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Thib-a-doe Tiger
LSU Fan
LaTour and in BRgetthenet's head
Member since Nov 2012
27335 posts

re: Dow down 700 pts
What happened baw? I’m catching up on shows



ETA: forgot what tomorrow is
This post was edited on 12/4 at 8:56 pm


LSUcam7
SRB FL
Member since Sep 2016
1387 posts
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re: Dow down 700 pts
quote:

bought a triple levered inverse index etf today based on that poster predicting the crash


2% of the time it works every time.


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TigersFan64
LSU Fan
Baton Rouge, LA
Member since Oct 2014
4057 posts

re: Dow down 700 pts
The yield curve inversion preceeded the Great Recession and other previous downturns in financial markets. We are just about in another situation where we have an inverted yield curve. Many economists put a lot of stock in it as a predictor of market downturns.


tigerpawl
LSU Fan
Can't get there from here.
Member since Dec 2003
12749 posts

re: Dow down 700 pts


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slackster
Stanford Fan
Houston
Member since Mar 2009
50542 posts

re: Dow down 700 pts
quote:

The yield curve inversion preceeded the Great Recession and other previous downturns in financial markets.


True, but that downturn was anywhere from 17-31 months out after inversion. That's a substantial amount of time to still make money post yield curve inversion, and it's more than a year gap you could be too early/late.

As a tool to use regarding investment decisions, it's shoddy at best.


LSUcam7
SRB FL
Member since Sep 2016
1387 posts
 Online 

re: Dow down 700 pts
Not a timing indicator, it’s a condition indicator.


slackster
Stanford Fan
Houston
Member since Mar 2009
50542 posts

re: Dow down 700 pts
quote:

Not a timing indicator, it’s a condition indicator.


Even still, what good is a condition indicator with no predictive power?

10y minus 3-month spreads are at 60 basis points. The last 3 times they fell from 150 basis points to 60, the market rallied 154% cumulatively (16.9% annualized), 32% cumulatively (8.5% annualized), and 26.5% cumulatively (11.5% annualized) from breaking that support level to actual recession.

Yield inversion is essentially hogwash as far as I'm concerned. It's a tiny part of a much larger dynamic.


Thib-a-doe Tiger
LSU Fan
LaTour and in BRgetthenet's head
Member since Nov 2012
27335 posts

re: Dow down 700 pts
quote:

Yield inversion is essentially hogwash as far as I'm concerned. It's a tiny part of a much larger dynamic.



I think it means even less when you consider all the instantaneous information that markets are able to react to now. Movements in the yield curve happen way more quickly than they did 20,30,80 years ago

2 percent daily movements in the market are the new norm


Hussss
Auburn Fan
Living the Dream
Member since Oct 2016
3561 posts
 Online 

re: Dow down 700 pts
Baby boomers have the majority of the money out in the economy (they had plenty of disposable income because their cost of living was so low). They don't have to spend (velocity has slowed to a crawl) like younger people do and are net sellers of stocks for the forseeable future. Liquidity in these markets are at all time lows. We have to ask ourselves: where will the net buyers come from? If central banks don't start buying stocks, we will collapse.

Personally, I am buying volatility on any weakness.

Good luck everyone
This post was edited on 12/5 at 1:27 pm


Shepherd88
Member since Dec 2013
2329 posts

re: Dow down 700 pts
quote:

If central banks don't start buying stocks, we will collapse.


That’s hilarious


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Shankopotomus
New Orleans Saints Fan
Who Dat Shack
Member since Feb 2009
18911 posts

re: Dow down 700 pts
I do think you'll see another round of QE to inflate the system once more ... the question is will Trump's rhetoric about The Fed actually have an impact on them in terms of acting, i.e. will they hold off during election cycle to allow down economy and hurt Trump's re election....


Thib-a-doe Tiger
LSU Fan
LaTour and in BRgetthenet's head
Member since Nov 2012
27335 posts

re: Dow down 700 pts
quote:

They don't have to spend (velocity has slowed to a crawl) like younger people do and are net sellers of stocks for the forseeable future. Liquidity in these markets are at all time lows.



Wut


Shepherd88
Member since Dec 2013
2329 posts

re: Dow down 700 pts
Inflate what system? There is no inflation.


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Hussss
Auburn Fan
Living the Dream
Member since Oct 2016
3561 posts
 Online 

re: Dow down 700 pts
Demographics are a HUGE problem not just here but globally.

People just aren’t having children like they used to. Just can’t afford it.

It takes more and more people borrowing and spending to keep the ponzi going. This is the exact reason that the banking system wants open borders which equal more debt slaves to keep it all going. Every country fighting over crumbs of a rapidly shrinking pie.
This post was edited on 12/5 at 3:05 pm


Thib-a-doe Tiger
LSU Fan
LaTour and in BRgetthenet's head
Member since Nov 2012
27335 posts

re: Dow down 700 pts
How can we have the largest demographic be net sellers, and at the same time have a liquidity problem? Someone is obviously buying


Hussss
Auburn Fan
Living the Dream
Member since Oct 2016
3561 posts
 Online 

re: Dow down 700 pts
PRogrammed algos are buying (until they aren’t and bids dry up). They can and will pull bids quickly when we get a 2008 type volatility spike which is coming very soon.

This is what happens when the Fed scared out short sellers for so long.

You need them to buy to cover (liquidity for sellers wanting out).

Most of the holdings are in passive investment vehicles like ETFs.

You will see the biggest flash crash you can imagine.
This post was edited on 12/5 at 3:49 pm


Shepherd88
Member since Dec 2013
2329 posts

re: Dow down 700 pts
The amount of volume that’s traded in the ETF’s secondary market is insane. They likely won’t ever have to touch the primary market, so liquidity is definitely not an issue.


LSURussian
LSU Fan
Member since Feb 2005
110102 posts

re: Dow down 700 pts
quote:

If central banks don't start buying stocks, we will collapse.
Then I guess we’re going to collapse because the Federal Reserve, by law, cannot buy stocks. It can buy corporate bonds but not equities.


Hussss
Auburn Fan
Living the Dream
Member since Oct 2016
3561 posts
 Online 

re: Dow down 700 pts
The Fed is withdrawing (quantitative tightening) 60B a month.


Hussss
Auburn Fan
Living the Dream
Member since Oct 2016
3561 posts
 Online 

re: Dow down 700 pts
Exactly


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