The Ongoing New Financial Era Thread

Blue&White
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Re: The Ongoing New Financial Era Thread

Postby Blue&White » Mon Aug 05, 2019 9:29 pm

Well, if you want a prediction, it's that at some point there is going to be a big correction and the market is going to lose a bunch of value. It seems inevitable. Between tariffs, our rising debt, Brexit, Iran, and just how juiced the market has been, it seems inevitable that it's going to correct at some point and reset at some lower number. I know exactly how far, too. But, I like to leave some surprises. So, what I'll do is I'll write it down and when it happens I'll tell you if I was right or not. Maybe I'll write a column about it.
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psu_dad
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Re: The Ongoing New Financial Era Thread

Postby psu_dad » Tue Aug 06, 2019 7:38 am

From today's WSJ:

China’s leaders appear to have concluded that they won’t secure an acceptable trade deal with President Trump. What they can do is try to weather the next 18 months while inflicting maximum political damage—and hope a weakening U.S. economy delivers a new president.

Probably true. And if so, screw them. I'm not an isolationist, but I'd rather pay more for U.S. manufactured widgets than submit to extortion.
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Blue&White
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Re: The Ongoing New Financial Era Thread

Postby Blue&White » Tue Aug 06, 2019 7:47 am

You think this is all China's fault? From what I've read Trump has moved the bar on them a couple of times. This can't be doing their economy any great favors either. The difference is, unlike American politicians, they are not beholden at all to their constituents. There are no elections in China. There are, however, over a billion people who, if they get pissed off enough, can rise up and cause a lot of damage to the ruling class there. They are clearly betting it will take more than 18 months for that to happen, and I'm pretty sure they are right.

And, this was absolutely predictable. I'm a nobody who knows nothing about anything when it comes to foreign diplomacy and negotiating international trade deals and I said months ago this was going to happen. So, there is no possible chance this was not listed as a possible outcome by the Trump administration.

It's a good thing trade wars are easy to win. Imagine if they were hard.
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psu_dad
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Re: The Ongoing New Financial Era Thread

Postby psu_dad » Tue Aug 06, 2019 8:07 am

You think this is all China's fault?

No. We created the monster by allowing totally ridiculous trade imbalances for years. So naturally, China feels that anything "reasonable" is a total screw-job for them. What they want is for us to buy their products in large quantities ... accept that they won't reciprocate ... and STFU about it.

They're probably right that a new POTUS will accommodate them. The previous ones did.
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Blue&White
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Re: The Ongoing New Financial Era Thread

Postby Blue&White » Tue Aug 06, 2019 8:20 am

I disagree with you on what the base issue is here. No matter. The important thing is that China apparently "stabilized" their currency overnight and we can expect some bounce back today.

Unless the real stable genius blows everything up on Twitter, that is.
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psu_dad
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Re: The Ongoing New Financial Era Thread

Postby psu_dad » Tue Aug 06, 2019 8:32 am

I disagree with you on what the base issue is here.

Yes, we totally disagree on that.
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PittGradPSUMad
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Re: The Ongoing New Financial Era Thread

Postby PittGradPSUMad » Tue Aug 06, 2019 2:35 pm

Blue&White wrote: So, there is no possible chance this was not listed as a possible outcome by the Trump administration.


No, no chance at all when the only outcome deemed acceptable by the driver of the clown car is a "we win...they lose" zero sum game. We are so screwed.
Yeah, well, that's like your opinion, man.

psu_dad
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Re: The Ongoing New Financial Era Thread

Postby psu_dad » Wed Aug 07, 2019 1:09 pm

The yield on 10-year U.S. Treasury notes is down to 1.6%. You may as well just stuff all your money into your mattress.
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Blue&White
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Re: The Ongoing New Financial Era Thread

Postby Blue&White » Wed Aug 07, 2019 1:59 pm

That's better than what I'm getting on my checking account. I have a money market account too and I don't think it's paying that much. It's all relative. To the man only getting 1%, 1.6% is a windfall.
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psu_dad
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Re: The Ongoing New Financial Era Thread

Postby psu_dad » Wed Aug 07, 2019 2:13 pm

It's not good news, though.

Treasury yields are subject to supply & demand. The lower the demand for Treasury bonds, the higher the yield required to sell them. And vice versa, This extreme low yield indicates not only a very high demand for treasury bonds. but a serious lack of confidence in the stock market. The only explanation for accepting a return of 1.6% (known as "chicken feed" in financial parlance) is suspicion that the stock market is going to go completely into the toilet.
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