Is the stock market going to tank?

[4matic]

Russell 2k at March 2018 price. Can easily drop another 20-30% in broad decline.

[BobMc]

I was buying it for $84 a year ago next week. It went down because of slowed cloud growth. They did well on everything else, pretty sure ah was a knee jerk. I’ll bet those after hours numbers don’t hold tomorrow.

Hah, I missed that. I just got ahold of some cash, if it drops again tomorrow I’m grabbing a few shares.

[Harry]

My sister. It's a 1914 structure that is a money pit but includes great lakefront property. Some of the best sandy beach on the lake. So it appraised high, and we're still working out the details of how we can make it affordable for her and keep it in the family. What happened to your mom's lake house?

It’s mine now. So I now own 4 pieces of lakefront property on this flowage. Fun to pontoon cruise between them.

[NakedShorts]

Unfortunately the time has not come to buy just yet.

[Cono Este]

I’m long, long vol. since early sept.

I will never, ever sell it.

[ghosthop]

Do any of you want to school me on the bond market?

I have read enough of the basic idea that because rates have gone up, the price of bonds have gone done over the past 18 months.

If I assume that the fed keeps rates where they’re at currently through next summer and continues to sell its holdings/treasuries stay cheap because of fear of default, are there any conclusions that can be drawn? Is there a good introductory text that I should seek? I am happy to work through the jargon.

If you’re still interested in passing knowledge on, would anyone like to explain their expectations for bond indices over the next six months?

[NakedShorts]

7% and yes you can lose 30% if you take duration risk. If you get lucky and what you say happens. SELL.

[byates1]

https://www.thestreet.com/investing/...ou-should-care

[Brock Landers]

Do any of you want to school me on the bond market?

I have read enough of the basic idea that because rates have gone up, the price of bonds have gone done over the past 18 months.

If I assume that the fed keeps rates where they’re at currently through next summer and continues to sell its holdings/treasuries stay cheap because of fear of default, are there any conclusions that can be drawn? Is there a good introductory text that I should seek? I am happy to work through the jargon.

If you’re still interested in passing knowledge on, would anyone like to explain their expectations for bond indices over the next six months?

I wouldn’t expect the Fed to still be where they are at next year, if inflation remains persistent, it could be higher.

Not our base case but that’s what the Fed has communicated.

Market is pricing in 50bps of cuts next year (second half) which is base case- inflation trickles lower, unemployment close to 4%, Fed just wants to start moving off a pretty high number (for recent history).

If shit starts to get ugly, Fed could start cutting at 50/75 a clip.

If these high rates start to hit businesses, consumer spending, credit card rates start to deter demand, student loan repayment hits spending, household savings has already been depleted….

Businesses themselves are flush with cash(paying 5%). The debt they have is largely at low rates (termed out in 2020/2021). If a consumer-driven slowdown starts to hit profits (spoiler alert it has outside of big tech and energy), businesses have another lever they don’t want to pull. And to this point they haven’t. Labor.

If it gets bad enough businesses have to start cutting workers, it will go downhill fast.

That said, right now cash or short term IG are paying 5-6%. Not bad!

High yield: 9+% yields for companies with ~400bps of spread? That’s not really “tight” but it’s close to average. So you’re getting 9% for bond index price close to $85. Not a ton of downside, even if defaults go to 2.5%. Recovery close to 60.

Rates- right now…well over the past 3-4-5weeks…yields have gone up as growth/inflation metrics have been on the higher side. Ok pretty easy relationship there. But yields and real yields have actually popped to the point of 2.5-3% growth. Trend (long long term) has been 2%. 3% growth??? I’m taking the under in 1 year. I’ll take under 2%.

The Supply thing is something to watch but I’d counter- how much did Treasury issue during and after the GFC? And how did that impact bonds? The 10y was under 2% for much of that decade. People will buy it.

In the end I’m sprinkling some broad high yield. I’m sprinkling some more 5-10y Tsy. And I’m buying short term gov and corporates.

[NakedShorts]

^^^^^

People like Brock believe this is orderly and just like last time. It is not. Just wait until the market takes the Feds hand and slaps it with higher rates. Then the sheep will realize the market sets the rates and not the Fed. Rates will not be lower until spending is also. And we will need China to buy the treasuries that they are selling. They will not cut this time either, even with a recession.

A friend who is also in the industry said "But how will they fund the debt at those rates, it doesn't seem feasible." My reply "How are they going to take care of the 8 million migrants who have recently entered our country, it doesn't seem feasible?"

Welcome to the grind and the end of our once great country. We still have a few more years to enjoy the sun but we have some problems starting.........

[fastfred]

^^^ once someone gets the balls to tell the boomers to shut the fuck up and get in the back of the line
things will be aok
until then we will continue to fund their desperate needs of material and financial wealth

who do you think is buying 75k plus rivians so they can pretend to care about the environment?
why does the stock market have to set records every month so 25% of the population can benifit?


the country will be just fine we just need major systematic change and you know what that is socialism and that is bad you know health care day care education you know that shit is bad

[skaredshtles]

the country will be just fine we just need major systematic change and you know what that is socialism

It's really easy for Boomers to rail on the evils of Socialism now that they're all on Medicare.

[ghosthop]

Deleted my rant but naked, take your doom and gloom to polyass. I was asking advice so that I can paper trade and hopefully make some sense from the outcome and learn.

As for your 8 million immigrants, read Brock’s post again about labor as lever. They will work without green cards and not receive the same level of benefits, like it’s always been. They’ll probably work two jobs for 16 hours a day and still not be as impoverished as they were in their home country even with the wild wage gap and inflation. I would rather work with 8 million Latinos than 8 million rednecks.

When Alaric knocks down the gates there will still be money to be made.

[skaredshtles]

<snip> They’ll probably work two jobs for 16 hours a day and still not be as impoverished as they were in their home country even with the wild wage gap and inflation. I would rather work with 8 million Latinos than 8 million rednecks.

The ironic part is that they will be working for mouth-breathing Trumptards for the most part.

"i dIdN'T KnOw tHeY WeRe iLlEgAl!"

[4matic]

10y rate was 100bp lower 4 months ago with basically the same Funds rate. Fed does not set the long end rate, they can only influence it. The timing of the sell off looks to be in line with the QRA refunding announcement. Supply has never been a long term factor. Could it be now? Of course..or, maybe not. Too early to tell.

I was listening to Rieder a couple months ago and he was saying there are technical factors that could cause long rates to go up for the next few months (which is now) but expects them to fall back next year.

As we’ve said before, the Fed never sells anything. They are not reinvesting proceeds and the roll off will continue to increase with maturity. So even though QT will likely increase it is not an additional drag from the Fed if they simply aren’t buying anything.

Bonds are pretty simple. Ask away.

Another point about the selfish boomers. These higher bond rates are manna from heaven. They are getting higher income which is one of the reasons consumer spending is above consensus. So, the selfish boomers have had the best of both worlds. Fat 401k’s from a 40 year bull market that they can roll into safe 5% yields.

One other point that I think is influencing rates right now is spread trading. Any managed bond fund has a bias toward the yield curve. The 2/10 yield curve has moved 100 bp in six months. That’s a lot! Rates can be affected by the trillions in managed funds changing or covering yield spread positions. This is bet on curve steepening for example:


Stan Druckenmiller on bonds:

“I am currently short bonds and long the front end”

[Kevo]

Every time the market pulls back by 8%-

"That's it, the chicken have come home to roost. This market can only take interest rates at 5% for so long. We're already in a recession but it'll be a few months before it shows up in the reporting. This is just like (fill in the blank with a time when the market pulled back). Consumers are tapped out (insert stat about credit card balances or "X percentage of people making $150K per year are living paycheck to paycheck"). Commercial real estate is going to pull the entire economy down. Look out below."

Then the market melts up.

"There's still trillions of dollars on the sidelines in short term treasuries/ money market accounts, etc. M2 nearly doubled since Q1 2020. The US is the poised to be the winner in the world economy- capital is seeking refuge in the US equities market."

[summit]

Daaa Bullllllsssss
Daaa Bearssssss

[oldnew_guy]

Every time the market pulls back by 8%-

"That's it, the chicken have come home to roost. This market can only take interest rates at 5% for so long. We're already in a recession but it'll be a few months before it shows up in the reporting. This is just like (fill in the blank with a time when the market pulled back). Consumers are tapped out (insert stat about credit card balances or "X percentage of people making $150K per year are living paycheck to paycheck"). Commercial real estate is going to pull the entire economy down. Look out below."

Then the market melts up.

"There's still trillions of dollars on the sidelines in short term treasuries/ money market accounts, etc. M2 nearly doubled since Q1 2020. The US is the poised to be the winner in the world economy- capital is seeking refuge in the US equities market."

Certain news sources would have you believe we have been in a recession for 3-4 years now.

[yeahman]

Certain news sources would have you believe we have been in a recession for 3-4 years now.

It's the Biden Economy

[skaredshtles]

Srsly - the cognitive dissonance of most folks of a certain political bent is hilarious/sad/maddening.

[4matic]

40y chart of .DXY has three lower highs and two lower lows. Lower dollar good for most companies globally. Another 4% lower looks likely in short term.

[skaredshtles]

Deleted my rant but naked, take your doom and gloom to polyass.

Naked has been oddly silent over the last few weeks.

I guess given a long enough timeline he'll EVENTUALLY be right.

[4matic]

Yield back in style.