Is the stock market going to tank?

[J. Barron DeJong]

“From 1929 to 1932, sales of new automobiles fell by 75 percent—and automobile companies had a combined loss of $191 million in 1932 ($2.9 billion in today’s money), or 25 percent of industry sales. This compared with profits of $413 million in 1929, or 14 percent of industry sales. The highly profitable luxury end of the market virtually disappeared. The lower-priced segment grew from 40 percent of sales in 1929 to 80 percent of sales in 1933 and remained at 60 percent through the upturn and beyond. As a result, half the automakers closed down.”

https://www.bcg.com/publications/201...eat-depression

[4matic]

As I redacted, the Great Depression created the environment for a sustained low inflation long period of prosperity of the Subsequent three decades. Just like the period after Volker.

[4matic]

The boomers squandered it with greed and selfishness.

[4matic]

Boomers think they’re fat because they bought a house for a dozen bananas and now it’s worth millions. Nothing created.

[J. Barron DeJong]

As I redacted, the Great Depression created the environment for a sustained low inflation long period of prosperity of the Subsequent three decades. Just like the period after Volker.

Wut?

Seems like inflation fluctuated quite a bit immediately post war. It wasn’t ever low and stable until post Volker.

[4matic]

Post war inflation is common. Like the seventies post Vietnam

[J. Barron DeJong]

Post war inflation is common. Like the seventies post Vietnam

But the only period with deflation is in 49/50 where prices dropped a modest 4%. What’s the evidence that that period of deflation specifically was good for the working class? That was your initial statement.

And there was no postwar depression, there were some recessions where unemployment peaked at ~8%.

So I’m still not convinced that a depression is someway beneficial for the the working class, or that it’s what led to the middle class.

But if someone has written a detailed argument for that, I’d read it.

[4matic]

A 30% decline in asset prices (stocks and housing) and a few years of PCE deflation would hurt who and help who? A 50% decline in stock prices would only take us back 4 years. Case Shiller is up 50% in the same period.

Consider that the average age of first time home buyer is up 13 years in the same period and the average age of a second time home buyer is 61 y/o! Who is going to buy all these houses at inflated prices?

[4matic]

First time home buyer as % of all sales is at an all time low and dropping. There is zero labor force growth and it will be negative if immigration gets whacked. We are at a similar stage as Japan in the early nineties. Japan has had thirty years of deflationary trend.

[4matic]

Japan has started allowing working age immigration

In 2018, Japan passed legislation to bring 345,000 foreign workers to the country over five years. In 2019, the government established the “specified skilled worker” program, which allows non-Japanese with limited skills to secure work visas.
Policy shift
In August 2023, the number of foreign nationals in Japan rose 11% from 2022. This is due to a number of factors, including:
A plummeting birthrate
A super aging society
A need for at least 7 million foreign workers by 2040

[J. Barron DeJong]

A 30% decline in asset prices (stocks and housing) and a few years of PCE deflation would hurt who and help who? A 50% decline in stock prices would only take us back 4 years. Case Shiller is up 50% in the same period.

Consider that the average age of first time home buyer is up 13 years in the same period and the average age of a second time home buyer is 61 y/o! Who is going to buy all these houses at inflated prices?

How are you getting that kind of price asset depreciation without a recession?

Who gets hurt the most in a recession? The unemployed.

Who’s most likely to become unemployed in a recession? The lower classes.

[J. Barron DeJong]

First time home buyer as % of all sales is at an all time low and dropping. There is zero labor force growth and it will be negative if immigration gets whacked. We are at a similar stage as Japan in the early nineties. Japan has had thirty years of deflationary trend.

Native born working age Americans are currently employed at near all-time highs.

Low-income workers came out the best from the recent bout of inflation, whereas they were the hardest hit during the Great Recession.

[4matic]

Native born working age Americans are currently employed at near all-time highs.

Low-income workers came out the best from the recent bout of inflation, whereas they were the hardest hit during the Great Recession.

Home affordability is at an all time low.

Deflation aside, a serious recession is not likely for quite a while since 80% of all jobs are service.

Where I think deflation will reside. Housing and energy. Specifically oil.

17% of new car buyers agreed to a payment over $1000 a month and negative equity in car loans is now at an all time high.

High paying jobs are where layoffs are happening. Also consider if the federal government does start cutting significant work force. Those are high paying jobs in today’s economy and 20% of all job gains the last few years were government.

[yeahman]

Specifically oil.

All due respect, but you've been predicting the dramatic decline of oil for a number of years now and it hasn't happened. Meanwhile the world's appetite for energy and fossil fuels just continues to increase. With AI it's only going to get worse. No energy technology that can logically replace fossil fuels is even in the pipeline (sorry green energy fans). I don't see oil rising much above $70 a barrel but I can't see how it's going to fall much below that either.

[4matic]

Three years ago the price of WTI was $100 a barrel. $70 now. Gasoline is down more, about 35%. I maintain my $50 price target for WTI.

A little over four years ago the price of WTI was less than zero. If dollar strength continues oil, priced in dollars, will be actively liquidated to get more dollars.

If and when Putins head is on a stick the price of oil will crash, at least short term. Syria used to produce 380k barrels a day. It’s 20k thousand now and they aren’t part of OPEC. Argentina could also ramp production in their new regime.

OECD predicts that the Americas demand for oil will fall.

With regards to AI data centers. Where does oil fit in that picture?

[4matic]

Argentine oil:

https://www.reuters.com/business/ene...ll-2024-10-23/

[yeahman]

Argentine oil:

https://www.reuters.com/business/ene...ll-2024-10-23/

Yah have you looked at what's going on in Guyana off shore? The Chevron takeover of Hess to get their interests? It's going to fail because Exxon has right of first refusal, but still. It is insane how much oil is already coming out of that play in the early stages.

But all your "three and four years ago" stuff completely ignores the distuption caused by the pandemic. If you look at the long term trend of oil prices and adjust for inflation and disregard the disruptions, it has been very steady at its current price level for literally decades. I predict it will remain so.

[fastfred]

Yah have you looked at what's going on in Guyana off shore? The Chevron takeover of Hess to get their interests? It's going to fail because Exxon has right of first refusal, but still. It is insane how much oil is already coming out of that play in the early stages.

.

LOL big nope on that statement sorry

as for oil crashing prolly not happening
the problem right now is negotiating with 2nd world dictators they want someone to do all the work and they want 80% of the profits most of their shit drilling and distribution methods are currently provided by soviet tech

imagine waking up every day and having to deal with the kurds who are nothing more than west virginia Appalachian hill billys thats where companies just give up and walk away
the stories are endless of these greedy fucked up people who are sitting on oil and gas
europe is hungry

I can go on and on about this shit cause the person in the room next to me and plenty of guyana shit on their desk right now it's a gold mine the gov't is one step above the kurds

[Cono Este]

I know I’m the perma bear, but this mkt is insane. Still making money, but not selling vol and 50% cash. Cost me a bit, but Tesla jihad made up for it and then some. Never selling.

[skaredshtles]

<snip>
the problem right now is negotiating with 2nd world dictators

This is a Trump reference, innit?

[fastfred]

This is a Trump reference, innit?

not really imagine your some jacked country with closed boarders and limit outsiders and what women can do and all that fun stuff
the country sells gas to europe promising to deliver but doesn't really have anyway to get the gas out of the ground into distribution and onto europe
40 million dollars will get the rig to drill and another bunch of tens of millions dollars will build a road and a pipeline

I find it pretty fascinating
all this green energy buillshit and at the end of the day were are a world desperate for oil and gas eventually we'll be getting back to coal
if your green stop consuming

[yeahman]

LOL big nope on that statement sorry

So you're saying you think Chevron will succeed at buying out Hess, despite Exxon's opposition? Want to bet a hundred bucks on that?

[Hott Butt Mud]

LOL big nope on that statement sorry

as for oil crashing prolly not happening
the problem right now is negotiating with 2nd world dictators they want someone to do all the work and they want 80% of the profits most of their shit drilling and distribution methods are currently provided by soviet tech

imagine waking up every day and having to deal with the kurds who are nothing more than west virginia Appalachian hill billys thats where companies just give up and walk away
the stories are endless of these greedy fucked up people who are sitting on oil and gas
europe is hungry

I can go on and on about this shit cause the person in the room next to me and plenty of guyana shit on their desk right now it's a gold mine the gov't is one step above the kurds

That's when USA just says fuck it, starts a war, invades and takes the oil by force.

[fastfred]

So you're saying you think Chevron will succeed at buying out Hess, despite Exxon's opposition? Want to bet a hundred bucks on that?

Sure

Chevron is over paying for Hess by 2x

Mike doesn't know shit about drilling he's from the refinery end he's a shareholder dick sucker

Chevron is going to start massive layoffs at the beginning of the year to off set mikes shitty decisions

[yeahman]

Sure

Chevron is over paying for Hess by 2x

Mike doesn't know shit about drilling he's from the refinery end he's a shareholder dick sucker

Chevron is going to start massive layoffs at the beginning of the year to off set mikes shitty decisions

I don't think you have really studied what's going on with this deal and the legal challenges. No offense, but people a lot smarter than you and me say it's not going to happen.