget. Add in the bureaucracies between collecting tax money and redistributing some of it back into the private sector, and frankly I don't have a nice word for the outcome. It's not a happy ending.

And Dems want to continue this direction. OUCH !!!
the higher interest is only on new debt

Unfortunately Congress will just assume that the Fed will drop back to ultra low rates as soon as inflation subsides, and unforrtunately that might be true

meanwhile, higher taxes and eventually higher wages will combine to reduce concern about the old, existing debt

They will do nothing to change, sadly

as for the Shiller ratio, people were crazy to think it would be different this time. just because they liked the value of their accounts and didnt want to admit that it cannot stay at 35-40 (if they understand what it is)

it has always reverted to the mean, which is about 15 or 16. what happened in 2008 was that it was headed for the 5-10 range, and the govt stepped in and stopped it from falling. it stopped at 15 and went straight up for basically 13 years. that action just made the ultimate correction worse, IMO. I think it is going below 15 this time, before anything starts to improve again
 

bdgan

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May 29, 2008
61,143
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I look at this rather simply. There is no way we can have a 40% increase in productivity to match the 40% money supply increase, especially with anti-growth fiscal policies. We've already lost purchasing power to the tune of at least 10-20% in two years, so we've got another 20-30% to go unless Powell's QT is rapid, and that I think will create a depression. Dem energy policies are not going to help, and neither will their socialist spending. Budget deficits are going to balloon, then the system collapses.

There was enough incompetence to create this mess so I have no confidence that they can undo it without an even bigger mess.

There is certainly no political will to do what must be done. In fact they are doing the opposite of what must be done.
All of that is true but do you really think the Fed will continue to raise rates and sell off the balance sheet until inflation drops to 2%?

I think there will be 2 more rate hikes, GDP will be negative 2%, and unemployment will increase to 4.2%. Inflation will drop to 4% and they'll back off. I think they're willing to accept some pain but not a severe recession.
 

KnightWhoSaysNit

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Jul 19, 2010
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the higher interest is only on new debt

Unfortunately Congress will just assume that the Fed will drop back to ultra low rates as soon as inflation subsides, and unforrtunately that might be true

meanwhile, higher taxes and eventually higher wages will combine to reduce concern about the old, existing debt

They will do nothing to change, sadly

as for the Shiller ratio, people were crazy to think it would be different this time. just because they liked the value of their accounts and didnt want to admit that it cannot stay at 35-40 (if they understand what it is)

it has always reverted to the mean, which is about 15 or 16. what happened in 2008 was that it was headed for the 5-10 range, and the govt stepped in and stopped it from falling. it stopped at 15 and went straight up for basically 13 years. that action just made the ultimate correction worse, IMO. I think it is going below 15 this time, before anything starts to improve again

I think our debt has a duration of about 5 years. The current rate for 5 years is about 3.9%. The 10 year is at 3.7. This is what investors are expecting. That is a lot to finance, 3% higher than a year ago. It was in the 2-3% range 5 years ago. Let's assume we are 2% higher going forward. That is an extra 600 billion per year. This could go higher as Congress keeps spending. The amount to finance goes higher as does the interest rate. It will be a death spiral without budget cuts.

As for Shiller, you and I tend to look at it. If it were my calculation I would shorten the business cycle basis a bit. I'm not sure how 10 years was determined to be a good basis, but even if you look at it through the Buffet ratio, we are still very roughly twice the mean as a result of incurring this massive debt ratio, i.e., artificially low interest rates due to the invention of QE to solve all economic problems.

In my view, both trickle down and trickle up solutions are bad. The important thing is to not have bad policies, and even loose banking regulations, that create problems. Why the Fed felt compelled to finance the economy beyond what even Congress was spending is beyond me. Buying mortgage backed securities, for example, after home prices had recovered. That was really stupid. There was no need to create a housing bubble and no need to create a stock market bubble. Now we have the consequence -- higher than necessary interest rates and a massive balance sheet to pay off.
 

bdgan

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May 29, 2008
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Why the Fed felt compelled to finance the economy beyond what even Congress was spending is beyond me. Buying mortgage backed securities, for example, after home prices had recovered.
  1. Powell wanted to be reappointed by Biden.
  2. The Fed thinks they can control things like boosting the economy or reigning it in without creating problems. Their low batting average says otherwise but they have a God complex. This time will be different!
 

Online Persona

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Feb 2, 2022
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Most still won't learn.

Posts pop up on Facebook about the evils of capitalism. The comments are scary. People suggesting that workers do the bare minimum because the more you do the more employers demand from you with no reward.

I see a lot of posts about republicans wanting to outlaw books like Nazis which of course is absurd. Ironically the comments talk about the need to remove conservative comments from social media.
Have you seen posts making the claim that Trump shut everything down and kept it shut down way too long? Just crazy how they rewrite or fabricate history.
 

bdgan

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May 29, 2008
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Have you seen posts making the claim that Trump shut everything down and kept it shut down way too long? Just crazy how they rewrite or fabricate history.
Trump screwed up by going along with the shutdowns too long. Early on we knew that 90% of the deaths were seniors with comorbidities so we should have focused on them and made sure people got back to work.

Republican congressmen screwed up by giving into the Democrat majority wrt bailout money. 90% were still working so why did they need stimulus payments? Those who weren't working made more money by staying home. Are you kidding me? The labor participation rate has never fully recovered.

Regardless, the democrats wanted covid to remain a big issue until after the election.
 
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PSUEngineer89

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Trump screwed up by going along with the shutdowns too long. Early on we knew that 90% of the deaths were seniors with comorbidities so we should have focused on them and made sure people got back to work.

Republican congressmen screwed up by giving into the Democrat majority wrt bailout money. 90% were still working so why did they need stimulus payments? Those who weren't working made more money by staying home. Are you kidding me? The labor participation rate has never fully recovered.

Regardless, the democrats wanted covid to remain a big issue until after the election.
It was 10,000 doctors, researchers, Fauci, Birx and the censors in tech against Trump.

He buckled. Anyone would.

But he was right and they were wrong/lying.

In 2025, payback time.
 

bdgan

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It was 10,000 doctors, researchers, Fauci, Birx and the censors in tech against Trump.

He buckled. Anyone would.

But he was right and they were wrong/lying.

In 2025, payback time.
I don't want Trump to run.

He would still be president if not for covid. The Russian hoax was debunked and the phone call to Zelinski wasn't a big deal. The dems blamed him for covid and frustrated people went along. It also helped that democrats changed voting rules using covid as an excuse.

But 1/6 has irreparably damaged Trump. He didn't summon people to overthrow the election like the dems say but he was a bad loser and got people riled up with claims he couldn't prove. It's time to move on.
 
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PSUEngineer89

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I don't want Trump to run.

He would still be president if not for covid. The Russian hoax was debunked and the phone call to Zelinski wasn't a big deal. The dems blamed him for covid and frustrated people went along. It also helped that democrats changed voting rules using covid as an excuse.

But 1/6 has irreparably damaged Trump. He didn't summon people to overthrow the election like the dems say but he was a bad loser and got people riled up with claims he couldn't prove. It's time to move on.
I trust no one else to not make nice with deep state.

Who do you trust to knock down deep state?
 
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fairfaxlion2

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All of that is true but do you really think the Fed will continue to raise rates and sell off the balance sheet until inflation drops to 2%?

I think there will be 2 more rate hikes, GDP will be negative 2%, and unemployment will increase to 4.2%. Inflation will drop to 4% and they'll back off. I think they're willing to accept some pain but not a severe recession.
they are not going to be okay with 4% inflation

the stakes are too high this time. they will accept a severe recession, IMO

what they will never admit is that they also were the cause of getting us to this point
 
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bdgan

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they are not going to be okay with 4% inflation

the stakes are too high this time. they will accept a severe recession, IMO

what they will never admit is that they also were the cause of getting us to this point
They won't be OK with 4% inflation but they have a dual mandate wrt employment. IMO they'll let the economy go into a mild recession and let unemployment creep up to 4.2%. Then their shorts will get tighter than Franklin's with a 15 pt 4th quarter lead over OSU.
 

The Spin Meister

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An altered state
They won't be OK with 4% inflation but they have a dual mandate wrt employment. IMO they'll let the economy go into a mild recession and let unemployment creep up to 4.2%. Then their shorts will get tighter than Franklin's with a 15 pt 4th quarter lead over OSU.
Unemployment will be much higher, likely 6-7%. Possibly higher.
 

bdgan

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Unemployment will be much higher, likely 6-7%. Possibly higher.
We're starting from a point where we have 11k job openings and only 5k looking.

Besides, inflation would be below 2% before we got to 7% unemployment.