Discussion ***Official*** 2022 Stock Market Thread

[biostud]

Keep calm and do nothing

Or rather follow your strategy.

 

[KB]

Zerohedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

There are definitely signs of a looming recession so I wouldn't be 100% in, but are the layoffs announced enough to cause it? Don't know that one. After this pop I pulled some money out to put in 4% cds to wait it out.

 

[FelixDeCat]

Buy.

Ok what the heck. It looks like the market is back in "dont give a shit, just buy mode". So Ill play along and sell in January.

 

[dullard]

Ok what the heck. It looks like the market is back in "dont give a shit, just buy mode". So Ill play along and sell in January.

1) Go back and look at my graph of inflation.
2) Realize that the US government will be in stalemate mode for the next 2 years.

Both are loved by the institutional investors.

 

[jpiniero]

There are definitely signs of a looming recession so I wouldn't be 100% in, but are the layoffs announced enough to cause it? Don't know that one. After this pop I pulled some money out to put in 4% cds to wait it out.

At this point, the unemployment numbers are still very low. I believe the layoffs will get going now that the election is over but it hasn't happened yet.

1) Go back and look at my graph of inflation.
2) Realize that the US government will be in stalemate mode for the next 2 years.

Both are loved by the institutional investors.

The House counting is not over. It's looking more and more likely that the GOP will end up getting the majority but there's enough Cali races where they haven't counted enough that it's possible enough turn. And even then the majority is going to be very slim.

I still believe that this rally isn't going to last without the Money Printer but I guess it goes to show how much money is floating out there.

 

[dullard]

I still believe that this rally isn't going to last without the Money Printer but I guess it goes to show how much money is floating out there.

The money printer is still going strong. Yes, rates have gone up, but they are still historically low. It only feels like the money printer has been turned off due to the unusually low rates for the past decade.

30-Year Fixed Rate Mortgage Average in the United States

View data of the average interest rate, calculated weekly, of fixed-rate mortgages with a 30-year repayment term.

fred.stlouisfed.org

 

[jpiniero]

The money printer is still going strong. Yes, rates have gone up, but they are still historically low. It only feels like the money printer has been turned off due to the unusually low rates for the past decade.

By Money Printer I am talking about the trillions of dollars the Fed gave to hedgies to buy stocks and who knows what else. These rallies (every time there's some 'good news') is because the market thinks the Money Printer is coming back soon.

 

[AdamK47]

Money printer this money printer that.

 

[jpiniero]

Money printer this money printer that.

I don't think I could understate the importance of the Money Printer for the post-2008 stock market rally.

 

[dullard]

By Money Printer I am talking about the trillions of dollars the Fed gave to hedgies to buy stocks and who knows what else. These rallies (every time there's some 'good news') is because the market thinks the Money Printer is coming back soon.

That hasn't been turned off either. I suspect that never will be turned off, it will just gradually decline over many years as the bonds expire.

Recent balance sheet trends

The Federal Reserve Board of Governors in Washington DC.

www.federalreserve.gov

 

[jpiniero]

That hasn't been turned off either. I suspect that never will be turned off, it will just gradually decline over many years as the bonds expire.

Recent balance sheet trends

The Federal Reserve Board of Governors in Washington DC.

www.federalreserve.gov

That's money that's already been given away. I'm guessing most of those assets are long dated at 0% (or close to it) which are unsellable. Even the mortgages they own are probally mostly 2-3% which they might be able to sell once rates drop back to zero. How long is that going to take though.

 

[dullard]

That's money that's already been given away.

That money is still out there sloshing around. It doesn't matter if more is added or not. It would be like having your home totally flooded, 10 feet under water, and then debating whether tomorrow's rain will be light or heavy. Tomorrow's rain isn't your problem.

 

[jpiniero]

That money is still out there sloshing around. It doesn't matter if more is added or not. It would be like having your home totally flooded, 10 feet under water, and then debating whether tomorrow's rain will be light or heavy. Tomorrow's rain isn't your problem.

I agree to an extent but I am skeptical of a real rally without them putting more in.

You could argue that the above is a good enough reason that the Fed should keep raising rates just to lower the money supply. That I don't think is going to happen.

 

[Charmonium]

Maybe cutting their massive asset hoard is something the Fed could do to 'tighten' once they do stop hiking.

Should mention that WS also bought massive amounts of treasuries. I think the going rate dropped like a half a point. The implication being that this is about as good as it's going to get.

Yeah, that huge spike in M1 didn't come from Yeezy sales. /s

I was always under the impression that the fed couldn't really raise or lower interest rates if those rates were not supported by the general market. I mean if ya got this wall of cash you need work thru anyway, why fuck around?

But given the aggressiveness of the rate hikes, I'm a little surprised such a small (around 400B I think) reduction in M1. It like we're remove the punch bowl, oh, wait, no we're not, yes we are. Just stare at this hologram for a while.

 

[Charmonium]

Y'all are forgetting about the money multiplier and, dare I say it, the shadow banking network.

The shadow banking system is a group of financial intermediaries which facilitate the creation of credit across the global financial system, but whose members are not subject to regulatory oversight. These companies are often known as nonbank financial companies (NBFCs). The shadow banking system also refers to unregulated activities by regulated institutions.

Examples of intermediaries not subject to regulation include hedge funds, unlisted derivatives, and other unlisted instruments, while examples of unregulated activities by regulated institutions include credit default swaps.

Either and certainly both can fuck with the fed's plans. I think that's probably why they need to grossly overcompensate for economic shocks but have to be a great deal more delicate with disappearing all that cash.

 

[Charmonium]

I pointed this out a while ago, but remember that "scalloping" we saw in a graph of their asset?

It seems that the local peak to trough amounts are in the 40B 150B range. If that's wrong, apologies. Took me a while to convert from Ms of Ms to thousands of Ms. So sad (for me).

Which fits well with what we're seeing.

 

[FelixDeCat]

Money printer this money printer that.

When the Fed does it, its fine. When we do it, its counterfeiting.


Back around 1982 I really listening to this song by the B52s, I was a big fan back then:

Ten,
Twenty,
THIRTY MILLION DOLLARS!

...ready to be spent...

 

[Charmonium]

I don't mean to talk down to anyone, but you create money every time you do anything related to fractional reserve banking.

The money multiplier is not all that mysterious, at least not in absolute academic terms.

Let's say that all banks have a 10% reserve requirement. That means the bank can loan up to 90% of all deposits. The online sources will tell you that the multiplier in that case will be 10x. Honestly tho, I don't see it. I would call it 9 times, but what could I possibly know about basic arithmetic.

Note: I think it has to do with running those transactions out to infinity, which is ridiculous. But this the academic view.

That's how the theory works, but in practice, that purely ridiculous. And apparently the fed is no longer enamoured of those stats since they don't seem to track them any more. As far as I can tell, they don't even track money velocity.

Presumably they have better metrics. Or, I suppose they have all sorts of internal data they keep and they prefer to play things close to the vest.

I used to track some of these things and during the recession, they were pretty much worthless. That's where you get the expression of pushing on a string.

My best guess here is that the slippery nature of the shadow bank system is sufficiently large that money in banks doesn't tell you much about the economy.

None of this however changes the basic mechanics which follow.

Pretty much any type of credit creates money. So even if banks can't find any decent outlets for their excess reserves (Fed stopped tracking this too), maybe the hot money is in MBSs, CDSs, etc. I don't know how much or that is tracked or if that's even knowable.

The point here is that any activity where you only need to keep a small fraction of the funds coming in from various sources such as depositors, that is tantamount to printing money. And that is, to a greater or lesser extent, largely unregulated.

 

[jpiniero]

BTW the current projection is only 219-216 in the House... and even that is questionable because there's a CA house seat where the GOP is ahead but barely. It could easily be 218-217. I'm not sure that small of a majority is really going to change things esp now that the Dems have an actual majority in the Senate and not 50-50.

My guess is that we will hear from Powell once the AP declares a majority. We'll have to see what he says.

 

[JEDI]

BTW the current projection is only 219-216 in the House... and even that is questionable because there's a CA house seat where the GOP is ahead but barely. It could easily be 218-217. I'm not sure that small of a majority is really going to change things esp now that the Dems have an actual majority in the Senate and not 50-50.

My guess is that we will hear from Powell once the AP declares a majority. We'll have to see what he says.

hm.. google says 48-48


link to dems having 51 seats?

also, controlling the House is huge because of Subpoena power.

 

[jpiniero]

link to dems having 51 seats?

also, controlling the House is huge because of Subpoena power.

Try cnn.com.

 

[FelixDeCat]

Sam Fried...from billionaire to broke...killing all crypto stocks along the way.

 

[FelixDeCat]

Big open on tap.

 

[jpiniero]

GOP only needs one more to win the House, but they are only ahead in 2 of the remaining races. And both of those are in CA so it might be some time before either race is called.

Assuming Powell won't speak until the House is settled, it could be awhile.

 

[Charmonium]

Assuming Powell won't speak until the House is settled, it could be awhile.

Does it really matter at this point. I mean, as the cliche goes, the results will be what they be. If the dems hold the house, it does become more likely that there will more spending bills, but take note of the fact that undr biden, the deficit has fallen to historic levels.

Also, even the recent spending spree won't put big amounts of actual dollars into the economy until at least a few years down the road.