Dow tumbles more than 800 points. How ugly will this get?

[Mai72]

China devalued their currency because of the new tarrifs. Trump is expected to raise these new tariffs up to 25%. IMO, this is troubling because he is now hitting consumer goods. Most analyst are saying that this is going to harm our economy, and we could be looking at an upcoming recession. Do you guys agree that this is very bad for our economy?

https://www.cnn.com/2019/08/05/investing/dow-stock-market-today/index.html

https://www.cnbc.com/2019/08/05/chi...t-the-dollar-amid-us-china-trade-turmoil.html

US retailers are going to feel this big time.

https://finance.yahoo.com/news/the-...be-worse-for-retailers-analyst-134539793.html

New tariffs "sword at throat of US economy, not China" analyst say.

https://www.cnbc.com/2019/08/02/analysts-on-the-impact-of-trumps-latest-tariffs-on-china.html

 

[PJFrylar]

I just hope the upcoming crash comes under Trump, so that brain dead conservatives don't have the pretense to blame anyone but themselves.

 

[Mai72]

I just hope the upcoming crash comes under Trump, so that brain dead conservatives don't have the pretense to blame anyone but themselves.

Yea, I hear you. If he gets a 2nd term, IMO this upcoming recession will definitely hit then. I think it's more immediate though. Maybe a recession next year?

 

[fskimospy]

I think the warning signs of an upcoming recession are blinking yellow at least - the yield curve inverting is a pretty strong sign, after all.

If I had to bet I would bet on a recession starting within the next 12 months but I wouldn't bet super strongly on it. The fact that the Fed is cutting rates to prop up the economy in response to Trump's trade wars just means it has less ammo to fight the actual recession if/when it comes.

 

[Hayabusa Rider]

I think the warning signs of an upcoming recession are blinking yellow at least - the yield curve inverting is a pretty strong sign, after all.

If I had to bet I would bet on a recession starting within the next 12 months but I wouldn't bet super strongly on it. The fact that the Fed is cutting rates to prop up the economy in response to Trump's trade wars just means it has less ammo to fight the actual recession if/when it comes.

Three hundred points is a burp at most, however as Trump wages war on the American economy by making us pay for tariffs with no mitigating plan things have to get worse. If it does while Trump is in office Dems will be blamed. If later then the Dems will be blamed. The best that can be hoped for over the next two election cycles is triage to save the patient, the USA, by keeping Reps out of power and reversing policies that got us here. I have no idea if that is even possible to a sufficient degree. It may take generations or forever to fully mitigate the damage being done today.

 

[Mai72]

I think the warning signs of an upcoming recession are blinking yellow at least - the yield curve inverting is a pretty strong sign, after all.

If I had to bet I would bet on a recession starting within the next 12 months but I wouldn't bet super strongly on it. The fact that the Fed is cutting rates to prop up the economy in response to Trump's trade wars just means it has less ammo to fight the actual recession if/when it comes.

How ugly do you think it will get? Lets add in $1T plus studen loan debt, $14T consumer debt (now higher than the 2008 financial crisis). The typical car note is $500 for 6 years. 75% of Americans don't even have $1k in their bank for emergencies. Most are living paycheck to paycheck. IMO, our economy seems like a ticking time bomb and many Americans aren't financially prepared. I've always wondered if the next recession will be the one to break most Americans. Oh, lets add in inflation and the fact that wages are for most stagnant. Not a good sign.

 

[K1052]

I was told China would give in to Trump very quickly. I was promised amazing deals. LOL.

The notion that the Chinese are willing to absorb enormous economic pain and dish right back to us to avoid being publicly extorted by a moron should be abundantly clear. It's gone beyond economics now. Since all Trump knows how to do is escalate this will get worse.

 

[ultimatebob]

300 points is like a 1% drop nowadays, right? That's nothing to really worry about. Trump can cause a bigger drop than that with just a single stupid tweet

 

[IronWing]

How ugly do you think it will get? Lets add in $1T plus studen loan debt, $14T consumer debt (now higher than the 2008 financial crisis). The typical car note is $500 for 6 years. 75% of Americans don't even have $1k in their bank for emergencies. Most are living paycheck to paycheck. IMO, our economy seems like a ticking time bomb and many Americans aren't financially prepared. I've always wondered if the next recession will be the one to break most Americans. Oh, lets add in inflation and the fact that wages are for most stagnant. Not a good sign.

In other words, policies designed to destroy the middle/working class and enrich the oligarchs are working splendidly.

 

[fskimospy]

How ugly do you think it will get? Lets add in $1T plus studen loan debt, $14T consumer debt (now higher than the 2008 financial crisis). The typical car note is $500 for 6 years. 75% of Americans don't even have $1k in their bank for emergencies. Most are living paycheck to paycheck. IMO, our economy seems like a ticking time bomb and many Americans aren't prepared for it. I've always wondered if the next recession will be the one to break most Americans. We are a resilient bunch though.

Household debt is a considerably smaller percent of GDP than it was before the 2008 financial crisis so I don't think it will break people in the same way. Also, student debt is generally the kind that if you run into economic problems you just put into forbearance and don't pay. Since it's federally backed too the person left holding the bag is the federal government and they can always print more money. (I think student debt is a huge problem, just not particularly for an imagined recession)

 

[Mai72]

Household debt is a considerably smaller percent of GDP than it was before the 2008 financial crisis so I don't think it will break people in the same way. Also, student debt is generally the kind that if you run into economic problems you just put into forbearance and don't pay. Since it's federally backed too the person left holding the bag is the federal government and they can always print more money. (I think student debt is a huge problem, just not particularly for an imagined recession)

Yea, but if the fed starts to print more money, then they risk undervaluing the US dollar. IMO, student debt is a HUGE problem now and will be for the future. If someone is $50k in student loan debt, then they have to put off buying a home. The end up spending less money which has an impact on our economy. Look at the prople who are defaulting. It's about $1M per year. Nearly 40% by 2023. That's a large percentage and will affect our economy. The consequences are dire for those who do default. And, will affect our economy negatively in the near future.

https://www.cnbc.com/2018/08/13/twenty-two-percent-of-student-loan-borrowers-fall-into-default.html

 

[Puffnstuff]

CNN now reporting more than 500 points.
https://www.cnn.com/2019/08/05/investing/dow-stock-market-today/index.html

 

[s0me0nesmind1]

China devalued their currency because of the new tarrifs. Trump is expected to raise these new tariffs up to 25%. IMO, this is troubling because he is now hitting consumer goods. Most analyst are saying that this is going to harm our economy, and we could be looking at an upcoming recession. Do you guys agree that this is very bad for our economy?

https://www.cnn.com/2019/08/05/investing/dow-stock-market-today/index.html

https://www.cnbc.com/2019/08/05/chi...t-the-dollar-amid-us-china-trade-turmoil.html

US retailers are going to feel this big time.

https://finance.yahoo.com/news/the-...be-worse-for-retailers-analyst-134539793.html

New tariffs "sword at throat of US economy, not China" analyst say.

https://www.cnbc.com/2019/08/02/analysts-on-the-impact-of-trumps-latest-tariffs-on-china.html

Acting as if we have the market figured out is why I laugh at stupid people.

Just like when the tax reform capped deductions for home mortgages, THE REAL ESTATE BUBBLE WILL POP! PEOPLE WILL STOP BUYING HOMES!!!

... Oh wait, everyone shrugged it off and the real-estate market is still hot hot hot.

 

[fskimospy]

Yea, but if the fed starts to print more money, then they risk undervaluing the US dollar.

I'm okay with that, we could use more inflation.

IMO, student debt is a HUGE problem now and will be for the future. If someone is $50k in student loan debt, then they have to put off buying a home. The end up spending less money which has an impact on our economy. Look at the prople who are defaulting. It's about $1M per year. Nearly 40% by 2023. That's a large percentage and will affect our economy. The consequences are dire for those who do default. And, will affect our economy negatively in the near future.

https://www.cnbc.com/2018/08/13/twenty-two-percent-of-student-loan-borrowers-fall-into-default.html

I 100% agree student debt is a huge problem and is a long term drag on our economy that we must address.

I'm just saying that with mortgage debt like in 2008 if you can't pay you become homeless. Even worse, when lots of people can't pay then the larger securities based on them default and you get failing banks, etc. etc. With student loans, generally speaking, if you can't pay you put them into forbearance and they aren't securitized the same way.

 

[fskimospy]

Acting as if we have the market figured out is why I laugh at stupid people.

Just like when the tax reform capped deductions for home mortgages, THE REAL ESTATE BUBBLE WILL POP! PEOPLE WILL STOP BUYING HOMES!!!

... Oh wait, everyone shrugged it off and the real-estate market is still hot hot hot.

Mortgage rates have fallen considerably since that legislation was passed but even with that home price appreciation is happening at a significantly lower rate than before the tax bill was passed, particularly in places that were hit by the effective elimination of the mortgage interest deduction. (Eliminating the MID wouldn't affect prices in the middle of the country because they weren't using it anyway)

I can say that NYC's housing market has softened significantly since the passage of the tax law and the loss of MID is certainly a significant contributing factor. (Manhattan real estate has been a bloodbath) I mean after all it's just common sense - before the law was passed I had a tax advantage of ~$300 a month over renting. That's gone now, so the 'price' someone would have to pay for my place if they bought it went up $300 (actually more like $500+ due to price appreciation) as opposed to if they were renting so of course they're going to pay less for it.

 

[purbeast0]

Sony has said there will be a PS4 and eventual PS5 price hike if this continues.

https://comicbook.com/gaming/2019/07/30/ps5-ps4-playstation-price-sony-tariffs/

 

[Indus]

Why is it that we believe the DOW as an indicator of a recession?

Other than 2008 it hasn't really fallen that much and I suspect it won't fall that much now. It's just part of the disconnect Wall Street has to Main Street.

The only time Wall Street feels pain is if consumers stop buying or paying for goods, but lots of time people just put stuff on credit cards and pay later, much much later.

Last time.. the dow didn't slide till mortgages weren't being paid! The Dow won't slide now till massive amount of cc debt is accumulated and not being paid.

 

[senseamp]

Tired of winning yet?

 

[IronWing]

Sony has said there will be a PS4 and eventual PS5 price hike if this continues.

https://comicbook.com/gaming/2019/07/30/ps5-ps4-playstation-price-sony-tariffs/

Prepare for war!

 

[IronWing]

Tired of winning yet?

It's like the election of 2016 all over again.

 

[allisolm]

300 points is like a 1% drop nowadays, right? That's nothing to really worry about.

Currently down 607.

 

[vi edit]

I hope it continues to shit itself a couple hundred points a week for the next 12 months. The only ribbon Trump can hang up on the fridge going into 2020 is "Didn't fuck up the economy".

 

[IronWing]

By all historical measures, the market is still grossly over valued from a P/E perspective. Only the super easy money policies of the Fed have floated the market thus far. China devaluing their currency soaks up US inflation pressure giving the Fed more room to pander to the market. So I'm not sure why the market dove. I guess US market players are worried about their costs in China going up in response to the devaluation.

 

[senseamp]

By all historical measures, the market is still grossly over valued from a P/E perspective. Only the super easy money policies of the Fed have floated the market thus far. China devaluing their currency soaks up US inflation pressure giving the Fed more room to pander to the market. So I'm not sure why the market dove. I guess US market players are worried about their costs in China going up in response to the devaluation.

Costs in China would go down with currency, that will probably be offset by tariffs. But US companies also make a ton of money in China, and that loss won't be offset. This has always been the stupidity of this trade war, to focus only on trade balance, not the profit balance. Apple makes a whole lot more profit in China market than Foxconn makes making iPhones for the US market. But trade balance makes it look like only China is exporting, because Apple is exporting brand value, design, and software which makes the most profit, not physical goods which go through ports.

 

[HomerJS]

Sony has said there will be a PS4 and eventual PS5 price hike if this continues.

https://comicbook.com/gaming/2019/07/30/ps5-ps4-playstation-price-sony-tariffs/

Glad I got my Pro during Prime Days. $100 off