[2020] A little stock market sense

[bluehende]

Are we selling 30 yr bonds again. I know W stopped selling them and went to shorter maturities to make the debt payment look better. I will point out it is not only new debt but also maturing debt that needs to be sold. We are not retiring that. If most of our debt is in short maturities we will see the effect of higher interest rates quite quickly over all our debt.

 

[emeryjre]

I am a believer in the Stock Market. I am also a believer in Business Cycles.

The business cycle is currently pointed down because of a shortages. This gives us inflation.

IMHO this current period of inflation is being caused by too much money chasing too few goods.

The too few goods is a function of 1.) China shutdowns, 2.) War in Ukraine, 3.) NIMBY issues in US. 4.) Drought. Not necessarily in that order.

As we try and transition to a different energy mix, the country is stymied by legal challenges to mining lithium and new power lines,

The problem of sufficient energy is exacerbated by shutting down legacy electrical generation before there are "clean" replacements.

We are unable to obtain lumber because of restrictions on harvesting on Federal lands.

Food costs will be increasing in the near future as the impact of fields not planted because of no water, trees not watered, grain locked up in war areas.

The economy will recover, but I am not a believer in a short term business cycle recovery at this point.

Adjustments will be made over time to relieve these problems, but not in the short run.

I am following the path of shorting hard rallies and buying hard selloffs, but not putting money to work in the stock market on a long term basis.

 

[pedro47]

The only bright spot in our economy right now, the price of a gallon of gasoline is coming slowly.

 

[emeryjre]

Oil prices, (using the NYMEX Crude Oil Futures Contract) Symbol CL, was up to $120+ area in Mid June. Then fell later in the month to around $102. Gas prices have been following down,
Today 6/27 the August contract is back up to around 110. I don't expect gas prices to keep falling.

China has arranged to buy all the oil that Russia will supply caused the price drop.

Now we need to see the OPEC+ start cheating on their quotas and pump more than their allocation to keep Oil prices down. Pray that none of the major refineries have a serious accident.

 

[easyrider]

Many are predicting a monster recession is on the way within the next two years. It seems like the mid 70's all over again. In the mid 70's the market tanked and the Blue Chips led the way out. That is what will likely happen again, imo.

Bill

 

[Brett]

Many are predicting a monster recession is on the way within the next two years. It seems like the mid 70's all over again. In the mid 70's the market tanked and the Blue Chips led the way out. That is what will likely happen again, imo.

Bill

Yes, there might be a "monster" recession this year or there could be "strong returns" this year

(but you've been "predicting" a "monster" stock market downturn for many years )



June 23, 2022
The stock market is poised for a strong 2nd half of 2022 as the US economy avoids a recession and inflation gets cut in half, JPMorgan says
https://markets.businessinsider.com...-avoid-recession-inflation-cut-in-half-2022-6

 

[VacationForever]

Yes, there might be a "monster" recession this year or there could be "strong returns" this year

(but you've been "predicting" a "monster" stock market downturn for many years )



June 23, 2022
The stock market is poised for a strong 2nd half of 2022 as the US economy avoids a recession and inflation gets cut in half, JPMorgan says
https://markets.businessinsider.com...-avoid-recession-inflation-cut-in-half-2022-6

For every analyst who says stock market is going bear for another 2 years, there is another who says that it is going to recover later this year. For anyone who guesses it right and acts on it, will be richly rewarded.

 

[Brett]

For every analyst who says stock market is going bear for another 2 years, there is another who says that it is going to recover later this year. For anyone who guesses it right and acts on it, will be richly rewarded.

true

 

[emeryjre]

If you are ready to throw in the towel on the need for people to consume, then you can plan on a major recession.
Consumption of goods is what drives the economy. If people are not able to get the goods they want, they will be upset and irritated at whatever the reason is for not being able to get the goods. Some how, somebody will find a way to get them the goods and assuage the irritation.

 

[Rolltydr]

For every analyst who says stock market is going bear for another 2 years, there is another who says that it is going to recover later this year. For anyone who guesses it right and acts on it, will be richly rewarded.

In other words,

 

[ScoopKona]

It's easy to separate the people who believe in the Austrian School of Economics from the rational any time markets get like this. The zealots from the von Mises "Institute" aren't just expecting the bottom to fall out of the world economy, they're praying for it. "Please god, let us go back the the gold standard and absolute monarchies. Please. Please. Please."

 

[emeryjre]

It's easy to separate the people who believe in the Austrian School of Economics from the rational any time markets get like this. The zealots from the von Mises "Institute" aren't just expecting the bottom to fall out of the world economy, they're praying for it. "Please god, let us go back the the gold standard and absolute monarchies. Please. Please. Please."

The prayer has changed from absolute monarchies to absolute dictators. Every thing else has stayed the same.

 

[DrQ]

The thing is this: We are in an effective recession. For the last two quarters the country's economic growth has not outpaced inflation.

People are saying that we are HEADING into recession, we are already THERE.

 

[Brett]

The thing is this: We are in an effective recession. For the last two quarters the country's economic growth has not outpaced inflation.

People are saying that we are HEADING into recession, we are already THERE.

OK, in the next few months we will know if the GDP has declined for several quarters and unemployment numbers start going up significantly

 

[easyrider]

Yes, there might be a "monster" recession this year or there could be "strong returns" this year

(but you've been "predicting" a "monster" stock market downturn for many years )



June 23, 2022
The stock market is poised for a strong 2nd half of 2022 as the US economy avoids a recession and inflation gets cut in half, JPMorgan says
https://markets.businessinsider.com...-avoid-recession-inflation-cut-in-half-2022-6

In recent years I had thought recoverable down turns, not a monster recession that takes out half the value of the market. The main reasons I think this, is that there has been an unprecedented loss of small businesses recently which will affect many goods, services and employment, cost for goods have increased dramatically and consumers are not spending. Also, many big businesses such as auto makers, home builders , banks and agriculture are having problems.

I think the last economic cycle peaked a while back but stayed viable through loose Federal Reserve open market operations and the plunge protection team. Currently the Fed is tightening the money supply, huge companies are defaulting on loans, Russia defaulted on it's foreign debt loan, hedge funds were liquidating equities and the market is down about 20% this year and we have many other supply problems which create food and energy insecurity.

If you look at actions instead of words, it looks like it will take a total reversal of many policies to change course. The path we are on looks like two plus years of decline and a declining trough for who knows how long. These thoughts are based on the conservative economic opinions that I agree with.

Brett, it seems you have a progressive economic opinion. Can you explain the reasons ?

Bill

 

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[emeryjre]

Big day for oil prices tomorrow. Opec + meeting

By Myra P. Saefong MarketWatch
6/29/2022 02:46:52 PM

Oil futures ended lower on Wednesday, pulling back after posting three consecutive gains, ahead of a meeting of key oil producers Thursday. The Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, are expected to confirm an existing agreement to boost production in August. The loss in oil prices came despite data from the Energy Information Administration which revealed declines in U.S. crude inventories in each of the past two weeks. West Texas Intermediate crude for August delivery fell $1.98, or 1.8%, to settle at $109.78 a barrel on the New York Mercantile Exchange.

 

[emeryjre]

OPEC+ announcement. Increasing output will help keep oil prices down. Refineries running at highest capacity levels in last 30 years.

Oil prices fall as demand destruction concerns prevail after OPEC+ pledge to boost output as expected (msn.com)

 

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[Tia]

It's been 40 years since last significant oil refinery was built in USA. 1976. (Maybe this has been mentioned already? )

Seems people drive much more then 40 years ago . No mass transit subway/trains where i live/visit family.

OPEC+ announcement. Increasing output will help keep oil prices down. Refineries running at highest capacity levels in last 30 years.

Oil prices fall as demand destruction concerns prevail after OPEC+ pledge to boost output as expected (msn.com)

 

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[Brett]

If the U.S. Is in a Recession, It’s a Very Strange One

https://www.wsj.com/articles/recession-economy-unemployment-jobs-11656947596

Economic output is down but the job market is strong, unlike in previous recessions

"Something highly unusual is happening. Economic output fell in the first quarter and signs suggest it did so again in the second. Yet the job market showed little sign of faltering during the first half of the year. The jobless rate fell from 4% last December to 3.6% in May. It is the latest strange twist in the odd trajectory of the pandemic economy, and a riddle for those contemplating a recession. If the U.S. is in or near one, it doesn’t yet look like any other on record."

"this might be a situation in which other indicators point to recession but the job market doesn’t, or it lags behind atypically for several months. “We are going to have a very unusual conflict between the employment numbers and the output numbers for a while,”

Though corporate profits are slowing, he said, corporate profit margins are exceptionally high

 

[DrQ]

Bonds flash recession warning light as key part of the yield curve inverts again

• The closely watched Treasury yield curve is sending a warning that the economy may be falling or has already fallen into recession.
• The curve between the 10-year Treasury yield and the 2-year yield has become inverted, meaning the 2-year is now higher than the 10-year.
• “There’s something afoot in investor sentiment that is difficult to ignore, given the inversion is occurring with 10-year yields below 3%,” said one bond market strategist.

https://www.cnbc.com/2022/07/05/bonds-flash-recession-warning-light-as-key-part-of-the-yield-curve-inverts-again.html

 

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[Ralph Sir Edward]

If the U.S. Is in a Recession, It’s a Very Strange One

https://www.wsj.com/articles/recession-economy-unemployment-jobs-11656947596

Economic output is down but the job market is strong, unlike in previous recessions

"Something highly unusual is happening. Economic output fell in the first quarter and signs suggest it did so again in the second. Yet the job market showed little sign of faltering during the first half of the year. The jobless rate fell from 4% last December to 3.6% in May. It is the latest strange twist in the odd trajectory of the pandemic economy, and a riddle for those contemplating a recession. If the U.S. is in or near one, it doesn’t yet look like any other on record."

"this might be a situation in which other indicators point to recession but the job market doesn’t, or it lags behind atypically for several months. “We are going to have a very unusual conflict between the employment numbers and the output numbers for a while,”

Though corporate profits are slowing, he said, corporate profit margins are exceptionally high

Employment is always a trailing indicator.