Goodrich Petroleum Corporation
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No idea, don’t follow him in that much detail. Consider that as a professional investor who has spent 8+ hours a day doing this for probably longer than you’ve been alive, with more capital at hand than the GDP of a small island nation, what he does to make money may be very different than what is good for the average investor to make money.
Idk what's making it blow up so fast, but the Buffett Indicator is over 200% Market Cap to GDP ratio. For comparison, the 2000 DotCom bubble maxed out at 140%, and the 2007 housing crisis was just over 100%. Full Market Cap to GDP history found here: https://www.longtermtrends.net/market-cap-to-gdp-the-buffett-indicator/
Hyperinflation mainly occurs when the country has large amount of debts denominated in a foreign currency and is desperate to keep people employed. The (better) alternative is to raise interest rates which will also allow imports to become cheaper as the currency appreciates from capital inflows seeking higher real returns. That also makes paying back the foreign debt easier. But that does come at a cost of higher short term unemployment. The ideal monetary policy in this situation imo maximizes the nominal GDP denominated in a reserve currency so that foreign debts can be reduced most quickly. Either that or invest in a military so that you can enact leverage to reduce the debt (Germany’s strategy in the 1930s). Instead we see leaders cripple the country as they keep printing more money to give to the people who race to the exchanges and pay down the foreign debt before it becomes devalued yet again. It’s a bad look to raise interest rates since it’ll be corporations paying down the debt while the people become unemployed and politicians can’t handle bad looks. The US dollar is a reserve currency already so all the above doesn’t really apply until we have another currency that looks more attractive. US debt is overwhelming denominated in US dollars.
Fwd PE, PEG and debt in comparison to competitors are my heaviest used metrics. But right now all the market metrics (PE, PS, Market/GDP) are saying we have entered bubble territory, so I'm reducing my exposure to stocks. Cash is an awful place to be with inflation at 7% but much better than the 30% or more drop in the market that is needed to bring us back down to reasonable value.
We are objectively no where near hyperinflation. Don't mix it up with stagflation, the two terms are not interchangeable. At the moment GDP is still growing, so that's not an immediate risk either. Obviously growth is slowing down since our crazy bounce back, but we survived the stagnant economy of the 70s. Best to stay invested in quality
Lol you’re clearly the type of American that has a very limited perspective on the rest of the world, especially if you think raw GDP per capita stats mean shit about quality of life. But it’s ok, you do you. America #1, fuck the communists!
I expect 'reversion to the average' and possibly overshoot into better than averaging pricing. https://www.currentmarketvaluation.com/models/buffett-indicator.php By the Buffett indicator the US market would need to fall by more than 50% to reach the average again. To reach historical 'cheap' levels you're looking at a 75% drop from here. https://www.multpl.com/shiller-pe By the CAPE shiller measure the US market would need to fall more than 50% to get to the average again. To reach historical 'cheap' levels, you're looking at a 75% drop from here. These measures of broad market valuation work in completely different ways so it's kind of interesting that they line up so well. Similarly from dividend yield, if we see 1.5-2.5% rise in interest rates moving closer towards the average, I would add that to the current SP500 dividend yield to get a rough idea. Again a 50% drop from here. If we need to reach the levels that were achieved historically to control inflation, again a 75% drop in the SP500 from here. Sales are another interesting measure. Sales tend to be a lot more stable than earnings over long periods so they are useful standard candle by which to measure overvaluation. The SP500 price to sales is 3.2 just now. The historical average is around 1.60 depending on which measure you take. The low is 0.8. This implies a 50% drop in the SP500 from here to get back to historical average valuations and a 75% drop if we revisit historical lows. Long story short: By all the varied measures that I know of, it would take a 50% drop to reach historical average valuations and 75% drop to reach historical lows, starting from where we are today. If we see a drop in sales or GDP or earnings for example: inflation effects, tax rises, recession, wage effects, then I would expect the necessary drop in SP500 to be a few percent greater e.g. 55% rather than 50% drop.
There are a couple of things going on in financial news the first one is you have people pitching their position just like you do on the internet. You have people speaking their opinion which would benefit them. Then you have people trying to figure out why something happened and assign meaning to it. Every now and then you will find useful information on the financial news. They will say something about GDP or unemployment or inflation and it sets off a little light in your brain. Then you start doing some research and put together your theory. It's pretty rare though as most of it is marketing. Thankfully it's not as bad as political marketing. That is out of control these days
Good talk, some financially literate dudes right there but I think they got the household net worth to GDP analysis wrong. Yes, there's enough capital there for the theoretical self-sufficiency but I don't think the chart translates to an expanding economy. It's either asset valuation increases or all households are ~~hording~~ hodling and let's be honest averages can be misleading. Middle-middle class and lower I wouldn't say is a contributing factor in this stat. I don't know what it means going further but I don't think it means expanding economy and I think it contributes to binary (have's and have not's) wealth ownership.
Pretty much yes you are correct. Ultimately there will have to be a deleveraging due to our debt to GDP being in the triple digits in both public and private. Policy makes just prefer to take on more debt to push that problem later in the future. If they actually allowed the capital markets to function properly they would allowed it to work on the way down just as easily as they allow it to go on the way up.
Also different euro zone countries have massively different rate of inflation, so I've no idea how they are going to control inflation through interest rates there. For instance portugals inflation for 2021 was 2.6%, pretty close to the 2% goal. Meanwhile Polands inflation was 7.4% way off the 2% goal. So what does the EU change interest rates for and what effect will it have on countries that aren't actually seeing inflation going too high already. Not to mention such as Greece with over a 200% debt to GDP ratio and the effects it will have on that. Italy is also sitting close to 140%.
To my knowledge the Fed has never borrowed money. I would assume this is due to the fact that printing money is free and borrowing is not. Now if we assume that the Fed doesn’t foot the bill for Uncle Sam then we must assume the banks are then forced to essentially liquidate trillions of dollars that the Fed has put into circulation off their books. All you have to do is look at the major issues the banks have had with the overnight lending rate over the past couple years to know that they are already struggling to stay liquid. You do this and now you have created a liquidity crisis almost 3 times the size of the 08 crisis and almost all major financial institutions would collapse. Now at that point I don’t think even doubling GDP growth would save the economy.
How do you know the Fed will clear off its balance sheet by selling dogshit bonds with crap yields compared to current to banks??? That has no sense. Plus bond market out of liquidity cuz who gonna buy bonds knowing the Fed has to sell tons of them??? On ‘normal’ circumstances yeah ur right, but this time different. No CB has ever done such a big QE culminating with 1/4 of GDP worth balance sheet. Bond market not attractive + inflationary pressures = equity market magnet
wat. 7% is less than the average (over 100 years) stock market return annually, lol. Or like 2 years of GDP growth. One year to destroy what took... like one or two years to build. Also it wasn't "destroyed", it was SPENT on social programs.
GDP Growth at start of the Depression: 1930(-8.6%), 1931(-6.5%), 1932(-11.6%), 1933(-1.3%) 2022 estimate is 4%. Last time GDP was at 4% or higher was 1997-2000. Do you know what the return for the S&P 500 was during those 3 years that ended the decade? 1997(33.36%), 1998(28.58%), 1999(21.04%) How does that all factor in to your calculation of the stock market imploding on the same level as the great depression. Do you know what actually happened during the Great Depression? Covid can't hold a candle to Influenza and the strength of the US economy is not faltering. The interest rates in this country have been around 5.48% historically and before covid. Last time inflation was 7% was in 1982 but interest rates hit an all time high of 20% in 1981. I have no idea about anything, but I would wager it is not the same situation.
The Cyclically Adjusted P/E ratio or Shiller P/E is the inflation-adjusted Price to Earnings Ratio of the S&P 500, where the Price is the current market price and Earnings used is an average of the past ten years. There have only been two times that the CAPE Ratio has exceeded 30, with very pronounced spikes: just before the stock market crash of 1929, and the stock market crash of 2000. There are also other indicators, like the Market-to-GDP ratio, and Global Liquidity Indicators from the Bank of International Settlements, as a couple of examples, that point to a similar pattern whereby excess valuation is linked to excess liquidity and steep increases in these markers are correlated with the worst crashes in stock market history.
I agree! I had this discussion with a friend three years ago before covid. The basic premise was: 1. Persistent Inflation is driven buy central banks primarily coupled with the stickiness of corporate prices for products and services over time. The purpose of any corporate executive is to increase shareholder value. 2. Supply chain inflationary pressures are generally transitory. Demand driven inflation is also transitory. 3. Price elasticity of goods or services or key to the demand/supply dynamic as well but still temporary in nature. One must ask why, the price of a gallon of gas in 2019 was higher than the price was in 1999. One must ask why wages were relatively stagnant during the same period. One must ask why the price of a home was $25,000 in 1975 but the exact house we was $250k in 2019. On a basic level, nothing has changed with the products or services provided. There will always be new innovations that have their own price points but a free market would settle those prices on its own. The main issue since 1929 is that the banks, corporations, and other financial institutions work in a delicate dance to insure persistent price increases year over year. The whole idea of persistent inflation as a framework is that if prices are always expected to rise, the consumer will continue to to purchase products and services rather than wait. This is purely artificial and a figment of people's imagination. The reverse is what central banks try to avoid (deflation). This is the expectation of lower prices which result in consumers waiting to purchase rather than purchase at the present moment. This is also a figment of imagination. Deflation, in theory, leads to wage stagnation and lower GDP. But how about stable pricing, along with less fed central bank, corporate, and government induce market friction. Supply meets demand and prices stabilize at levels that resemble 1950s or earlier. The argument for demand out striping supply due to population growth does not hold. This is illustrated in the price of oil. When Opec releases supply to match demand, prices stabilize or drop. However, these organizations are not interested in 1:1 demand supply. Nobody cares that there could be price stability at 1929 or 1950's levels or earlier due to the profit motive, creating s increasing hareholder value (not just share holder value), and central bank motivations to continue increasing prices forever (the Fed is mandated to due so at 2%). If I have a business and charge enough margin to deliver 30-40% above cost. I could charge more and people would buy but why? If I did, eventually my customer volume would slow down and I would have to lower my prices. I could also charge less, but why? If the consumers are willing to pay then I'll take what the market will allow (within reason). So we have a mechanism for market equilibrium. As these input cost and consumer prices converge, we have even more equilibrium points. There is actually a point at which nearly everything in the world could be free or very low cost if you start with the beginning of every supply chain and adjust for labor cost that is not artificially inflated due to external forces. For example, if someone was in the woods alone, they would have to find ways to eat and provide shelter. Before all of these systems were in place, items were free or low cost and the price was the time it took to hunt or build shelter. Most things are outsourced now but human behavior and needs have not changed. The need for food, clothing, shelter are basic. Communication and entertainment is also basic, along with travel. These basic things really do not cost that much. Imagine, discounting current prices of everything from today by the persistent inflation rate to 1929 is what things should be. Eve then, they were too expensive. When 2008 hit and prices of homes and everything else dropped, they moved to fair value. Same thing with the 2020 drop in the stock market...prices went back close to fair value not as close to 2008 prices but close. Yes, I agree that value creation leads to higher prices at first but our world order has systematic price increases embedded regardless of value creation. My last example is the US Copyright laws. I have copyrighted material so I'm glad the law is structured this way but it is unnecessary and provides a monopoly and perpetual near infinite rights to monetary gains for corporations that usually end up with most intellectual property (not the original creator). Prices are and always will be artificially higher than they should be and will always increase. Since we know the game, we just have to figure out where this increase is happening and jump in early to get the big wave. If you miss it, it's ok since prices always increase, your rate of increase will just be lower.
No Reagan was the catalyst that killed the middle class: Decades of union depletion, vastly unregulated capitalism & poorly regulated capitalism resulting in recession, stagnant wages, unaffordable college tuition, and last but not least the never ending rise of cost of living. Started in the 70’s. Go look at a chart graphing GDP growth with wages. Watch how it tracks until the 70’s then just majorly diverges
.... This is my 3rd time writing this lol... reddit keeps quitting on me... so I'm going to try and hyper shorten what I said since the first 2 times they were long. Yes, I knew El Salvador recognized Bitcoin as legal tender, but in doing some research on this, it's more due to how their economy works, than it's belief in viability. Apparently, 20% of El Salvadors GDP comes from El Salvdorians (?) who are abroad sending money home to their families in the country. The traditional route resulted in high fees being incurred, whereas bitcoin doesn't have that issue, so more money in, and higher GDP. >Frankly, even if it was banned in my country, I could just fly to El Salvador (legal) transact from bitcoin to usd while there (legal) and take my USD home (legal). I'm not super aware of how this works, but I assume you woukd have to convert it to El Salvadors native currency, and then to USD. But regardless, you essentially reduce the pool size of crypto traders substantially, since you would have to physically transport yourself to El Salvador, which most people woukdnt be willing to do (unless their accounts are worth a good amount), and you kind of create a supply issue and devalued it a bit. Even if 100% of the people did this, if enough countries saw it as a threat (or even just a few of the big ones) they couldd force the IMF to beat El Salvador into submission and ban it. >But I’d ask you to look at inflation rates, property prices and wage stagnation (none of which are bitcoins fault) I think we're both US (I assume just since you used USD in your example), and I recognize the shortcomings of the gov in handling a lot of the economic issue, and don't think bitcoin is the cause for any of the ones you stated. It's just what we see as threats, and what a government sees as threats, are very different. Allowing for an alternative currency to be used instead of the native currency, is a big threat. I'm not saying governments are bad, or anything like that, but at the end of the day, they're going to do what's best for them, even if it's a negative for the citizens (ie with Turkey).
I've said it on here before but I think a ton of people would also benefit from looking at the Fed's own projections for where they see inflation, rates and GDP growth over the next year. I've seen so many people act like the Fed doesn't publish anything quantifiable on the topic or there's no rough time line on all this when there actually is and always has been.
The market has over reacted to these policies and news. 50% market drop back to 2015-2017 lows is why China's stocks are surging. When you have multiple over valued market IE S&P TSX DOW NASDAQ; China is one of the only options that actually makes sense in this environment. China has the fastest and largest GDP growth in the decade. Lower class is becoming middle and middle to upper, upper to Uber elites like the USA. Except this time there's almost 4times as many people. There's buying pressure because most know the other markets are tapped out and this market is only beginning.
We grew through three things. 1. GDP Growth 2. Printing a ton of money + low interest rates 3. P/E multiple expansion The real capacity for growth in the US economy is 2-3% at this point, according to all the economist. You can juice it here and there but that’s average. Multiples are already REAL high, historically so. In all likelihood you can’t expect further multiple expansion without negative interest rates. Now we come to inflation. It forces higher interest rates and doesn’t allow for more money printing. This actually causes p/e multiple compression, bringing stock prices down. If you want to know how bad this will suck, google: Japan Lost Decade
> What I don't understand is why people believe Powell is credible after this obvious reversal. How is The Fed so steadfastly credible when Powell was so obviously wrong? Because economics are - largely - cyclical, and depending on where you are in the cycle, there are certain rules n regs that macroeconomic theory says you should or shouldn't do. The dude was handed a global pandemic all the while dealing with DJT actively trying to influence Fed policy. US markets suffered a momentary market drop, only to see markets more or less recover. People got to remember that we FOMC was flirting with rake hikes all through 2018 and 2019. Then March 2020 hits, [GDP drops 10% by Q2'20](https://imgur.com/a/4H9uj1k) and everybody thinks global economic fallout is imminent, since we didn't really know the severity or scope of COVID. I'd say for a guy that was handed (1) a black swan event that last happened in the early 1900's - so before '33 or '34 were passed, fuck, back when the NYSE was just a bunch of dry goods merchants trading contracts on the corner of Broad and Wall - and (2) having to deal with a president that was attempting to influence Fed policy to not raise rates, while at the same time giving the image of an independent Fed chairman, relative to the president. I don't know about you man, but I for damn sure have not performed my job perfectly 100% of the time. You're nailing Powell to a cross for......not accurately predicting economic outcomes, in the very near term, after a one-in-a-century global pandemic? That's a hard ask.
We have negative real rates already, have for a while. Inflation increases nominal GDP. I agree that they're walking the line between inflating away debt, not destroying trust in the US dollar or foreign holders of that debt, stimulating the economy etc... If GDP does not increase through actual productivity to offset these debts we big fukt
The period that most closely resembles the current one is 1946-47. Double digit inflation, 10 year treasury at 2.2% https://inflationdata.com/articles/inflation-consumer-price-index-decade-commentary/inflation-cpi-consumer-price-index-1940-1949/ http://1.bp.blogspot.com/-lKlMuAO0eNQ/T--W5Oukg_I/AAAAAAAABlQ/iLtmR6DWSCg/s1600/Long+Term+10+Year.png The huge difference is that in 1946 we were the only modern economy not destroyed by WW2. But I think the Fed is following the same playbook. They want relatively high CPI to try to inflate away the debt to drive debt/GDP lower. They will do this via negative real rates. At the federal level the US is on the brink of insolvency. Tax revenues now roughly equal net interest plus entitlements and Medicare. The entire discretionary budget is debt financed. That debt is increasingly being monetized by the Fed. I’m maintaining long equity exposure but all my systems trade long/short (currently about 30% short). I think the current system can sputter along for many more years but the Fed charter will be expanded. CARES act let them buy junk bonds. The next equity crash will result in authorization for the Fed to buy equity indexes. How do you all see it?
What really drives me up a wall that in reality if we really wanted to, and had the will to as a people we could wipe out the national debt in 2 years time. We could usher in an era of prosperity afterwards that would last for centuries. But nah, instead we won’t even get our debt to GDP ratio down to 100% before blowing it back up.
So, "It didn't happen before, so it will never happen?" What vague thinking. It's also a logical fallacy - specifically, a non-sequitor. "It hasn't rained for the past five days, so it won't rain tomorrow - nevermind what the weather itself is doing." This is not complicated. In the 70's, the Fed killed inflation by jacking up raising rates for several years, with rates peaking at 20%. (Much of that inflation had to do with geopolitics. It doesn't particularly matter what starts the inflation cycle.) What makes today different? Inflation has been low for decades, so rates could stay low. So politicians loaded up on debt. Debt-to-GDP exceeds 100%. Now we can't raise rates without blowing up the economy. But I'm sure we can pretend that it's 1971 and everything will be fine.
"Don't worry about rising prices, worry about rising wages." Huh. Meanwhile, [GDP growth causes a slight rise in inflation.](https://qph.fs.quoracdn.net/main-qimg-d61d75ae8f2b694beb7e0f8bb117a16e) though [inflation causes slight decrease in GDP](https://www.quora.com/What-is-the-relationship-between-inflation-and-real-GDP) (but, note that the outlier point on the right is near 10% inflation followed by positive GDP growth, and further note that both graphs are really uncoordinated blobs and the regression lines are about as defensible as a sandcastle in a monsoon...)
Engineers are the worst when it comes to biases. Anyway since you are a data engineer, think in first principles and not the models handed it you in text books / some other idiots. Let me remind you some basic laws of nature 1) Law of conservation of energy (i.e Energy can neither be destroyed or created). So, you sound like a hillbilly and not a data engineer when you make statements like "We will run out of energy" 2) The universe itself has infinite energy and we are only using 0.00000000000000000001% of it. The problem with you is, you are too focused on the 'geo' and the hydrocarbons part that you are missing out the incredible innovation that are happening in other areas of renewable, clean energy and storage. Let go of silver. I myself is long some mining companies like GOLD, NEM. (< 2%). I'm also not a crypto fan (again < 2%). There are amazing profitable companies around the globe that are returning capital at 25%+ rate. Do your DD and find them. Stop wasting your time on non-productive assets like Gold/Silver/Crypto For a Data Engineer, you are wasting your brain cells on Silver. In my other post, I also asked you to not worry about Debt / GDP.
>stagnation of the economy is always a very very bad sign. Good thing we have the opposite of stagnation, with a tight labor market and a labor shortage caused by the larger boomer generation finally retiring and not being replaced by smaller subsequent generations, as well as record low unemployment figures. And real GDP is also increasing at a pretty quick rate too.
I wrote that it is revenue of all Shopify stores in 3Q 2021. And I say that this number is unrealistic to me. It is more than Coca-Cola and phizer combined. It is around 33% of imports from China to US in the same period (2 largest world economies). It is more than GDP of Hungary (10 mln. population developed country).
Good analysis and a well argued case. I don't disagree but.... A few points. **A.** Dumbed down.... "The Problem" is: 1. Debt/GDP is high, also in [US, EU, Japan & some other](https://upload.wikimedia.org/wikipedia/commons/3/35/Public_debt_percent_gdp_world_map.PNG) pax americanas. 2. Debt\*Rate is a sum of money that the fed (ECB, etc.) must pay. 3. Point #1 means that raising rates means spending lots of money on interest payments. 4. Paying lots of money in interest payments means debt grows even faster. 5. Paying lots of money in interest payments also means more money "in the wild," causing inflation. 6. The Fed's (ECB, etc) solution to inflation is raising rates.... vicious cycle. **B.** End games don't end the game. There is always more game. 1. There are other ways to control inflation, at least in theory. Taxes, for example. 2. Fed rates have never really been a great way of controlling inflation anyway. 3. The debt isn't really real, in some sense. If rates are set to 0% forever, that debt becomes pretty theoretical. 4. Under the current game, there's no market discipline on interest rates. The Fed can do what it wants, including 0%. Medium-Long term, changing the rules of the game is probably inevitable. Debt/GDP will continue to rise, just like Japan. We've been playing this game for 40-50 years... ish. It's reached an endpoint. New game soon. My guess is that the new game means dropping rates as an inflation control. It might mean just accepting inflation. Maybe the print dollars and convert all securities to non yielding deposits. That's a reset button. Debt/GDP goes back to 0 and we can play the game again. Maybe they just declare 0-interest forever, and there's no difference between dollars and dollar securities. Yes, the Fed is in a trap. But, it's a trap they built and they also have the keys. The trick is guessing how and when they break out of the trap. They'll not stay in the trap forever voluntarily.
It’s a bit of both. Some supply side pressures should ease with the post-holiday slump in demand; next month’s readings could be where the drop begins. And with American Rescue Plan money dried up and the debt-to-GDP ratio currently on a prolonged decline, it’s highly unlikely we see 5-7% inflation on a YoY basis throughout 2022. Especially since this year’s numbers will be based on how inflation changes compared to 2021, as opposed to the sub-2% inflation of 2020 that last year’s numbers were based on
Every person in this country pays a marginal tax rate on every extra dollar they earn/profit. Inflation means US Gov will also getting a lot of extra tax dollars, which can easily overcome the extra interest they have to pay. Bottomline, people who scream Debt / GDP and inflation hasn't really thought through their analysis. Oh also Debt / GDP ratio also goes by **nominal** dollars. Inflation is always beneficial for debt holders and this time it's no different. Having said that, I agree with your thesis that Fed may go at the most 1.5%, that's because the inflation will come down pretty quickly this year and we are already seeing some slow growth
Yes, this is the point. Almost nobody actually paid the top tax rate because it was pointless to make that much money. This is not the counter argument you think it is. The overall revenue may of been similar compared to GDP, but the sources were not. 1960 Tax Revenue Sources: Income Tax - 44% Compare Income Tax - 23.2% Social Insurance/Retirement Receipts - 15.9% (Mostly Social Security and Medicare) Excise Taxes - 12.6% Other - 4.2% 2018 Tax Revenue Estimates: Income Tax - 49.8% Compare Income Tax - 11.3% Social Insurance/Retirement Receipts - 32.9% (Mostly Social Security and Medicare) Excise Taxes - 3.1% Other - 3.6% The main problem here is the changes in corporate taxes and social insurance taxes. Tax cuts to corporations is the same as giving a tax cut to the ultra wealthy that actually own these companies. It does not result in higher wages, lower prices, or anything of the sort. In 1960 the top 1% earned 9% of all income and paid 13% of taxes. In 2008 the top 1% earned 20% and paid 38%. On the surface it seems like they’re paying more, but when you compare it to their share of total wealth now and then it’s not even close. This has gotten especially bad in the last 10 years as the top 10% and top 1% continue to own more and more of the total wealth at an accelerating rate. This all stems back to changes in tax and fiscal policy from the Reagan that were *intended* to shrink the middle class as the ruling class got scared. It worked, the middle class started shrinking and the ultra wealthy ruling class got back the wealth (but more importantly the power this brings) that they had been losing. Except this *never stopped*. These same policies are still being implemented today and the middle class is near nonexistent and wealth inequality is at all time historical highs for pretty much all of history anywhere. As for social insurance taxes this is primarily borne by the working class. The biggest part of this is social security and the rest is Medicare. Social security is 6.2 of earnings matched by employers for an effective total of 12.4% of income. Medicare is the same way for a total of 2.9% of income. The problem is that the tax for social security has an income cap. Only up to $127,000 (top 10% of individual incomes) can be taxed for social security. This means that once you start going above the top 10% of income you pay a lower tax rate. Which is regressive and kind of defeats the point of SS in the first place. After WW2 the US implemented extremely progressive tax, economic, and fiscal policy. This combined with the economic boom of the rest of the world having their industrial sector blown up and relying on the US led to the middle class growing at an incredible rate. It was the single best time and place for the working class in history. The civil rights movement, anti-war movement, environmental movement, and other social movements of the 50s, 60s, and 70s were all born out of the rising wealth and expectations of the middle class after WW2. This sudden shift in power dynamic between the ruling class and the working class did not go over well with the ruling class and conservatives. They were terrified and losing the power they had held since basically forever. We saw the results of this with Reaganomics, which was just an attack on the working class. The ruling class had worked hard to spread the idea that the middle class getting to big would lead to social instability and eventual societal collapse. This was not a new concept and was already a many decades old thing. It’s full of fallacies and had already been disproven many times at this point. The efforts of the ruling class came to fruition in 1980 when conservatives took back power for the first time in close to 40 years. Ever since then the only goal of the right wing has been to destroy the middle class and push the working class back down. They succeeded and wealth inequality trends started to reverse and start rising again. Except whoops, we went past where we were before. But it’s too late, the left wing in America has already been destroyed and neither party has any interest in stopping rising wealth inequality or rebuilding the middle class. All they really disagree on how fast they want wealth inequality to continue rising. We’re facing down the barrel of a gun. Rising wealth inequality is unsustainable, it will inevitably result in some kind of economic and or societal collapse as it has historically. The greed of corporations and the ultra wealthy is what lead us to our current situation of nonexistent interest rates and huge debts everywhere, both national and personal. They will never stop the party of their own will for the sake of everyone else. They’ll lead us up the hill and then right off the cliff as the markets collapse. This is the exact same road the same class of people lead us on in the 20s resulting in the 1929 stock market collapse and the Great Depression. At this point a market and economic crash are more or less inevitable. The only question is which straw will finally break the camels back. We’ve got rising domestic instability and political violence, the a resurgence of fascism globally, ballooning debts, out of control inflation, rising international tensions between the West and everyone else, climate change, and probably other shit I’m forgetting. If we had a political party in the US that had any interest in actually solving problems then we might have a chance to course correct. Personally I don’t see us making it to 2040 before this happens. Unless you have an underground bunker city to run away to nobody can avoid it. The world is too interconnected nowadays, and the US is just a big enough domino to bring everyone else down with it. Economic collapse, the largest economy, fascism (mostly the xenophobia and ultra-nationalism part), and the worlds greatest military by a long stretch all in the same country is not a good recipe for the world.
The bond market is more powerful than the Fed ultimately. If the bond market strongly thinks interest rates should be at 5%, then they will. The Fed’s only choice at that point is whether or not to bankrupt itself trying to stave off the inevitable. The higher the US debt and deficit to GDP ratios, the more likely this turn of events occurs.
First of all let’s address inflation currently we’re experiencing stagflation where demand outpaces supply this is due to pussies scared of covid and so the there are bottle necks in the supply chain which means there are less things being produced than people wanting to buy them that causes demand push inflation so actual inflation is lower than what we’re currently seeing as j pow has described a hundred times how will it pan out in the coming quarters we’ll we don’t know because it’s all dependent on how our suppliers decide to continue on with covid basically if all covid regulations and fear came to a complete halt tomorrow then supply would very quickly catch up to demand and inflation would deflate quickly to regular levels next how stupid do you have to be to think institutions have any interest in propping up companies their whole objective is to see a return so why would they be burning money? Next the whole reason for rate hikes is because liquidity is returning to normal levels when covid hit the fed dropped window lending to close to 0 levels and boosted quantitive easing to make sure the market doesn’t come to complete halt with people stoping spending and business loosing credit now that unemployment has hit 3.9% supply chain bottle necks are starting to clear up the fed can start increasing rates because economic activity is returning to normal and they don’t have to worry about the banks or the public running out of money and the economy coming to a halt causing a recession which by the way is one of the only two things that could kill out snp bull run now to address why “institutions are propping up the market “- they’re not with all the factors I just listed GDP will hit ath and so will corporate revenue not just that but these large businesses all have massive earnings coming up and soon it will be a race to who can get the cheapest shares then you’ll have panic buying everyone afraid they’ll miss the window for a profitable buy and if you would look at these companies you’d know that they’re fairly valued - undervalued by every valuation standard EV/EBITDA P/E intrinsic not to even take into consideration that most of these big tech companies gross profit is growing at 15%-20% annually meaning in speculation buying shares rn would have a huge profit In the future. So yeah you asked if you have spy puts you may profit tomorrow no one can predict the market day to day but if you hold them you’ll get absolutely fucked within the next two weeks you’re welcome dumbass go read some books and 10Q/10ks
Well post 2008 kind of adds to my point, that the Fed adding liquidity is the primary driver of S&P 500 returns. We've had 10 years of historically outsized returns. The correlation between the market and the Fed's balance sheet is stronger than with rates or GDP growth or basically any other economic factors. We're gonna get double digit PPI here in the next couple months. Feds gonna have to dump bonds for the first time in a very long time.
That’s been my bull thesis for the last few months. Some percentage of headline/core inflation is transitory, maybe half of it, and that inflation itself is global. The US is well-positioned to receive less of a blow on this: output and employment metrics remain strong, and stagflation hypotheses remain fruitless against rising wages and early boomer resignations. I do think it’s going to take several more months for a clearer picture to emerge and it’s heavily contingent on adjacent covid factors, but I think the biggest bottleneck moving forward for GDP growth will be labor markets, which are currently under squeeze. But hiring shortfalls are the literal definition of a “good problem”. Steady communication and stability alongside a bond market that will take *years* to recover are good arguments for equities markets to keep growing, despite volatility.
Yes I'm bearish but we're not gonna go down all at once. Markets still in an uptrend and so there will be buyers for the time being. Once we're in a world with 5% rates, 5% inflation and 2% nominal GDP growth the market will be acting differently
Today, in support of these goals, the Federal Open Market Committee kept interest rates near zero and updated its assessment of the progress that the economy has made toward the criteria specified in the Committee’s forward guidance for interest rates. In addition, in light of the strengthening labor market and elevated inflation pressures, we decided to speed up the reductions in our asset purchases. As I will explain, economic developments and changes in the outlook warrant this evolution of monetary policy, which will continue to provide appropriate support for the economy. Economic activity is on track to expand at a robust pace this year, reflecting progress on vaccinations and the reopening of the economy. Aggregate demand remains very strong, buoyed by fiscal and monetary policy support and the healthy financial positions of households and businesses. The rise in COVID cases in recent weeks, along with the emergence of the Omicron variant, pose[s] risks to the outlook. Notwithstanding the effects of the virus and supply constraints, FOMC participants continue to foresee rapid growth. As shown in our Summary of Economic Projections (SEP), the median projection for real GDP growth stands at 5.5 percent this year and 4 percent next year. Amid improving labor market conditions and very strong demand for workers, the economy has been making rapid progress toward maximum employment. Job gains have been solid in recent months, averaging 378,000 per month over the last three months.
What QE does is basically swaps long dates securities (bonds) with short dated securities (bank reserves). This reduces the supply of bonds which pushes down the yield because they have an inverse relationship, this makes borrowing money a lot easier for both consumers and corporations. Remeber Europe's economy is largely finance, touism and fashion and automotive based, not as tech based like the United States, there aren't quite as many growth companies in Europe like in the United States, so the process of QE which pushes down long term rates isn't as beneficial to European companies. It's also important to note that almost every economy in Europe has stagnated since 2008, you look at the GDP of the big three, Germany, France and UK theve all stagnated since 2008, this combined with low birth rates and taking a while to get imigrants fully intergrated into the economy aren't helping European stocks.
The best way to apporach this is to adjust rate as we read economic data, labor participation, GDP, unemployment rate, corp earning, corporate debt level, U.S. treasury health to pay interest rate payment. Jpow just issued some dovish statements just now and sort of calmed the market a bit. We will hear him more tomorrow, and CPI data on wednesday. I dont have the answer, but clapping the stock market is not the correct way to reduce inflation and can have a long lasting consequences such as slow down in hiring, less innovation, more inflation due to cut back in hiring and investing back to the business.
if real GDP doesn't grow in those 12 years, you absolutely can expect to not have a rebound despite zero growth. stock growth requires GDP Growth, no matter what individual stock explosions in 2020 and/or 2021 seem to suggest. without GDP and real income growth, the market does not stay up very long and will pull back. amc and gme avoided the requirement of income growth for awhile but they are now falling back to earth along with all of the other growth stocks that have yet to show growth in the present vs. future
Not yet. recession: a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. I betcha consumer spending this quarter goes down the shitter though. We'll see if it's enough.
Gamestop could absolutely turn around. They seem to have a good team in place. I'm actually rooting for them. If they execute really well and catch a few breaks, they may even be able to justify a $100-$200 share price in a few years. If turn-around was what apes actually cared about, they might be admirable. Most apes only care about a GME turnaround as a trigger for MOASS (which is where the bullshit cult aspects comes in). Successful corporate pivots are not unheard of. They happen fairly regularly. A single retailer becoming more valuable than the US GDP, because the whole system is colluding against it? that's a bit harder to swallow.