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Old 01-03-2019, 09:00 AM   #1
Edward64
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Financial Markets 2018-2019

Okay, I think this deserves its own thread.

Getting scary out there.

Apple is dragging the market down today. Although I'm personally hurting, I'm okay with Apple getting hit - they've been obnoxious on how they've been raising their prices and glad consumers are wising up.

On the marco level, the US-China will likely (have to?) come to a head sometime this year, waiting to see who blinks first in the game of chicken.

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Old 01-03-2019, 09:45 AM   #2
bhlloy
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I bet China doesn’t blink first, seeing that they aren’t a consumer based democracy and have 80 years of suppressing their people over things like free speech. Where as if people’s 401k crater in the US the middle class are going to lose their god damn minds (for valid reasons).

I imagine we blink, continue to throw a ton of money at the affected industries, we get some minor face saving concessions in a deal and call it the greatest win by the greatest businessman ever.
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Old 01-03-2019, 12:39 PM   #3
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If Trump caves in on China, IMO it'll be worse than him caving in on the Wall.

With the Wall, he can blame the Democrats. With China, its all him.
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Old 01-03-2019, 02:26 PM   #4
ISiddiqui
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So I have... oh, at least 15 years until retirement. I'm a bit scared to look at my retirement account and what December hath wrought. I got enough years for it to rebound... eesh...
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Old 01-03-2019, 04:05 PM   #5
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So I have... oh, at least 15 years until retirement. I'm a bit scared to look at my retirement account and what December hath wrought. I got enough years for it to rebound... eesh...

Better make that 20.
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Old 01-11-2019, 12:38 AM   #6
Edward64
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Thank God.

Okay stock markets, the correction has officially occurred, can we get back to going up-up-down-up-up?

The stock market just got off to its best start in 13 years - MarketWatch
Quote:
Things are coming up roses in the stock market, lately.

The Dow Jones Industrial Average, S&P 500 index and Nasdaq Composite Index are off to their best starts to a year since 2006 after a powerful series of gains.

The Dow DJIA, +0.51% closed up 0.5% on Thursday, pushing its year-to-date gain to 2.89%, which would mark the best first seven days to a year since 2006, when stocks burst 3.04% higher over the same period. The S&P 500 index SPX, +0.45% rose 0.5% on the day and has returned 3.58% thus far this year, its best start since a 3.68% gain 13 years ago, while the Nasdaq Composite COMP, +0.42% booked a 0.4% gain, enough for a 5.3% year-to-date advance, representing its best seven-session to kick off a year since its 5.72% rise also in 2006.
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Old 01-11-2019, 10:18 AM   #7
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My guess is there is more dropping to come.
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Old 01-14-2019, 07:46 AM   #8
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Pacific Gas & Electric, the largest US utility, announced they would be filing for Chapter 11 bankruptcy this morning in the face of potentially immense liability for the CA wildfires. Since November 7th, their stock has tumbled from $48.80 per share to a before-hours number today of $9.70.

It is a terrifying time to be an employee, especially a non-union represented one.
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Old 01-14-2019, 03:25 PM   #9
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Originally Posted by Vince, Pt. II View Post
Pacific Gas & Electric, the largest US utility, announced they would be filing for Chapter 11 bankruptcy this morning in the face of potentially immense liability for the CA wildfires. Since November 7th, their stock has tumbled from $48.80 per share to a before-hours number today of $9.70.

It is a terrifying time to be an employee, especially a non-union represented one.

If PG&E really did cause those fires (has that really been shown to be true?), they deserve to go under/forced reorganization for mismanagement.

Or was it contractors installing equipment incorrectly, or some other agency not clearing the brush enough etc. I don't know how much is attributable directly to PG&E.
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Old 01-31-2019, 04:08 PM   #10
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So how bout that January?

S&P 500 caps its best January since 1987

I'm sure Trump will be along shortly to take all the credit.
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Old 01-31-2019, 04:46 PM   #11
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So how bout that January?

S&P 500 caps its best January since 1987

I'm sure Trump will be along shortly to take all the credit.

he already did yesterday,
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Old 02-01-2019, 01:57 PM   #12
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I see we all learned nothing from 2008.
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Old 02-01-2019, 02:27 PM   #13
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So how bout that January?

S&P 500 caps its best January since 1987

I'm sure Trump will be along shortly to take all the credit.

I did find this to be funny.



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Old 02-01-2019, 03:12 PM   #14
Vince, Pt. II
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If PG&E really did cause those fires (has that really been shown to be true?), they deserve to go under/forced reorganization for mismanagement.

Or was it contractors installing equipment incorrectly, or some other agency not clearing the brush enough etc. I don't know how much is attributable directly to PG&E.

Sorry I missed this the first time around Edward. I have a ton of thoughts on this, but mostly it's just frustration. California is a reverse indemnity state. That means that for things like the Wildfires, the owner/operator of the equipment from where the fires originated can be found liable for damages even if there was no evidence of negligence. As far as I know, PG&E has met or exceeded all California Public Utility Commission safety regulations in all fire cases thus far. And yet we are still held accountable for the costs associated for the fires.

Record level winds, immense dead tree counts because of years of drought, never-before seen conditions? You met (or exceeded!) all safety regulations that the regulatory body deemed necessary? Doesn't matter.

And yet the news makes this out as if it's entirely the company's fault. Heck, a Federal Judge was literally quoted as saying "There is one clear pattern here: PG&E is starting these fires. Global warming is not starting these fires." Listening to news outlets and public officials bash my company while doing shoddy reporting and omitting facts is bad enough, but I've had to practically abandon social media for fear of losing friends - most of whom are really good people.

So we just have to sit here and wait to see what the investigations have to say. The company was cleared of all liability for the Tubbs Fire, which was the biggest one in 2017, recently. It started on privately owned energy equipment that was not ours. I believe there are still 12 fires from 2017 alone that PG&E has liability for because of the reverse indemnity rule. Then there's the 2018 Camp Fire in Paradise. Typically these investigations take forever (the Tubbs investigation just finished a week or two ago, and that was in October of 2017), but with all the publicity around this issue, I would imagine it will turn around a bit quicker than that.
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Old 05-13-2019, 10:23 AM   #15
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Ouch. Tough day on the markets so far. Thanks Trump.
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Old 05-13-2019, 12:36 PM   #16
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EDIT: Not worth it. I hate where I end up defending a buffoon like Trump.

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Old 05-13-2019, 12:51 PM   #17
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That was mostly a play on the "Thanks Obama" crap we heard for years. But there is a pretty obvious connection between the tariffs and the markets dropping in this case.
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Old 08-14-2019, 09:24 AM   #18
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We are on borrowed time and due for a recession. If it happens, I hope it happens in time (e.g. not too early) to impact the 2020 elections as I do believe a strong economy helps Trump significantly.

Dow tumbles more than 300 points on weak Chinese, German economic data, U.S. yield-curve inversion - MarketWatch
Quote:
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -6.20% fell below that of the 2-year U.S. Treasury note TMUBMUSD02Y, -5.83% for the first time in more than a decade early Wednesday as investors digested weak economic data out of China and Germany.

Stock index-futures extended premarket losses after the spread between the 10-year and 2-year notes briefly turned negative shortly after 6 a.m. Eastern Time, a phenomenon referred to as a yield-curve inversion, because yields on longer-term debt are typically higher than those for short-term bonds.
:
:
An inverted yield curve is widely seen as a recession indicator, as it signals that investors believe the economy will slow significantly or contract in the near future.
:
:
The action in the bond market followed data showing that Chinese industrial production growth in the world’s second-largest economy slowed to 4.8% year-over-year, its lowest level since 2002, while retail sales growth came in at 7.6%, down from 9.8% the month prior and well below the 8.6% consensus, according to FactSet.

Data out of Germany showed its economy contracting by 0.1% in the second quarter of 2019, the first time since the third quarter of 2018, with weakness in the global manufacturing sector and uncertainty over Britain’s planned exit from the European Union pointed to as reasons for the slowdown in Europe’s largest economy.
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Old 08-14-2019, 09:35 AM   #19
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Well I'm glad I took some of my money out of the market to buy a condo a couple weeks ago. Now I just need the seller to get his act together and clear out some liens.
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Old 08-14-2019, 11:32 AM   #20
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Time to reallocate the 401k. The move has begun.
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Old 08-14-2019, 01:57 PM   #21
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I had a refinance offer that would shift from a 30 year fixed to a 20 year fixed, dropping a little interest and monthly payments about the same. Wondering if I should investigate it now or wait to see if Fed cuts interest rates (FWIW I'm 4.75% now, with 4.44% projected rate. Through my bank so there's only origination costs, which cap out at $500 max)
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Old 08-14-2019, 02:28 PM   #22
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I just moved from a 30 to a 20 (I think we got a 3.60 rate). It's always worth investigating, but I could see some additional rate cuts coming this fall. My day job is an international manufacturing company and we have been trying to read the tea leaves since July. Our estimate is about a 25% recession chance, but we do see sales demand decreasing slightly through December.

Our guru here thinks there will be a massive push by the media (esp world media) to downplay the global economy to try and hurt Trump. That looks to be as big a factor as any when projecting. I would plan for a slight downturn over the next 6-8 months (with multiple rate cuts).
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Old 08-14-2019, 02:45 PM   #23
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The fact that the Fed is cutting interest rates when rates and unemployment are both already low suggests that they think a recession or something else bad is coming. Otherwise, why cut the rate if the economy is doing well and unemployment is low?
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Old 08-14-2019, 02:55 PM   #24
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The fact that the Fed is cutting interest rates when rates and unemployment are both already low suggests that they think a recession or something else bad is coming. Otherwise, why cut the rate if the economy is doing well and unemployment is low?
Yeah, outside of some international concerns, I really don't get the panic. Look at the numbers:

2016 -
Dow started at 17,000 and finished at 19,700
unemployment: 4.7%
GDP growth: 1.6%

2017 -
Dow started at 19,700 and finished at 25,200
unemployment: 4.1%
GDP growth: 2.4%

2018 -
Dow started at 25,200 and finished at 23,327
unemployment: 3.9%
GDP growth: 2.9%

2019 -
Dow started at 23,327 and is currently at 25,700.
unemployment: 3.6%
GDP growth in the first half of 2019: 3.1%

Outside of chicken little thinking, there really is no reason to expect 2019 will finish worse than any of the last three years. Yet, I expect it may happen because of politically based panic. Just look at the hashtag #TrumpRecession. It's crazy to me how people are fully endorsing trying to hurt this country just for a higher chance to get Trump out.
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Old 08-14-2019, 03:29 PM   #25
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Yeah, outside of some international concerns, I really don't get the panic.

I mean... we live in a global economy. International concerns affect all of us. Germany's economy shrank by 0.1% in the 2nd Quarter. Germany is, of course, the 4th largest economy in the world.

China is not growing as quickly as it has in the past. And the tariffs that are being placed on Chinese goods and the trade war that is brewing will hurt both economies.

All of these are reasons that the tea leaves are showing recession.
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Old 08-14-2019, 03:49 PM   #26
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I mean... we live in a global economy. International concerns affect all of us. Germany's economy shrank by 0.1% in the 2nd Quarter. Germany is, of course, the 4th largest economy in the world.
It shrank in Q1 2016, Q4 2017 and Q1 2018 - yet no one cried recession.

Quote:
China is not growing as quickly as it has in the past. And the tariffs that are being placed on Chinese goods and the trade war that is brewing will hurt both economies.

All of these are reasons that the tea leaves are showing recession.
China is still at 6.2% growth and will finish over 6% for the year. It's dipped from 6.5% a year ago, but the government will prop it up to be back at 6.3% soon.

Neither of these are to the level that should cause any kind of recession fear in the US with 3.6% unemployment and 3.1% GDP growth. Just a reminder unemployment was at 5% in 2015 and the DOW at 16,700. There were massive international issues with Russia's economy, China's GDP growth dipped 0.6% in one year in 15/16 (it's dipped 0.3% since 2018), Greece was a mess and Brexit was scaring everyone in Europe. Yet, #Obamarecession wasn't trending before the 2016 election.
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Old 08-14-2019, 04:10 PM   #27
ISiddiqui
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Did any of those moments have inverse bond yields? Or did they have trade wars ramping up between the two largest economies in the world?

(Granted the inverse bond yields are like a result from the trade wars and the fall in the German economy coupled with the havoc Brexit is going to play on Eurozone economies)
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Old 08-14-2019, 04:40 PM   #28
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The fact that the Fed is cutting interest rates when rates and unemployment are both already low suggests that they think a recession or something else bad is coming. Otherwise, why cut the rate if the economy is doing well and unemployment is low?

Well, according to some it was the "pressure" that Trump applied and Powell caved in. In retrospect, Powell and the Fed may have seen something.

No doubt China & Trump weighs heavily on sentiment.

I've read this 2/10 year yield inversion is a 100% predictor of a recession? Can this be correct?
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Old 08-14-2019, 05:14 PM   #29
JPhillips
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Our guru here thinks there will be a massive push by the media (esp world media) to downplay the global economy to try and hurt Trump.

I hope you're not paying a lot for that kind of "analysis." You can get that message from Lou Dobbs for free.
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Old 08-14-2019, 05:22 PM   #30
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I can tell you that no recession in history has begun less than a year after sub 4.0 unemployment and a GDP above 3. In 2007, unemployment was 5% and GDP growth was 1.9% right before it started. Even in 9/11, unemployment was over 5 and GDP under 2% right before it happened. So any recession in the next 6-9 months would be unprecedented.
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Old 08-14-2019, 05:26 PM   #31
Arles
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I hope you're not paying a lot for that kind of "analysis." You can get that message from Lou Dobbs for free.
Nah, he's our sales director and just gets a lot of data on global trends. He's more dialed in with all the data he gets so I tend to listen to him more than most.
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Old 08-14-2019, 07:15 PM   #32
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Yeah, outside of some international concerns, I really don't get the panic. Look at the numbers:

2016 -
Dow started at 17,000 and finished at 19,700
unemployment: 4.7%
GDP growth: 1.6%

2017 -
Dow started at 19,700 and finished at 25,200
unemployment: 4.1%
GDP growth: 2.4%

2018 -
Dow started at 25,200 and finished at 23,327
unemployment: 3.9%
GDP growth: 2.9%

2019 -
Dow started at 23,327 and is currently at 25,700.
unemployment: 3.6%
GDP growth in the first half of 2019: 3.1%

Outside of chicken little thinking, there really is no reason to expect 2019 will finish worse than any of the last three years. Yet, I expect it may happen because of politically based panic. Just look at the hashtag #TrumpRecession. It's crazy to me how people are fully endorsing trying to hurt this country just for a higher chance to get Trump out.

There are a lot of signs pointing to a recession. Real wages remain stagnant. Housing prices rise, student and medical debt continues to soar. And the trade war looms over everything and continues to hurt the country.
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Old 08-15-2019, 11:30 AM   #33
Arles
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There are a lot of signs pointing to a recession. Real wages remain stagnant. Housing prices rise, student and medical debt continues to soar. And the trade war looms over everything and continues to hurt the country.

Real wages have been doing better in 2019 than they have in 2 years:


Student and medical debt have tapered off since 2017 (there was much higher growth in these areas from 2014-2017). Here's the 2nd half of 2017:
unemployment: 4.1%
GDP growth: 2.4%
real wages: -1.0%

Here's 2019:
unemployment: 3.6%
GDP growth: 3.1%
real wages: +1.3%

Again, outside of the trade war that hasn't even materialized yet - the US economy is stronger now than anytime in the past 4 years. Yet, everyone is talking recession (right as the election year approaches). Retail sales rose 0.7% in July and we had a great first half for worker productivity (rose 3.5% in Q1 and 2.3% in Q2). If the year were 2017 instead of 2019 - the narrative would be much different. But, people have to get rid of Trump at all costs so let's talk down the economy as much as possible (until everyone actually starts believing it and panicking).
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Old 08-15-2019, 01:12 PM   #34
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Real wages are at around the same level they were in 1970. We're barely seeing growth despite near full employment. That's crazy.

40% of the country can't cover a $1000 unexpected. Student and medical debt tapering off is still out of control.

The markets did fine because a massive tax cut allowed companies to buy back stocks and juice their stock price. It didn't "trickle down" or "pay for itself". And temporary boosts from cutting interest rates will be coming to an end as I see no way the fed cuts them again in the near future.

The trade war is going to hurt the economy. It's destroying agriculture and forced us to hand out welfare checks to cover losses. Business investment is stagnant. Job growth is falling to a point where unemployment is about to start ticking up.

Also the 3.1% GDP growth was for the 1st quarter. 2nd quarter was 2.1%. It's clear the direction we're going.
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Old 08-15-2019, 02:25 PM   #35
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Real wages are at around the same level they were in 1970. We're barely seeing growth despite near full employment. That's crazy..

Nixon shock - Wikipedia
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Old 08-15-2019, 02:27 PM   #36
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Debt has been an issue since the housing crisis, I don't see that ever changing. So, unless we are heading for a permanent recession that never ends, I think it is now baked into the economy moving forward. Real wages don't seem to increase as much under low unemployment in today's economy. The US and other countries like Great Britain have very low unemployment and low wage growth. This has been happening in the US since Obama's second term - so it's also nothing new.

The trade war is the only thing that could tip the scales, but a lot of other things would need to change for a recession to come on. If you look back to 2013, here's been our GDP growth: 1.8%, 2.5%, 2.9%, 1.6%, 2.4%, 2.9% (18). So, starting at 3.1% and 2.1% for the first two quarters is still very good compared to the past 6 years. Given the retail numbers and productivity in June-August, it doesn't look like growth is going to get substantially worse in 2019. Finally, there have been stories about how unemployment is going to increase under Trump for three years, yet it has gone from 4.7% (last Obama year) to 4.1%, 3.9% and now 3.6%. We need to actually see it happen before we can point to that as a sign for a recession.

Also, I don't want to make it sound like I am pro-Trump on this either. A lot of this has happened because Trump simply got out of the way (not because of any act he did). I also think he is being disingenuous by working the Fed behind close doors to get rate decreases and other short-term economy bumps to make it look better for the election. There's no reason for a rate decrease right now or any other tax-cut/stimulus policy change. That could actually have negative long term implications as there will come a time (in 2-3 years, I'm guessing) where we may need a rate cut. And if Trump has already played that card multiple times, it's a bit like the boy crying wolf.
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Old 08-15-2019, 02:32 PM   #37
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I also wonder how much of this growth is being paid for by deficit spending.
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Old 08-15-2019, 02:42 PM   #38
Arles
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I also wonder how much of this growth is being paid for by deficit spending.
Outside of a few "tech bubble" years under Clinton, deficit spending has been a staple of all presidents back to the 70s. Yet, we still had numerous recessions. Neither party is going to balance the budget. Even if we had a massive windfall of revenues, a republican would increase defense and give more tax cuts, while a democrat would use it to fund a massive health care/pay off student loans/entitlement effort.
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Old 08-15-2019, 02:52 PM   #39
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Outside of a few "tech bubble" years under Clinton, deficit spending has been a staple of all presidents back to the 70s. Yet, we still had numerous recessions. Neither party is going to balance the budget. Even if we had a massive windfall of revenues, a republican would increase defense and give more tax cuts, while a democrat would use it to fund a massive health care/pay off student loans/entitlement effort.

I don't know why this keeps being said about Democrats. They have said any programs would be PAYGO. There is a fight within the party about it, but the side that wants it is winning.
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Old 08-15-2019, 05:33 PM   #40
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I thought a finance person on TV yesterday summed it up well, either the USA is going to slow with the rest of the world, or the rest of the world is going to be picked up by the USA.

The idea that we can hum along unaffected by a global slowdown seems unlikely.
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Old 08-23-2019, 10:32 AM   #41
Kodos
Resident Alien
 
Join Date: Jun 2001
https://www.nytimes.com/2019/08/23/b...tes-trump.html
Quote:
Mr. Trump, who regularly accuses the Fed of slowing the economy by raising rates in 2018 and has urged it to cut aggressively, lashed out at Mr. Powell after the remarks.

“As usual, the Fed did NOTHING!” Mr. Trump said in a tweet. “My only question is, who is our bigger enemy, Jay Powel or Chairman Xi?,” the president wrote, a reference to Chinese President Xi Jinping.

Mr. Trump, who appointed Mr. Powell to a four-year term, has said the Fed should use monetary policy to create a more even playing field with trading partners like China and Germany, which he believes are weakening their currencies and lowering rates to gain an economic advantage.

Looks like another rough day on the market. Fed didn't mention lowering interest rates, and China announced tariffs on $75 billion worth of U.S. products.

News flash, Trump: 2.25% is a very low interest rate from a historical perspective. Rates are low, and have been low for a long time.


Current Federal Reserve Interest Rates: Why They Change

Quote:
The FOMC raised the fed funds rate a quarter-point to 2.5% on December 19, 2018.

Prior to that, the Fed had raised rates to the following levels:

0.5% on Dec. 15, 2015.
0.75% on Dec. 14, 2016.
1.0% on March 5, 2017.
1.25% on June 14, 2017.
1.5% on Dec. 13, 2017.
1.75% on March 21, 2018.
2.0% on June 13, 2018.
2.25% on September 26, 2018.

Last edited by Kodos : 08-23-2019 at 10:39 AM.
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Old 08-23-2019, 11:47 AM   #42
Bisbo
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Join Date: Mar 2006
Quote:
Originally Posted by Arles View Post
I also think he is being disingenuous by working the Fed behind close doors to get rate decreases and other short-term economy bumps to make it look better for the election.

Behind closed doors? lol
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Old 08-23-2019, 12:23 PM   #43
PilotMan
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Join Date: Oct 2002
Location: Seven miles up
Outright market manipulation by the government is a trademark of the Chinese. He just wants the same thing here, you know, to level the playing field. No matter what that actually means.
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