Is the stock market going to tank?

[Kevo]

Just to add to this: Moody’s analysis for the effect of the American Rescue Plan are inline with those of the Fed:

Attachment 419007

https://www.presidency.ucsb.edu/docu...rics-according

It’s not that the stimulus has no effect, but this breakdown is for inflation over the past 12 months, and the effects of ARP are waning (estimated contribution to inflation for 2021 was 0.35%, previous 12 month from now only 0.1%). A lot of that stimulus money has gone into personal savings as well, which also limited the amount of inflation the stimulus caused.

Their model (computer/mathematical simulation of the economy) has waaaaay more than multiverse’s current three/Joni’s desired one variable. My understanding of what they are doing here is playing a game of ‘what if’ with that model: what if instead of the money supply increasing x billions of dollars over the past 12 months it had been constant? What if we took ARP out? What if corporate profits weren’t higher than normal?

So they run a simulation with each of those variables held constant, compared to how they actually changed, and see the difference in inflation that the model spits out.

Everything in the ‘other’ category would for all the other components of the model that weren’t explicitly broken out.

The accuracy of their results are only as good as their model, but from what I’ve read by people who actually know about macro, their model is very good.

Great breakdown of the methodology and good to know about Moody's Analytics being separate from the rating agency. Touche.

I still believe that they may be underestimating the effect that low rates for too long had on the economy and asset prices in general. Maybe that lives in the "other" category, but I think it is worthy of a breakout.

[Brock Landers]

I still believe that they may be underestimating the effect that low rates for too long had on the economy and asset prices in general. Maybe that lives in the "other" category, but I think it is worthy of a breakout.

This…..this is different than the inflation argument. The idea that easy monetary policy caused asset bubbles is one of the big macro/fed policy debates of the last 10 years. Bernanke/Yellen said no, it didn’t really, and they had some numbers to try and back that. Most other people had reality.

Regardless, the fed was trying to boost employment, which, to me, was already good enough for a few years before becoming all-time good. Inflation was not a concern (well not a concern to the upside, they didn’t sniff the goal of 2% inflation for years…not really close).

Did they inflate a few bubbles in financial assets along the way? Yeah probably. But economically, the country had low inflation and full employment for a long time. Which is their mandate.

[MakersTeleMark]

The fed doesn't have power to boost employment. Sorry. It has a very limited roll with a very late coming elastic effect. Picture someone shooting a sling shot at a single target when a heard of buffaloes are charging, then put that shot in slow motion, then you will have enough time to understand what Jerome is looking down the peep sight at in his and the feds time. Boing.

Janet is a totally different story.

[Cono Este]

Glad others pointed out the issues with the Moody's chart.

Inflation is NOT entirely on the supply side.

PPP loans were a massive stimulus to the economy that caused inflation. Ever The fed buying assets including MBS, corporate bonds and stocks was a massive stimulus to the economy that caused inflation.

It was a combination of the two. That’s why it’s so bad.




Sent from my iPhone using TGR Forums

[RoooR]

fed buying was the cause of inflation….that was the original point of it. To inflate the economy. And it never really worked that well. Remember all the inflation in 2011,2012, 2013, 2014…2015…2016…17. 2018. 2019. 2020 (haha) 2021? Neither do I.

In goods and services? No. In asset prices? Yes.

[Brock Landers]

The fed doesn't have power to boost employment. Sorry.

Ok. Agree to disagree.

[sirbumpsalot]

Fun fact. Competing energy options should LOWER not raise the price of gas at the pumps.

Except the equipment that runs off fossil fuels cannot switch to the cheapest fuel on a daily basis...theory, meet reality!

[J. Barron DeJong]

The fed doesn't have power to boost employment. Sorry.

If the Fed has no power to boost employment, that would also imply that they have no power to reduce employment. And if you believe that, then Paul Volcker would like a word:

”Mr. Volcker’s Fed rolled out policies that pushed a key short-term interest rate to nearly 20 percent and sent unemployment soaring to nearly 11 percent in 1981. Car dealers mailed the Fed keys from unsold vehicles, builders sent two-by-fours from unbuilt houses and farmers drove tractors around the Fed building in Washington in protest. But the approach worked, killing off the rapid price inflation that had festered throughout the 1970s.”

https://www.nytimes.com/2022/03/14/b...n-volcker.html

[shera]

How many of you were alive and aware of what was going on then? My first political and economic awareness was around 1976, the bicentennial. I remember hostages and gas pump lines off the top of my head.

Oh yeah, I remember the advent of Japanese cars becoming predominant in the USA. Four bangers.

[4matic]

Today is expiration day for a good portion of the quarterly options.

[NakedShorts]

Brock is correct in that the Fed can hire more academics into their regional offices. However, they cannot do anything about the business cycle except make it worse by pretending they can control the business cycle. It would be better to keep believing in magical fairies as they are more likely to help here.

Just wait for the real estate show to drop. $ is feeling the suck now. Deflation in the stuff we own and Inflation in the stuff we use up.

We be fucked and once enough monkeys realize that the Governments around the world are DUMB and POWERLESS to our state of affairs the good assets (productive and maybe shinny) will soar. Only in relative terms though.

Welcome to the transition!

[4matic]

Quarterly expiration is always important but I think more so these days with all the new found retail activity. Especially selling puts. What Bob and LL is prudent investing but I’m guessing there are tons of new retail traders up to their eyeballs in premium losses. I know one long time trader in a mess.

[skaredshtles]

As to the OP's question: maybe.

Perhaps today is that day.

[4matic]

How many of you were alive and aware of what was going on then? My first political and economic awareness was around 1976, the bicentennial. I remember hostages and gas pump lines off the top of my head.

Oh yeah, I remember the advent of Japanese cars becoming predominant in the USA. Four bangers.

The 70’s was a post war recession exacerbated by the oil shock. Additionally, taking USD off the gold standard led to uncertainty about dollar stability.

As you said, it was also the beginning of a swift decline in domestic manufacturing with the emergence of post war Europe and Asia that were rebuilt and much more modern and efficient.

[RoooR]

As you said, it was also the beginning of a swift decline in domestic manufacturing with the emergence of post war Europe and Asia that were rebuilt and much more modern and efficient.

The decline of US manufacturing is largely a myth. Output continued to increase but manufacturing EMPLOYMENT cratered.

output
https://fred.stlouisfed.org/series/INDPRO
employment
https://fred.stlouisfed.org/series/MANEMP

[LeeLau]

Quarterly expiration is always important but I think more so these days with all the new found retail activity. Especially selling puts. What Bob and LL is prudent investing but I’m guessing there are tons of new retail traders up to their eyeballs in premium losses. I know one long time trader in a mess.

There are a lot of put sellers who are inadvertently tech longs now. SHOP at 400, ARKK at 50. Pretty ugly

RVLN declares bankruptcy. Went from 1.60 to 2.90. Insanity!

[J. Barron DeJong]

RVLN declares bankruptcy. Went from 1.60 to 2.90. Insanity!

Maybe it’s Maybelline?

[sirbumpsalot]

I saw this a couple days ago....very interesting....Ruble has recovered and THEN SOME post Ukraine. Also heard that they are selling more oil than pre-war but haven't confirm. All this activity may be hurting everyone in the world BUT putin!

[MultiVerse]

An explanation for the Rubles recovery would involve equations with variables used by the Russian central bank like capital controls and very high interest rates but what's the point when all anyone sees is number go up?

FWIW, Russian oil production is down nearly 20% since Russia's unprovoked invasion of Ukraine. And Russia’s GDP is forecast to contract up to 15 percent this year, erasing the last fifteen years of economic progresses.

Why do you hate America?

And thanks for making the case for higher gas taxes.

heh, instead of sanctions there's a strong case to be made for taxing Russian petroleum imports instead.

[NakedShorts]

Russia may be producing less but they are on track to DOUBLE fuel revenue from 2021!

https://www.ogj.com/general-interest...rease-in-april

New G8 formed by Russia is 24% LARGER than current G8

https://www.pravda.com.ua/eng/news/2022/06/11/7351902/

Welcome to the GRIND!

If you are watching the mainstream news for news expect the BANDSAW! Funny watching the national morning show try and explain Stagflation this morning.

Keep blaming the FED for all the SPENDING the fools in DC budget.

[RoooR]

New G8 formed by Russia is 24% LARGER than current G8
https://www.pravda.com.ua/eng/news/2022/06/11/7351902/

Ha. I actually looked up the countries and every single county in the currend G8 (minus Russia) United States, Japan, Germany, Britain, France, Italy, and Canada have a higher GDP per capita than every single country in thier new G8 :China, India, Russia, Indonesia, Brazil, Mexico, Iran, Turkey. Do people there just not have the internet?

[MultiVerse]

Jono nailed it with the unAmericanness of considering more than one variable given GDP equations already include a variable for government spending...

[dunfree]

Ha. I actually looked up the countries and every single county in the currend G8 (minus Russia) United States, Japan, Germany, Britain, France, Italy, and Canada have a higher GDP per capita than every single country in thier new G8 :China, India, Russia, Indonesia, Brazil, Mexico, Iran, Turkey. Do people there just not have the internet?

Pravda would never publish lies in service of Russia, it’s truth, says so right on the masthead

[dunfree]

The decline of US manufacturing is largely a myth. Output continued to increase but manufacturing EMPLOYMENT cratered.

output
https://fred.stlouisfed.org/series/INDPRO
employment
https://fred.stlouisfed.org/series/MANEMP

Depends how you value manufacturing - both economically and not, and neither are simple to do. The profit chain of an iPhone is maybe the most revelatory? Over that time the US offshored large amounts of low value high labor manufacturing to other countries and domestic manufacturing increasingly became “higher value” systems integration/assembly work. The past few years show the risks.

[NakedShorts]

Not Good Not Good At All . Bye Bye $ If We Loose These Levels (These are monthly levels to watch).

Daily - To much Noise
Weekly - Trends Start to Develop
Monthly and Quarterly - Trends Are More Easily Defined


Remember These #'s

Dow 29600 and then 25,000 - 26,000
NASDAQ 10800 then 7800 then 7200
S&P 500 3200 then 2800 then 2500


The lows are also coincidentally the RONA lows. Do we test them?