***Official*** 2017 Stock Market Thread

[ImpulsE69]

Yea, i watched it. I completely didnt' expect it, and didn't try to get in after the initial spike.

 

[FelixDeCat]

Yea, i watched it. I completely didnt' expect it, and didn't try to get in after the initial spike.

Im kind of torn as to NUGT's next move. Everyone knows rates will continue to rise, yet gold /silver went up on Friday....despite the move up.... gold miners fell. So in this crazy mixed up world gold/silver/NUGT should go back to recent lows based simply on the expectation of higher rates. However its just not that easy.

 

[Charmonium]

From Thurs. to Fri. the dollar index dropped about 1.5% and gold went up by a little more than 2%. While increases in interest rates normally signal a stronger currency, it's not the only factor. And when you have a president who is a 70 year old toddler insulting our closest allies, that's going to have a negative impact on your currency.

 

[FelixDeCat]

From Thurs. to Fri. the dollar index dropped about 1.5% and gold went up by a little more than 2%. While increases in interest rates normally signal a stronger currency, it's not the only factor. And when you have a president who is a 70 year old toddler insulting our closest allies, that's going to have a negative impact on your currency.

Words are easily forgotten. Policy is what matters and so far not much has happened.

 

[ImpulsE69]

Word is that the hike was already priced in and apparently I was one of the few out there that didn't expect gold and miners to spike that day. That being said, since then (and before) miners has very loosely if at all followed gold in the last 3 months.

Currently (because I still suck at timing) I am learning and watching more than entering. Looking at a new combo of metrics and trying to watch the patterns. So far, I have not made a bad play this year, but I haven't made many and those that I did make didn't make much.

 

[FelixDeCat]

Local rabble-rouser and noted investor Steve "M" (<so as to not fall in search results) has laid out a case for SNAP going under $17 that I agree with.

1) First of all, SNAP shares are *not* voting shares so many institutions are boycotting them out of principal. That removes a big layer of support.

2) Second there is lockup period of six months before insiders can start selling shares and the game with IPOs is to short shares before they can sell.

3) SNAP shares were set to go public at $17 and thats seems to be the target of shorts, eliminating all premium for this money loser.

 

[zinfamous]

Words are easily forgotten. Policy is what matters and so far not much has happened.

See! I knew that your P&N persona is a complete troll.

 

[FelixDeCat]

See! I knew that your P&N persona is a complete troll.

There are many new cabinet appointees and a lot has been proposed. Plans are underway to implement major changes but technically no new laws have been passed outside of some executive orders.

 

[Charmonium]

Well the dollar is about to hit it's Feb. lows. That's not an accident in my opinion. People are looking at the controversies surround Trump, especially the emoluments and Russia issues, and they're starting to wonder if he'll even be around long enough to effect any changes. That's not to even mention the fiascoes of Muslim bans I and II. And then there's Trump's proposed budget, which even the ultra conservatives are looking at with disbelief.

I don't want to get all P&N here but objectively speaking, I don't think there are many folks out there aside from Trump's rabid base, who believe he's capable of either supporting the Republican agenda in any meaningful way or even remaining in office past this year.

 

[FelixDeCat]

Banks and the entire market have been on a TEAR since TRUMP was elected. With hopes of easing regulation and lowering taxes, along with the anticipation of higher interest rates set banks and all financials on a 30%+ run up since the election. Higher interest rates are seen as favorable to bank earnings.

People want to pin this measly 1% sell off on Trump, but this has more to do with the Fed if anything.

Why? Why is the Fed to blame for the first 1% sell off since last year?

The Fed raised rates, after much preparation and announcement, by .25%. After the Fed announced the rate hike, gold and gold miners have gone vertical to the upside since the pace of hikes might not be as aggressive as first anticipated.

Yesterday, a Fed official gave a speech suggesting that the next rate hike wont happen until JUNE, and even then might only be another .25%. That caused another spike in gold, silver and NUGT near market close.

Banks are sporting a very large premium and now you have the first indication rates will go up but not enough near term to JUSTIFY the extreme runup in banks. AS a result, the first wave of selloffs in banks and other financials has now happened triggered selling in the overall market.

Add to that Republican bickering over Trump's Obamalite proposal, and now there is some doubt that all Republicans might not be 100% behind the serious roll backs of regulation and taxes Trump has proposed.

Again, it was just a measly 1% selloff, and it was mostly financials.

More Fed officials will speak this week, ending with Yellen on Thursday.

....and we are long overdue for at least a 5% correction.

(Earnings season starts the 2nd week of April, so this might be a buying opportunity)

 

[Charmonium]

Everybody in the media was calling this a Trump rally due to the sorts of expectations you mentioned. But it's becoming clear that Trump doesn't have the respect of Congressional Republicans. He can't even brow beat the Freedom Caucus into accepting Ryan's proposed Healthscare bill. If the Pubs can't even get this passed in the House (it's DOA in the Senate), that is going to be a chum in water for the sharks who are looking for any excuse to short this rally.

As for the fed, they've done their normally stellar job of telegraphing their intentions well in advance of any action. The only people who would be influenced by any pre-announced fed moves are going to be retail investors. Everybody else realizes that higher rates are a positive sign for the economy since it means that the fed believes there is sufficient economic activity to support the increase w/o causing market disruption.

 

[FelixDeCat]

There is another thing the Fed is going to do and thats throw the market into a premature recession. Their "stellar work" has caused financial chaos before which is why they have taken almost 11 years before bringing about the third rate hike totaling .75%

Recession / contraction is part of the normal business cycle - unavoidable - no matter what. Higher rates hasten its return. Then the Fed starts cutting. Over the last 50 years I have seen it all.

Even worse, we are now $20,000,000,000,000 in debt. Every quarter point is going to cost us big time. I have long held that America will default in our lifetimes.

 

[zinfamous]

There is another thing the Fed is going to do and thats throw the market into a premature recession. Their "stellar work" has caused financial chaos before which is why they have taken almost 11 years before bringing about the third rate hike totaling .75%

Recession / contraction is part of the normal business cycle - unavoidable - no matter what. Higher rates hasten its return. Then the Fed starts cutting. Over the last 50 years I have seen it all.

Even worse, we are now $20,000,000,000,000 in debt. Every quarter point is going to cost us big time. I have long held that America will default in our lifetimes.

you were screaming that the rally was due to Trump.

Now the contraction isn't. Oh, we were due for that anyway. Of course. Yes, we were due. But he's never responsible for bad things.

Oh, as you said, the market just runs in cycles. Expansion and contraction. These things happen. If you want to chalk up the initial rally to things Trump said, that makes some sense. But the reality of Trump is finally sinking in--those that knew exactly who he was, exactly what he would be, knew this is what would happen. This contraction, if it becomes one, and if it gets worse, is simply correcting back down to pre-Trump because, well, it is pretty clear that not a single word can be trusted from this man.

It's also painfully obvious that he's incompetent and, as everyone has said: wall street doesn't really like chaos. That is the only thing he promised. I guess this could be good news if you like Gold. And Bullets.

If America defaults, you can chalk it up to republican stage craft again trying to hold the country hostage with some nonsense debt ceiling theatrics. If it comes to that again. The country can only default if those in charge believe, for whatever misguided reasons, that government debt (development, research, expansion, services) is the same as personal or even business debt. The government isn't a business, and it certainly is no place to put some mediocre businessman in charge.

IMO, the market is responding to these truths.

 

[Charmonium]

The fed under Greenspan helped cause the financial crisis by keeping interest rates too low for too long. I think they've learned their lesson from that. And besides, if it hadn't been for Bernanke, we'd all be back to a barter economy by now.

Increasing interest rates does indeed slow economic growth, but that's a good thing when the economy is healthy enough to absorb those rate hikes w/o skipping a beat. The alternative is what happened with the financial crisis. You get market aberrations that can bring the entire system to a screeching halt.

As for the debt, that really was just political theater. Nobody seems to care about the deficit when they're handing out tax breaks or asking to spend more on an already bloated military.

 

[FelixDeCat]

QQQ back to 132

 

[FelixDeCat]

QQQ back to 132

131.20 this week after the 1% drop to 129.65...not a bad recovery

Next week, the market feeds off quarter end money movements, window dressing and the shift in focus from healthcare to taxes. Also, Trump learned he cant simply order Congress around like he can employees, so maybe he might start to temper himself, which might help pass some of the reforms he wants to get done.

Let everyone participate and you are more likely to be successful!

 

[FelixDeCat]

Gold up 10 dolla pre-market.

 

[Exterous]

There is another thing the Fed is going to do and thats throw the market into a premature recession. Their "stellar work" has caused financial chaos before which is why they have taken almost 11 years before bringing about the third rate hike totaling .75%

Recession / contraction is part of the normal business cycle - unavoidable - no matter what. Higher rates hasten its return. Then the Fed starts cutting. Over the last 50 years I have seen it all.

Even worse, we are now $20,000,000,000,000 in debt. Every quarter point is going to cost us big time. I have long held that America will default in our lifetimes.

I'm a bit more with Charmonium with this - at least if this is in regards to Greenspan and the Great Recession. Even at closer to 'normal' interest rate of 5.25% the housing boom continued and MBS were widely popular and many entities were holding and trading CDOs despite questionable valuations and assumptions on liquidity. Greenspan gets a lot of flack for not doing much about this but only about 25% of the entities engaging in this practice came under the Fed's purview (barring an extreme application of the 13(3) rule). The rest were split among the SEC, OTS and State Regulators. Sometimes a firm had different areas regulated by different groups so each regulatory oversight group could only get part of the picture. Some entities like Fannie and Freddie had much lower capital requirements than a Fed regulated bank would require. Hindsight is 20/20 but if you look at the FOCM notes there were a lot of other concerns at the time that weighed on their interest rate decisions. A valid argument can be made for the Fed's roll in it but a good argument can be made that the loss of confidence and drying up of lending in the commercial paper market as the structural issues surrounding MBS and CDOs became clear would have happened regardless. And, assuming it had, Bernanke did a superb job at preventing a much greater collapse. The amount of time the spent over long weekends trying to stabilize the financial markets were key and their apolitical structure allowed them to act while Congress grand standed and quibbled

Unfortunately economics isn't an exact science although economists like to point to their predictions and say "Everything would have been all right if they had just listened to me." Of course how do you know they were right at the time? Just look at all of the critics of Bernanke's work during the crisis. Many experts said he was doing too much while another group said he wasn't doing enough. Which prominent Harvard or Princetown economist do you believe?

 

[Charmonium]

There are people who still believe that helicopter Ben is going to be the cause of hyperinflation in the US. Even though it's obvious by now that the trillions of dollars Bernanke pumped into the economy is tied up in excess reserves. Add to that the fact that slowly, the fed is reducing those reserves - https://fred.stlouisfed.org/series/EXCSRESNW

 

[FelixDeCat]

The price for 1 oz of Gold was $42 in 1971, the year Nixon turned our currency that could be directly exchanged for gold into a fiat currency. As a result, the price of gold has risen THREE THOUSAND PERCENT to $1250.

Also the national debt has gone up FIVE THOUSAND PERCENT from $398 billion to $20,000 billion.

We are not supposed to be squandering our childrens future like this.

We are not supposed to be pushing America to an inevitable default.

But president after president seems like its their right to pile on.

When - exactly - do we ever pay even one damn penny of the debt off permanently? Never you say?

So what do you have in a scenario like that? National default. And its probably closer than we think. The more we owe, that faster the reckoning will come.

 

[Charmonium]

Fiat currencies are necessary for managing the money supply. During economic expansions, there is a greater need for money so you have to be able to create more. The opposite happens during contractions. If you had a gold standard you'd have to constantly adjust the amount of gold behind each dollar - which is exactly the opposite of what a gold standard is designed to do.

Managing the money supply gives you the opportunity to lessen the severity of the business cycle. You can smooth things out during booms so you don't get runaway inflation and do the same during contractions so you don't get spiraling deflation.

I do agree with you on the national debt though. You can't continually increase the deficit and as a result put more and more money into servicing that debt. The way it's supposed to work is that the govt borrows money during recessions so it can spend and stimulate economic activity. But you're then supposed to pay that money back during booms when you have more revenue coming in. But everybody looks at the budget like it's a Christmas turkey and spend their time trying to figure out how they can get the biggest cut.

 

[zinfamous]

There is no inevitable default. The US is not a business. National debt is not business debt. Please get that through your mind, FDK.

 

[FelixDeCat]

There is no inevitable default. The US is not a business. National debt is not business debt. Please get that through your mind, FDK.

People disagree, I understand that. I am of the opinion we are not supposed to owe one thin dime to anyone. Spending more revenue than you bring in is just plain wrong and borrowing to make up the difference is seen as common and acceptable. If you want to spend more, tax more. Then the true cost will be felt by everyone.

Trust me, I dont want to see default as their will be no escaping it. America is so intertwined financially with the rest of the world it will cause quite an upset to world markets. If anyone wins the lottery and takes annual payments those payments could be prematurely ended in a default scenario as lottery commissions usually invest in Treasury securities.

Heres a crazy idea - BALANCE THE BUDGET.

 

[dullard]

The price for 1 oz of Gold was $42 in 1971, the year Nixon turned our currency that could be directly exchanged for gold into a fiat currency. As a result, the price of gold has risen THREE THOUSAND PERCENT to $1250.

Also the national debt has gone up FIVE THOUSAND PERCENT from $398 billion to $20,000 billion.

We are not supposed to be squandering our childrens future like this.

We are not supposed to be pushing America to an inevitable default.

But president after president seems like its their right to pile on.

When - exactly - do we ever pay even one damn penny of the debt off permanently? Never you say?

So what do you have in a scenario like that? National default. And its probably closer than we think. The more we owe, that faster the reckoning will come.

1) Cherry picked dates don't prove any points. For example, in inflation adjusted dollars (using year 2012 as a basis, but the point is the same) was well over $2000/oz in 1980 to 1981. Now it is under $1250/oz. Since that price of gold dropped 38% does that mean that fiat currency is the better option? Of course not. There is no link when you cherry pick dates.

2) 1971 is the wrong date anyways. The US only followed the gold standard from 1879 to 1933. In 1933 it was made illegal to own gold, so the idea that you could exchange currency for gold was eliminated. Also in 1933 the POTUS was given control of the price of gold. By 1934 we were only 60% gold backed due to this. The amount of gold backing kept dropping over the years. In 1945 due to the war, we dropped the reserves another 25%. In 1965 we repealed the requirement for gold reserves on Federal Reserve deposits. In 1968, we repealed the requirement for gold reserves on Federal Reserve notes. 1971 was only a partial dropping of the remaining miniscule gold reserves as it really didn't end in practice until 1973. Then in 1976 the end of the gold standard was made official. So which date do you need for your point to be true?

3) There is no link to debt and gold prices; at least none that you proved.

4) Yes, we should pay off debt but through balanced budgets, not through fake gold backing. The US debt dropped in actual dollars once that I know of. The actual officially sanctioned US treasury debt level dropped at the end of the 1990s. As percent of GDP, the US debt dropped after the start of the country, after the civil war, after WW1, after WW2, and in Clinton's second term (combination of computer boom and fighting among political parties so no spending could be passed).

 

[dullard]

When will we truly balance the budget? In my opinion, not until we force a link between spending and taxes. Until then politicians can promise to spend more (such as being tough on crime or supporting the military or helping the poor) while a the same time promising to cut taxes. Trump won on that campaign promise to both increase spending and cut taxes. The sad fact is that it is impossible to do so without borrowing from our future.

But if we had a way to actually force all spending increases to include tax increases, there would be a cost to politicians who promise the world. You want to increase the military spending by 10%? Fine, but you also have to raise all taxes 2% to do so (for example the 25% tax bracket becomes 27%, the long-term capital gains taxes go from 15% to 17%, payroll tax goes from 15.3% to 17.3%, etc).