Is the stock market going to tank?

In my first Economics class, the professor stated that everything relates back to supply and demand. Over simplified of course, and you have to think through the details of what is supply and demand, but it was a comment that has always stuck with me.

In this case, the supply of money via jobs is too great, which creates excess cash for consumers. They freely spend, increasing demand, which raises prices (and inflation).

This is obviously over simplified and coming from my Econ minor over 30yrs ago, so I'm sure someone else can improve on my explanation.

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Originally Posted by gravitylover

But how does reducing wages, available jobs and putting people out of work help? FWIW a lot of those advertised jobs don't really exist. So many times it's companies wanting to look strong, "hey things are so good we need people!" but they're not actually hiring.

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You think the fed just checks the help wanted ads to gauge unemployment?

Can you imagine how rising wages might work hand in hand with inflation? Barista team gets a $2hr raise because the coffee shop is worried about losing their employees to another coffee shop, and your Mocha Frappe Latte goes up a buck to cover their wage. But that barista still has to buy groceries that went up in price because the folks at General Mills also had to raise prices to afford to keep their employees.

And a good chunk of inflation was in the housing market. It doesn't matter that the barista got a $1 raise when rents have climbed ~7%

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Originally Posted by Ted Striker

A good chunk of inflation was in the housing market. It doesn't matter that the barista got a $1 raise when rents have climbed ~7%

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Well $1 could very well be that 7%. No idea what baristas make these days, but $1 is about 7% of $15 an hr. So realistically, it would be keeping up with the increased rents. I assume that rents will be headed down or leveling off as demand is decreased, potentially from STRs being converted back to LTRs due to a glut of STRs and increased regulations/incentives. But those are mostly local issues.

And property values 30%.

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Originally Posted by Brock Landers

The way to cooling inflation is through cooling the job market.

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Or, if we don't skip the basics: A way to cooling inflation is through cooling incomes.

It seems like gravitylover is pointing out that, as we all know, another way is to increase production, and cutting jobs obviously reduces production. But the Fed only has the ability to adjust money so they're trying to cut demand instead.

Like steering the car with one finger from the passenger seat?

Don’t forget we have to keep corporate profits high.

I'm told constantly to get rid of my employees or cut back because they are a drain when you look at the numbers by the money man

Employees are the greatest expense and drain on any business

All these tech companies laying people off is more of cutting the bloat than anything proving all the slouches who do very little at work a wake up call to show your worth because your expendable

The past couple years have been a win for employees flexible schedules work locations low wage earners are forcing the invisible hand of economics union growth etc

The fed and the govt are controlled by corporations as well as the stock market mary Jane's craft store on main Street America is nothing to federal govt corporate America is losing by a hair right now and they want full control when employees have the upper hand its not good

Hopefully in the next five years we will see anti trust regulations break up of monopolies

Rents have already cooled. Zillow puts out data on rents that are more real-time. The cpi piece of shelter is longer term, so the cooling rents will eventually get baked into that metric (OER).

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Originally Posted by fastfred

Hopefully in the next five years we will see anti trust regulations break up of monopolies

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Could such a thing happen?

Maybe... nearly every industry is a monopoly including the industries with relatively recent monopoly breakups (telecom).

Social Media
Web Search
Live Event Tickets
Telecom
Healthcare in many markets
Skiing

Slashdot on the google suit: https://news.slashdot.org/story/23/0...ntitrust-chief

@NR yeah, that's my point. It's a wash at best. Our imaginary barista's housing is likely eating up that raise before they even get to the grocery store.

Either way, inflation hurts poor people more than the wealthy. It prevents wage slaves from joining the asset class.

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Originally Posted by Cono Este

Who else bought Tesla?

Trade of the yr.

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Crazy how high TSLA has flown. It feels like it is too close to the sun and will get burned and fall crashing to the Earth in a epic, Icarusian flameout.

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Originally Posted by Ted Striker

@NR yeah, that's my point. It's a wash at best. Our imaginary barista's housing is likely eating up that raise before they even get to the grocery store.

Either way, inflation hurts poor people more than the wealthy. It prevents wage slaves from joining the asset class.

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Most of the income gains (maybe excluding recent history??) have been going to the top 1-10% of income earners.

The barista has been in the hole in terms of wage gains for decades.

I posted a question about demographics somewhere else here and got some useful responses /S but what I keep seeing thrown around is that we are seeing some structural changes in the availability of labor, willingness to have a two income household (raises labor supply, lowers labor wages) and now that the boomers are really getting going on retirement things are swinging towards labor and probably won’t normalize for at least a decade.

TSLA scares me.

RIVN I bought close to the bottom and would buy a little more of if it goes down again.

So, effectively, make it more difficult for average folks to afford the things they want so they redirect their dollars to the things they need. Won't this raise the demand for the things they need thereby raising the prices for those things?

People have already reduced their buying as evidenced by sales and bloated inventories. Miles driven by the trucking companies are way down, rents are dropping, home sales and new construction are down, layoffs at the high end are way up, hiring at the low end is nearly non-existent... Let's boost the markets! :redface:

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Originally Posted by gravitylover

So, effectively, make it more difficult for average folks to afford the things they want so they redirect their dollars to the things they need. Won't this raise the demand for the things they need thereby raising the prices for those things?

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Prices go up (in general) in inflation for both staples and luxuries (although different goods can inflate differently as mentioned). It is not that average folks increase consumption of what they need thus increasing demand, it is that they buy (most) of what they need, as before, but they spend more to do it because the demand is inelastic. When they spend more on the needs, there isn't as much left over for what they want... or... there just isn't enough for what they need. This inflationary effect causes a lowered living standard and even hardship depending where people were in their budgeting/disposable income. Average people spend a higher proportion on needs and have less disposable income. (see also: elastic demand and substitution)

The poors have even less disposable income and it is far easier to push them to hardship. The middles get pushed toward the poors. Inflation sucks for everyone, and sucks for the poors most of all. Unemployment really sucks for the few percent unemployed, but not so much for the vast majority of employed.

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Originally Posted by gravitylover

So, effectively, make it more difficult for average folks to afford the things they want so they redirect their dollars to the things they need. Won't this raise the demand for the things they need thereby raising the prices for those things?

People have already reduced their buying as evidenced by sales and bloated inventories. Miles driven by the trucking companies are way down, rents are dropping, home sales and new construction are down, layoffs at the high end are way up, hiring at the low end is nearly non-existent... Let's boost the markets! :redface:

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What the fed is doing with interest rates should hurt/slow businesses, as it slows the economy. Hiking interest rates is not boosting the markets. See: 2022.

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Originally Posted by gravitylover

I need to understand something. Why does the Fed want to cool the job market and see unemployment go higher when people are hurting from inflation? It seems to me that more jobs, higher wages and companies in a stronger position to add hours rather than cutting hours to reduce payroll would help people. If it's about giving the stock market a boost, fuck that.

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This is the theory:
Attachment 445381

6 mo high IWM

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Originally Posted by goldenboy

This is the theory:
Attachment 445381

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So then you raise interest rates so growth money gets expensive and companies retard that growth and lay people off. Things are still expensive and more people are feeling the pain but because companies have reduced their costs their margins are ok and the people at the top still make the money they want to make. Demand only goes down just so much because people still need things but the businesses that supply the want side hurt so those employees get canned and the pain gets worse. Because the want side slowed down taxes have to go up to cover the lost cash flow and people hurt more.

Grrr. I know, too simple but that's who I am sometimes.

SPY chart is pretty bullish. ~4250 maybe which is only 4% higher

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Originally Posted by gravitylover

So then you raise interest rates so growth money gets expensive and companies retard that growth and lay people off. Things are still expensive and more people are feeling the pain but because companies have reduced their costs their margins are ok and the people at the top still make the money they want to make. Demand only goes down just so much because people still need things but the businesses that supply the want side hurt so those employees get canned and the pain gets worse. Because the want side slowed down taxes have to go up to cover the lost cash flow and people hurt more.

Grrr. I know, too simple but that's who I am sometimes.

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As people get laid off there’s less money to spend. As companies halt growing there’s less money spent on things. Which impacts suppliers and their employees. All of which reduces the demand for goods (at the margin which is all that matters) from a company and consumer standpoint. This kills inflation.

Margins will decrease as supply chain issues continue to improve. That’s more a timing issue than a straight interest rate thing.

People at the top may make money. Or they may be let go where it’s an efficiency question and they make too much.

Yes people will feel it. Companies will feel it too. What do you think a company is anyway? It’s workers and owners. Both come down to people. If demand doesn’t go down enough prices won’t go down. If demand does go down -marginal is all you need- prices should follow (or at least stay stable).

NatGas -61% last 2 months. Worst stretch ever. $UNG

Guessing JPow goes 25 basis points tomorrow and the market goes bananas.

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Originally Posted by Kevo

Guessing JPow goes 25 basis points tomorrow and the market goes bananas.

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It’s pretty well baked in at 25. If he went 0 market would go nuts. 50 and it’ll crater.


I’ll tack on to this, I think they hike more/longer than the market expects.

I say 50/25 is 33/67 because that is what I pulled out of my ass.

Bought more RIVN at 18.

Bought PHG at 17 for the long term.

After buying AAPL, GOOGL, and AMZN for cheap earlier in the month I’ve just been sitting on my remaining cash. I haven’t seen anything cheap enough to compel me to sink costs into any of my preferred equities.

I’ve been trying to stay active in options. I currently have two open, a Sofi call I’m underwater on by $12 and an ET put I’m up about $3. Been trying to sell an XOM Mar 17 $130 call for the last few days, missed it by a buck today. I’m super conservative in my options style, price them higher than I think will sell and see what happens. Sofi has beaten estimates the last few cycles, rose and then sank back within a few days, still hoping for that.

Looks like I’ll end up January with a $169 profit on options, I’d be happy with a year long performance of that.

Attachment 445499

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Originally Posted by LeeLau

Around the 120s then gritted my teeth as it looked sub 100s. It's a bit of a blowoff top right now. Am debating selling some or adding if it dips back to 140s. Not sure what to do tbh as I'm always concerned about Elon's fat mouth

Still playing dividend covered call adds as the core portfolio for the most part
- T is back at my buy point
- Added MSFT
- Added AMZN
- Added IRM
- Added TTD in hope it can be a core long
- Added SNAP short

Started small short position on BZFD via call straddles

Failed to repurchase XOM much to chagrin
Failed to short BBBY

Sidenote - RSX the Russian ETF I shorted has been marked to sub $ 1 on the portfolio. A paper win but a win nonetheless

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Added SNAP short on their disappointing earnings. Took the spike in options IV as an opportunity to sell puta against my short position getting a nice bit of cash.

Took profit on BZFD short straddles hoping for another bounce as its a resillient meme stock

INTC cuts costs... hit the news tonight.

"The person familiar with Intel's ( INTC ) pay cuts said that in addition to 5% decreases for mid-level employees, vice president level employees will see 10% reductions and the company's top executives other than the CEO will get 15% cuts.

The company has also lowered its 401(k) matching program from 5% to 2.5% and suspended merit raises and quarterly performance bonuses, the person said."

Gross. The market might like that but holding INTC for the long term, that seems like a way to get your best talent to bail. Intel NEEDS talent to drive the competitive edge and regain long term profitability.

I'll probably sell out of it as it bumps up.

INTC is now the kind of stock I would buy like XOM when it was in the $30’s or MSFT in the $20’s. They’re not going out of business. My guess is they will increase option grants to make up for pay cuts. It won’t surprise me if they eventually move hq out of California at some point. Probably to the new fab when it’s done. It’s still 10% higher than it was in October. GM, IBM. I’d put VZ in that camp now too. It’s why I own T.

Remember when it was dire for WMT last summer at $100? Up 50%.

INTC yielding 5.17.

2yn yield chart looks poised to fall off a cliff.

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Originally Posted by 4matic

INTC is now the kind of stock I would buy like XOM when it was in the $30’s or MSFT in the $20’s. They’re not going out of business. My guess is they will increase option grants to make up for pay cuts. It won’t surprise me if they eventually move hq out of California at some point. Probably to the new fab when it’s done. It’s still 10% higher than it was in October. GM, IBM. I’d put VZ in that camp now too. It’s why I own T.

Remember when it was dire for WMT last summer at $100? Up 50%.

INTC yielding 5.17.

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yah i could see them moving it to phoenix, create a new silicon valley with TSMC and ON.

25 basis points confirmed and the market is melting up on the idea that the Fed is pivoting

DJIA chart says possible test ath.

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Originally Posted by pogs4ever

yah i could see them moving it to phoenix, create a new silicon valley with TSMC and ON.

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New fab is in Ohio

they broke ground in AZ at the same time as well. but yah, either way i could see them moving hq out of cali someday

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Originally Posted by pogs4ever

they broke ground in AZ at the same time as well. but yah, either way i could see them moving hq out of cali someday

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I overlooked that. Not sure which one makes more sense for an HQ. AZ has nice airport.

Was someone quoting 5% on CDs somewhere earlier in this thread? If so, where were you buying them?

META on a tear after hours

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Originally Posted by Yonder_River

Was someone quoting 5% on CDs somewhere earlier in this thread? If so, where were you buying them?

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I think they went down. I picked up a 6-month CD at 4.85% APY last month. It's a Wells Fargo CD, but I purchased through my Brokerage acct.