1-2 years ago Everyone looked like a genius when they were getting free unemployment money and stimulus money which inflated a huge bubble during a bull run and everyone was winning. Then shit hit the fan. Now a year later what’s next?
Ape brain here gaining some wrinkles. With all this talk about Russia threat to cyber attack the U.S. It reminded me of the IMF cyber attack simulation 🤔I wonder how this connect and if they were just preparing for another well calculated market cover up conspiracy.
Whales are out, already cashed out. 3 or r rate hikes, record national debt, due to covid spending, once rates increase, the housing bubble will pop. Then people won't qualify under new rules and flood market with listing. Jobs, GDP, earnings down, perfect. Those that remember 1982 remember 19-20%
Investing into $BLNK great ev company with 36.34 million shares floated wow crazy shorts this is totally a good investment for future ev wow wow wow ev's only %1-3 percent in the world watch out 2035 wow crazy shorts what the freak. there revenue is def mooning we will see. $BLNK vs GDP+retail trad
I think the technical analysis people on this thread are better to answer this question. But if you look at the price chart for any composite (dow,s&p, nasd, russell) from pre-1992 till now, you will see that stock price change without debt-fuled bailouts look like tiny blips (internet boom and housing bubble) compared to the runup starting in 2009. That’s because in ‘09 the GDP was around $11T and since then we added $18T. Much of that money went to the market where it caused the stock price inflation you see in the chart. I don’t know if anyone knows how long it will take to unwind a cash influx of 2x the whole economy.
Real GDP, which is what I've been referencing, has already accounted for inflation. https://www.investopedia.com/ask/answers/030515/when-do-economists-use-real-gdp-instead-gdp.asp#:\~:text=Nominal%20GDP%20is%20the%20total,any%20distorting%20effects%20from%20inflation.
Of course we have a total Reddit moment. Find headlines that *fit your narrative*, don't read the actual articles and post them for karma. # Jun 2011: Jeremy Grantham: We're Headed For A Disaster Of Biblical Proportions Talking about all time *commodity prices* and *societal issues caused by climate change* and NOT about S&P crash. ​ >From an investment standpoint, this paradigm shift need not mean disaster: Grantham says the obvious play is to own "the stuff in the ground" (and the ground itself, as the huge boom in farmland prices illustrates). The less obvious but equally compelling play is to own companies and technologies that facilitate resource conservation. ​ >From a societal standpoint, the news is far worse. Grantham believes that the planet can only sustainably support about 1.5 billion humans, versus the 7 billion on Earth right now (heading to 10-12 billion). So not super doom and gloom, quite reasonable in my opinion and taken out of context. # Oct 2012: Jeremy Grantham Warns 2013 Will Be A Dangerous Year For Stocks >I think next year will be a dangerous year. It is the first year of a presidential cycle. I have always paid close attention to it as a reliable indicator. It is the time when the Fed and the U.S. government typically try to get things more in order. History is quite clear. There has been, on average, no money made in year one and two after a Presidential election going back to 1932, after you adjust for inflation. All the money is made in year three with an adequate return in year four. So he was not calling for market collapse but rather poor returns based on historic pattern. 2013 was good year for SPY and he was wrong with that call but still. Historic pattern he thought will be repeated just broke down but its not crazy "cash out now!" call. >His advice is to avoid U.S. stocks, but if you must buy them, as he does for some of his funds, he recommends nothing but the blue-est of blue chips. Big, safe brand names, with rock solid franchises. If you owned "blue-est of blue chips" in 2013 would you be regretting it? I don’t think so. # May 2014: Grantham: Big Stock Bubble ‘Will End Badly’ in 2016 >The bull market may come to an end any time, indeed as I write it may already have happened. It could be derailed by disappointing global growth, profits sagging as deficits are cut, a Russian miscalculation, or, perhaps most dangerous and likely, an extreme Chinese slowdown. **But I believe it probably (i.e., over 50%) will not end for at least a year or two and probably not before it reaches a level in excess of 2,250 on the S&P 500.** So lets ignore bullish quote and take the bearish one to make nice sensationalist headline for people who don't read the actual article... Full quote: >I am not saying that this time is different (attention Edward Chancellor). I am sure it will end badly. But given this regime of the Federal Reserve and given the levels of excess at other market peaks, **I think it would be different to end this bull market just yet.** [https://web.archive.org/web/20210929204517/https://images.thinkadvisor.com/thinkadvisor/article/2014/05/04/GMO\_QtlyLetter\_1Q14\_FullVersion.pdf](https://web.archive.org/web/20210929204517/https://images.thinkadvisor.com/thinkadvisor/article/2014/05/04/GMO_QtlyLetter_1Q14_FullVersion.pdf) So again lets take "will end badly" from the quote and lets ignore call that bull run still has legs and its too early to sell just yet. # Aug 2015: GMO founder Grantham says markets ‘ripe for major decline’ in 2016 >Given that central banks were able to create money to recapitalise themselves, this “**could be a crisis we could weather**”, Mr Grantham said. ​ >Unlike many asset managers or analysts, Mr Grantham does not fret greatly over the impact of the Federal Reserve lifting interest rates for the first time in almost a decade this year. “We might have a wobbly few weeks when they do move, but I’m sure the Fed will stroke us like you wouldn’t believe and **the markets will settle down, and most probably go to a new high**.” ​ >Mr Grantham is uncertain what could trigger the next crisis, pointing out that bubbles do not burst simply because financial assets are overvalued. But he argued that by late 2016 markets would probably be extremely vulnerable to a crash, given lofty valuations. Not a doomsday prophet, I think quite reasonable statement and markets did correct in 2016 although maybe not by as much as he thought they would. ​ >**The 2015–2016 stock market selloff** was the period of decline in the value of stock prices globally that occurred between June 2015 to June 2016. It included the 2015–2016 Chinese stock market turbulence, in which the SSE Composite Index fell 43% in just over 2 months between June 2015 and August 2015,\[1\]\[2\] which culminated in the devaluation of the yuan.\[3\]\[4\] Investors sold shares globally as a result of slowing growth in the GDP of China, a fall in petroleum prices, the Greek debt default in June 2015,\[5\] the effects of the end of quantitative easing in the United States in October 2014,\[6\] a sharp rise in bond yields in early 2016, and finally, in June 2016, the 2016 United Kingdom European Union membership referendum, in which Brexit was voted upon.\[7\] [https://en.wikipedia.org/wiki/2015%E2%80%932016\_stock\_market\_selloff](https://en.wikipedia.org/wiki/2015%E2%80%932016_stock_market_selloff) # Jul 2016: These three investing legends are warning of another market crash This is some guy on "Canadian Business" magazine referring back to his statements in 2014 - 2015 to churn out "top 3 …" article . Its is not a new interview in 2016 so OP included this one just to look more right… # Jan 2018: Jeremy Grantham, who predicted the last two bubbles, warns the stock market is ready for a “melt-up” The article linked did not link original source just few quotes out of context. This is the original source. [https://www.gmo.com/globalassets/articles/viewpoints/2018/jg\_bracing-yourself\_vp\_1-18.pdf](https://www.gmo.com/globalassets/articles/viewpoints/2018/jg_bracing-yourself_vp_1-18.pdf) **Bracing Yourself for a Possible Near-Term Melt-Up** *January 3, 2018* Summary of my guesses (absolutely my personal views) ■ A melt-up or end-phase of a bubble within the next 6 months to 2 years is **likely**, i.e., over 50%. ■ **If** there is a melt-up, then the odds of a subsequent bubble break or melt-down are very, very high, i.e., over 90%. ■ **If** there is a market decline following a melt-up, it is quite likely to be a decline of some 50% (see Appendix). ■ **If** such a decline takes place, I **believe the market is very likely (over 2:1) to bounce back up way over the pre 1998 level of 15x, but likely a bit below the average trend of the last 20 years**, as the trend **slowly** works its way back toward the old normal on my “Not with a Bang but a Whimper” flight path. *Emphasis on certain words was put by author himself, not me.* So he said its likely, and if meltup happens then… Well it didn’t happen. Markets did go up in 2018 quote a lot but it wasn't a meltup so his "if" points are not valid. Again, I think its not that unreasonable. He also wrote: >B. For those individual investors willing to speculate > >**Consider a small hedge of some high-momentum stocks primarily in the US** and possibly **including a few of the obvious candidates in China**. In previous great bubbles we have ended with sensational gains, both in speed and extent, from a decreasing number of favorites. This is the best possible hedge against the underperformance you will suffer if invested in a sensible relative-value portfolio in the event of a melt-up. So he called meme rally back in 2018, pretty impressive in my opinion and he was completely right on this one. # Mar 2019 Jeremy Grantham, "I would stay away from the US" & Oct 2020: Jeremy Grantham: The Market Bubble Will Burst in Weeks or Months [https://www.youtube.com/watch?v=RYfmRTyl56w](https://www.youtube.com/watch?v=RYfmRTyl56w) and then follow up to this interview in 2022 [https://www.youtube.com/watch?v=JlEGU2ypr1Q](https://www.youtube.com/watch?v=JlEGU2ypr1Q) Just watch it for yourself and make your own conclusions. Form the last interview: ​ >*Interviewer:* Jeremy a year ago you predicted an epic collapse in stock prices and you told me it would rival the 1929 crash and the dot com bust of 2000 2001. Were you wrong? ​ >*Jeremy:* No I don't think so. I noticed reviewing it last night that there was one little element of contradiction. At one stage I said you can't call these events to within a few months. And at another point I said history says that when you reach this level of craziness the market tends to break within a few months rather than a few years. And I think with hindsight. The markets started to get distinctly weaker about 10 months after we talked. So that's a few months plus a little bit all the same.
Will never happen. I would not even expect 4 rate hikes this year. The Fed is not putting all their cards on the table. If they crash the markets they crash all the pension funds. The Fed is not talking about all the added debt from rent moratoriums and student loan forgiveness. Who is going to pay for this? Our debt is unsustainable and crushing our GDP would even make the problem worse.
The GDP deflator literally means inflation impact on GDP. If you swap it with the 'real' inflation such as ecport or import price increase, we are already in a recession. Most jobs these days are worthless service jobs. That's also why US trade deficit hit a record high becuz nothing productive is happening right now.
Listen when you have 6% GDP last year which hasn't happened since 1984 and when companies manufactured to the usual demand your going to have inflation I don't believe the fed is going to increase interest rates more then 2 times.Becuase companies are adjusting to accommodate demand and things will be balanced and inflation will drop .Also we had positive news friday the dollar is getting stronger ,increasing I value this will hp inflation if it keeps up the trend.
>Russell 2000 is not in excess territory if you take a look at its past 5 years' performance. It's up about 6% annually except 2021 Maybe that just means it was already too frothy *before* the Fed dropped real interest rates well below zero and Washington DC "saved" the economy by borrowing 20% of our annual GDP and showering the masses and the rich with cash from helicopters.
The situation is too complex to allow them to invade. If Russia invade military forces will come. Because if they don’t China will invade Taiwan. The West needs to maintain it’s power. Russia will not benefit from invasion. It’s GDP is down. It’s Economy is struggling. The main export is both a pro and a con; oil. They can’t threaten others with sanctions because they would lose a massive income.
You haven’t asked me my credentials, you’ve just assumed that I’m wrong because you don’t agree with me? Are you interested in reading the GDP report I mentioned? My theories may be opinion, but fact of the matter is that late stage capitalism will ruin all small business eventually. In 70 years time our kids will be going to McDonalds Elementary where every $100k education comes with a happy meal.
Yup. Money isn’t real. It’s a construct that we had to help each other get things done. Greedy people learned that money equals power, thus capitalism was born. It hasn’t always been called capitalism, but the end result is always the same. The greedy hoard the wealth until poverty is so out of hand that the people revolt. Then someone new gets in power and starts the process over. Have you looked at historic GDP charts? Every time our economy shits the bed, who gets richer? Big business and the 1% get richer. They crash the economy on purpose to hurt small business, they increase their wealth while the country “rebuilds” and then they blame it on lazy Americans that don’t want to work. If you’re interested I have a 75 page GDP analysis of 1998-2014 that goes into detail about how small business GDP and market share has been on a steady decline since at least the 1950s when they started keeping the records. Every time big business “fucks up” the tax payers get stuck with the bill, little business suffers, and big business grows their market share by 3%. In a capitalist system, not everyone can win. There always has to be someone losing money for another person to gain. Why do you think the shills troll the stock subs influencing people to buy shit stock? Somebody gotta hold the bag.
If inflation drops off a cliff they will only do 4 hikes and not do QT. Not doing QT allows for more leverage in the system. Low inflation and above trend GDP will be a tail wind for growth stocks. Hence, if inflation drops fast, shorts will be squeezed on their growth stock positions.
True. But as long as the GDP per capita keeps increasing and is larger than the effect of a declining population an economy can keep growing with a declining population. The question is whether this will remain feasible or not. I have faith though.
I remain skeptical that the Fed is really going to do more than a token raising of rates in 2022. Sure, they're talking tough right now but I think that's due to the CPI narrative running away from them. They have to say that they'll pursue policies that stabilize prices. Whether they actually do anything remains to be seen. Powell said last Wed that a March hike was probable but not certain. He left it open that they could do no hikes. Looking at CPI components that are elevated, it's unclear how raising the FFR would help. Food and energy demand is largely inelastic and not driven by credit. Car prices are elevated due to supply constraints. In addition, the global credit impulse is turning negative: [https://www.home.saxo/content/articles/macro/chart-of-the-week--global-credit-impulse-update-17122021](https://www.home.saxo/content/articles/macro/chart-of-the-week--global-credit-impulse-update-17122021) And given the size of the sovereign debt there's big consequences to raising the FFR even 2-3% (which in theory could still result in negative real rates). I agree with Luke Gromen's take on this: [https://twitter.com/LukeGromen/status/1487058567328849924](https://twitter.com/LukeGromen/status/1487058567328849924) I think the Fed wants to repeat the late 40s and run prolonged negative real rates in order to reduce the debt/GDP ratio. This means inflation of 4-6% over several years is not out of the question. I wonder if they can successfully produce sustained inflation at that level. Japan has been unable to, although their demographics are far more problematic.
>Happy Monday and Lunar new years eve! Anyone feeling Tiger-ish this week? \>Major economic events this week (in GMT) EUR GDP Monday German CPI Monday RBA IR Decision Tuesday EUR CPI Wednesday USA Employment change Wednesday BRL IR Decision Wednesday TRY Inflation Thursday ^IGSquawk ^[@IGSquawk](http://twitter.com/IGSquawk) ^at ^2022-01-30 ^16:30:34 ^EST-0500
Statistically it's not that bad to be honest https://www.atlantafed.org/cqer/research/gdpnow/tab_FAQs#:~:text=How%20accurate%20are%20the%20GDPNow%20forecasts%3F&text=Since%20we%20started%20tracking%20GDP,forecasts%20is%201.25%20percentage%20points. We are 60 days out right now, so avg root mean squared error would be about 1.7%
Can we stop posting false shit like this? The Fed has had interest rates at 0% for over a decade (except a slight upward blip around 2018 that was quickly reversed due to damaging effects) and they will never be able to raise rates again. We are now forced on a debt monetizing campaign until the music stops. We are accruing debt at a rate that is so immense that just the interest payment alone on nearly $30T will fucking destroy the country. This doesn’t leave much to pay for all the completely unsustainable programs already in the works after hacking off ~$2T (or 10% of GDP) yearly just to cover interest. If they attempted to cover interest rates like the 80s than 1/4 of total GDP is up in smoke. The game is over and they are stuck. Plan accordingly, but anybody with a realistic perspective understands that anything short of a complete reset is no going to be adequate enough to cover the damage accrued so far.
I feel like we're still totally underestimating inflation, and the "transitory" narrarive is still dominant even if we're not using that word. This is entrenched now. 4Q GDP growth was just a race to build inventories before prices rise... twas okay when it was just asset prices and the rich could quietly double their wealth, but now this shit has leaked into everything. Price controls while desperately trying to goose demand and prop assets are the natural political responses in this situation. Not to get all doomer, but when you start seeing price controls, we're in the final stage of can kicking, and that's your signal to initiate your inflation plan, whatever that is... guns, precious metals, land, fuck if I know. When you read about high inflation in other countries, not much actually works as a hedge and I don't that the US's experience would be analogous anyway. TLDR: Price contols = inflation doom loop has initiated.. don't really trust the textbook hedges
Hell the media screams how much money Americans have right now. I realize some people are Doctors, executives, software engineers, etc. The upper middle class with recession resistant jobs are the only ones that have “more” money in pockets right now. Excluding the wealthy, but they’re the ones who exponentially increased net worth over the last 2-3 years. Imo 60%-70% of citizens are more broke than ever. GDP will fall, Inflation will increase, demand will contract, so supply won’t be as important. You’re seeing corporate acquisitions MSFT-ACTI, and that will be a reoccurring theme throughout the world. We are in the beginning of a recession, and the Govt./Fed is delaying the inevitable & smearing lipstick all over the pig. The can can’t be kicked further, but they’ll try to continue until after midterms. Lots of jobs will be lost, and 401k’s decimated. The housing market will come next. The banks aren’t excluded from being fucked. GLTA.
Yeah I know, but they're joined at the hip dude. You can't really have one move and not the other. The only time you could diverge GDP from the stock market would likely be massive government spending, as spending is included in the GDP calculation. But once again, the market absorbs that money and it bleeds into stock prices over time. In what scenario can the economy be great, and the stock market is in the toilet?
Bear thesis: * Consumer spending is grinding to a halt. Holiday sales have been disappointing. We have explained this away by Omicron, but it's a dangerous brush-off. More likely, inflation is weighing on people's purchasing power, there are no stimmy checks anymore and generous unemployment benefits. * GDP growth mostly from inventory buildup, will they be able to sell all that? And GDP is a *lagging* indicator. * On the other hand, companies (especially FAANG) priced for perfect growth. Any sign of slowing and they'll get decimating, and guidance has not been particularly strong so far, but it acted as hopium for the market this week. Phenomenal growth must slow down. There's only so much shit you can spend your money on. * Yield curve slowly inverting, very early in the economic cycle. We haven't seen this before. * Elon selling TSLA at the top. * Michael Burry exiting all his positions in Nov 2021, talking about shorting bonds. * Everything is increasingly correlated. High-growth, tech, value, corn, all moving in unison to the macroeconomic outlook and in unison with what the Treasuries are pricing in. This is a shaky market * High P/Es, especially riskily high when growth is expected to slow down. Any earnings miss in Q2 and it's fucked. If you like numerology: * This month, we broke the imaginary trendline from 2009 for the first time, although we have been backtesting it numerous times ever since Oct 2020. * Distinct head and shoulders pattern on QQQ weekly chart during Nov and Santa rally. * Bear flag forming this week. Everywhere, literally, since everything is correlated. I think it's either a big meltup from here leading into an even more serious crash, or a bear market right away. I hope to god I'm wrong, since I'm balls deep long on all this shit.
TSLA like all other tech stocks do trade in tangent with overall market. Macroeconomics if you please have to face couple of important issues; inflation, rates hikes and Fed unwinding their 7 tril asset balance sheet. Don’t know who is going to absorb that. If done too quickly it will crash the market. If dine slowly, they face the possibility unable to finance the debt. Can the US gov’t service the 2x GDP/yr debt with rising rates? These macro factors with untimely will blow any good news individual companies may have. We are facing possibly a decade long of stagnation at best, depression at worst. Fed propping the market to ATHs is recipe for disaster
Why not? Not everyone needs, wants, or is able to do the amount of work required to house, feed, and clothe themselves independently. Shouldn't those people still be able to find jobs that suit their needs? And if still want to redistribute our GDP to ensure everyone has enough money to do so no matter how much they contribute, then great, but wouldn't it be more efficient to implement tax-funded UBI than it would be to manipulate the labor market to force employers to provide the social safety net? How did that work out with health care?
GDP and SPX growth don’t have to be linearly correlated. If a publicly traded company can steal market share from say independent competitor company then gdp can stay consistent, but SPX companies go up, hence why corporate earnings are a better kpi. For example, independent pharmacies are going out of business faster than ever, yet CVS stock has almost doubled in the last 12 months. GDP contribution has shifted from non public independents to publicly traded cvs
Market goes up 8% not because of inflation (that isn't the historic inflation rate) but because of real GDP growth. Companies are more profitable because of technology and efficiency gains. In fact, this growth is exponential. The reason GDP gowth has declined is because of our debt carry levels and export-import imbalance. Hold inflation, export gap, and debt carry constant, GDP has grown significantly every decade.
1) real gdp growth is probably sustainable as its inflation + real growth, real growth has averaged 2%, which means real gdp over that time grew 92% not 324%. That said since inflation is likely to reduce back to 2% ish long term, GDP growth will be less. 2)it’s not just efficiency on a national level, it’s trade, the economy is way more global than ever. It’s cheap capital, interest rates on bonds used to be over 10%, now they are 2-4%, meaning investment costs way less. Even without efficiency the cost of debt dropping would give more gains. It’s lower inflation and interest rates making future cashflow more valuable now, thus cashflow producing assets like stocks are values higher. The interest rate change from 10%->2% accounts for 2x-2.3x the stock market alone. So gdp 342 * 2 = 684, so all other effects to get to 927% on the market amounts to 34% difference, or less than 1% efficiency gains per year. 3) gdp grows and stock growth will slow down, but will still meaningfully grow. Deficit spending will eventually have to drop to lower deficit levels in order to be sustainable, so that will drag the US GDP, but companies are global, and so are there markets. Expanding into global growing economies will provide meaningful increases in earning beyond just US consumption. Continued .5-1% efficiency gains over gdp growth can absolutely happen, there is so much than can still me automated.
Regulation would be good. It would allow big funds to enter the market. Mr wonderful, Raoul Pal, etc talk about this often . If they wanted to ban it, they would have already. And banning it would whipe out a trillion + in wealth. Seems like a banning it would be a bigger threat to the market than letting it blossom, especially when it's already becoming mainstream (corporations own it, countries own it, big funds are waiting for regulation to own it, banks that have been traditionally against it are allocating portions for their high net worth investors, etc) Additionally, tons of the top developers and engineers all over the world are moving to the crypto space . They don't want to stifle innovation . The internet was a big threat to power and certainly has led to some problems but It turned out to be one of the biggest reasons for such strong GDP growth and tech advancement in history . They won't ban crypto. Especially if it means another up and coming superpower would benefit from the innovation while we are left out. Worst case (which is probable) is they will make a lot of them securities, but not bitcoin (probably not etherium either). Plus, ftx owner is one of Biden's largest donors, lots of Congress people own crypto, it's a huge pull for millennials/younger (popular, bipartisan, etc) and politicians will realize it's a win-win to push for crypto to be normalized. I'd check out raoul pal if you want to challenge your view.
No it is not sustainable without high inflation. Sure GDP has been driven by productivity improvements but eventually someone has to buy the all the goods that are being produced. A lot of that has been driven by deficit spending my consumers but that will eventually hit a wall as well. Productivity improvements also means less workers are needed to produce those goods which should drive down demand for high paying jobs. Eventually GDP growth will have to slow down because the demand for goods will slow down (or at least not keep up with the production output gains). Now having said all that it could still be decades before that happens.
V=PQ/M or V=GDP/M For economists, the velocity of money is the number of times consumers spend each dollar in a year. So every time you spend a dollar someone else receives it. So the turnover rate is the velocity of money. Typically, not always though, increasing the velocity of money leads to a rise in inflation. If a dollar bill sits in a savings account it stops being exchanged and it stops contributing to aggregate demand which is how the collapse of the velocity of money can mean lower inflation or even deflation over time. This is because the velocity of money is tied to the number of transactions that each dollar will be used for. When the frequency of transactions rises, the velocity of money rises. Velocity is an indicator of how willing consumers are to spend money. Lots of expectations play into this, but future expectations of inflation is a big one. This can operate as a feedback loop. Expectations are that inflation will increase so consumers buy now instead of later which in translates into a higher velocity which can then translate into inflation. The opposite is also true. This has been an economic structural shift for almost two decades and indicates a shift in how wealth is generated and/or who is generating it. [Long Term Trend](https://imgur.com/gallery/Jo569wj) [Trend Since 1998](https://imgur.com/gallery/gmTWCPY) [Personal Savings Rate](https://imgur.com/gallery/CIvDVpC) VS [Climax of collapse](https://imgur.com/gallery/Jo569wj) M1= paper money, coin currency, demand deposits, travellers checks M2 = M1 + savings deposits and money market shares So V = PQ/M and this shows that expansionary policies can actually cause a lower velocity of money if the real economic output is constant. In other words, the "real economy" output is constant. So changing the ratios changes the dynamic. So if M increases at a faster rate than the rate that goods and services are produced Q then prices P should rise. An indicator we use to track using this is savings rate which can have a huge impact on inflation. Personal Saving = Personal Income - Personal outlays and taxes Personal savings rate = personal saving/disposable personal income x 100 So we can look at some data to see how this is reflected. Personal Savings rate Savings rate is strong compared to historical levels. If we look at the trend from a technical analysis point of view, the use of concepts such as climax can be applied to determine market cycles. Velocity of money completely collapses which indicates an end to a market cycle and a shift in the economy.
Oh, they did increase the price. The SEC states this. But by the time it had hit $500 one morning, they were already out and it was a combination of retail FOMO of the likes of which has never been seen before nor since and other hedge funds buying and selling. GameStop was traded nearly 2 billion times during this period, which is more than enough volume for them to cover their short positions. There is no evidence that they had taken out more short positions, and especially not more than the float. This is where the conspiracy comes into play. The 'MOASS' thesis relies entirely on data that cannot be verified, and the belief that there are numerous bad actors in the media, Wall St., government, etc. and I'm sure some say the Zionists as well that are all colluding together to suppress a failing brick-and-mortar video game pawnshop. And if they do not do so, it would cause financial collapse on a global level and greedy hedge funds would fall a part, and then apes will then become the greedy hedge funds and the largest transfer of wealth in the history of mankind will occur. Somehow. Even though you cannot *actually* short a company into bankruptcy. And somehow, despite the government apparently assisting them, and despite this purportedly being the case, somehow ape believe that if their fantasy comes true, they will actually have to pay out more trillions than the entire global GDP. Where the fuck would the money even come from??? It's absurd. Believing any of this is not only the case, but even possible, is hopium & copium of the highest order. You broke some of the biggest rules of trading, sir. Do not trade emotionally. Do not bet more than you can afford to lose. Now you have nothing left but fantasy and delusion to keep you going, and you are far more likely to lose it all than walk away green.
The 2008 global economic crisis had a deep and underlying catalyst where very large firms had effectively worthless and risky assets on their books that were eventually called out on. What on Earth leads you to believe the stock market will lose over half of its value in the face of higher than estimated GDP growth (almost 7%)? What you've seen is incredibly overvalued stocks start coming back to Earth. 6% of the entire SP500 (APPL), crushed earnings yet again. MSFT also beat earnings (also 6%). You had \~12% of the entire SP 500's weighting beat earnings in Q1. Now, I recognize there is a low probability of this happening in Q2 again, but still. My worst case scenario is the SP500 hits around 3500. My call is that Q2-Q3 will be a shitshow as firms and the economy respond to changes and then things will settle in Q4. Now, I don't see us having another +20% increase, but I don't suspect the sp500 will be down on the year overall.
If Dems had their way, we’d be getting $2000 stimulus checks every month until “Covid-19 is over” aka forever. That’s $500B per month or $6T extra per year added to the national debt, where our Debt to GDP ratio would hit 2x in less than two years. Add to that all but certain hyperinflation too.
>Curious what if anything you’re doing in anticipation of the models pointing towards more drop if/when it reverts to the mean. I'm not doing anything differently than I have done. The reason I'm cash heavy right now has less to do with the market than the fact that I typically exit positions once they approach or exceed their individual fair value estimates. >Edit: Also, how do you ensure the different drivers don’t have the same trigger, variables, or biases? Depends on what you mean by "trigger"... if an economic event affects multiple components of the economy, that's useful data. But they don't have the same variables... Market-to-GDP doesn't invoke. CAPE Ratio doesn't invoke GDP. Yet both of them are saying roughly the same thing... are they all related? Yes. Models aren't about measuring apples, and then oranges, and then trying to predict some completely unrelated variable called potatoes. They're about looking at the same situation from different angles and triangulating the best estimate. I'll give you a real world example: I built an ARIMA model to forecast usage. Then I built a simple mathematical model. Both look at history but one of them is pretty basic algebra to proportionalize the timing and the impact of pricing on unit volume. The other is completely statistical and looks at multiple layers of seasonality, weekly, monthly, quarterly... and yet both models forecast a result within 0.1% of the actuals with a very low MAPE. Now, if we were dealing with a business that isn't 97% retention and highly seasonal, we might use a different model or series of models to forecast and we might have a different range of forecast accuracy... but we know these businesses well and when we understand these things we characterize our answer in degrees of confidence. There are always best, worst and average case estimates. As it applies to investing, I look for the most conservative estimates of fair value, to increase my odds of getting an adequate return.
Wow, there's a surprise. Last Q GDP#s are a one off event because 5% came from an inventory build up. The Fed is predicting a nice contraction in GDP from Q4: https://fred.stlouisfed.org/series/GDPNOW/ This year is just getting warmed up. I'd still be very stingy wrt picks. Better be good value plays and companies that actually make profit and who have pricing power. Friday's close doesn't portend all that much going forward.
S&P average return is 10+%, but plenty of years are flat, or down 15-20%. After the 1929 crash, people didn't make a real return on equities(accounting for inflation) for like 30-40 years. Only I'd you got dividends, did you make anything. After 2000, the market didn't get back to even until 2008, and then it crashed again, and didn't get back till 2013 or so. Accounting for inflation, you didn't get back till even later. Right now, the market is at historic valuations compared to GDP and earnings. I would take the guarenteed 6%, over the risk of going all in on the market at this moment in time. Had you gone all in after the covid crash, that is one thing, but now it is very precarious.
It's all a relief rally until proven otherwise. We need to retake the 200 DMA and get over the 50% fib to disprove the dead cat. Mostly we need the macro to improve. Yield curves are screaming toward inversion, Q1 GDP forecasts are coming in abysmally low, and fed is all but certain to raise rates. Not a great cocktail.
I think it will be a nice slow burn. All the degenerates think it will be a 1 day crash, but that is way less likely. Inflation hurts slowly. And the fed will not want to raise rates, so inflation should stay high. I would say it is either inflation, or credit carrying costs. Most likely inflation. I believe war has fundamentally changed. Not to mention, Russia is a small country (by GDP and population). This is the same deal as North Korea playing games. Everyone knows how this ends- The US invades and does a 10 year war. Although this time there would actually be strong European support and coalition. Russia might attack, but we won't have a war. They are hurting, but war won't solve their problem.
>do you think there's a good chance for the market to revert to the mean, Well, first, I think it's inevitable given all of the factors at play. Second, let's talk about what the "mean" is... and let's talk about metrics for a minute. I built my career on business/finance metrics. That's what I do professionally. When we build forecast models, we run several different models to see whether they all point in roughly the same direction using completely different drivers. If they don't, then we dig into why they don't agree. Most of the different ways of looking at the market say the same thing: It's massively overpriced, across the board. So, when we talk about mean reversion, what is the mean? Well, if you're looking at Market-to-GDP it's 120%... and we're currently around 190%... so that's saying there's about 40% to go. If you're looking at Shiller PE, the median is around 16. Let's say it's trending upward and make it 20. It's currently at 36? So 36 to 20 would be a 44% drop. If you're looking at Grantham's estimate... 4431 to 2500 is a 43.5% drop. So right off the bat there's three completely different metrics with completely different drivers all within about 5 percentage points of each other. Do you think that's a coincidence?
The degree of overvaluation (CAPE ratio) is still extremely steep. GDP in isolation is not the only metric to look at here... Market to GDP is relevant. Interest rates may be rising more slowly, but interest rates are going to rise. Since 2000, I've built my entire fortune on buying securities when they're undervalued, and I don't touch tech, and I've beaten the market for the past fifteen years... I don't make predictions and you can do whatever you like. I mean, I'm a millionaire who bested everyone in this room without touching tech in the past twenty years... but what do I know?
> because one company missed earnings by 50% # > And we are approaching those red flags again... In case you’ve missed it, most disruptive growth is already down 50%+ and profitable tech has crushed earnings. I’m not sure how you can compare the two situations. Also, the Fed rapidly raised rates 6 times before dot-com popped. GDP growth cratered.
Exports have been falling dramatically as a part of their GDP. Don’t put too much stock in China giving a shit about the US. Their new venture of predatory loans for developing nations is going to make them quite a bit in the future.
Im speaking though in a very general sense, other things could effect domestic goods especially for agricultural products (weather, supply chains, fertilizer costs(china imports a lot of fertilizer products)). The numbers international agencies report as well as China reports indicate a large number of unskilled laborers. This may be skewed by anecdotal views of someone that lives in larger cities, but the majority of China’s workforce and GDP is from unskilled laborers. It is definitely growing to a skilled labor force, they just have a large population so it will take many years.
Well, the fed balance sheet is posted with Wednesday’s numbers, so if you are saying there may possibly be bonds rolling off Thursday and Friday, it’s feasible, but it would show in next weeks numbers. I’ll be interested to look. From my look at the data, it looks like they attempted to in December, markets started tanking in January and they capitulated, and now they are just hoping for recessionary data to roll in over the next few weeks (which is already rolling in, and the 2s10s chart is tanking) to allow them to call off any perspective hike. Kashkari was out today spouting off about how it may just be a one and done, ATL Fed GDP now expecting .1GDP Q1, the recent initial jobless claim was effectively a plateau value of the rather large spike we had the week before... things aren’t looking great. My thoughts are they just keep saying they are tapering, while doing nothing, knowing full well they aren’t even going to attempt to raise rates. Even if they don’t have enough recession data to capitulate, they’ll just say they had to alter the taper pace “because the data said blah blah blah” and “we are still on track for several rate hikes later this year, just not yet, pinky promise”.
>Apple is its own monster, GDP too hot… inflation, they were talking about 7 rate hikes today, but I agree… also it’s not going to go straight down, pretty big pullback already. These charts are insane though. So much stuff looks like it just wants to die I think it's all going to hinge on inflation numbers every month. Everything is just fucking volatile cause half the people are terrified and the other starving for the dip. It could go either way IMO
I don't think anybody is claiming GameStop, the store, is worth more than the world's GDP. How I understand it is that naked short positions have infinite risk. The price of the valuation of the store and stock price would be completely disconnected if a squeeze were to happen.. But I'm glad you're calling yourself financially literate.
Apple is its own monster, GDP too hot… inflation, they were talking about 7 rate hikes today, but I agree… also it’s not going to go straight down, pretty big pullback already. These charts are insane though. So much stuff looks like it just wants to die
Universal truths: ​ GDP/Economy does not "grow" when you spend a year shutting everything down and then re-open it and watch it climb back to something vaguely almost reaching previous levels. ​ When you take X people out of work, and then put X people back to work a year later, you haven't created a single job. ​ If savings rates are down bigly from a year ago, and you have 12-16% real inflation, then savings are down double bigly. ​ As an old professor of mine used to say, if you torture a statistic enough it will tell you whatever it is you want to hear. ​ Someone needs to stop waterboarding all the statistics.
history? what about 2008 to 2016? QE was used first in 2008. No other year in history has the government printed 8 trillion USD, and give more than 2k USD per person to spend. This is new. Inflation in the past has nothing to do with this. And no, stocks are not doomed. Interest Rates will be lower for many decades to come, and JPow said it aswell. Debt to GDP is in record numbers and Biden wants to throw even more, so that gives little room for JPow to increase rates. Money will be flowing into the stock market like never before while bonds suffer. The greatest bubble in history is just beginning
1. How much bullish flow into energy has been the result of defensive rotation ahead of feared stagflation? 2. How much of *that* flow will dry up in response to positive GDP growth data, which contraindicates one half of the stagflation recipe? 3. What catalysts between now and March exist to add more doubt to growth slowdown? 4. What catalysts between now and March exist to bolster the now priced-in (imo) expectation of growth slowdown? I know my answers to these questions. I also know that every person may have different ones. That's fine with me.
Oh yeah, I totally believe in that. Because of data, backtests and financial literacy. Not because I’ve read some mumbo jambo online and now I believe all the financial data in the whole world is actually false in a literal conspiracy to mask the true price of a dying brick and mortar game store that is actually worth more than the whole worlds GDP.
The 6% tax isn't just transaction costs (gas fees in crypto is higher anyways)... But the entire financial sector. Crypto wouldn't disrupt anything, because the financial sector would still just switch to crypto and find ways to scrape from that. In fact, they already are. How many fees are thrown around buying, transfering, sending, trading, etc? That's before all the fees for using different financial instruments. The reason it's gone from 1.5% to 6% of GDP going straight to the financial sector, is just because they've gotten better at it, just like every other industry squeezing out as much as they can. Crypto would have the same thing happen.
Well thanks for refining that down for me. To be honest I do see a potential flaw, although I haven't double checked this for myself. It seems like you may have accidently conflated the size of balance sheet with the actual tapering of purchases. In other words, the balance sheet might not be shrinking but the actual purchasing is slowing. How is this possible? Well I imagine that things like appreciation or other outside factors can keep the balance sheet growing faster or keeping pace with the reduction of the purchasing rate. However more importantly none of this is that big a deal since these smooth brainers still don't understand that real rates are continuing negative, possibly quicker than any proposed hikes, so money is actually probably still getting easier and looser and not tighter despite the fake appearance. See also misleading CPI and GDP numbers As for actual inflation, I don't think it will stick around for more than a few years. Which is still a major problem but I don't think the bond market will care nearly enough nor the fed since they don't want to make the government insolvent. My thesis now is basically inflation will be bad but continue driving the markets higher because money is actually getting easier and looser and not tighter despite bs reporting and misleading data. Inflation is a huge problem for the working class but not the government and the bondmarket. So they are hiding it to their own benefit. Let me know what you think