Rolling US Economy Into The Shitbin Thread

There are legitimate reasons to support a rate cut here. One that comes to mind is that it would be better to let inflation run a bit hotter. Of course that’s not the reason Trump wants a rate cut.

See, one tweet and to the shitbin we go.

makes no sense to me

The lament of a lot of investors. Since 2008 and Fed quantitative easing, we get enormous asset inflation, but no trickle down or real wage growth. Undoubtedly, we're also getting enormous malinvestment from the below-market credit prices, but that doesn't matter, until it does.

Maybe its just too many years of Catholic theology classes and skeptical exposure to Austrian economics, but I can't but suspect there is a long term hell for the sin of a decade of effectively free money for the bankers.

For example, the entire reason petroleum and natural gas fracking has been viable at all for the past decade is super low rates on junk bonds. All those upstream O&G cos have or are going bankrupt, because you can only be cash-flow negative for so long. Malinvestment.

Some of that has been visible in retail, but there Amz is an easy scapegoat. But my spidey sense is that its more pervasive.

here we go, maybe?

eh, this stock market has been doing shit like this all the time lately. it might continue to plunge or it might rebound by mid-afternoon.

The market has been pretty blasé about ratcheting tensions around the globe for a while now. How much longer can it whistle past the graveyard with Hong Kong, Iran, Brexit, China trade war, an increasingly untethered Trump, etc? Not to mention slowdown in Europe.

yeah it has been remarkably non-volatile since Trump was elected.

i cant tell if the market is resilient or just blindly exuberant and optimistic

Is it because rich white people have blind faith in the stock market since trumps arrival?

^^^

it is definitely not resilient. xpost

almost every thinking of mine devolves into some sort of conspiracy tinged thoughts on Trump and his coterie of criminals needing the major indexes to stay on steroids until he gets re-elected. People love to talk about the size of their 401k as a balm against whatever else he is doing.

I'm only 30 my 401k 403b can tank multiple times in the next decade for all I care, eventually Vanguard will lower my risk appetite for me

for a fee

lowest in the industry!

Trump has clearly learned the lesson that he can use trade war to get his rate cuts, so expect more of this!

— Chris Hayes (@chrislhayes) August 5, 2019

An opinion piece in Bloomberg today was entitled "Trump’s Economy Leaves Democrats Speechless: Sorry, candidates, silently hoping for a recession is not a viable campaign policy."

China confirms it is suspending agricultural product purchases in response to Trump's new tariffs

https://fm-static.cnbc.com/awsmedia/chart/2019/7/5/image%20(5).1565046032353.png

pfft who needs six billion dollars

https://www.washingtonpost.com/outlook/2019/08/06/this-trade-war-will-get-out-control/?noredirect=on

Searing

what’s this going to mean for all those dropshippers

Uh oh spaghetti oh!

OK, help me out here. Indicators have been, well, indicating all sorts of shit for years at this point. We've been long overdue a correction. Trump's policies have been economically disastrous, the market has been in flux, doom is just around the corner, inverted yield curve, tariffs, borrowing, and so on. And yet ... people have been saying this since he was elected and started fucking things up, almost on a weekly or bi-weekly basis - this time it's the end! - but each time the market keeps bouncing back from every bit of bad news or Trump bomb, often to all-time highs. So what's going on?

markets assume rational actors

But what does that mean? Trump has been a radically irrational actor for years, so why hasn't that driven the market down?

My take: Despite Trump doing everything in his power to fuck it up, the underlying economy is strong. There isn't a single obvious problem area like the real estate market back in 2008, just lots of smaller areas getting progressively weakened by stupid choices.

It will break eventually though, it can't bounce back indefinitely.

Thank goodness we have a president who knows how to bounce back after flushing all his money down the toilet.

xpost For sure, but you can say that (and others *have* been saying that) for months and years until it actually happens.

The unemployment rate is 3.7%. We’re fine.

And increase in average hourly earnings. And the recession when it occurs is at least a year away.

don't worry Trump figured this all out years ago

Our debt is about to reach $17T. Iraq has $20T in oil reserves. Interesting.

— Donald J. Trump (@realDonaldTrump) June 20, 2013

Oh, but don't you know? The low unemployment rate is actually a problem, because as the economy chugs along there are too few people left to hire! Businesses will wither and die on the vine!

(Let me be clear that I don't want the economy to tank, as much as it may or may not hurt President Asshat. But there is more than a little element of chicken little to some of these hyperbolic headlines and predictions. I was talking to my wife in the car the other day, listening to economists talking about the disastrous new Chinese tariffs. Sure, he soon enough took them off the table - as he did the equally disastrous Mexican tariffs - but I made the argument that the discussion should not be whether new tariffs or bad decisions could be bad for the economy but why so far all the other tariffs and countless other bad decisions *haven't* yet been demonstrably bad for the economy, relatively flat (record) stock market or no.)

Uber has stopped hiring software engineers, surely something is happening

The self driving cars have taken over?

The tariffs ARE bad for the economy, they just aren't destructive enough to bring the whole thing down.

But they really haven't brought any of it down yet, to any noticeable effect, right? If they are bad for the economy, which logically you'd think they would be, then the implication is if the tarrifs were reversed the economy would be doing even better. Which doesn't seem plausible.

Germany looks to be heading into recession and commentators are blaming trade issues. Seems the argument is that it’s a knock-on effect of China weakness.

If they hadn't happened in the first place I do think the market would be going better. The constant back and forth reversals on trade war moves has generated a lot of uncertainty and volatility that was completely unnecessary. They just haven't been enough to break things completely yet.

Trump has made a lot of foolish choices that have kept him from strengthening an already strong economy. But so far we haven't seen anything on the scale of the major cataclysms we had in the aughts: 9/11, multiple wars, the utter decimation of the mortgage industry.

xp

If you trade actively or semi-actively and are not buying big dips, you're crazy

tell me about these big dips.

xpost I guess that's what I'm getting at. If this is how well the economy is doing with all the volatility and uncertainties, what does "better" even look like?

Remember the "irrational exuberance" of the 90s?

Surely there are many ways things could be going better. The stock market could be moving in a straight line up. Employees could be getting real raises. Maybe we wouldn't be subsidizing all our farmers and taking on massive amounts of debt. IDK, just spitballing here...

Like, I think there's a pretty big difference between the economy hasn't tanked YET vs. there's no conceivable way things could possibly be any better.

^^^ it's all just whistling past the graveyard

"There isn't a single obvious problem area like the real estate market back in 2008"

I think this is probably right, but then again, it's a hindsight description. Until 2006 people didn't really sense the real estate market was a problem, and until 2007/08 people didn't realize just how many different ways and how badly the real estate market was poised to fuck the economy.

iirc Americans actually spent a good deal of the interim paying down debt and saving.

But that trend may have long ago reversed, for all I know.

i think there are a lot of new investors who have been conditioned now to think the general market will keep going up/immediately bouncing back and won't know how to weather any real downturn. But then again they are willing to do whatever it takes so that corporations can hoard their money.