Is the stock market going to tank?

[J. Barron DeJong]

Here’s my analogy for the Fed/Monetary Policy:

What they’re doing is like driving a car on a winding, rolling mountain road where you can’t see very far ahead. Also, the car is short on power, has undersized brakes, and when you try to accelerate or brake there’s a 15 second delay between your input and when the car starts responding.

In this analogy, when Covid hits it’s like coming around a bend and seeing that you’re facing a really steep hill, so you press the throttle to the floor.

Then your passenger flips the nitrous switch (stimulus bills) because the worst thing that could happen would be to come to a crawl/stall out. So you’re cruising along pretty good now, but it turns out you were actually near the top of the hill and you’ve unexpectedly come upon a flatter section of road with the nitrous still engaged, so you’re driving much faster than desired (high inflation).

The goal now is to apply the brakes to slow the car back down to a comfortable speed. It’s possible that the Fed jumps on the brakes too hard (reversing QE and/or increasing interest rates too quickly) and slows the car down too much (recession), or maybe they don’t apply the brakes hard enough to get down to a comfortable speed (continued inflation).

Also keep in mind that while they’re trying to bring the car down to a comfortable speed, they still can’t see what hills or valleys may lie ahead.

I don’t personally think a recession or continued high inflation is in any way ‘inevitable’ at this point, but either one is certainly possible.

[dunfree]

Most central banks printed money. And the fiscal stimulus was inflationary. That's the point of stimulus. But it was certainly better than the alternative.

so, you think it would be better to starve like the poor plebes in china you were bitching about last month. Such myopia. Covid response - health/social control, fiscal policy, and monetary policy- were hugely different around the world!

never mind, just grind that dullard axe and buy max bits. Because that worthless trash has nothing to do with inflationary worthless funny money

[NakedShorts]

Little Observational Awareness here to impart on the dynamics of global markets. The perspective of your home currency investment will make all the difference in the world.

Here is the price of gold over the last year in USD, EURO, YEN, Turkish Lira.

They all are 1 year returns on gold and all have very different outcomes. Understanding currency is important today.

Strong Dollar = Recession

[Cono Este]

much, aren’t you being political? Check out inflation globally. Its up most everywhere. Is that the fed printing money? Or China and it’s now certifiably insane zero Covid policy fucking up supply in the worlds factory? Or a huge global shift from services to consumption that’s now being reversed, slowly? Or all of it?

Not disagreeing that lots of money went into trash and propped up trash (crypto, the spac boom, Tesla) just that it’s not even or systemic. And tired of hearing people with $70k bought in pandemic pickups bitching about $4 gas

Dude. I don’t care about politics and the mkt. the two are not tied for me. I’m not an investor either, I’m a risk manager, derivatives dork. I look at implied volatilities, skew, shit I spent yrs learning.

If I sound bearish, it’s because I always am. That’s how I was taught to think.


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[RoooR]

so, you think it would be better to starve like the poor plebes in china you were bitching about last month. Such myopia. Covid response - health/social control, fiscal policy, and monetary policy- were hugely different around the world!

never mind, just grind that dullard axe and buy max bits. Because that worthless trash has nothing to do with inflationary worthless funny money

You have me confused with someone else. I don't own any bitcoin. I prefer assets that generate cash flow. I don't even know what your point is? That all the stimulus wasn't inflationary? If you're trying to convince me it was worth it, well that I agree with. Some inflation is certailly preferable to millions of people out of work and hundreds of thousands of shuttered buisnesses. Even if a lot of those buisness owners used their PPP "loan" to push up asset prices.

[shera]

Here’s my analogy for the Fed/Monetary Policy:

That was awesome, thanks for taking the time to post it.

[J. Barron DeJong]

That was awesome, thanks for taking the time to post it.

Thanks. Glad you appreciated it.

An additional thought about the current situation:

I think there are two things that are going to make it difficult to pull off a smooth landing -

First, using my analogy, we’re currently going way faster than desired, like 50 mph over our desired speed, so it’s difficult to judge exactly what amount of ‘braking’ is going to be required and not overshoot/undershoot the target. Would be much easier to estimate if we were only 5 mph over our desired speed.

Second, while we can’t see too far down the road at any given time, we can look out the window and gauge the terrain we’re in. And the terrain we’re in right now certainly doesn’t look smooth, so who knows what ups and downs are going to lie ahead as the Fed tries to gently bring the economy back to it’s desired speed.

[shera]

I know the fed has a tough row to hoe, but Powell seems determined to do his best. I am guessing end of quarter we will officially have a recession, but hopefully can recover reasonably fast.

[dschane]

The role that the fiscal stimulus has had with respect to inflation is a good question. Many countries around the globe are experiencing high inflation, and many of them provided much less stimulus. Good discussion here. What is most interesting, at least to me, is the divergent views on its nature (transient or long term), its causes, and its cures.

[J. Barron DeJong]

The role that the fiscal stimulus has had with respect to inflation is a good question. Many countries around the globe are experiencing high inflation, and many of them provided much less stimulus. Good discussion here. What is most interesting, at least to me, is the divergent views on its nature (transient or long term), its causes, and its cures.

If you want a nerd explanation of the theoretical aspect of it, Krugman wrote about it on his blog during the Great Recession:

https://krugman.blogs.nytimes.com/20...9/is-lmentary/

[MTT]

It’s been a rough couple weeks
I bought a bit more yesterday hoping it has bottomed out
Not as enthusiastic as last month

[4matic]

Rates rolled over pretty well into support. HYG down on the day. That needs to show some strength.

[Hopeless Sinner]

Plain vanilla for me please. Bought some more APPL today in the YOLO account.

[skaredshtles]

Is MTT still under the impression that NDAQ is an index play?

[Hott Butt Mud]

I bought little MSFT, NVDA, AAPL today.

[BobMc]

Grabbed $31.03 in profits on options trades this week. All of them by selling calls on XOM on shares I was way up on. $31 ain’t shit, but it’s probably more than most are contributing to their future. That shit compounds, take control of your future.

Make your lunch free…

Edit to add: Also been adding AAPL, can’t see how it’s a bad buy below $140. Most price targets are North of $200. Long term buy and hold.

[shera]

Speaking of analogies, the one I have been running through my head - we had a BIG party and boozed it up waaaay too much. Now is the hangover, paying the price.

I guess you have all seen Ray Dahlio's economic cycles video. That made things so clear for me. We just have to get through this contraction, reset.

[Ski220]

Is this the one you are referring to ?

https://www.youtube.com/results?sear...remy+grantham+

YouTube dated 5/20/2022. Interview date 5/9/2022

I was going to post this in thread "Where to invest right now" but since you brought it up.

Kind of long, but lots of good stuff.
'Cliff Note' - inflation

[edited to add youtube and interview dates.]

[shera]

No, that one's new, I have it queued up, hope I can get to it. The OG is 8 years old, here: https://www.youtube.com/watch?v=PHe0bXAIuk0

It is very cool! Just watch 5 minutes, you will love it!

[4matic]

Dalio has consistently said that a real rate of return going forward will be difficult and requires a very broad diversification

Good video. Really like both long term views.

An optimistic view is that USA still has the aspiration for immigrants which can ease the labor and wage pressure from low birth rate but is negatively rejected by nationalist populism

[yeahman]

Dalio has consistently said that a real rate of return going forward will be difficult and requires a very broad diversification

Good video. Really like both long term views.

An optimistic view is that USA still has the aspiration for immigrants which can ease the labor and wage pressure from low birth rate but is negatively rejected by nationalist populism

The only problem I can see with immigration right now is it could exacerbate the housing shortage. Otherwise I think it's ridiculous that it's not easier for people to come here and work. You shouldn't have to swim a river and hike through the desert just to fucking work. The War on Immigrants is no different than the War on Drugs, it basically results in the exact opposite outcome from what we really want, or should want.

[shera]

Well it does force illegal people to find their work on the black market, so the employers don't have to pay minimum wage, in California.

As an immigrant with libertarian tendencies I am absolutely in favor of open borders, and open trade.

[m2711c]

agreed.

[Cono Este]

I watch that Canada immigration show when I’m drinking, and between that and the UK one where they card immigrants on the street, I’ve decided we are way lenient.


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[RoooR]

Most Americans are sadly ignorant of just how much their lives have been improved by immigrants. The scientific / medical / technological discoveries and advances. The businesses (large and national as well as small and local.) The caretakers. The food that ends up on your table. The cultural / food / musical influence. Immigrants are the best people in this country and let us cheat on the demographic decline plaguing the rest of the west.