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Off-Topic Stock Market & Crypto Discussion

mr.h said:
Bloomberg- Recession can be avoided.

(Bloomberg) -- Professional investors are loading up on bets that an economic recession can be avoided despite all the warnings to the contrary. It’s a dangerous bet -- for a variety of reasons.

Money managers have been favoring economically sensitive equities, such as industrial companies and commodity producers, according to a study from Goldman Sachs Group Inc. on positioning by mutual funds and hedge funds with assets totaling almost $5 trillion. Shares that tend to do well during economic downturns, like utilities and consumer staples, are currently out of favor, the analysis shows.

The positions amount to wagers that the Federal Reserve can tame inflation without creating a recession, a difficult-to-achieve scenario often referred to as an economic soft landing. The precariousness of such bets was on display Friday and Monday, when strong readings on the labor market and American services sectors drove speculation the Fed will have to maintain its aggressive policies, increasing the risks of a policy error.

“Current sector tilts are consistent with positioning for a soft landing,” Goldman strategists including David Kostin wrote in a note Friday, adding that the fund industry’s thematic and factor exposures point to a similar stance.
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Explain to me how we dont have a hard landing/recession with:

The Fed raising rates to at least 5%, and possibly higher to much higher
While at the same time, doing QT
and with the Federal government spending recklessly (at least $2 trillion in bills passed that havent been spent) which forces the Fed to keep hiking
 
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Today's Barrons:

Markets are getting restless, they want to get to the bottom. But as long as the data point to a resilient U.S. economy that won’t happen.

Services sector activity unexpectedly picked up in November, data showed Monday. With Friday’s stronger-than-expected jobs report still on investors’ minds, it was enough to spark a selloff over fears the Federal Reserve will need to be more aggressive with rate hikes.

Investors are waiting for the cumulative impact of the Fed’s hiking to hit the economy and therefore to signal a pivot on the horizon.

The Fed’s expected rate hike slowdown next week doesn’t appear to be under threat—traders are still pricing in a 0.5 percentage point hike at December’s Fed meeting, with a 20% chance of another supersize 0.75 percentage point increase. That’s a high probability given that Fed Chairman Jerome Powell has signaled he’s ready to slow down.

The central bank will also want to avoid overtightening, especially given the lag of its hikes hitting the real economy.

However, recent robust data do have implications for the Fed’s longer-term stance. Powell was keen to stress the likelihood of a higher terminal rate than previously expected last month. A resilient economy certainly points to higher rates for longer.

The Reserve Bank of Australia raised rates again Tuesday and warned more hikes were to come. Governor Philip Lowe said the path to a soft landing was a narrow one. Yet Powell sees a soft landing as “very plausible” for the U.S. economy.

For the foreseeable future, good news for the economy will be bad news for markets.
 
SpikeUM said:
Explain to me how we dont have a hard landing/recession with:

The Fed raising rates to at least 5%, and possibly higher to much higher
While at the same time, doing QT
and with the Federal government spending recklessly (at least $2 trillion in bills passed that havent been spent) which forces the Fed to keep hiking
Click to expand...
Because we have had rates that high before.

Because as soon as a recession rears its head, the Fed will no longer have inflation to battle.
 
TheEye said:
Because we have had rates that high before.

Because as soon as a recession rears its head, the Fed will no longer have inflation to battle.
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We have never had high rates before while simultaneously doing QT and with a $32T deficit plus continued trillion dollar spending. And a recession doesnt guarantee no inflation, stagflation is a real possibility. We have systemic shortages of workers, housing, oil, et al.
 
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SpikeUM said:
We have never had high rates before while simultaneously doing QT and with a $32T deficit plus continued trillion dollar spending. And a recession doesnt guarantee no inflation, stagflation is a real possibility. We have systemic shortages of workers, housing, oil, et al.
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The global economy is a freaking mess!
 
90scane said:
Does anyone find irony in Congress going after people for FTX asking where the money went yet Congress received many Millions in donations from FTX/employees?

I wonder how many congress members will return the donations to help those that have lost funds to FTX.
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They just want to use it to make new laws. Even if there are already laws they can get him on but don’t want to. It is so weird that they want to make all these laws but don’t want anyone arrested.
 
PanteraCanes said:
They just want to use it to make new laws. Even if there are already laws they can get him on but don’t want to. It is so weird that they want to make all these laws but don’t want anyone arrested.
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I fully expect most of them to serve time. You don’t commit that type of crime and get off
 
SpikeUM said:
Explain to me how we dont have a hard landing/recession with:

The Fed raising rates to at least 5%, and possibly higher to much higher
While at the same time, doing QT
and with the Federal government spending recklessly (at least $2 trillion in bills passed that havent been spent) which forces the Fed to keep hiking
Click to expand...
Let’s wait and see how inflation is dropping. If too slow, the rate hikes will stay high, but there are signs of inflation dropping enough to continue to lower rate hikes or pauses. No one wants mass unemployment and the fed will be more cautious despite what is being said. Our economy is still strong enough for a soft landing.
 
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mr.h said:
Let’s wait and see how inflation is dropping. If too slow, the rate hikes will stay high, but there are signs of inflation dropping enough to continue to lower rate hikes or pauses. No one wants mass unemployment and the fed will be more cautious despite what is being said. Our economy is still strong enough for a soft landing.
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How are you determining that the economy is strong enough for a soft landing? We had negative gdp in 2 or 3 quarters this year. Lots of signs are flashing weakness. Interest rate hikes are hurting the real estate sectors of the economy in massive ways.
 
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90scane said:
How are you determining that the economy is strong enough for a soft landing? We had negative gdp in 2 or 3 quarters this year. Lots of signs are flashing weakness. Interest rate hikes are hurting the real estate sectors of the economy in massive ways.
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We have been seeing strong economic indicators despite rising rates and inflation is dropping. Of course with massive hikes we will see flashes of weakness, but overall our economy is still strong. Look back at prev posts and you will see the areas that are still strong and in some cases growing. Retail and medical were the strongest employment sectors.
what follows a bear mkt? A bull..I’m not getting out of the game.
A lot of talking heads thing aggressive rate hikes are wrong.
 
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As long as we do not have millions unemployed, 2023 should see a rise in earnings.
 
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JD08 said:
@SpikeUM -
www.reuters.com

Vanguard quits net zero climate effort, citing need for independence

Vanguard Group Inc is pulling out of a major investment-industry initiative on tackling climate change, the world's biggest mutual fund manager said on Wednesday, explaining it wants to demonstrate independence and clarify its views for investors.
www.reuters.com www.reuters.com
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As I have said multiple times, whether you believe in climate change or not, pursuing an ESG agenda depresses profits, and a company that is a strict ESG adherent is hurting the bottom line and should be avoided.
 
This Barron's article today is quite sobering; some quick summaries:

Deglobalization leads to Inflation: "That means the world will get less efficient and more inflationary. A safe supply chain will be more important than a cheap supply chain".

Bad Commodity inflation is coming: "What is also important is that the autocratic bloc controls, at the margin, a lot of the commodities, be it oil or gas or certain metals. I think that the U.S. made a big mistake by using the U.S. dollar payment systems as a political weapon. Those nations that are not close friends with the U.S. will not store their foreign-exchange reserves in the U.S. dollar anymore. I think they will try to store their reserves in stuff—hard assets, commodities—instead".

After a rally some time next year, the second shoe drops: Yes, I think it (inflation) will be double digits. I think the price of oil goes up in 2024-25 and could easily trade near $200. And that gives you a CPI in 2025 of over 10%. And, of course, bond yields will also move up then, from late ’23 onward in the next cycle.

www.barrons.com

Market Vet Predicts the Next Decade Will Be Awful for the 60/40 Portfolio. How to Invest.

The former Barron’s Roundtable member warns of a roller-coaster market through the end of the decade, with major challenges ahead for the world economy, inflation, the dollar, and more.
www.barrons.com www.barrons.com
 
BTW, re the article above, one of the wirehouses just posted a piece that countries such as Russia might shun the US$ and instead trade in gold. And its also been reported that Ghana wants to buy oil in Gold and not US$.
 
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