The Investment Thread

[LouisEly]

23 minutes ago, owbc said:

The stock market would crash if the Fed lowered rates because it would indicate that the executive branch coerced them to do it. It would set off a panic for sure. 

Yes and no.  Keep in mind the dual mandate - and whenever Powell references the dual mandate he always says "maximize employment" before "control inflation".  If unemployment were to rise more, then there would be justification to lower interest rates.  There would likely be selling, but not because of any inclination that the executive branch coerced them to do it - it would be because rising unemployment is a leading indicator of recession.

[owbc]

1 hour ago, LouisEly said:

Yes and no.  Keep in mind the dual mandate - and whenever Powell references the dual mandate he always says "maximize employment" before "control inflation".  If unemployment were to rise more, then there would be justification to lower interest rates.  There would likely be selling, but not because of any inclination that the executive branch coerced them to do it - it would be because rising unemployment is a leading indicator of recession.

I think any previous "soft landing" monetary policy can be thrown out the window at this point. The Fed will need a new strategy to deal with the current situation. 

Rate increases are more likely than decreases in my opinion. But I think everything is complicated by the uncertainty. If the tariffs happened and were set in stone, you might see more domestic hiring and higher wages. But with the uncertainty I think we might see higher prices without a corresponding uptick in investment in domestic production. I think stagflation is a real risk. 

The bottom line is that the economic policy decisions are being made to gain political leverage over various groups. The actual impacts to the economy are not really being considered, the goal is control. 

[BrewerFan]

4 hours ago, wallus said:

You gotta be on an island to say these tariffs are a minor footnote. I follow things quite closely, from both sides, and you are the only one ever saying it.

This is like one poster saying Braun can play third base

I've got a good friend who is a Sr VP at Morgan Stanley, manages just shy of 2B dollars.

Take a guess what he thinks is causing a 2.8% contraction in the GDP when it was projected to GROW at over 3%...much less tanking the markets?

To the later...yes. 

50% tariffs steel and lumber and now paying 25% on energy from Canada...trade wars with your closest allies, that's not setting up a recession for the economy that was the "envy of the world," coming out of Covid. It's the fed. I guess they cut too much? Because that was the argument before. Only two cuts last year, 50 basis points. 

 

Even the POTUS and Musk have talked about what they hope will be "short term pain." Instead it's all on the Fed? 

[BrewerFan]

4 hours ago, owbc said:

The stock market would crash if the Fed lowered rates because it would indicate that the executive branch coerced them to do it. It would set off a panic for sure. 
 

The uncertainty is what’s killing the economy right now more than anything. If they set 25% tariffs and stuck with them the market would probably adapt and move on after a period of disruption. But instead it’s a new policy every day! 

I don't know that a cut would set off a panic. I do know the odds of a cut by June went from 14% to nearly 70% in about 2 weeks...so you may be right. That may cause more harm than good, but how did we have SUCH a strong economy recover while hitting ATHs repeatedly in '23 and '24 before they started the cuts.

It's the uncertainty that is crushing the market...and i guess now to some degree, the certainty of the tariffs. 

It has a direct impact on prices. I've read it will and it won't impact Wisconsin or me, but electricity goes up, 25%, that's another 100+ a month. 

We're alienating ourselves and we're hurting ourselves and...another we think a cut of 25 basis points is going to fix this?

I'm bracing for April 1st...ironically(or maybe it's not the first, it just feels like it should be) when we announce the prospect of more tariffs and or export controls. That'll be a BIG day for tech. Flashing Green or A River of Red....again. 

Side note...this really has me looking at BRK as a larger pct of my portfolio. They've managed to be green during some REALLY ugly days...

 

Quote

The bottom line is that the economic policy decisions are being made to gain political leverage over various groups. The actual impacts to the economy are not really being considered, the goal is control.

 

At least I'd be able to understand the reason behind it... it really just seems like a way to tax without saying you're taxing or argue that you're "taxing" other countries. 

Obviously a lot of the goal has been to strong arm countries(or the EU) into giving in and exerting control...but they're not budging anymore and we're ramping it up. 50% as of tomorrow on steel and aluminum. 

[BrewerFan]

Man, CPI 2.8%...that's HUGE. 2.9 expected, 3 or more would have been VERY bad, but...2.8

Shelter accounting for 50% of the increase...

Energy down .2% over the trailing 12 months.

 

Nice little break and some actual...good news. Good-ish news.

Market should have a green day...some blood pressure cooling off. Who knows what will be announced today or...what will be coming back at us, but should be good...especially in the "MAG 7," and then whatever nickname they gave to the 11 when they added AVGO, TSM, BRK and...whoever else.

[wallus]

1 hour ago, BrewerFan said:

Man, CPI 2.8%...that's HUGE. 2.9 expected, 3 or more would have been VERY bad, but...2.8

Shelter accounting for 50% of the increase...

Energy down .2% over the trailing 12 months.

 

Nice little break and some actual...good news. Good-ish news.

Market should have a green day...some blood pressure cooling off. Who knows what will be announced today or...what will be coming back at us, but should be good...especially in the "MAG 7," and then whatever nickname they gave to the 11 when they added AVGO, TSM, BRK and...whoever else.

It was good for a few seconds and then Europe put on retailitory tariffs 

[BrewerFan]

21 minutes ago, wallus said:

It was good for a few seconds and then Europe put on retailitory tariffs 

I don't think tariffs had anything to do with it🙃

No, I think until the 10 year comes down and Powell cuts interest rates, we're going to keep dealing with all of this nonsense. That's the primary goal(at least the short term one).

But I figure we celebrate a green-ish day.

 

Could be someone on the 3rd floor discarding their cat...but i think it's evidence how little good news it'd take to at least get the markets moving back in the right direction.

Gonna be a REAL wild few years. At least 2.

[wallus]

16 minutes ago, BrewerFan said:

I don't think tariffs had anything to do with it🙃

My mistake. I really shouldn't even bring up something so incredibly minor.

[Fear The Chorizo]

26 minutes ago, BrewerFan said:

I don't think tariffs had anything to do with it🙃

No, I think until the 10 year comes down and Powell cuts interest rates, we're going to keep dealing with all of this nonsense. That's the primary goal(at least the short term one).

But I figure we celebrate a green-ish day.

 

Could be someone on the 3rd floor discarding their cat...but i think it's evidence how little good news it'd take to at least get the markets moving back in the right direction.

Gonna be a REAL wild few years. At least 2.

Corrections and extended bear markets inevitably happen with the market even when every single economic lever is is pulled in the direction to try and avoid them at the expense of the rest of the economy.  The fact things are so volatile and swing so wildly based on what anybody is saying points to how long those levers were left unchanged in effort to avoid natural market swings that would more accurately mirror what the rest of the US economy has been feeling for years.

Despite the shock of the last few weeks of a market swing down, it's a blip when you look at market performance over the past 5 years - it feels like a profit taking cycle before all of a sudden a whole bunch of capital gets dumped back into the market and we're going the other direction again.

[BrewerFan]

1 hour ago, Fear The Chorizo said:

Corrections and extended bear markets inevitably happen with the market even when every single economic lever is is pulled in the direction to try and avoid them at the expense of the rest of the economy.  The fact things are so volatile and swing so wildly based on what anybody is saying points to how long those levers were left unchanged in effort to avoid natural market swings that would more accurately mirror what the rest of the US economy has been feeling for years.

Despite the shock of the last few weeks of a market swing down, it's a blip when you look at market performance over the past 5 years - it feels like a profit taking cycle before all of a sudden a whole bunch of capital gets dumped back into the market and we're going the other direction again.

Sure...but that's not at all what happpened. "Every single economic lever," was NOT pulled to avoid them "at the expense of the rest of the economy."

The market had a few MASSIVE years while they were raising rates(which I've been told is a bigger deal than any tariffs) and what other levers were pulled?

On top of that, the GDP was GROWING at roughly 3% the last two years, unemployment was extremely low and inflation was coming down near the 2% rate.

Everything was moving in the right direction until...tariffs. Find a financial advisor, hedge fund manager, economist, anyone who thinks this ISN'T directly related to tariffs...

You can't as tariffs are creating the uncertainty and they are causing the "corrections."

So great GDP growth to a contracting economy.
Higher interest rates
Low unemployment

The economy was humming along VERY smoothly...and then it took a hard right turn.

 

 

Edit-It IS a blip...if this was the end. It doesn't appear that's the case. The Russell is down nearly 20% now(which is a "crash.")

The other indexes are down...15-17%...approaching "crash" territory. And again, that this happened at a time when the economy was booming, it was GROWING(the BEST way to pay down the deficit if that's actually your aim).

 

Finally, this is all happening while these companies are having EXCEPTIONAL earnings.

[BrewerFan]

1 hour ago, wallus said:

My mistake. I really shouldn't even bring up something so incredibly minor.

I've never seen literally EVERY single expert...even those who are implementing the tariffs themselves and TELLING us they're going to cause "some temporary pain...hopefully," and people are just like, "nah, that's not it!"

[Fear The Chorizo]

On 3/12/2025 at 11:23 AM, BrewerFan said:

Sure...but that's not at all what happpened. "Every single economic lever," was NOT pulled to avoid them "at the expense of the rest of the economy."

The market had a few MASSIVE years while they were raising rates(which I've been told is a bigger deal than any tariffs) and what other levers were pulled?

On top of that, the GDP was GROWING at roughly 3% the last two years, unemployment was extremely low and inflation was coming down near the 2% rate.

Everything was moving in the right direction until...tariffs. Find a financial advisor, hedge fund manager, economist, anyone who thinks this ISN'T directly related to tariffs...

You can't as tariffs are creating the uncertainty and they are causing the "corrections."

So great GDP growth to a contracting economy.
Higher interest rates
Low unemployment

The economy was humming along VERY smoothly...and then it took a hard right turn.

 

 

Edit-It IS a blip...if this was the end. It doesn't appear that's the case. The Russell is down nearly 20% now(which is a "crash.")

The other indexes are down...15-17%...approaching "crash" territory. And again, that this happened at a time when the economy was booming, it was GROWING(the BEST way to pay down the deficit if that's actually your aim).

 

Finally, this is all happening while these companies are having EXCEPTIONAL earnings.

The Fed waited far too long to raise rates to try and get a handle on inflation, and even after they did they didn't raise them high enough to actually get prices headed back down - not to just keep slowly increasing, but to actually drop.  Them starting those rate increases from a point of basically zero was still an after-affect of the last bad recession from the housing market crash.  This goes back years, not months - and the market still has a significant amount of a bubble baked into it because of monetary policy that wasn't allowing a typical economic downturn to happen in financial markets.  We are overdue for a recession that also includes a market correction that isn't self-imposed like the COVID shutdown was, and trying to soften or ease into/out of it just risks it being more painful than it otherwise would be for people who don't have yachts.

 

My point doesn't discount the fact that imposing new tariffs of any kind from the US' perspective on foreign goods is impacting the markets right now - especially until there's some sort of certainty on what those will look like in the long run.  Kind of the same way that tariffs imposed on US goods by other countries in the long term had been baked into the global economy.  Fundamentals of the economy are still really solid, which is why the weird threat of making trees from Canada or bottles of red from France cost alot more to get through customs and into the US marketplace isn't going to be a sustained anchor on what the markets do or don't do.  The uncertainty of what may or may not come next is the biggest drag - but once that does clear up and if we wind up seeing a better overall economic playing field for US goods to compete in because of it, stock prices will bounce right back up the other direction.

[owbc]

5 hours ago, Fear The Chorizo said:

The uncertainty of what may or may not come next is the biggest drag - but once that does clear up and if we wind up seeing a better overall economic playing field for US goods to compete in because of it, stock prices will bounce right back up the other direction.

How could the economic playing field for US goods possibly improve on the other side of all of these tariffs? I'm genuinely curious what that might look like. The best case scenario that I can think of is that things to like the Russia economic restrictions and we manage to find new trading partners. 

[BrewerFan]

17 hours ago, Fear The Chorizo said:

The Fed waited far too long to raise rates to try and get a handle on inflation, and even after they did they didn't raise them high enough to actually get prices headed back down - not to just keep slowly increasing, but to actually drop.  Them starting those rate increases from a point of basically zero was still an after-affect of the last bad recession from the housing market crash.  This goes back years, not months - and the market still has a significant amount of a bubble baked into

So they waited too long to raise rates. Ok...lets grant that's the case.

You're going back years not months.

As of last quarter, we were growing the GDP at over 3%, the CPI was down to 2.7% and unemployment has been VERY low for a while now. 

The bubble you're talking about...I don't agree. That's what happens when you have great growth. 

 

The economy was in a great place...and particularly in a great place relative to the rest of the world. 

This is not a correction or a dip(it's getting close to the definition of a crash according to some indexes...Russell -19% is nearly there). And it didn't happen organically. It happened deliberately. With a...foolish plan for blanket tariffs and a cowardly congress that ceded it's authority. That's just another thing we've ignored. Tariffs are meant to be for emergencies or passed through congress. They ceded that power and they also included language to state this session of congress is ONE calendar day so they couldn't actually have a vote or a debate on it. 

 

This wasn't a bubble, the multiples of these companies weren't getting ridiculous(as a whole). Obviously you had some, but you always do. But these companies are growing double digits each quarter, the ones driving the market and the fundamentals of the US Economy aside from the Market were strong.

 

I heard so many times 'This is the worst inflation we've ever seen, nobody has seen inflation this bad.'

We had 10% unemployment and 10% inflation, actual stagflation from Nixon when he froze prices(and wages) and it stayed that way under Ford, Carter and into Reagans years when we started cranking up the deficit spending. 

 

 

The "Recession is coming," people are yelling that constantly and perhaps it would have come. I don't know why we're actively steering into one though. THAT is my issue....

[BrewerFan]

11 hours ago, owbc said:

How could the economic playing field for US goods possibly improve on the other side of all of these tariffs? I'm genuinely curious what that might look like. The best case scenario that I can think of is that things to like the Russia economic restrictions and we manage to find new trading partners. 

I don't agree this will lead to a better "playing field," for the US.

-We're starting trade wars with allies. 
-Tariffs, across the board tariffs and trade wars do not work. We're going back to 1870 for our outline. WE also had REAL cheap labor just a decade before that.

We now live in a global economy now. 

The EU, Canada and Mexico. Those are our targets(as of now, April 2nd could get a whole helluva lot worse). 

Trump signed the damn deal with Canada and Mexico after tweaking NAFTA and declared it the greatest trade deal ever....and now because we import  lot of energy from Canada...oh, and all those Canadian Cartels up there, we're starting a trade war with them?
 

As for the markets bouncing back...yeah, they always do eventually. A Bear market lasts on average 8 months. We're USUALLY in a bull market. Maybe it'll be a year(market gets MUCH more important with the mid-terms coming up) or maybe it's 3 years, 5. I don't know, tariff wars make this a LOT more complicated...which is why I was talking about Smoot-Hawley previously(at LEAST when congress passed that Months BEFORE the '29 crash, it was congress, not just Hoover).

This is causing real pain for people right now. Personally, I think I'll come out of this better. I sold a lot during the "Trump bump," and I'm about 80% back in as of this week and my income doesn't rely on an employer.

I do think the people who've called 90 of the last 2 recessions are going to be right this time...

[LouisEly]

On 1/17/2025 at 8:57 AM, LouisEly said:

The reality is that tariffs don't cause inflation

Last week Fed chair Jerome Powell said any effects on inflation from U.S. President Donald Trump's tariffs would be "transitory."

I highly doubt that the Fed is going to consider the effects of tariffs as justification for raising rates.

[igor67]

Supply chain disruptions were only transitory as well... But to say that raising the cost on cheaper products (aka a tariff) doesn't having any inflationary pressure undercuts any logic to trade and specialization being worthwhile. Of course the economy can adapt over time to new rules that doesn't mean it will be as efficient as before, so Powell's statement is ridiculous.

[BrewerFan]

2 hours ago, LouisEly said:

Last week Fed chair Jerome Powell said any effects on inflation from U.S. President Donald Trump's tariffs would be "transitory."

I highly doubt that the Fed is going to consider the effects of tariffs as justification for raising rates.

To be more accurate, Powell said he didn't know. 

He said they COULD be transitory or temporary...which I would guess would infer he thinks they're going to work something out, but he plainly said they didn't know if they were transitory or not.

 

1 hour ago, igor67 said:

Supply chain disruptions were only transitory as well... But to say that raising the cost on cheaper products (aka a tariff) doesn't having any inflationary pressure undercuts any logic to trade and specialization being worthwhile. Of course the economy can adapt over time to new rules that doesn't mean it will be as efficient as before, so Powell's statement is ridiculous.

 

Well...the reason I think Powell couched it like he did was because he also said the inflation from Covid would be transitory and he's taken...more than a little heat for just how wrong he got that. 

But again, I don't think he knows any better than anyone else how long tariffs will be in place. Obviously if they stay in place, they will not be transitory. You're talking about adding 10-15K to the MSRP of a new car...

[wallus]

How much will the market be down tomorrow?

[homer]

On the bright side, it's my chance to get NVDA below $100!

[owbc]

20% off when I sold in early Feb is my target to start buying the dip. Holding in HYSA until then. Hoping for a sharp drop and a quick reversal of these policies, but if there isn’t a path to a quick reversal I might stay out of the S&P for a while. Tech is getting destroyed since the easiest path to retaliation is against the US service exports. Tim Apple didn’t really think this through. 

[BrewerFan]

On 4/2/2025 at 7:18 PM, wallus said:

How much will the market be down tomorrow?

It was just a footnote. 

Nobody really cares about tariffs. 

Now when the Fed Cuts another 25 basis points, THAT is what really matters. 

Not 54% tariffs on China or...10% tariffs on an UNINHABBITED ISLAND. And when I say uninhabited Island, I mean no humans live there. Penguins do live there. 

 

Every Economist in 1929 warned the US what would happen if they implemented Smoot-Hawley and every Republican since then, every FREE TRADE capitalist have pointed out how damaging tariffs were. 

 

All the same, #47 told Hoover...hold my Beer;

He's merely talking about a footnote though. 

[OldHeidelberg]

23 hours ago, homer said:

On the bright side, it's my chance to get NVDA below $100!

Looks like you will get your chance this morning. Of course, now it is wait and see where the bottom is...

[homer]

2 hours ago, OldHeidelberg said:

Looks like you will get your chance this morning. Of course, now it is wait and see where the bottom is...

Can we get below 90? 

[BrewerFan]

2 hours ago, homer said:

Can we get below 90? 

Heck, I wouldn't be buying until it starts turning around unless you have some of those chain link gloves so that falling knife doesn't get you;

https://youtu.be/YXBwYHQthqo