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OT - Economic sentiment of members?

PeteM

Diamond
Joined
Jan 15, 2002
Location
West Coast, USA
So, the DOW just lost all the gains of the past year. A year in which we apparently committed to borrowing a trillion or so from those willing to buy our bonds (Saudis, Chinese, etc.) primarily to give big financial players a tax holiday. It was/is a massive stimulus to an economy that had already been improving for the past eight or so years. Ten months later, at least for the past few days, we're headed in the wrong direction. So far most of the money has gone into pockets rather than investment in things like manufacturing or R&D.

I realize none of us know what the next year or two holds, but I'd appreciate hearing the sentiments of those who are invested in the US markets.

Seems to me the "pros" for continued growth might include:
- Pretty much full employment, best in many years
- As screwed up as we are, the rest of the world is worse
- We're still a fairly innovative country
- Could be we'll get some jobs back, or at least not lose so many of them
- Our Treasury Dept. is predicting strong growth for the next 4-5 years

Seems to me the "cons" for another recession somewhat sooner than later might include:
- We seem to do this every ten years or so, with few lessons learned
- "Full employment" increasingly means working two part-time jobs with no benefits, or independent contracting
- Our local, state, and especially national debt is growing even in the best of times
- More money is going into things like nukes; less into things like productive infrastructure
- Uncertainty and rancor over tariffs and trade agreements - with some supply chains screwed up
- Weakening of the dollar and US in global financial leadership
- No meaningful reform in terms of financial abuses
- Some backlash toward tech firms (which until recently fueled growth) like Facebook, Google, Amazon
- Still spending too much, covering too little in terms of health care for an aging population
- The culture of ripping off folks prior to 2008 now seems on the rise, after a sort of decline
- General instability in the world economy; some of which we're contributing to
- Things like the recent Economist cover story predicting recession sooner than later

Thoughts? Who's bullish? Bearish? Cautiously anticipating we'll ride it out for the next few years?
 
Does that mean cash goes into the mattress, for you?

My wife (bright woman, MBA) thinks we're headed for a deep recession again. I'm not, at least yet, so pessimistic.
 
Does that mean cash goes into the mattress, for you?

My wife (bright woman, MBA) thinks we're headed for a deep recession again. I'm not, at least yet, so pessimistic.

So I'm just on the cusp of filing for SS.

Might be a good time?..........
 
Pragmatic here- though I have been having a very good few months I am not confident this will last.
The pleasure boat marine industry is the very definition of disposable income and is thus subject to a perception of wellbeing among clients.
I have tightened up on expenditures and tossed every thing I can into the bank to create a buffer for what I expect to be a roll over in the economy.
The markets- well they were in a bubble- the indexes broke out of a very strong bull trend Nov 2017 and went parabolic. ( I have all the charts on this).
I pulled everything out of equities as the first top rolled in Jan 2018 and made money on shorts.
Nothing changed to convince me that the return roll up to 26k this year was valid so stayed in cash and started looking for shorts again at that level.
As the market rolled over it started to be reported that housing sales were softening, then real effects of tariffs (Ford) started hitting the news.
It just seems like a reality check is being made by the broader economy.
Recession no, but a realistic sell off of DOW say to 18-22k is going to make it seem like the sky is falling to some folk.
These folk will stop spending cash on boat repairs and I will take a big hit.

I have offered this many many times- the anomaly is the bull phase of economic activity.
Those buoyant spikes that rise far above trends are dangerous.
They are invariably described as the ‘new economy’ but always roll over in “recessions”.
Was the economy over heated?
Pundits always say ‘you can’t tell’ if you are in a bubble.
From my view this is hogwash- at least so far as markets were concerned the bubble activity was plainly visible.
Was that overheated buy in present in other areas- real estate for example?
A key point to the 2008 “housing crisis” and all the damage it created to the real economy:
Nationally housing prices during the crash never hit the long trend line- they stayed ABOVE it.
The perturbation of funds rushing into property overheated the economy and a pause was damaging to folk.
That cycling to high side is the issue- did it just occur again?

See Henry George (American economist) on the dangers of real property being treated as an asset class.
I have long called myself a ‘Georgist’- we have to cling to some plank in the stream eh?
 
Seems to me the "pros" for continued growth might include:
- Pretty much full employment, best in many years
- As screwed up as we are, the rest of the world is worse
- We're still a fairly innovative country
- Could be we'll get some jobs back, or at least not lose so many of them
- Our Treasury Dept. is predicting strong growth for the next 4-5 years


- Pretty much full employment, best in many years
If so then wages should be increasing. Are they?

- As screwed up as we are, the rest of the world is worse
LOL No it isn't. Be more exact.

- We're still a fairly innovative country
True but no longer the most innovative.

- Could be we'll get some jobs back, or at least not lose so many of them
Huh? I thought you wrote "Pretty much full employment, best in many years"?

- Our Treasury Dept. is predicting strong growth for the next 4-5 years
Yes obesity is on the increase. Apart from that what is increasing?

What really shows how things are going is import/export.

Foreign Trade - U.S. Trade with .
 
I kept hearing the pundits( WSJ,yuck!) over and over the past year," Well, ya know, their ( any big Corps.) numbers are not very good,and we don't know why, but Wall St. loves em" . I believe cheap money (low interest rates), big tax cut+massive stock buybacks created a false growth scenario that is now coming back to reality. Whether or not all of this tariff nonsense, will add to that I do not know. As far as the employment numbers go, I find it an odd coincidence that such fabulous employment gains are coming in at the same time that " Boomer" retirees are leaving the workforce in huge numbers. Seems like hocus pocus manipulation to me. If the GOP hold on to their majority after the midterm, I fully expect another tax cut, just to keep the "sugar high" going for just a little longer.
 
One of the talking heads on radio this morning (spokesman for one of the big investment banks) used my phrase: sell down is “reality check” given some indicators that the global economy is slowing.

A couple of weeks or so back I was reading something from one of the talking heads about market direction.
They stated and I kid you not- “today’s drop indicates that the sell off is over because all bottoms are marked by steep falls just before the reversal”

I think they said that on the day the market dropped from 26.7 to 26.3!
Market bottom lol..!

As these things go they we’re probably trying to steer retail so they could get out of Longs or build shorts.
 
my economic sentiment is- cross my fingers.

who the hell knows?
Almost zero professional economists, left or right, accurately predicted the last recession, or the one before that, or the one before that.

Nobody accurately predicts volcanic eruptions, tidal waves, earthquakes, terrorist attacks, who gets elected, Brexit, Putins Mood, or Trumps Tweets.

in the stock market, in my 401k, I buy and hold solid stuff, and keep my assets in mixed categories- not too much in equities.

Beyond that, I am pretty good at fixing things, sharpening tools, and making parts for people.
I have tools, and a garden, and an orchard. And a bicycle or two.
 
As much as I hate a forum tit for tat- there were some rather robust warnings being published about structural weakness in the housing market of 2005 onward.
The national association of realtors publicly rejected such warning as being destructive to a robust real market:

https://www.bizjournals.com/houston/stories/2006/01/02/editorial4.html


There are economists which predicted the rally in property before it even happened and the danger it would represent on failure.
I used to have lots of articles- English chap- Fred Harrison was one voice I think (he is a fellow Georgist...)

An economist seems to have predicetd the 28 crisis way back in 1997 | Mostly Economics

In come the waves - The global housing boom

Etc also...

It seems a key feature of bubble conditions is that intractable belief in the new economy.
Warnings are present but fall on deaf ears.
 
The previous eight years were hardly exemplary of economic growth unless you believe that stocks really are a financial product. Perception is reality there, but for only as long as the perception remains favorable. When manufacturing business owners' confidence in the future is buoyed, they invest in hard assets like productive equipment, which has an income-producing potential, considered dollar for dollar, several times greater than stocks. Also it doesn't tend to become valueless overnight.

Screw the Dow as a general indicator; computerized trading has divorced the market from the everyday realities of manufacturing. If it helps rationalize your politics, you can predict a recession. Eventually the business cycle will prove you right—but only in the sense that a stopped clock is still correct twice a day. As for me, I'm a lot more confident with the Trump administration than with our previous one. But then I'm actually in manufacturing, my portfolio—such as it is—is managed very conservatively, so my point of view will necessarily differ from that of the social commentators here.

Whatever, I see no reason whatever to anticipate tough times ahead. Sure, China is slowing down because they've reached the point of diminishing return, but I really don't see that precipitating a crisis in the US.
 
Very, very, well put, Oldwrench. I'm down nearly a 100 grand on one equity alone the past year, but it is only a "paper" loss. OTOH? The companies are as healthy as ever. Their dividend's have not diminished. Not a factor in the household budget atall, in any case. Just one leg of a many-legged stool.

Also more comfortable than in many years that the "mailbox money" of pension and Social Security is going to be just fine. Even still buy groceries enough, etc.

China? As said.. they had started to bump up against "diminishing returns" a while ago already, and regardless of hardball trade & IP re-balancing "projects".

The "general population" of China - hardly anyone's stereotypical version of a Communist Society - is HIGHLY pissed. Reading it as a deliberate attempt of Trump & Co. to wind them back to more servile, less challenging, and far less affluent times. Not happening. A few generations now of damned hard work, they've tasted winnings off that, serfs no longer, they ain't going back any more than WE would.

Why should it be any different for them than it was for us, back in our turn?

Why should we not expect their resolve to come roaring back up - stronger and higher-tech and wealthier than ever - much as the "British Empire" once had to face from a younger United States and other former colonies, economic OR political?

No one I know of has had even a single "official" word from Beijing. The invisible hand of the decision-making adult percentage of over a billion souls automagically cut their spend and extended their working hours without NEED of an official word. Much the same as we do, here, when it seems a good idea. No interest in a wasteful "shooting war". But Katy bar the door a nation where a FAT person is a statistical anomaly decides they can too, still work even harder and damned-well MUST do. "Competition" there will surely be.

EU? Lots of messages on their table for some time that complacency isn't any sinecure, and economic security cannot simply be "legislated" or run off the back of Banksterism, after all. Some of those messages are even earning a read, of late.

EVERYBODY has serious work to do.

Some will get onto that sooner. Others later.

Companies and individuals are already aware and "on it". Whether talking-heads have yet grasped that. Or will, ever.

"The more things change..."
 
It kind of seems that credit card companies have been making a killing again having low interest money then lending with all the bells and whistles increases in minimum payments and interest.

They will gladly dangle much more than can be paid back. In this environment it is important to be very conservative with credit as it will bite you. Yet I saw the pushing of Credit cards hard. The housing market seems like there is good demand and houses are selling.
Like a bubble.

What does real estate look like? Houses here are selling over appraised value. It concerns me in that my gut tells me this will end. The people I know that sold moved to a newer development. He came out way ahead. He likely knows the market as he is supporting new homeowners services.
Bubble seems likely.

There is a lot of turnover in workers today. I noticed one place I used to work cut back yet they were really getting a lot of work done forabout two years. They did good and the cut will not last too long. Jobs are numerous the unemployment rate is low and many people have two part time jobs. Some have said the American worker in the next couple of deckades will be made up of a lot of independent contractors.Automation lingers.
Stormy skies

The trade talks with China will still bea standoff. Each side is serious. Both sides are tough.

Clearly the settlement of the issue on trade will help a lot if it does not overheat the economy more. The feeling is to move from a global to a narrower Nationalist outlook.
Wildcard
 
One old saw is that the market is not the economy.
Fair enough but the economic trajectory of those companies representing the markets are influenced by economic conditions.

It is a valid metric among others.
 
Major global players/empires in the past often seem to have a final period of financialization (rent seeking) before they collapse. I've seen comments that the amount of "money" floating around in second/third/higher level derivative financial instruments is many times the actual productive economy. It doesn't look good to me.

I'll probably put my savings into something safe, like tulip futures.

cheers,
Michael
 
Thermite;

China? As said.. they had started to bump up against "diminishing returns" a while ago already, and regardless of hardball trade & IP re-balancing "projects".

The "general population" of China - hardly anyone's stereotypical version of a Communist Society - is HIGHLY pissed. Reading it as a deliberate attempt of Trump & Co. to wind them back to more servile, less challenging, and far less affluent times.

Why should it be any different for them than it was for us, back in our turn?”


They definitely are not the stereo typical version of a Communist Society you know that well because you are well traveled and you stayed there for a time.I respect that growth.

The world has been amazed at the growth of China a really high rate of growth which seems would never slow down. The Chinese have never struck me as servile or less challenging. I do not think we want to destroy things and also this slowing has been expected and no one likes that. The United States does not want to walk away I believe what is wanted is expanded and greater trade both ways. This is where China emerges onto their own working together. Peace in the region would help this.

I say “We do not want to walk away” I believe this. Yet I ask your opinion given you know sales and the Chinese. Do you think if we walked away from the table during the negotiation how will the Chinese take that action? We know a salesman and high stakes discussions, that is one reason (Trump) makes himself such a jumpy target saying all kinds of conflicting things. Trump may pull any tactic. I fear he is capable of isolation for a time also it seems to be dependent on his gut and his personal read yes and it does concern me.




 
I say “We do not want to walk away” I believe this. Yet I ask your opinion given you know sales and the Chinese. Do you think if we walked away from the table during the negotiation how will the Chinese take that action? We know a salesman and high stakes discussions, that is one reason makes himself such a jumpy target saying all kinds of conflicting things.

It no longer matters what "we" want.

You may not want to hear this, but the Chinese are not interested in any further negotiations WHATSOEVER beyond short-term convenience. That is not a "bargaining position" at all.

Their attitude has its closest match, economically, to that of Britain at the evacuation of Dunkirk. Except that they are not weak and surrounded by enemies, poor, barely armed, hungry, and with scant hope. Not even close to.

Just very fiercely determined to never, ever, again be pushed around economically. Or otherwise. Even if they were in the wrong. Or WILL be again! They will look out for THEIR interests.

They'll go it alone. They just did.

That new bridge? The world-class experts were DUTCH firms. "No deal" on sharing the complex technology and experience required to build a safe and enduring bridge and tunnel system across the muddy delta-mouth of a very, very ancient river - the Pearl.

FAILURE of their spy service, FAILURE of bribes, to steal the technology by way of Korean and other bridges. Yes, they tried. Housewives now know this.

What to do? Muster their own experts. Re-invent from scratch what they were unable to find out. Do it their way. Accept that the f**ker might fall down, flood, and kill a lot of people.

Then take the G-Damned risk, JF BUILD the bridge - and put the traffic across it, regardless. We'll be ON it. Taking that risk. It shaves three whole hours off transit time to one of our holiday homes in Zhongshan.

Not Trump's "fault" whether he expected it or not. It was going to happen eventually, regardless.

It's like a still-young girl suddenly discovering she is going to be a Mother. A forced becoming of an adult. When the "kid" has thousands of years of experience and just didn't know how well they could apply it until there was no other option? Life does go on, yah?

Just took IBM and a whole lot more to take-back "a" top slot in most powerful global supercomputers. China owned the top TWO for about two whole years.

We wanted a "worthy competitor" that did not depend on cheap shit, but could challenge us on the hard stuff?

We may soon see the menu and prices for the granting of that wish.

I hope we, too, will get OUR "skates on" so we can earn enough to still afford the nicer entrees, not just bats**t shakes and soggy BigMacs.

Western trite phrase? "Competition improves the breed."

Chinese counterpart? "Anything that does not kill you makes you stronger."

We have ALL met Chinese. There are more of them living OUTSIDE the reach of mainland China's government than the entire population of the United States. The wealth they control is a major part of that rapid-reacting "invisible hand" that shapes global economics, "official policy" or no.

When is the last time you met one you could class as a failure? Not at all bad at the most basic of tasking - that of simply being competent human beings and taking care of their families, yah?

韓家標
 
It no longer matters what "we" want.

You may not want to hear this, but the Chinese are not interested in any further negotiations WHATSOEVER beyond short-term convenience. That is not a "bargaining position" at all.

Their attitude has its closest match, economically, to that of Britain at the evacuation of Dunkirk. Except that they are not weak and surrounded by enemies, poor, barely armed, hungry, and with scant hope. Not even close to.

Just very fiercely determined to never, ever, again be pushed around economically. Or otherwise. Even if they were in the wrong. Or WILL be again! They will look out for THEIR interests.

They'll go it alone. They just did.

And - with the *substantial* exceptions of their expansion in the South China Sea and a few minor issues like stealing IP, a lot of us who were pretty firmly in the USA camp are likely to support them over you guys.

Why? Look at the rapacity of your own business practices, the mendacity of your current leadership and the total betrayal of your own claimed ideals since 9/11.

So far - and I stress that bit - the Chinese are turning out to be a lot better and more reliable trading partners than the USA is.

PDW
 
It no longer matters what "we" want.

You may not want to hear this, but the Chinese are not interested in any further negotiations WHATSOEVER beyond short-term convenience. That is not a "bargaining position" at all.

Their attitude has its closest match, economically, to that of Britain at the evacuation of Dunkirk. Except that they are not weak and surrounded by enemies, poor, barely armed, hungry, and with scant hope. Not even close to.

Just very fiercely determined to never, ever, again be pushed around economically. Or otherwise. Even if they were in the wrong. Or WILL be again! They will look out for THEIR interests.

They'll go it alone. They just did.


Just took IBM and a whole lot more to take-back "a" top slot in most powerful global supercomputers. China owned the top TWO for about two whole years.

We wanted a "worthy competitor" that did not depend on cheap shit, but could challenge us on the hard stuff?


Western trite phrase? "Competition improves the breed."

Chinese counterpart? "Anything that does not kill you makes you stronger."

We have ALL met Chinese. There are more of them living OUTSIDE the reach of mainland China's government than the entire population of the United States. The wealth they control is a major part of that rapid-reacting "invisible hand" that shapes global economics, "official policy" or no.

When is the last time you met one you could class as a failure? Not at all bad at the most basic of tasking - that of simply being competent human beings and taking care of their families, yah?

韓家標

Good points. Did not China buy a heavy if not controlling interest in IBM? I thought they did and I recall I was concerned about IBM's supercomputer tech. It does make sense a lot of people are in the country and uncontrolled by the government. Is it more that as long as they do not disobey then they are left alone?

I have never met a Chinese person here in the US that was not advancing noticeably. It is most agreeable when they are moving away from Communism though. Some accept the restrictions of the Chinese Communist party believing in the enforcement of the limits of freedoms inherent in Democracies. Their day may come. Perhaps they would be much better off to unshackle from Communism and then what the hell do I know. Time will tell I can believe.
 








 
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