The Stock Market thread

[GrantDawg]

Has there ever been a recession where job growth continued to increase and unemployment declined? Because that is still happening.

Sent from my SM-G996U using Tapatalk

[Edward64]

No, don't think there's ever been this situation.

[albionmoonlight]

Post-pandemic and war involving a major global energy supplier will do that. Unprecedented times.

[NobodyHere]

There's also the fact that we have a whole bunch of folks retiring or are on the cusp of retiring.

[flere-imsaho]

If more people are working than ever, but GDP is declining, doesn't that mean, in the simplest terms, that we're just not being as productive as before?

I mean, maybe people are just not trying as hard. The labor market is super-tight and I could see a lot of white collar workers being like "I'm not working myself to death. You get 40 hours and then I'm out of here. What are you going to do, fire me?" And we already know how the service sector is struggling, to the point where vast swathes of it have cut hours and service offerings, which I have to feel would impact the GDP numbers.

But, I'm not an economist, so this could be completely wrong.

[Edward64]

I wonder what they'll call this "phenomenon" in the next couple years (e.g. they came up with "stagflation" in the 70's).

[Arles]

It seems to me that people that switched jobs in the pandemic are making a lot more while people who stayed in their jobs had their buying power cut a bit by inflation. This may be why retail spending is slowing down. What's crazy is services and travel spending is way up. It is a weird economy right now.

The biggest tell on a recession may be if Apple, Google and Microsoft all start missing earnings and lowering guidance. My thinking is we haven't been in a recession this summer, but we may be entering one in the fall.

How inflation looks in Q4 is going to be huge. If it starts pulling back and the Fed gets more worried about a recession, we could get that "soft landing" everyone talked about a year ago. But if inflation is still hot, the Fed could literally put us into a full recession.

[NobodyHere]

What's the definition of a "full recession"?

[Fidatelo]

You never go full recession.

[Edward64]

Originally Posted by NobodyHere

What's the definition of a "full recession"?

I think the delineation will be pretty subjective. Probably a combination of severity and duration. For me, a full recession would be a recession lasting more than a year. A mild recession is < 6 months. See below for list & duration.

List of recessions in the United States - Wikipedia

The Covid Recession was -19.2% but only for 2 months, so I would not call that full blown.

The Great Recession was -5.1% but for 1.5 years (but felt longer).

[Ksyrup]

Originally Posted by Arles

It seems to me that people that switched jobs in the pandemic are making a lot more while people who stayed in their jobs had their buying power cut a bit by inflation. This may be why retail spending is slowing down. What's crazy is services and travel spending is way up. It is a weird economy right now.

People are cutting back on every day things, but after Covid, they are willing to spend on personal services and travel. Credit card debt is climbing:


https://www.cnbc.com/2022/08/02/cred...ge-growth.html

[Edward64]

We should assume another .75 in Sept unless Fed sees good evidence that inflation is doing better.

https://www.cnbc.com/2022/08/06/fed-...int-moves.html

Fed Governor Michelle Bowman said she supports the central bank’s recent 0.75 percentage point rate increases and believes they should continue until inflation is subdued.

“My view is that similarly sized increases should be on the table until we see inflation declining in a consistent, meaningful, and lasting way,” she added in a speech Saturday.

Markets are anticipating a third straight big increase when the central bank meets again in September.

[RainMaker]

Originally Posted by flere-imsaho

If more people are working than ever, but GDP is declining, doesn't that mean, in the simplest terms, that we're just not being as productive as before?

I mean, maybe people are just not trying as hard. The labor market is super-tight and I could see a lot of white collar workers being like "I'm not working myself to death. You get 40 hours and then I'm out of here. What are you going to do, fire me?" And we already know how the service sector is struggling, to the point where vast swathes of it have cut hours and service offerings, which I have to feel would impact the GDP numbers.

But, I'm not an economist, so this could be completely wrong.

Would that trend be bad though? We saw productivity go up over the past few decades but wages stagnate. So maybe some course correction is necessary.

[Edward64]

On the way to Costco, saw regular unleaded at $3.60. At Costco, they were selling it for $3.30. We were going to top off the car but the line was too crazy. Effects of inflation everywhere, all the prices that we normally shop were up except for ...

... pretty sad when you look forward to the $1.50 hot dog meal after shopping.

Just on a side note, I understand sometimes there will be the inevitable jams at the "intersections", but people really shouldn't just park their carts on the lane waiting for whoever and being oblivious of being part of the problem.

[albionmoonlight]

This is Twitter's response to his counterclaims, which Musk helpfully confirmed because he couldn't bear saying he was tricked online. pic.twitter.com/7132wBGU5q

— Raffi Melkonian (@RMFifthCircuit) August 7, 2022

It is interesting. If Musk's main legal argument is some version of "Twitter tricked me," then Twitter trying a defense of "Elon is way too smart to be tricked" is brilliant psychology b/c you know that he can't admit to being tricked.

Legally, I don't pretend to understand securities law. But from 10,000 feet up, this seems to be what is happening right now.

[flere-imsaho]

Originally Posted by RainMaker

Would that trend be bad though? We saw productivity go up over the past few decades but wages stagnate. So maybe some course correction is necessary.

Not bad at all. Much of American "productivity" is based on working people to death, so anything that pushes that trend in another direction is a good thing IMO.

[NobodyHere]

[Edward64]

Nice CPI figures, hopefully a good day for the markets.

Prices that consumers pay for a variety of goods and services rose 8.5% in July from a year ago, a slowing pace from the previous month due largely to a drop in gasoline prices.

On a monthly basis, prices were flat as energy prices broadly declined 4.6% and gasoline fell 7.7%. That offset a 1.1% monthly gain in food prices and a 0.5% increase in shelter costs.

Economists surveyed by Dow Jones were expecting headline CPI to increase 8.7% on an annual basis and 0.2% monthly.

Excluding volatile food and energy prices, so-called core CPI rose 5.9% annually and 0.3% monthly, compared to respective estimates of 6.1% and 0.5%.

EDIT: Whoa, just looked at futures +2.5% for Nasdaq and +1.7% for S&P.

[Lathum]

My BIL who is as high up as you can get in banking without being a CEO said this is a very good number and shows what the feds are doing is working. Wonder how fox will spin it.

[NobodyHere]

Originally Posted by Lathum

My BIL who is as high up as you can get in banking without being a CEO said this is a very good number and shows what the feds are doing is working. Wonder how fox will spin it.

Fox will probably just bury it and focus on how unfairly Trump is being treated.

[Lathum]

Originally Posted by NobodyHere

Fox will probably just bury it and focus on how unfairly Trump is being treated.

This was the conclusion we came to on our drive to the beach this morning.

[NobodyHere]

Originally Posted by Edward64

Nice CPI figures, hopefully a good day for the markets.



EDIT: Whoa, just looked at futures +2.5% for Nasdaq and +1.7% for S&P.

Yeah, another 7 or 8 days like this and the S&P will be positive for 2022!

[Ksyrup]

Just checked my accounts for the first time in a few months. Even with the little rebound, I'm still down about $75K this year.

[Edward64]

And just think, it was probably another $40-$50k down 3 weeks ago.

[Edward64]

Originally Posted by Edward64

My zillow house price has dropped about 3.5% from it's high. It's painful to see but in big scheme to things, nothing compared to the meteoric price rise in the past 2-3 years. So can't complain (yet).

In about a week, my zillow house price has dropped about 4.4% from high. Not complaining yet but sure hope it stabilizes soon.

[Edward64]

Oh yeah baby. Keep 'em coming.

At this rate, the bear market and significant inflation may be over before mid-terms!

https://www.cnbc.com/2022/08/10/dow-...ket-rally.html

Stock futures rose on Thursday as Wall Street was poised to rally for a second day after another better-than-expected inflation report.

Futures tied to the Dow Jones added 0.7% or 245 points, while S&P 500 futures and Nasdaq 100 futures climbed 0.6% and 0.7%, respectively.

Investor sentiment got a boost when the July producer price index showed a surprise decline month over month. PPI showed a decline of 0.5%, compared to an estimate of a 0.2% gain, according to a Dow Jones survey. The PPI reading excluding food and energy rose less than expected.

That reading follows an encouraging read on the consumer price index for July on Wednesday. CPI came in at 8.5%, slightly cooler than the 8.7% expected by analysts surveyed by Dow Jones and a slowing pace from the prior month.

[Edward64]

Man, and I thought we had it bad.

Can't be bothered to research it but you have to figure 69.5% interest rate would have beaten inflation a while ago. And the only reason why not, is because of some other policy the government is doing.

https://www.cnn.com/2022/08/12/econo...tes/index.html

Argentina's central bank raised its benchmark interest rate by 950 basis points on Thursday as the country struggles to keep a lid on spiraling inflation that rose to a 20-year high of 71%, according to new data.

The central bank raised the benchmark rate for the 28-day term to 69.5% from 60%, a rate the bank set just two weeks ago when it hiked the rate by 800 basis points and the government shuffled its cabinet to install a new economy "superminister."

New inflation data on Thursday underscored the urgency driving economic policy: Prices rose 7.4% in July, above expectations and pushing annual inflation to a 20-year high of 71%. The month saw the resignation of President Alberto Fernandez's longtime finance minister followed by the ouster of his replacement.

[Edward64]

Nice chart to give some context on past recessions.

[albionmoonlight]

Originally Posted by Edward64

Man, and I thought we had it bad.

Can't be bothered to research it but you have to figure 69.5% interest rate would have beaten inflation a while ago. And the only reason why not, is because of some other policy the government is doing.

https://www.cnn.com/2022/08/12/econo...tes/index.html

What it is about Argentina? Didn't they already have an inflation supercrisis, like, 20 years ago?

[Edward64]

Add Turkiye to the list of high inflation.

I've always wanted to visit Constantinople, Gobekli Tepe, and Hisarlik (aka Troy). Might be a good time to visit Turkiye.

https://www.cnbc.com/2022/08/18/turk...0percent-.html

Turkey’s central bank shocked markets Thursday with a cut to its benchmark policy rate, despite inflation in the country sitting near 80%.

The country’s currency, the lira, slid 0.9% against the dollar, trading at more than 18.1 to the greenback following the news — near a record low.

The country’s main policy rate, which had been at 14% for the last seven months, was cut to 13% in a complete mismatch to what other central banks are doing around the world.

[Edward64]

Originally Posted by albionmoonlight

What it is about Argentina? Didn't they already have an inflation supercrisis, like, 20 years ago?

Yup.

When it comes to defaults, Argentina does have a bit of a history. Since it joined the IMF in 1956, Argentina has sought and agreed to 22 financial-support programs from the organization, the most notable of which was during the 2001 Argentine financial crisis when it defaulted on a $21.6 billion IMF loan. (It also halted payments on $95 billion worth of bonds to other creditors.)

Following the 2001 crisis, many Argentines blamed, and still blame, the IMF for imposing harsh conditions that worsened the country’s already dire economic situation. Last year, Argentine President Alberto Fernández criticized the IMF’s 2018 loan to Argentina, the largest loan in IMF’s history, as being “toxic and irresponsible.”

[sterlingice]

Turkey has had high inflation in its recent past, too. Back in the 90s, they dropped some 0s off the currency.

SI

[Edward64]

I know BBBY (Bed Bath & Beyond) is getting a lot of meme play. I'm not into options but still enjoy checking out r/wallstreetbets once in a while.

Saw this thread and was thinking WTF. Apparently mods there are reminding/publicizing a suicide hot line to help those hurt by BBBY fallout.

Call 988 if you need help. : wallstreetbets

[Edward64]

You're killing me Jerome ... but I agree with you. Keep the hurt on until we are convincingly in the clear.

Fed Chairman Jerome Powell on Friday pledged that the central bank will “use our tools forcefully” to attack inflation that is still running near its highest level in more than 40 years.

In his annual Jackson Hole policy speech, Powell added that higher interest rates likely will persist “for some time. The historical record cautions strongly against prematurely loosening policy.”

The remarks come amid signs that inflation may have peaked but is not showing any marked signs of decline. Powell said the Fed will not be swayed by a month or two of data.

[albionmoonlight]

The good news: Powell has his sheriff's badge prominently displayed and his six-shooters set to "hair trigger".

The bad news: Once inflation has started to run away, the way you signal you're on the job is by risking overtightening.

— Megan McArdle (@asymmetricinfo) August 26, 2022

[albionmoonlight]

It's a balancing act, and the Fed has indicated pretty strongly that it is going to err on the side of overtightening.

[Hammer]

I like what the FED is doing. Could give a nice springboard down the line with buying opportunities in the mean time. They really can't add much more than 1% or stuff will break. Maybe .75, .25, .25. But I think that will bring U.S. inflation down to around the 5% mark or so. I suspect 2% is a fantasy for the time being.

It's the DXY that concerns me. A strong dollar brings downward pressure. Maybe a double top for now but I suspect it rises in 2023 due to weakness elsewhere. So that might counter balance the FED pivot.

[NobodyHere]

I take the blame for today. I added money to my index fund yesterday.

[Kodos]

Oof.

[Drake]

Originally Posted by Kodos

Oof.

I hate this thread so much. I really need to stop clicking on it and then giving into the temptation to go check my portfolio.

[Edward64]

[Hammer]

Originally Posted by Edward64

Bought any Bitcoin yet Edward?

[Edward64]

Originally Posted by Hammer

Bought any Bitcoin yet Edward?

Nope. Still debating internally!

[Edward64]

It seems the markets were caught by surprise by Jerome's Jackson Hole speech. Not sure why. I think the only question was if it was .5 or .75 hike in Sept.

In addition to Jerome, we now have 2 other governors (in the past couple days) pretty much telling it the way they see it. Rates are going to keep going up, the question really is at what pace.

Cleveland Federal Reserve President Loretta Mester said Wednesday she sees benchmark interest rates rising above 4% by early next year.
:
In line with that, Mester said rates will remain elevated “for some time,” a phrase used in recent days by both Fed Chairman Jerome Powell and New York Fed President John Williams. She said real rates, or the difference between the fed funds rate and inflation, will need to “move into positive territory.”

"I see us needing to kind of hold a policy stance - pushing inflation down, bringing demand and supply into alignment - it's going to take longer, will continue through next year," New York Fed chief John Williams told the Wall Street Journal. "Based on what I'm seeing in the inflation data, and what I'm seeing in the economy, it's going to take some time before I would expect to see adjustments of rates downward."

[Vegas Vic]

My 401K portfolio’s nominal increase over the past 10 years is 137%, which translates to an annual return of about 9%. I’m OK with that.

[Edward64]

FWIW. Beats me but let's hope the Fed can rationalize a 50 hike vs 75.

https://www.cnn.com/2022/09/02/inves...ing/index.html

The takeaway: Wall Street is currently pricing in a 60% chance of a 75-basis point rate hike at September’s Fed meeting. That’s down nearly 15 percentage points since Thursday, before the jobs report was released. But there’s still a lot of ambiguity around the Fed’s upcoming policy decision. There’s a lot of economic data to digest in the first half of this month – in particular, inflation numbers for August – and this is just one piece of a larger puzzle.

“The Fed will require further proof of softening before adjusting policy materially,” said David Page, head of macro research at AXA Investment Managers. “But on balance these figures are consistent with a 50-basis point September Fed hike.”

[Hammer]

One major problem the FED have got is the national debt to GDP ratio. The U.S. is behind very few large economies now, and have broken past 100%.

You are looking at Italy, Greece, Portugal and Japan above. Who clearly have problems. You push the GDP down the debt becomes out of control. So the FED are in a tight spot. The only way to get hold of the national debt if it becomes out of control is to turn the money printing back on. Which increase inflation.

I think one more hard .75 hit, then maybe .25, .25. Playing with fire past that. System would be in risk of breaking.

[Edward64]

No idea what this guy was going through but assume it's because of all the BBBY meme/drama stuff (and not like he was a Putin critic or heavily in debt to Vegas). Assume BBBY will be strongly negative on Mon.

He must have been under a lot of pressure. I'd just say f*ck it and walk away from it all, and take a nice long vacation in Asia.

Bed Bath & Beyond exec Gustavo Arnal ID'd as NYC 'Jenga Building' jumper: source

The chief financial officer of troubled Bed Bath & Beyond has been identified as the man who jumped to his death from the iconic new Tribeca skyscraper known as the “Jenga Building,” The Post has learned.

[GrantDawg]

Originally Posted by Edward64

No idea what this guy was going through but assume it's because of all the BBBY meme/drama stuff (and not like he was a Putin critic or heavily in debt to Vegas). Assume BBBY will be strongly negative on Mon.

He must have been under a lot of pressure. I'd just say f*ck it and walk away from it all, and take a nice long vacation in Asia.

Bed Bath & Beyond exec Gustavo Arnal ID'd as NYC 'Jenga Building' jumper: source

That could be unrelated personal problems at home, but it is more likely massive embezzlement or fraud and he was about to get caught.

[Ksyrup]

According to an article I read this morning, he was facing a $1.2B pump and dump stock fraud suit filed against him 2 weeks ago