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Post by anitya on Apr 26, 2024 6:10:57 GMT
But wait, isn’t lowering GDP called “recession”? I realize recession is 2 quarters in a row of negative GDP growth. This is what the Fed was trying to do. Lowering GDP should be called a receding. Then after 2 qtrs, a recession. This is just a decrease in growth rate but still a positive growth. You need 2Qs of negative growth to call a recession. My memory could be faulty but to call a recession, I think it is not enough just having negative GDP growth. I think there are other metrics that are taken into account as well. Check NBER.
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Post by Norbert on Apr 26, 2024 7:45:12 GMT
Hmmm. Core inflation is a high 3.8% and GDP fell last quarter. Not a pretty combination. Given stock valuations and an administration unfriendly to business; two uninspiring presidential candidates plus an already high federal deficit ... a man could be forgiven for feeling bearish on stocks. I do not see this administration as unfriendly to business. The Inflation Reduction Act and The Chips Act both throw billions of dollars toward businesses. I am sure there are other instances as well but those two example were what came to my mind immediately. They were nationally strategic moves and those long term commitments influenced several of my stock and ETF purchases over the past 24 months from an unacceptably high level of MM holdings. As for GDP, it didn't fall at all. It did grow at a slower pace than several previous quarters, though. The higher interest rates did not impair capex of those businesses already awash in cash but the perception of hardship across the board may now influence their valuations in the short term. If those businesses take a temporary breather, so be it. Semantics ... GDP isn't negative, but fell from previous levels. There's no question about the US remaining one of the globe's most competitive nations and I agree about the strategic nature of investments in chips and new energy. However, "throwing billions of dollars" at particular sectors was accomplished with increased deficits and taxes. That may be contributing to sticky core inflation, which is Small Business's biggest complaint. (Anecdotally, I received $1000s in Covid checks, even though I don't need the money and live overseas.) Increased FTC, SEC, and environmental regulation combined with increased social spending and friendliness to trade unions is considered unfriendly to business by some. Maybe I was wrong to state that the administration is unfriendly to business. It's a complex issue.
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Post by Chahta on Apr 26, 2024 11:01:06 GMT
But wait, isn’t lowering GDP called “recession”? R48 reply in bold: No. A reduction in GDP, but still positive, is not a recession. Your next sentence is the definition, AFAIK.I realize recession is 2 quarters in a row of negative GDP growth. R48 reply: Yes.I should have said “lowering GDP into negative growth”.
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Post by Chahta on Apr 26, 2024 11:03:43 GMT
The Fed needs something, anything, anything at all to consider lowering ST rates... and so far they are not getting much. June cut is probably out, which means September at the earliest? Is that what the proverbial tea leaves showing? The "something" is called “the November election”.
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Post by steadyeddy on Apr 26, 2024 13:01:04 GMT
But wait, isn’t lowering GDP called “recession”? R48 reply in bold: No. A reduction in GDP, but still positive, is not a recession. Your next sentence is the definition, AFAIK.I realize recession is 2 quarters in a row of negative GDP growth. R48 reply: Yes.Definitions for "recession" vary depending on who you ask - but NBER (National Bureau of Economic Research) is the formal authority and it defines a recession as two consecutive quarters with negative GDP.
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Post by steadyeddy on Apr 26, 2024 13:03:17 GMT
Today's PCE print further shows inflation is sticky as heck, this can't be bullish for stocks -
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Post by chang on Apr 26, 2024 15:20:18 GMT
Hmmm. Core inflation is a high 3.8% and GDP fell last quarter. Not a pretty combination. Given stock valuations and an administration unfriendly to business; two uninspiring presidential candidates plus an already high federal deficit ... a man could be forgiven for feeling bearish on stocks. Sell in May?
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Post by Mustang on Apr 26, 2024 15:31:14 GMT
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Post by bizman on Apr 26, 2024 16:47:05 GMT
P.S. I didn't vote because I have no idea what's coming. This is me. I can see both sides. Long term technological progress, capitalism, and millions of people working hard every day argue for good things for stocks. But short term it's something like a coin flip.
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Post by Chahta on Apr 26, 2024 16:52:25 GMT
Unemployment is generally part of recession. That is the collateral damage the Fed creates by raising rates to kill the economy.
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Post by acksurf on Apr 26, 2024 17:25:46 GMT
Definitions for "recession" vary depending on who you ask - but NBER (National Bureau of Economic Research) is the formal authority and it defines a recession as two consecutive quarters with negative GDP. No that's not quite correct: www.whitehouse.gov/cea/written-materials/2022/07/21/how-do-economists-determine-whether-the-economy-is-in-a-recession/What is a recession? While some maintain that two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle. Instead, both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data—including the labor market, consumer and business spending, industrial production, and incomes. The National Bureau of Economic Research (NBER) Business Cycle Dating Committee—the official recession scorekeeper—defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” The variables the committee typically tracks include real personal income minus government transfers, employment, various forms of real consumer spending, and industrial production. Notably, there are no fixed rules or thresholds that trigger a determination of decline, although the committee does note that in recent decades, they have given more weight to real personal income less transfers and payroll employment.
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Post by anitya on Apr 26, 2024 20:52:24 GMT
Lowering GDP should be called a receding. Then after 2 qtrs, a recession. This is just a decrease in growth rate but still a positive growth. You need 2Qs of negative growth to call a recession. My memory could be faulty but to call a recession, I think it is not enough just having negative GDP growth. I think there are other metrics that are taken into account as well. Check NBER.A forum member wrote: "According to some reports our elected government changed the definition of recession." I decided to ask Gemini. "A: who defines what is a recession? Gemini: In the United States, there isn't a single official entity that defines a recession. Here's how it works: No fixed definition: There's no universally agreed upon definition of a recession. It's generally understood as a significant decline in economic activity that lasts for a prolonged period. NBER's role: The National Bureau of Economic Research (NBER) is a well-respected private research organization that tracks the business cycle. Their Business Cycle Dating Committee is considered the authority on dating U.S. recessions. NBER's approach: The NBER committee doesn't rely on a single metric like GDP. They analyze a broad set of economic data including employment, real income, industrial production, and sales to determine if a downturn is widespread and significant enough to be classified as a recession. Focus on months, not quarters: While a common rule of thumb is two quarters of negative GDP growth, the NBER takes a more nuanced approach, considering the overall economic health and the duration of the downturn. In essence, the NBER uses its expertise to analyze various economic indicators and declare recessions based on a comprehensive understanding of the economic climate. Their pronouncements are widely accepted by economists, policymakers, and the media." Though we want to maintain our cocktail party atmosphere, as a self moderating forum, I think it would be nice if the forum gets back to running tighter discussions about serious topics. Too casual conversations about serious topics can lead first to gossip and then to conspiracy theories.
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Post by retiredat48 on Apr 26, 2024 22:32:45 GMT
Today's PCE print further shows inflation is sticky as heck, this can't be bullish for stocks - steadyeddy,...I will mildly disagree here. Let's not lose sight of Investing 101: The cure for any inflation is to OWN STOCKS (businesses)...not sell stocks. Inflation in the long run is bullish for stocks. Rising prices are estimated to have contributed about 40% of overall stock market's rising prices over the many decades. It's simple. Double prices, you double monies being spent, meaning you double Visa and Mastercard throughput of charges, meaning they continue to take their 0.25% slice, meaning they at least double earnings over this time, and stock prices rising accordingly. Don't lose sight of the prize! R48
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Post by steadyeddy on Apr 26, 2024 22:54:10 GMT
Today's PCE print further shows inflation is sticky as heck, this can't be bullish for stocks - steadyeddy ,...I will mildly disagree here. Let's not lose sight of Investing 101: The cure for any inflation is to OWN STOCKS (businesses)...not sell stocks. Inflation in the long run is bullish for stocks. Rising prices are estimated to have contributed about 40% of overall stock market's rising prices over the many decades. It's simple. Double prices, you double monies being spent, meaning you double Visa and Mastercard throughput of charges, meaning they continue to take their 0.25% slice, meaning they at least double earnings over this time, and stock prices rising accordingly. Don't lose sight of the prize! R48 retiredat48, you are spot on with your assessment - but over the intermediate/longer term. My point, I should have explained better, is that the near-term stock valuations assumed interest rate cuts. At the beginning of the year, it was 6 cuts and now may be none (or one) at best. Thus not bullish for stocks.
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Post by retiredat48 on Apr 27, 2024 15:07:59 GMT
steadyeddy ,...I will mildly disagree here. Let's not lose sight of Investing 101: The cure for any inflation is to OWN STOCKS (businesses)...not sell stocks. Inflation in the long run is bullish for stocks. Rising prices are estimated to have contributed about 40% of overall stock market's rising prices over the many decades. It's simple. Double prices, you double monies being spent, meaning you double Visa and Mastercard throughput of charges, meaning they continue to take their 0.25% slice, meaning they at least double earnings over this time, and stock prices rising accordingly. Don't lose sight of the prize! R48 retiredat48 , you are spot on with your assessment - but over the intermediate/longer term. My point, I should have explained better, is that the near-term stock valuations assumed interest rate cuts. At the beginning of the year, it was 6 cuts and now may be none (or one) at best. Thus not bullish for stocks. I maintain my same position. Market has lost complete interest in fed decisions. What did market do when we went from 6 cuts to 2-3 this year...it WENT UP! Fed rate decisions fully discounted already. But see my next post on an interesting development. R48
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Post by retiredat48 on Apr 27, 2024 15:12:18 GMT
Here's an interesting tidbit posted by yogi re Barron's weekly:
"TREASURY accounts are overflowing with tax receipts around $930 billion vs $750 billion projected. YELLEN may release $200 billion into the economy and a dramatic announcement is expected on May 1 AM just a few hours ahead of the (almost) no-action FOMC Statement (2pm Eastern) and POWELL’s presser (2:30pm Eastern). The FOMC may reduce the Treasury QT by half to -$30 billion/mo (vs -$60 billion/mo now) but keep the MBS QT the same (-$35 billion/mo). These combined liquidity moves may lower the bond yields and support the stock market ahead of the US elections and provide the Fed some cover for saying that it really isn’t political."
------------------------------------------ Was wondering if the fed would reduce rates in Sept, being so close to election. But the above moves could also lower rates. Yellen has become quite political IMO and Biden could play off the lower rates scenario.
10 yr approaching 5% is a great rate to buy!
R48
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Post by steadyeddy on Apr 28, 2024 16:24:43 GMT
Oh Boy... bullishness on stocks got twice as many votes as bullishness on bonds. I am taking the contrarian bet -
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Post by fishingrod on Apr 28, 2024 16:33:16 GMT
Oh Boy... bullishness on stocks got twice as many votes as bullishness on bonds. I am taking the contrarian bet -
So the real contrarian bet is Bearish on bonds. Right?
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Post by uncleharley on Apr 28, 2024 18:44:19 GMT
Maybe. I would consider a short sale on equities to be contrarian.
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Post by steadyeddy on Apr 28, 2024 20:24:28 GMT
Oh Boy... bullishness on stocks got twice as many votes as bullishness on bonds. I am taking the contrarian bet -
So the real contrarian bet is Bearish on bonds. Right?
fishingrod, I was thinking "bullish on bonds," since the winning vote count is in favor of "bullish on stocks."
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Post by fishingrod on Apr 28, 2024 20:32:29 GMT
So the real contrarian bet is Bearish on bonds. Right?
fishingrod , I was thinking "bullish on bonds," since the winning vote count is in favor of "bullish on stocks." I knew you were Bullish on Bonds, as I am, But we could be wrong. That would be the really, really contrarian bet.
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