2022 investing thread

[FireFoley]

China is big and has a huge role in the world economy but to me it is too difficult to truly understand what goes on there. I don't believe their numbers b/c they can manipulate anything and you won;t know it. If they don't like something, they will just take it over. Real estate developers going belly up, the government will just take them over and not pay. Who knows? I always figured that their GDP was probably half what they said and their desire to expand the middle class was BS. They want total control of their people, hence the prison lockdowns and want most all to be at the poverty level. For me I stick to what I think I know or at least have an educated guess about. China I have neither.

 

[Bernardo de la Paz]

China is big and has a huge role in the world economy but to me it is too difficult to truly understand what goes on there. I don't believe their numbers b/c they can manipulate anything and you won;t know it. If they don't like something, they will just take it over. Real estate developers going belly up, the government will just take them over and not pay. Who knows? I always figured that their GDP was probably half what they said and their desire to expand the middle class was BS. They want total control of their people, hence the prison lockdowns and want most all to be at the poverty level. For me I stick to what I think I know or at least have an educated guess about. China I have neither.

So you are saying you don't own any AAPL?

 

[FireFoley]

So you are saying you don't own any AAPL?

I do not not own any Apple, never have and never will. but not b/c of China, but for a different reason.

 

[soflagator]

As if things weren’t bad enough, you’ve now got retail in the tank after back-to-back earnings whiffs from WMT and TGT, sending a message that recession is just around the corner if we’re not in one already.

It’s fairly hilarious to listen to all the hawk talk from the Fed. Even these clowns know they’re only a couple bad steps away from having to consider a policy reversal. Pick your poison, boys.

Even a company like Ulta, which has been a darling of numerous analysts recently wasn’t even given to the 26th to announce their earnings. It’s just assumed that they will be well off and they get pummeled. It’s tempting since most of the negative has been baked in and there’s probably a decent chance it’s overdone. But I can’t bring myself to do it.

Esther George was reiterating today their stance that they’re giving no consideration to the price of stocks. Not sure how they balance this.

 

[Bernardo de la Paz]

Esther George was reiterating today their stance that they’re giving no consideration to the price of stocks. Not sure how they balance this.

They'll keep raising rates until inflation goes down or unemployment goes way up.

 

[Bernardo de la Paz]

This is an interesting shot at Powell.

The Fed ‘overshot dramatically’ on inflation: hedge fund founder

Insinuates that he wasn't being honest when he said inflation was transitory and was waiting to get reappointed before raising rates. Saying that's why it was so late.

 

[78]

Even a company like Ulta, which has been a darling of numerous analysts recently wasn’t even given to the 26th to announce their earnings. It’s just assumed that they will be well off and they get pummeled. It’s tempting since most of the negative has been baked in and there’s probably a decent chance it’s overdone. But I can’t bring myself to do it.

Esther George was reiterating today their stance that they’re giving no consideration to the price of stocks. Not sure how they balance this.

For the time being, they won’t. They’re working with data, which is always after the fact. The market, a forward indicator, is telling us by ways of billions of transactions where it thinks the economy will be in six months. It clearly doesn’t like the view.

How much reverse damage for the Fed to be inspired to step in and alter its view? That’s where the windshield and rear-view mirror come in conflict. A reminder. QT hasn’t yet begun. I’m openly asking. I don’t know.

In relative terms, even a hint of change of stance is big when it comes to the Fed. It’s this big freighter out at sea navigating the circumstances.

 

[Bernardo de la Paz]

QT hasn’t yet begun.

QT began when they started raising rates.

 

[78]

QT began when they started raising rates.

Wrong. It starts June 1. You just love to argue inane points.

 

[Bernardo de la Paz]

Wrong. It starts June 1. You just love to argue inane points.

Quantitative tightening - Wikipedia


Quantitative tightening (QT) (or quantitative hardening) is a contractionary monetary policy applied by a central bank to decrease the amount of liquidity within the economy. A central bank implements quantitative tightening by reducing the financial assets that it holds in its balance sheet. This is accomplished by no longer buying financial assets from commercial banks and other financial institutitions to replace the securities that have matured.[1] The Central bank can also take this a step further by selling the financial securities (on its balance sheet) on the open market.

 

[78]

Quantitative tightening - Wikipedia


Quantitative tightening (QT) (or quantitative hardening) is a contractionary monetary policy applied by a central bank to decrease the amount of liquidity within the economy. A central bank implements quantitative tightening by reducing the financial assets that it holds in its balance sheet. This is accomplished by no longer buying financial assets from commercial banks and other financial institutitions to replace the securities that have matured.[1] The Central bank can also take this a step further by selling the financial securities (on its balance sheet) on the open market.

Very good. You just described the taper, or deceleration, process.

I’m talking about tightening.

 

[78]

With all due respect Bernie, your OCDism is a bit out of control, don’t ya think? But if you must …

 

[Concrete Helmet]

I thought they quit buying MBS back in November but I might have misunderstood that for slowing down the purchases of MBS.
The way I see it they will only be able to tighten to the point where the zombie companies start to tap out then the "full employment" mandate will kick back in. I've also heard there is something like 1.5 trillion in a special facility at the Treasury that will be the next pile of cocaine once the script is flipped.

 

[Concrete Helmet]

A pretty good summary of what I mentioned above.
The Fed Still Hasn't Fired their Secret Weapon - YouTube

 

[78]

I thought they quit buying MBS back in November but I might have misunderstood that for slowing down the purchases of MBS.
The way I see it they will only be able to tighten to the point where the zombie companies start to tap out then the "full employment" mandate will kick back in. I've also heard there is something like 1.5 trillion in a special facility at the Treasury that will be the next pile of cocaine once the script is flipped.

It’s the difference between selling assets versus no longer buying.

 

[CaribGator]

the MOAC is coming..

The Dow is on its longest weekly losing streak since 1923 - CNN

 

[Concrete Helmet]

Ya know the more I think about and study about this situation, both the economy and markets, the more I realize that even people who like to claim they are "experts" on macro have abandoned their predictions and analysist from 3-6 months ago. Both Bulls and Bears. Most seem to be moving the goalpost more than Pilot in the Vaccine thread....

The truth is even the Fed has never been in this exact scenario. I think they not only painted themselves into a corner by waiting a little too long to tighten, I also think the way the CPI and Labor statistics have been cooked over the last 20-30 years is coming back to haunt them. Ever watch someone lie themselves into a trap?

There are 3 main factors that the Fed has never had to deal with at the same exact time....
Obvious money supply expansion from the Pandemic.
Global supply chain disruption.
The worst Energy policy ever.

Typically tightening and raising rates upward puts a damper on monetary expansion(or at least in the short term).
Typically after tightening a global supply chain shortage reverses due to favorable trade exchanges(meaning global markets catch up to us)
Energy or the 3 combined are a wild card. I know in the 70's we had energy crisis but I don't remember there being a supply chain crisis?
I know there was some inflation caused by money printing too but not neary on the level of the last 2 years.

Given the set of circumstances above we could be looking at a much different animal than recessions in the past. Foreign markets like Europe and even China look to be years behind us in recovery which could turn out to be a VERY bad thing prolonging this sh!tshow for years to come as well as a totally inflexible Energy policy at least for the next 2 years will contribute to the mess.

 

[Bernardo de la Paz]

With all due respect Bernie, your OCDism is a bit out of control, don’t ya think? But if you must …

Really I'm just picking on you because you represent yourself as an expert, getting a little condescending at times, which is amusing to me because from what you post it seems like you only have a surface level understanding of how things work.

Take this example. I thought that you were wrong on when QT was starting because you don't understand how QT is actually implemented. While I was wrong about QT having already started, I was clearly right that you don't really know how it works. I posted a copy and paste of the definition of QT and in a stunning display of willful ignorance you called it a description of tapering. The correct response would have been to say that, no, while we have stopped adding new securities to the balance sheet by creating new money, we are still reinvesting the proceeds from the securities we have. That bit of data is also in the articles you posted and apparently read (and missed), just not in the part you highlighted.

Now you might think it's inane to come on a message board and challenge what each other says to build a better common understanding. Personally I would think you'd really want to understand this specifically given what you do for a living. But I guess to each his own.

 

[URGatorBait]

Ya know the more I think about and study about this situation, both the economy and markets, the more I realize that even people who like to claim they are "experts" on macro have abandoned their predictions and analysist from 3-6 months ago. Both Bulls and Bears. Most seem to be moving the goalpost more than Pilot in the Vaccine thread....

That's because experts, are experts on trends, not psychics ;)

 

[78]

Really I'm just picking on you because you represent yourself as an expert, getting a little condescending at times, which is amusing to me because from what you post it seems like you only have a surface level understanding of how things work.

Take this example. I thought that you were wrong on when QT was starting because you don't understand how QT is actually implemented. While I was wrong about QT having already started, I was clearly right that you don't really know how it works. I posted a copy and paste of the definition of QT and in a stunning display of willful ignorance you called it a description of tapering. The correct response would have been to say that, no, while we have stopped adding new securities to the balance sheet by creating new money, we are still reinvesting the proceeds from the securities we have. That bit of data is also in the articles you posted and apparently read (and missed), just not in the part you highlighted.

Now you might think it's inane to come on a message board and challenge what each other says to build a better common understanding. Personally I would think you'd really want to understand this specifically given what you do for a living. But I guess to each his own.

My friend, you made a fundamentally flawed statement about QT by suggesting we had already arrived and then, insult to injury, doubling down on it. I understand you’re embarrassed and perhaps frustrated, but you have only yourself to blame. You made a similar misstatement a week ago when I had to correct you. Rate hikes and the unwind don’t necessarily start together. (Oh gosh, you’ll probably try be take me to task over the use of unwind.) We aren’t in QT yet, either, although that should be quite apparent by now.

So now you want to argue that I don’t understand QT? Really? That’s pretty funny coming from you.

I apologize for sounding condescending. I had to poke you back after the dislike and facepalm. I’ll work on it. I’m trying to better myself as I get older. Being a jerk is not something I am proud of. You could stand to work on that, too.

Mostly, I just want you to know in plain terms that I really don’t give a f*ck for silly little arguments like this.