Down goes the Dow

agip wrote:

coach d wrote:

("when the FED sneezes, the world catches a cold"), and I don't think it's going to be Goldman.

meh.

Rising interest rates in a low inflation environment is historically bullish, not bearish.

Not for emerging markets and non-US generally, it isn't. Why do you think people, including Goldman, are bailing from BRICS and other emergings in droves?

Take a look at the Two Steps and A Stumble rule that was activated at the end of 2004 and explain how bullish that was for equities in 2007-2008.

Long-term, interest rate hikes are not bullish, and I can't imagine any economist playing with a full deck that would claim it is. It's just that there's a period when profits haven't started to fall due yet to interest rate hikes that the market keeps going up. In the last two cycles that was 20% increase over 2 years.....then look out below.

So you've got nothing. Why am I not surprised?

POTO,

On 7/4/2015 your post in reference to my posts concerning rising investment risk in China.

"Only the clueless think China is going under."

You cut your foot on your own turd.

Igy

coach d,

I find it interesting that for years now the mantra was "the Fed has your back." Today the Street tells us rising rates shows the economy is improving. Of course either way you should buy more stocks. I suspect the worlds central banks have reached their limit to inflate asset prices.

Igy

Until China goes under, I will be right and you will be wrong. Where are they now, about 50% above where they were last year?

Care to try again?

POTO,

Past performance has sure been a poor predictor of future performance. Buy on the dip.

Igy

Pointing Out the Obvious wrote:

"Notice the silence"?!? What you may be noticing is that there is nobody else on this thread (not even K5 or the Maz) who is quite as in love with the sound of their own voice as you appear to be.

.

The irony. Or is it self delusion?

The viral video of Ahed Tamimi fighting an Israeli soldier who was brutalizing a boy in the occupied Palestinian village of Nabi Saleh has prompted a backlash from Israel's propagandists: the incident was staged by villagers as a "Pallywood" production. The charge is a cruel smear of people who did not ask to have their lands confiscated by illegal colonists.

POTO,

A quote from your 7/5 post:

"the Chinese market will certainly be up over the short term."

It is you that needs to try again. Over a series of days you poked fun at my posts that the Chinese market was a bubble. You twisted the content of articles I sourced to support your view that the Chinese economy was sound. Furthermore, you accused me of falsifying a short trade I had on the Chinese market.

Moving on, we will get to Dow 13,000 and i will remind you. And if not I will fulfill my promise to send some of your favorite libation. Nothing required from your side of course.

Igy

Drop you sumb#tch:

A fresh round of volatility shook Asian and European stocks on Wednesday as further evidence of slowing growth in China's economy cast a cloud over global markets.

Following hefty early losses, some Asian bourses reversed direction to close in positive territory -- the latest session of roller-coaster trade as concerns over the worldwide outlook keep investors on edge.

In early European trading London, Paris and Frankfurt tried to stage a rebound from a painful sell-off Tuesday, only to turn lose the gains by late morning.

The Australian dollar -- heavily linked to demand for the country's abundant natural resources -- plumbed six-year lows as figures showed the economy logged a slower-than-expected 0.2 percent quarterly expansion.

That came after Canada officially entered recession, hit hard by stubbornly low oil prices.

Both countries' economies are dependent on the exports of commodities -- such as iron ore -- that have powered Chinese growth over the past decade.

Pointing out the more obvious wrote:

Pointing Out the Obvious wrote:

"Notice the silence"?!? What you may be noticing is that there is nobody else on this thread (not even K5 or the Maz) who is quite as in love with the sound of their own voice as you appear to be.

.

The irony. Or is it self delusion?

The viral video of Ahed Tamimi fighting an Israeli soldier who was brutalizing a boy in the occupied Palestinian village of Nabi Saleh has prompted a backlash from Israel's propagandists: the incident was staged by villagers as a "Pallywood" production. The charge is a cruel smear of people who did not ask to have their lands confiscated by illegal colonists.

Hi, K5! How are your investments doing?

Ghost of Igloi wrote:

POTO,

A quote from your 7/5 post:

"the Chinese market will certainly be up over the short term."

It is you that needs to try again. Over a series of days you poked fun at my posts that the Chinese market was a bubble. You twisted the content of articles I sourced to support your view that the Chinese economy was sound. Furthermore, you accused me of falsifying a short trade I had on the Chinese market.

Moving on, we will get to Dow 13,000 and i will remind you. And if not I will fulfill my promise to send some of your favorite libation. Nothing required from your side of course.

Igy

Thanks for posting another of my correct predictions. It really wasn't too difficult to know the Chinese market would be up over the short term thanks to those links you provided. But I guess you see it as twisting the content of those articles.

Hmmm, that's twice now that you've tried to prove me wrong and failed. One more strike and you're OUT! Let's just say the 13,000 call is strike 3 and move on to the next batter.

Ghost of Igloi wrote:

coach d,

I find it interesting that for years now the mantra was "the Fed has your back." Today the Street tells us rising rates shows the economy is improving. Of course either way you should buy more stocks. I suspect the worlds central banks have reached their limit to inflate asset prices.

Igy

Think about how peaking works in running and track. You cut your training volume sharply (or you stagger smaller cuts like the FED staggers multiple hikes). All the time after you cut, your fitness is going down. But for a short period, muscular strength goes up faster than fitness goes down, so you get faster overall. In the longer run, though, the falling fitness "wins", which is why you can't ride your peak too long.

In the case of the market, the FED hikes rates because the economy is improving (if we forget about paranoid inflation hawks). So, for a period after the FED hikes, the effect of the economy improving is greater than the effect of the FED hiking and the market goes up. But in the long run, the FED owns the game and they win. Rising interest rates are NOT a stimulus for rising asset prices, but it takes a while for the effect to hit.

Coach D:

I think you are too simplistic. I'll say again: In the US, rising interest rates off a low base is bullish. Stock prices tend to rise fairly dramatically for the next 2-5 years. I'm trying to find a chart showing that.

I think you are saying all rate hikes have the same effect on business. And that is your mistakee - if rates are already high and they go higher - that is bearish. Because it starts to choke off bizness. on purpose. It is taking away the punchbowl. It is hurting business on purpose in order to stop inflation.

But going from 0% to 1% when there is no inflation? That's not going to choke off much business. And the Fed (lower caps) is not TRYING to choke off business in this situation - they don't have to - inflation is low.

in a high interest rate+ high inflation environment: The better running metaphor is: you are in great shape, running hard but maybe getting close to overtraining. The coach wants to slow you down, so he cuts off your feet. You will slow down.

I can't think of an appropriate running metaphor for the low inflation/rising interest rate sitch.

Agip,

This is a chart that LizAnn Sonders posted two months ago:

http://www.schwab.com/public/file?cmsid=P-7843917&filename=061715FastSlowTightenCycles.png&cv0

If rising interest rates were a stimulus, don't you think things would get even better in a fast tightening cycle so we could get more of that stimulus more quickly?

Would you care to explain how much money I made in Hovnanian in the next two years after the FED's second hike at the end of 2004? It went up for 6 months. Then HOV went from 72 to less than 1 in early 2008. I remember that because I had HOV (and NVR and RYL) and had to bail in the second half of 2005 when the whole housing market collapsed...and that was the thing that led to the whole (world) economy collapsing. There was more to it than housing (unregulated over-the-counter derivatives), but it was the FED that started the ball rolling downhill. What happened in 2008 is something those of us invested in housing saw happening much earlier.

I think you will have a very difficult time coming up with a quote from an economics or financial analysis text that rising interest rates are a stimulus for asset prices or economic growth.

coach d,

I like your analogy but I will give you another.

Fed policy is like giving the market PEDs. Once taken away the economics of easy money changes the way everything works. The market is like the drug testing protocol, once the cheaters are discovered the game is over.

Igy

agip,

See my analogy of Fed Policy as PEDs.

Igy

Nice to Know wrote:

Nice to see censorship of facts that put Israel in a true light are still being censored on letsrun.com.

What does it say about the strength of your argument is you need to censor everything that does not conform?

What censorship was that, K5?

POTO,

Perhaps you hould load up on BABA:

http://www.bloombergview.com/articles/2015-09-01/alibaba-is-the-canary-in-china-s-coal-mine

Igy