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KillTheGophers
Texas Fan
Nawtheastlouisiana
Member since Jan 2016
3144 posts

re: There are some major issues lurking in the US financial markets
He is not a moron.


And to think a president has any real power over the economy or quantitative measures is really naive.



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Doc Fenton
LSU Fan
New York, NY
Member since Feb 2007
52607 posts

re: There are some major issues lurking in the US financial markets
Are you still holding those puts?


Doc Fenton
LSU Fan
New York, NY
Member since Feb 2007
52607 posts

re: There are some major issues lurking in the US financial markets
This time around we saw a local peak in the 30-year at around 3.46% on Friday, 11/2, and a climb back to a local peak for the S&P 500 on Wednesday, 11/7, but nothing as pronounced as the unfolding from February this year, as interest rates have remained relatively elevated, as the global demand just hasn't been there to meet increasing supply.

I increased my holdings in SPXU a little bit, but I'm still waiting on a few rallies to transpire before going in more. I think we've now reached the stage where "buy on the dip" is near dead, and "sell on strength" is becoming the new buzz phrase.

For the earlier parts of this year, market selloffs have mostly been related to expected Fed hikes or trade spats, and trotting out Larry Kudlow to offer promising hints on China, or jawboning the Fed a little bit, has been enough to trigger rallies to change the market direction. I think we'll see a little bit more of that in coming weeks, but the effects will start to dwindle. Then it'll be time to prepare for much steeper losses.


Vols&Shaft83
South Carolina Fan
Throbbing Member
Member since Dec 2012
63379 posts
 Online 

re: There are some major issues lurking in the US financial markets
How steep we talking, Doc?


Shepherd88
Member since Dec 2013
2329 posts

re: There are some major issues lurking in the US financial markets
Agreed, unless a big time deal comes through with China. Which is also very possible. Then you may see the markets soar.


b-rab2
LSU Fan
Lafayette
Member since Dec 2005
11599 posts

re: There are some major issues lurking in the US financial markets
quote:

Are you still holding those puts?



I am. Currently holding CHRW puts also.

Been in and out of NVDA puts and FB puts..
This post was edited on 11/20 at 4:25 pm


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Doc Fenton
LSU Fan
New York, NY
Member since Feb 2007
52607 posts

re: There are some major issues lurking in the US financial markets
That's definitely the biggest risk for anyone trying to short too early.


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Doc Fenton
LSU Fan
New York, NY
Member since Feb 2007
52607 posts

re: There are some major issues lurking in the US financial markets
I'm expecting something in the range of 1,000 to 1,500 for the S&P 500 as a bottom over the next bear market cycle.


1609tiger
Member since Feb 2011
1524 posts

re: There are some major issues lurking in the US financial markets

The Morons are the people who just put idiots like Maxine Waters in charge of Congressinal committees. The market has tanked since her “ we’re coming after the banks” comment. No responsible person says something like that.


LSUtoOmaha
LSU Fan
Nashville
Member since Apr 2004
24502 posts

re: There are some major issues lurking in the US financial markets
I am. Also put some money in FNGU (3x inverse fang).

B-rab honestly has the best idea. Facebook is a disaster of a company and will implode even without market headwinds.


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USA
Member since 2001
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fallguy_1978
LSU Fan
Half mile from St George
Member since Feb 2018
7950 posts
 Online 

re: There are some major issues lurking in the US financial markets
quote:

The Morons are the people who just put idiots like Maxine Waters in charge of Congressinal committees. 

She can barely speak a coherent sentence.


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52
Shepherd88
Member since Dec 2013
2329 posts

re: There are some major issues lurking in the US financial markets
So S&P at 1500 is roughly another 37% lower from here. Curious as to how you come to that figure since that would be much more than a correction and more of a collapse.

There has to be MAJOR economic failures to reach that magnitude.


Doc Fenton
LSU Fan
New York, NY
Member since Feb 2007
52607 posts

re: There are some major issues lurking in the US financial markets
Not necessarily. You can call it whatever term you like, but the degrees of overvaluation previously observed only in 1929 have now occurred for the 2nd time in the past two decades (with a housing crisis between the two). I'm simply taking the best long-term valuation indicators out there, and seeing a likely 1/2 to 2/3 fall from the peak at around 2,940.91, based on what happens with similar deviations from the norm.

I know that the past two times the S&P 500 only dropped about 50-58% from the peak, but a lot of that is attributable to the tactics the Fed had at its disposal to postpone the full effects of the ongoing corrections. The Fed will be unable to soften the blow the same way this time around (although it will still be able to soften the blow).

There is also a solid macroeconomic narrative that supports an intuitive business reason to back up the statistics. There is too much low-quality corporate debt relative to the size of the economy, and with interest rates so low for so long, there's no good way to come back up without destabilizing the whole system. Plus you have falling unemployment and temporary stimulus that's been driving recent macroeconomic growth that can't keep going, and demographic headwinds in terms of the size of the overall labor force. On the corporate earnings side of the story, you have not enough gross domestic investment, Wall Street pumping unrealistic revenue growth projections, an over-reliance on passive investing strategies as hedge funds lose popularity, and a reversion to the mean that's occurring in the balance between corporate profit margins and wages. Against all this, you have global equities entering into bear markets around the world, FAANG and cryptocurrencies falling out of favor, and a U.S. housing sector that is starting to seriously slump (based in part on falling foreign demand from China and elsewhere) bringing an end to the wealth effect from home and stock prices. So a reasonable mechanism for the drop exists to back up the statistical argument.

This doesn't necessarily imply an economic collapse. The Fed will likely turn more dovish and revert to near-ZIRP again. More QE will go into effect. Life will go on. But first, asset prices must drop.


Shepherd88
Member since Dec 2013
2329 posts

re: There are some major issues lurking in the US financial markets
Bro, there’s just way too much in there that I disagree with and can show data against. I’d love to have a beer and discuss all that but for now, agree to disagree.


LSUtoOmaha
LSU Fan
Nashville
Member since Apr 2004
24502 posts

re: There are some major issues lurking in the US financial markets
The SP500 Price Earnings Ratio is 30.8% higher than its historical median.

Household debt to GDP is 0.773, which is 25% higher than the historical median.

There is a lot of other stuff at play, but basically we have moderately high P/E and high household debt at the same time.

A lot of companies also have floating interest rates, which make already high debt levels even tougher to pay off.


Shepherd88
Member since Dec 2013
2329 posts

re: There are some major issues lurking in the US financial markets
quote:

A lot of companies also have floating interest rates, which make already high debt levels even tougher to pay off.


No, a lot of small cap companies have floating interest rates.

CAPM models (which show valuations compared to 10 yr treasury rates) show were at least 20% undervalued still.

Also, yes household debt is at record levels, but so is household net worth. And debt to net worth is at the lowest levels it’s ever been.
This post was edited on 11/20 at 8:44 pm


zatetic
Missouri Fan
Member since Nov 2015
3596 posts

re: There are some major issues lurking in the US financial markets
quote:

the Fed


How much of the stock market is the Fed pump? Or has the feds tom foolery some how worked its way out of the market pricing?


athenslife101
Georgia Fan
Athens
Member since Feb 2013
11639 posts

re: There are some major issues lurking in the US financial markets
It’s all a big pool of money that will work itself out one way or the other.


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athenslife101
Georgia Fan
Athens
Member since Feb 2013
11639 posts

re: There are some major issues lurking in the US financial markets
A lot of emerging markets have floaters too. They suck. And factored. And dirty priced.mexican bonds are just annoying to deal with


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lynxcat
Rutgers Fan
Member since Jan 2008
19790 posts

re: There are some major issues lurking in the US financial markets
quote:

Facebook is a disaster of a company and will implode even without market headwinds.


I don't really get the whirlwind of hate on FB in the last few months. I don't believe most of the 'election interference' talking points and I think the privacy issues are overblown. They have some things to sort out but the ROI of social media ads, led by Facebook and Instagram are going to continue to outpace every other provider.

Owning Instagram will be Zuck's saving grace.


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