Economics Corner: Markets and the global state of play

[El Presidente]

We are blessed to have a wide range of knowledgeable members on FOH from a diverse array of backgrounds. 

There appears to be an element of "nervousness" in global markets and economies. The US has largely come out of the covid period stronger than the rest of the West but even then, there are signs of strain. Asia has it's own issues. Geoploitics is always a concern and the current status is only adding to market nervousness. 

Time to bunker down?, it's just a blip?, media hype?

How are things looking in your neck of the woods? 

From your perspective, crystal ball the next 12 months for us 

[Groucho.]

All of this is just my opinion, not financial advice for anyone....

There is no doubt there is a mixture of fear, profit taking and overall correction. Some entities are rebalancing and taking profits. Nothing new.

I used to be the eternal bear and have converted to all cash and then back to the stock market twice in the last 10 years (2017 and then 2020 before the pandemic - both during that big bull run from 2008 - my mistake)

However I see where we are now, this very young down turn, even if it lasts for the next 12 months as it did in 2022 will only clobber short term investors that need to pull money out of the market -or- those retirees required to take Minimum Required Distributions (a USA thing) resulting in stock or mutual fund sales in a down market.

Long term investors have nothing to worry about, why? Because technology in all forms isn't going anywhere and is very profitable. Couple that with globalization (outsourcing tech labor) by every country's Top 1000 companies and there is even more profit/earnings for all companies' stock price - not just the tech sector.

This is bad for employment and wages in first world countries - good for 1.) the financial markets overall and 2.) good for countries benefiting from the outsourcing (BRICS) due to the fact that they are selling their labor. Inflation in these countries and a leveling off of their currencies will probably continue for another 15-20 years, if not more. Couple that with a slow implementation of retiring Boomer labor that will be replaced by low cost new labor or automation, or just not replaced at all and large corps continue freeing up payroll resulting in for more profit/earnings = higher and higher stock market.

SP500, Nasdaq and most corresponding ETFs are heavily weighted in the tech sector.

How long will this current pullback last? a month or two. Even if it lasts a year, who cares? Keep dollar cost averaging in. Your money is safe invested in the stock market becuase it always has been. Corporations control the world and politicians will kow tow to those corps in return for contributions and other kickbacks.

The corporations and stock market always wins. Be on their side, stay on their side.

Fear and talk of crashes and such sells a lot of newspaper, gets a lot of clicks and makes you tune into those news shows.

I am no longer the eternal bear.

To answer Rob's question, my gambling sense says this is short lived and that once the US election is over, or a clear winner is known before the election, the stock market will go back up.

[Arabian]

In crisis wealth is made.. people who got cash aside, i believe it's their opportunity now to buy stocks as they are taking a dive down. (not a financial advice for sure, I'm far from it) 

Every morning the past a few days i became attached to the trading monitor investing heavily in the local stock market (Saudi Aramco, STC, banks, petrochemicals, cements companies, insurance, human resource companies, retail...etc) companies that pay dividends and at all time low since covid days. I'm not sure when we are getting this sales discount again?

Also a tiny bit of U.S ETFs.

Warren Buffett selling his Apple stocks might spooked many people, but I'm optimistic, I gotta be thou 😆

[BoliDan]

[NSXCIGAR]

Summer sell off. Happens most years. Election year so probably won't be a disaster before 2025. In fact I'd expect a bounce before Nov in fact. 

[El Presidente]

17 minutes ago, NSXCIGAR said:

Summer sell off. Happens most years. Election year so probably won't be a disaster before 2025. In fact I'd expect a bounce before Nov in fact. 

Job numbers were a suprise on the downside. The first  AI reality/expectation check underway?  There is a ton of money internationally looking for a home and it may be plastering over some unpleasant truths. 

[NSXCIGAR]

2 minutes ago, El Presidente said:

Job numbers were a suprise on the downside. The first  AI reality/expectation check underway?  There is a ton of money internationally looking for a home and it may be plastering over some unpleasant truths. 

Don't disagree. I'm only talking about the next 90-120 days. After that things could get dicey. Unpleasant truths abound.

[MrBirdman]

1 hour ago, NSXCIGAR said:

Don't disagree. I'm only talking about the next 90-120 days. After that things could get dicey. Unpleasant truths abound.

I agree. I think there won’t be anything dramatic before the election unless there’s really bad economic data or the Fed throws a curveball, although the tech and chip stocks might sag. Personally, I’m just cashing out part of my NVIDIA stake but that is mostly to rebalance my portfolio since the gains there have thrown it out of wack a bit. Otherwise for now I’m sitting tight. 

[Namisgr11]

The U.S. economy has been remarkably resilient. Despite the treasury balance sheet being shrunk by around $2 trillion, and some economists predicting that a recession was likely before the end of 2023, here we are with a nicely growing GDP for 1H24, a taming of the inflation rate to the point that the Federal Reserve will finally begin to lower short-term interest rates, and a labor market that is only now showing the first rumblings of slight weakening. With average wage increases for the American worker exceeding the cumulative amount of price inflation over the past three years, and the equity markets having gone through another strong period, most economists have been classifying the economy as strong. It's been an especially fortunate time to be a retiree with some savings, because the opportunity to make income with minimal risk (the short-term treasury and money markets) that exceeds the rate of inflation after taxes has been around for nearly two years now.

What the future holds will unfold before a huge spread of economist and other pundit speculations. But with so many people having misjudged the recent past and mischaracterized the state of the economy relative to the economist community itself, I have nothing of substance to add to the speculations. My only expectation is that, at some point in the near-term, the US equities markets will finally go through a long-awaited and anticipated correction.

[joeypots]

On 8/9/2024 at 6:38 AM, El Presidente said:

Job numbers were a suprise on the downside. The first  AI reality/expectation check underway?  There is a ton of money internationally looking for a home and it may be plastering over some unpleasant truths. 

And then Job #s report a few days later and surprise to the up side. S&P 500 has best day in what? 18-24 months? Buffetts sells half of Berkshires Apple. It’s still Berkshires largest holding, just half as big. 

This afternoon the 500 index is off of all time highs about 5-6% but is still up about 20% or 1000 points in the last 12 months. In my lifetime of 65 years every time there has been a big drop in equity values there has been a recovery. 

The business news talking about interest news makes me want to stick an ice pick in my ears. It’s all noise. There are so many reports and talking heads and journalists and none of them can tell the future. There are loads of pessimistic talking points and optimistic ones as well. So far, holding the USA market has been a winner. Invest monthly on every pay day like religion. 500 index, some bonds, some cash, buy a little something( AAPL, NVDA, ect..) to make the whole thing interesting if you like. Let time be your friend, let the pros trade. Go do your job. When you start to sense that time is getting short, keep more cash and bonds, less stock. It’s not a competition, it’s about saving and compound interest/returns. 

I try to remember what my old man once told me. 

"I never buy at the bottom and I always sell too soon.” This was Baron Nathan Rothschild's advice. 

A fookin’ Rothschild said that. 

[Fireball]

I don’t know much. But where I’m at in the US, everyone is working, inflation is tamed, and the housing market is stable. Employers can’t find enough workers. 

I would only be concerned if some large scale global conflict started. Despite all of the global issues, I don’t see that happening either. 

[LordAnubis]

At every market peak I have transferred the entirety of my super (pension fund for the non Australians) to cash and waited for the crash. It hasn’t guided me astray yet. I’m waiting for asx200 to retreat to 6800.