Rolling US Economy Into The Shitbin Thread

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.

Tesla definitely established that there's a market for these cars but I imagine they're gonna run into lots of trouble once car companies that actually know what they're doing horn in on that market

Uber does nok make anything people want, though...

Uber does nok make anything people want, though...

― Frederik B, Friday, August 16, 2019 1:22 PM (thirty-one seconds ago) bookmarkflaglink

Of course it does -- it created an easier and better way to get taxi service. While I rarely take taxis, I live in an area where it's very hard to get a cab or even order a car service, yet ubers are abundant. I don't like the company, but the reality is they created a useful product that people use. The problem is that if they had to actually be profitable they'd have to charge so much money for it that it would no longer be worth using.

I mean, every time we go to the airport, for example, we use one of these apps (I actually typically use Juno or Lyft but they're the same concept). Every time I have to do work-related car service, I use one of these apps (no need to save the receipt!).

esla definitely established that there's a market for these cars but I imagine they're gonna run into lots of trouble once car companies that actually know what they're doing horn in on that market

― frogbs, Friday, August 16, 2019 1:20 PM (five minutes ago) bookmarkflaglink

Opposite is true -- Tesla is eating the lunch of the established car companies who have entered this market. Tesla figured out how to make it cool. They just can't make it profitable.

^^^

The next tech crash is going to be rough for california. It’s totally dependent on the income taxes of outlier high earners. State revenues are materially affected by a handful of IPOs each year.

Afaik Uber didn't so much create a new way of hailing cabs - it's just an app, would be the same as ordering online - as they spent 20 billion dollar subsidizing unprofitable rides. And in countries like Denmark, where they've had to deal with normal regulation, they have left the market. The only thing that would make them slightly profitable was them being able to pay lower wages by saying it was a 'ride share' app rather than a taxi company.

yeah, seems to me that the uber model is destroy the competition - i.e. cab companies - and then ratchet up the prices once ride-sharing is all that will be available

uber can hurt public mass transit investment, but that's a very long-term process

the barrier to someone re-entering the taxi business once uber ratchets up the prices is pretty low tho, especially since uber would by then have destroyed all regulations

Not doubting that these tech companies might crater, but how big a share of the economy do the Ubers and Spotifys really represent?

they indirectly fuel a lot of real estate transactions

Oh, I forgot the really obvious one: Tumblr going from 1.1 billion to being sold for less than three million in no time, basically

But again, Verizon's market cap is $233B

Tumblr going from 1.1 billion to being sold for less than three million in no time, basically

"Let's buy a porn site and force people to delete all the porn! We'll make billions!"

Opposite is true -- Tesla is eating the lunch of the established car companies who have entered this market.

I looked this up and wow, Tesla 3 really does have a bigger share of the market than the Nissan Leaf or the Chevy Bolt/Volt, cars which I feel like I see more of on the street. I don't quite get it. Everything I've read suggests that the new Teslas are just ... not that good. But the numbers are the numbers.

decent chance Musk is buying them himself and parking them in his backyard

thing about most tech companies is their actual product is rarely what they’re offering consumers

ubers nutso valuation was in large part because of its dynamic pricing calculation.