Down goes the Dow

Not sure if you figured that would be added to the weird vibe of the last four years. At least we will unlikely see a proliferation of males running girl’s and women’s track.

This time was different.

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Charlie Bilello
@charliebilello
The longest yield curve inversion in history (758 days) is close to ending today w/ the 10-year Treasury yield now only 0.08% lower than the 2-Year Treasury yield. Historically, the flip back to a positive sloping curve after a long inversion has occurred near a recession.

7:12 PM · Aug 4, 2024
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This time was different

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Financelot
@FinanceLancelot
This is the blueprint of 1929. I won't update it because you can tell things should fall apart mid Jan.

12:10 AM · Dec 30, 2024
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And yet the economy has boomed and profits have soared. Soft polls mean next to nothing.

unusual_whales
@unusual_whales
US workers are more downbeat about the prospects for their employers than at any time in nearly a decade, per Bloomberg.

9:02 AM · Feb 6, 2024
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Seems like we are sleepwalking into stock market losses here.

If we posit that economic growth is important to keep stocks moving higher, but the admin is dedicated to slowing that growth...what miracle exactly do we expect to happen here? What elixir of black magic will bring growth?

Official US policy now is anti-growth:

fewer workers because of expulsions and fewer immigrants

fewer consumers because of expulsions and fewer immigrants

fewer taxpayers because of expulsions and fewer immigrants

less trade because official US policy is now to slow trade

More expensive raw materials, assuming we do put tariffs in place

Higher taxes on companies because of the tariffs

lower econ growth, assuming the feds do arrest growth in government spending.

All that in the face of some of the highest stock valuations we've ever seen.

And on the other side, maybe lower regulation will spur some econ growth. And if they lower taxes that might balance out the tariff taxes. Maybe some wild west laissez faire animal spirits would help.

Not sure how interest rates will be affected here...inflation is falling again, which could exert downward force... but trade wars will boost inflation in the other direction. But lower growth would bring rates down. Not sure on that one.

Maybe the outperformance of non-US stocks so far is people adding all this up and saying the risk/reward has shifted away from the US.

Year to date:

SP500: +3.1%

Non-US developed nations: +5.4%

The waste and corruption being exposed by DOGE will result in positives for the economy and Government over the long term, the pain short term will be hard to avoid. I don’t believe pretending it is not needed is a viable choice.

DOGE isn't going to make any material difference in spending...to do anything serious on spending - beyond show business headlines - the military and entitlements would have to be cut. Will the admin cut the military or entitlements? Doubtful.

But sure, let's cut out the dead wood that has gathered for decades. I have no real problem with the project...the numbers just show that there's not much fiscal benefit to cutting a few billion dollars. Drop in the bucket.

Doing stupid things is never an excuse. It starts with the mentality Government knows best, and leads to the type of corruption being exposed.

mixed report card here, from a Barry Sternlicht (starwood) a year ago. but he has that show biz pizazz!

Triple Net Investor
@TripleNetInvest
Barry Sternlicht recently went on an EPIC rant about the Fed, predicting when they'll lower rates and the challenges the US is facing
"Inflation will fall below 2% as soon as the rent component catches up to the data.
The question is, when will the Fed lower rates? But here's where it gets really tricky...
The economy is too strong.
It's too strong because of public spending. It's not too strong because of private spending.
Private spending is rolling over.... Everyone's laying workers off.
But the federal government's hiring them.... They're spending enough money to keep these guys employed.
So the Fed keeps using this really blunt, horrible instrument 5.5% interest rates with two huge victims, because we have a $34 trillion deficit, and the debt is going to roll over.
A third of our debt rolls over this year. He can pay 5.3% on it, or he can pay 3% if he lowers rates. That's $200 billion.
That's a quarter of the defense budget, which is the largest component of our budget.
So he has a choice. Pay $300 billion on $13 trillion, or pay $500 billion on $13 trillion.
It's up to you, right? So it's 3% or 5%. So that's one problem.
Second problem is the regional banks. He's blown a hole through their balance sheets.
There's $1.9 trillion of real estate loans in the regional banks... there's only $800 billion in the money center banks, and he blew their banks to garbage.
These banks are out of business. They can't make money offering us 5.5% CD rates.
So he's gonna have the next crisis if he doesn't lower rates.
It's a serious mess in the capital markets and real estate and fixed income... anything that was yield related.
Will he keep rates here?
Yes, unfortunately. Why? He's up for, he's leaving in January. Powell's out.
He's not going to be the guy who let inflation come back...
I don't think we'll get the March cut. I think the data, as soon as inflation falls below 2%, there'll be a lot of pressure on him.
That might be May. So I think June, you'll see cuts.
It'll become very obvious that the private sector is struggling as the consumer runs out of money...
And why has this economy kept going?
Not only his spending, people have jobs. And b/c they have jobs and employment rates are good, so they're spending.
But they're spending money they don't have. It's not in their savings account. It's all gone.
And now they're on the credit cards. [And now] Americans are willing to live on Affirm. Now we have new ways to spend money we don't have."

It's still happening

YTD:

USA: +3.52%

Non-US Developed: +5.9%

I'm pretty the Government has spearheaded and led a lot of efforts to remove asbestos and lead from the environment, and setup funds for people who have been massively overexposed in their lifetimes.

Might be something you want to check out

meh

I heard Big Balls is quite a bit smarter and manlier than you, Dr Racket The PhD.

You might want to check him out. :-)

https://x.com/elonmusk/status/1887872132836630727?s=61

Remember when posters here scoffed at the possibility that BLS was manipulating job numbers?

there is zero evidence of any intentional data manipulation.

all econ data are soft and a matter of opinion, really.

Who would admit to it? The Philly Fed was the first to note BLS was up to something, intentionally or otherwise. Regardless, it was scoffed at months ago, and provably correct. One of those Zerohedge Russian plants, you know.