Rolling US Economy Into The Shitbin Thread

Crazy Inverted World

Companies & jobs are fleeing

Wait, this is... a good thing?

fleeing from China, I assume he means

this is a good thing for the US! those jobs are definitely coming right back into the US!

Rewards & Gains definitly need to be reaped ! fuck those guys

China has definitely taken more of a hit from the trade war than the US, however I think Trump underestimated the fact that China’s leadership doesn’t have to worry about being thrown out of office because of short term economic downturns but he does. I think China is content to wait until after the election.

i like to invert and i am crazy?

When the curve inverts, it means we've opened the portal to bizarro world, and the only way to fix it is to do everything backwards.

I love this bond yield and its inverted curve. As a teenager, I was often teased by my friends for my attraction to bond markets on the inverted side, ones where the 2-year yield topped the 10-year, markets that the average (basic) bro might refer to as "indicating a recession"

— Alex Yablon (@AlexYablon) August 14, 2019

these after hours seem calmer than last time

i guess everyone just assumes it will bounce back tomorrow ?

Why wouldn't it? Why wouldn't people assume that?

Many will, and they may be correct. The day will come where it doesn't bounce back, and it'll probably be sooner rather than later.

fwiw the single biggest trade today is someone betting that it will be back by october https://www.bloomberg.com/news/articles/2019-08-14/someone-s-betting-big-on-an-s-p-500-rebound-as-sell-off-worsens?srnd=premium

the US tech industry is not big enough to cause a global recession, but wework's *insane* S-1 (https://www.bloomberg.com/opinion/articles/2019-08-14/wework-ipo-shows-it-s-the-most-magical-unicorn?srnd=opinion) and uber losing $20bn (with a b) a year do seem significant

the US tech industry is not big enough to cause a global recession

And yet the US tech industry (or at least Facebook, Apple, Google, Amazon) is the closest we have right now to Too Big to Fail. I think their total valuation is something like $3 trillion? That's, what, more than 10% of the US GDP?

Didn't it do just that in 2001?

Nothing like 2008. Less deep where it happened and less global

https://en.wikipedia.org/wiki/Early_2000s_recession

Think we may be in for more pain tomorrow, but there are certainly steps that can be taking to smooth things. This article sums up some of the available options. Just a question of whether the political will exists for any of it.

https://slate.com/business/2019/08/recession-economy-bond-market-yield-curve-trade-china-germany.html?via=homepage_taps_top

“Sure, keeping borrowing costs down might encourage some bad lending or investment bubbles that could lead to problems down the line, but that concern should probably be outweighed by the near and present danger of an actual recession. ”

article asks for lowering rates from the fed (expansionary monetary policy), raising infrastructure spending (expansionary fiscal policy), and stopping trade war (trade policy). i only have faith that one of these (fed) will get done.

I could see Trump flinching on the trade war. There's nothing driving it except his pride. If someone tells him he'll be more popular if he drops it, he may well listen.

Infrastructure seems extremely unlikely despite the fact it's presumably a bipartisan goal.

Infrastructure spending would require passing a budget, so that’s not happening

China is content to wait until after the election.

They've been targeting their own tarriffs/cessation of purchases on swing states. They clearly are using the means at their disposal. I don't think the success of Russian active measures escaped their attention either.

Looks like we aren't getting day 2 of market tanking. Guess that's a good sign.

China has definitely taken more of a hit from the trade war than the US, however I think Trump underestimated the fact that China’s leadership doesn’t have to worry about being thrown out of office because of short term economic downturns but he does. I think China is content to wait until after the election.

― o. nate

oh haha there are still people who believe america is a "democracy"

When was the last big stock drop that wasn't reversed within a few days?

the days after the brexit vote should've lasted longer. then there was 1Q 2016 when china's new circuit breaker kept going off at the beginning of the year and all of 2015 was bad for them.

Yeah, but how about the US?

All that stuff affected the US. I guess last december it seemed like the market would really reverse but then it came back.

That's the thing. It's one thing to affect the market, it's another thing to alter it or reverse it. If the market goes down, then goes right back up again, then it hasn't really been affected, especially if it keeps going up. There's definitely a high-dive precariousness to its ongoing ascent, all things considered, but it beats the alternative. It's like when Facebook dropped big last year or so, and there were all these sky-is-falling predictions (for 12 hours), but I have a good friend who does trading stuff, and he was all, well, yeah, it looked like a big drop, but Facebook is worth a bazillion dollars, so any drop is going to look huge.

I guess it depends on if you are talking about the general health of the market and economy or if you are talking about trading on a certain timeline. Like, you can trade the market in both directions and make money and everyone has a different timeline, expectation for what they are trading.

This is why almost all 401ks only can hold preselected mutual funds, it's the expectation that a basket of stocks/indexes are a safety against one company going under and wiping out your entire account because the expectation is that companies will continue to grow in value.

For sure. But day trading or whatever, frequent trading, it's risky but not because of broader trends so much as the challenge and timing of taking advantage of regular ups and downs. Trying to make a quick back and forth buck can be trouble no matter the state of the economy. But the bigger picture is that for all the instability, the market has been remarkably, inexplicably stable, and for all the uncertainty, it's still probably the best bet, in terms of investment. Keep your money invested and historically it will grow in value. Cashing out is a gamble no matter what is going on.

Someone else on this board is a daytrader (sanpaku?). I wouldn't call myself because I don't make multiple trades every single day but when I do my taxes it is ~500 trades a year. It really depends on the person and their risk appetite/management. But in general, if you have investments in the market and aren't right on the cusp of retirement, you shouldn't have much to worry about.

Which is always the case, right? At least when the economy is fundamentally strong. If the US were on the cusp of some sort of collapse, like the housing market went through 10-ish years back, clearly that takes longer to bounce back from. But I suspect many, many more Americans have at least some relationship with real estate (rent to mortgage) than they do with the stock market.

A whistleblower who warned regulators about Bernie Madoff released a report alleging that General Electric is short on cash and hiding $38 billion in losses, calling it a "bigger fraud than Enron" https://t.co/CmTMZ1e7VK

— The Washington Post (@washingtonpost) August 15, 2019

this seems very bad!

GE has been a complete disaster in the past year, it's just layer upon layer of terrible

xpost bear and then l3hman in 09/2008 were the catalysts for the market really tanking at that time even if the underlying was the housing bubble/bad securities.

Well there were kind of a few different layers of realizing how bad it was -- there was realizing the housing market was worse than most people thought and then there was realizing that the entire financial sector was way more dangerously exposed to housing than most people realized.

are there any good financial sites that can help explain whats going on right now? I had some blogs I used to read during the last crisis but don't have any good sources at the moment.

There’s a few economists I follow on Twitter: Krugman, Dean Baker, Noah Smith, Austan Goolsbee. Following them and others they retweet is not a bad source of commentary.

800 point loss is halfway made up already

the US tech industry is not big enough to cause a global recession, but wework's *insane* S-1 (https://www.bloomberg.com/opinion/articles/2019-08-14/wework-ipo-shows-it-s-the-most-magical-unicorn?srnd=opinion) and uber losing $20bn (with a b) a year do seem significant

― 𝔠𝔞𝔢𝔨 (caek), 15. august 2019 00:38 (yesterday) bookmarkflaglink

I feel like I'm becoming a crank but I really feel this might collapse. All these tech companies insisting they're revolutionizing other fields seem significantly overvalued. Tesla as well. If at some point ad companies figure out that all that data collection isn't really worth paying for, then it could be really ugly. Facebook is supposed to know everything about me, but the ads I get are for junk news sites, the fitness gym I'm already paying to, and nicotine gum, and I don't smoke.

I don't get ads on facebook? I think you can remove them. I just get recommended videos of people making food and doing repetitive manufacturing stuff.

Tesla as well.

Musk is a clown but... nah

https://dms.licdn.com/playback/C4E05AQFzDfpcQYTobg/9777550d02154130a31a6021661d49dc/feedshare-mp4_3300-captions-thumbnails/1507940147251-drlcss?e=1566068400&v=beta&t=fFgsqpxLJDpO8JWg-RujWWGOD2xwC6NNw4Qaf8QeyhQ

xp there's no question that at least 9/10 of these companies are cheap-money-fueled fever dreams. Facebook is not really the best example, as it has consistently made a lot of money for some time now.

yeah I completely agree about the larger point that tech companies are way overvalued

Spotify and Uber losing money hand over fist etc

whoa I didn't know Tesla's Model 3 was like 35k. Tesla's problem is not figuring out how to make a car that people want, it's profitability.

I mean you can say that about Spotify and Uber as well -- they make things that people want and are useful, they just have no clear path to doing it profitably. Maybe Spotify does if it grows massively. Uber basically only makes sense as a stepping stone to being a self-driving car company, and that's so far off that I don't think they're going to make it.