I find the soothing talk a little scary

[rpadebet]

Ok, that was a really fuckin' ugly way to end Tuesday trading.

 

What happens in China market tonight will be entertaining. they cut the rate as requested/demanded by the market. Now if it drops a further 10%, then are we going to see china do QE? Will fed have the balls to raise rates in a month? or will they fold and go for QE4?

 

We live in interesting times...

[rpadebet]

I am seeing if they will accept me being long the inverse ETFs!

 

Those are horrible. Don't do it.

 

I know but you have any other ideas how I can be short but appear to be long?

 

They wouldn't accept me shorting SPY puts last year. I had to explain to them I am actually going long by doing it.

[original mungerville]

Ok, that was a really fuckin' ugly way to end Tuesday trading.

 

What happens in China market tonight will be entertaining. they cut the rate as requested/demanded by the market. Now if it drops a further 10%, then are we going to see china do QE? Will fed have the balls to raise rates in a month? or will they fold and go for QE4?

 

We live in interesting times...

 

The reason this could get ugly is the Fed can not do a uturn immediately towards QE4. First they are going to come out and say something professional sounding like "Hey, you know about that rate raise, we were just kidding - again!". They may even think that will make a difference to the market, but at that point they may be bringing the equivalent of a knife to a gunfight. In which case, they will be caught off-guard by how little they actually helped the market.

 

Remember, these are my humble prognostications only...odds of them all turning out to be correct is very low.

 

 

[kfh227]

All the mouth pieces on CNBC need to talk the markets up while the managers unload their personal positions first.  Then second, the mutual funds get fixed and third, the mouth pieces will talk smack so everything can be bought back cheaper.

[blainehodder]

Ok, that was a really fuckin' ugly way to end Tuesday trading.

 

What happens in China market tonight will be entertaining. they cut the rate as requested/demanded by the market. Now if it drops a further 10%, then are we going to see china do QE? Will fed have the balls to raise rates in a month? or will they fold and go for QE4?

 

We live in interesting times...

 

The question I have is why would the Fed raise rates? Having rates at some "normalized" level is not a goal. Raising rates is to slow down overheated inflation and economic growth. US inflation numbers are not even at the minimum target.  What good could possibly come from boosting the USD and raising borrowing costs on businesses and consumers right now?  At best the economy would cope with higher rates.  More likely, higher rates would shrink growth and inflation further which would be directly blamed on the fed raise, whether or not that was the real cause.

 

Yellin knows this. I don't think near term rate hikes are even being contemplated seriously behind doors right now.

 

 

 

[rpadebet]

Ok, that was a really fuckin' ugly way to end Tuesday trading.

 

What happens in China market tonight will be entertaining. they cut the rate as requested/demanded by the market. Now if it drops a further 10%, then are we going to see china do QE? Will fed have the balls to raise rates in a month? or will they fold and go for QE4?

 

We live in interesting times...

 

The reason this could get ugly is the Fed can not do a uturn immediately towards QE4. First they are going to come out and say something professional sounding like "Hey, you know about that rate raise, we were just kidding - again!". They may even think that will make a difference to the market, but at that point they may be bringing the equivalent of a knife to a gunfight. In which case, they will be caught off-guard by how little they actually helped the market.

 

Remember, these are my humble prognostications only...odds of them all turning out to be correct is very low.

 

Yes very possible though...I really don't see how fed tries raising rates with all this happening around us. IMF has given some cover to these guys.

 

You maybe right, they will have to dance their way to get to QE. If they are smart, which I think they are, atleast as much as the system allows them, Jacksonhole conference gives them a chance to introduce doubt about rate hikes. We will know this week.

[rpadebet]

All the mouth pieces on CNBC need to talk the markets up while the managers unload their personal positions first.  Then second, the mutual funds get fixed and third, the mouth pieces will talk smack so everything can be bought back cheaper.

 

I don't believe there is any such conspiracy. They are not that smart. If they were they would have figured out how to prevent their ratings from going down the crapper the last 6 years of this massive bull market.

 

I am going with.. they are dumb...

[blainehodder]

Ok, that was a really fuckin' ugly way to end Tuesday trading.

 

What happens in China market tonight will be entertaining. they cut the rate as requested/demanded by the market. Now if it drops a further 10%, then are we going to see china do QE? Will fed have the balls to raise rates in a month? or will they fold and go for QE4?

 

We live in interesting times...

 

The reason this could get ugly is the Fed can not do a uturn immediately towards QE4. First they are going to come out and say something professional sounding like "Hey, you know about that rate raise, we were just kidding - again!". They may even think that will make a difference to the market, but at that point they may be bringing the equivalent of a knife to a gunfight. In which case, they will be caught off-guard by how little they actually helped the market.

 

Remember, these are my humble prognostications only...odds of them all turning out to be correct is very low.

 

Personally, I think they can absolutely do a u-turn. Running the Fed isn't a job for people who can't take criticism.  If the Fed felt more QE would somehow help the economy get some legs, I see no reason why they shouldn't or wouldn't accept some criticism and make that choice.  The problem is really that QE may not provide much for economic stimulus.

 

Along with not raising rates, Yellin should take a more vocal approach about Washington's failure to implement meaningful stimulus.

[Zorrofan]

ss, I am a bit cautious at this time and I have a hard time understanding why the world was so interconnected since 2008 and now all of a sudden, the U.S. is becoming the only place in the world totally insulated from the outside. Anyone else?

 

Cardboard

 

 

It's one of the relatively most insulated, with exports being a small percentage of GDP (at about 13%).

 

The rest of the world feels relatively more pain when the US stops buying their goods, than vice-versa.

 

Eric, are the S&P 500's overseas earnings part of "exports". My line of questioning relates to if they aren't, then with emerging and Asian economies slowing, this could impact Europe's economy (which may be more reliant on exports than the US). If this is the case, the rest of the world may be slowing dramatically reducing the S&P 500's overseas earnings (which I hear is half their earnings).

 

Does this make sense?

 

I thought the overseas earnings were what we derive from the exports.  Happy to be proven wrong though so I can keep learning.

 

All exports are overseas earnings but not all overseas earnings are exports.  Many multi-nationals have both production and sales located in other regions (ex. China).  GM produces and sells cars in China, however since they are produced in China they are not US exports but they are overseas earnings for GM.

 

hope this helps...

 

cheers

Zorro

[Uccmal]

Ok, that was a really fuckin' ugly way to end Tuesday trading.

 

What happens in China market tonight will be entertaining. they cut the rate as requested/demanded by the market. Now if it drops a further 10%, then are we going to see china do QE? Will fed have the balls to raise rates in a month? or will they fold and go for QE4?

 

We live in interesting times...

 

The reason this could get ugly is the Fed can not do a uturn immediately towards QE4. First they are going to come out and say something professional sounding like "Hey, you know about that rate raise, we were just kidding - again!". They may even think that will make a difference to the market, but at that point they may be bringing the equivalent of a knife to a gunfight. In which case, they will be caught off-guard by how little they actually helped the market.

 

Remember, these are my humble prognostications only...odds of them all turning out to be correct is very low.

 

Personally, I think they can absolutely do a u-turn. Running the Fed isn't a job for people who can't take criticism.  If the Fed felt more QE would somehow help the economy get some legs, I see no reason why they shouldn't or wouldn't accept some criticism and make that choice.  The problem is really that QE may not provide much for economic stimulus.

 

Along with not raising rates, Yellin should take a more vocal approach about Washington's failure to implement meaningful stimulus.

 

We probably shouldn't use the word "balls" when referring to today's fed.....  Yellen has had a child.

 

Did anyone seriously believe rates were going to be raised anytime in the next few years.  .the best you were ever going to get was a 1/4 to 1% as a token.  We had a hundred year event 6-7 years ago.  It appears things will take a little longer than our mayfly perceptions to normalize. 

 

The bank stocks are pricing in no increase.  The big guys are all dirt cheap at 11-12 times earnings.  They are going to make tons of money going forward either way. 

 

For the purposes of a bear market definition being 20 %.  The S&P is down 12.5% and the Dow is off ~ 14.5.  Not much further to go.  The TSX is down about 16%, and the energy stocks are deep in a bear. 

 

[Viking]

It looks to me like Mr Market is finally waking up to the end of QE in the U.S. and the Fed wanting to normalize interest rates. The first result, the past 18 months, was a rapid increase in the $US. This then lead to commodities tanking and economies of commodity producers tanking. The second result, China has now decided to unpeg their currency from the $US. Where does this take us? Currency wars and trade protectionism?

 

Moving forward, I think the Fed and the China Central Bank are holding the keys as to where this goes from here (and how ugly it gets). Until we get further clarity from both parties we likely will see lots more volatility.

 

Perhaps it is time to focus on return OF capital more than return ON capital.

[rb]

Well we're back to Oct 2013 prices for the Dow. If it drops another 10%-15% prices are gong to get very interesting.

[original mungerville]

Ok, that was a really fuckin' ugly way to end Tuesday trading.

 

What happens in China market tonight will be entertaining. they cut the rate as requested/demanded by the market. Now if it drops a further 10%, then are we going to see china do QE? Will fed have the balls to raise rates in a month? or will they fold and go for QE4?

 

We live in interesting times...

 

The reason this could get ugly is the Fed can not do a uturn immediately towards QE4. First they are going to come out and say something professional sounding like "Hey, you know about that rate raise, we were just kidding - again!". They may even think that will make a difference to the market, but at that point they may be bringing the equivalent of a knife to a gunfight. In which case, they will be caught off-guard by how little they actually helped the market.

 

Remember, these are my humble prognostications only...odds of them all turning out to be correct is very low.

 

Personally, I think they can absolutely do a u-turn. Running the Fed isn't a job for people who can't take criticism.  If the Fed felt more QE would somehow help the economy get some legs, I see no reason why they shouldn't or wouldn't accept some criticism and make that choice.  The problem is really that QE may not provide much for economic stimulus.

 

Along with not raising rates, Yellin should take a more vocal approach about Washington's failure to implement meaningful stimulus.

 

No they can't do a uturn immediately - so this will take a few months or a couple/few thousand points on the Dow. I agree, QE does not provide economic stimulus but the Fed's policy has been that it does because it raises asset values and somehow those values help economic activity (without apparently having adverse unintended consequences - like ensuring enough cheap junk debt to finance an oil exploration boom which just went bust, etc). In any case, I don't think they can do a uturn until more pain is felt which is why I think there is a risk of this sharp correction continuing. Who knows though...

[original mungerville]

Ok, that was a really fuckin' ugly way to end Tuesday trading.

 

What happens in China market tonight will be entertaining. they cut the rate as requested/demanded by the market. Now if it drops a further 10%, then are we going to see china do QE? Will fed have the balls to raise rates in a month? or will they fold and go for QE4?

 

We live in interesting times...

 

The reason this could get ugly is the Fed can not do a uturn immediately towards QE4. First they are going to come out and say something professional sounding like "Hey, you know about that rate raise, we were just kidding - again!". They may even think that will make a difference to the market, but at that point they may be bringing the equivalent of a knife to a gunfight. In which case, they will be caught off-guard by how little they actually helped the market.

 

Remember, these are my humble prognostications only...odds of them all turning out to be correct is very low.

 

Personally, I think they can absolutely do a u-turn. Running the Fed isn't a job for people who can't take criticism.  If the Fed felt more QE would somehow help the economy get some legs, I see no reason why they shouldn't or wouldn't accept some criticism and make that choice.  The problem is really that QE may not provide much for economic stimulus.

 

Along with not raising rates, Yellin should take a more vocal approach about Washington's failure to implement meaningful stimulus.

 

We probably shouldn't use the word "balls" when referring to today's fed.....  Yellen has had a child.

 

Did anyone seriously believe rates were going to be raised anytime in the next few years.  .the best you were ever going to get was a 1/4 to 1% as a token.  We had a hundred year event 6-7 years ago.  It appears things will take a little longer than our mayfly perceptions to normalize. 

 

The bank stocks are pricing in no increase.  The big guys are all dirt cheap at 11-12 times earnings.  They are going to make tons of money going forward either way. 

 

For the purposes of a bear market definition being 20 %.  The S&P is down 12.5% and the Dow is off ~ 14.5.  Not much further to go.  The TSX is down about 16%, and the energy stocks are deep in a bear.

 

The only thing more hated that energy stocks might be gold miners. I mean gold has not declined that much over the past year relative to oil, but the miners have been smacked big time. Furthermore, oil/energy are gold miners second largest cost component. So with Gold not declining that much and oil really declining, it is really odd these miners are still being sold.

[writser]

Well we're back to Oct 2013 prices for the Dow. If it drops another 10%-15% prices are gong to get very interesting.

 

The Dow is a price-weighted index, you should not use it for any macro analysis / comparisons at all.

[stahleyp]

I do find it odd that there was very little bearish talk on the board until the 2000 point drop. Now, there are several posts about it. I didn't post back then, but wasn't there a lot of talk about how bad things were in 2009 on the board?

 

[orthopa]

I don't know why the Fed has to do anything. They back themselves into a corner bc of their verbage. For some reason they feel they have to respond to the markets. They could have just sit back and said we may sit still for a long time we may not, and just leave it at that. There is no perfect time to raise rates but when it becomes obvious ie inflation, out of control growth its the right time to do it. Trying to time it like they have is a fools game. There is no perfect time when the economy is what it is.

 

As a young (early 30's) investor Im happy as a pig in $hit with the recent drop. Just wish I kept more dry powder as always. Sucks to look at the net worth but it will be worth it in the end.

 

As value investors we should live for these moments and get giddy for 20% drops. Some I'm sure are but for some reason as Buffett says its perverse that lower prices scare people. Maybe its the red on the screen, or the scary forecasts. If it was hamburgers everyone would be loving it.

[rb]

Well we're back to Oct 2013 prices for the Dow. If it drops another 10%-15% prices are gong to get very interesting.

 

The Dow is a price-weighted index, you should not use it for any macro analysis / comparisons at all.

I'm not using it for macro analysis. I'm using it for prices. :)

[maverick]

I feel a sense of panic among the esteemed value investors on the board. Equities have been trading at a very high P/E multiple and how can we be so sure that they do not continue to trade at high multiples. Rates are likely to stay low worldwide and in such an environment, won't companies that can grow their earnings even ~5% or so be a good investment. European QE has further to go and that will perhaps provide a boost to the European equities. With the continued strength in the US dollar and decline in emerging market currencies, will the Fed be really able to raise the Fed Funds rate? Isn't the Fed supposed to be raising rates only if the US economy is steaming hot? With the US economy growing so slowly, the Fed would be a blockhead (using Gundlach's words) to raise rates. Summer and Dalio are already talking about QE4. What happens if the Fed gives indication that they will not be raising rates in the near term due to all the global concerns? Will that lead to a rally in the equities? What happens if they don't raise rates at all in 2016 due to the upcoming elections? Will that lead to a rally in the equities?

 

The Chinese economy has been slowing down since long. There's no new information about it lately to have caused such a decline in the US equities market. Also, we all saw how the Chinese equities markets were going up in a parabolic manner, with barbers and taxi drivers all jumping in. We all knew that it was a bubble and that it would burst at some point of time.

 

The worldwide growth is low. That should keep rates low. In such an environment, will equities not be the only game in town. And if rates do rise, that would be if the economy is doing well. That should lead to increased earnings which could mitigate some of the headwinds due to P/E multiples normalizing.

[Jurgis]

I predict this thread will reach 100 pages.

 

 

 

Unless my prediction kills it cold.

 

 

 

In which case another similar thread will reach 100 pages.

 

;D

 

[ERICOPOLY]

I feel a sense of panic among the esteemed value investors on the board. Equities have been trading at a very high P/E multiple and how can we be so sure that they do not continue to trade at high multiples. Rates are likely to stay low worldwide and in such an environment, won't companies that can grow their earnings even ~5% or so be a good investment. European QE has further to go and that will perhaps provide a boost to the European equities. With the continued strength in the US dollar and decline in emerging market currencies, will the Fed be really able to raise the Fed Funds rate? Isn't the Fed supposed to be raising rates only if the US economy is steaming hot? With the US economy growing so slowly, the Fed would be a blockhead (using Gundlach's words) to raise rates. Summer and Dalio are already talking about QE4. What happens if the Fed gives indication that they will not be raising rates in the near term due to all the global concerns? Will that lead to a rally in the equities? What happens if they don't raise rates at all in 2016 due to the upcoming elections? Will that lead to a rally in the equities?

 

The Chinese economy has been slowing down since long. There's no new information about it lately to have caused such a decline in the US equities market. Also, we all saw how the Chinese equities markets were going up in a parabolic manner, with barbers and taxi drivers all jumping in. We all knew that it was a bubble and that it would burst at some point of time.

 

The worldwide growth is low. That should keep rates low. In such an environment, will equities not be the only game in town. And if rates do rise, that would be if the economy is doing well. That should lead to increased earnings which could mitigate some of the headwinds due to P/E multiples normalizing.

 

You too had a hard time engaging the enemy after you lost Goose. 

 

There is something to be feared in fear itself, as the economy is in part a confidence thing.  Large market collapses and currency crises can feed into the real economy.  Will they?  Well, we'll see.  The odds are higher with a collapse rather than without one.

[enoch01]

How is it that so many here know so much about all this stuff?

[merkhet]

How is it that so many here know so much about all this stuff?

 

+1

[CorpRaider]

I feel a sense of panic among the esteemed value investors on the board. Equities have been trading at a very high P/E multiple and how can we be so sure that they do not continue to trade at high multiples. Rates are likely to stay low worldwide and in such an environment, won't companies that can grow their earnings even ~5% or so be a good investment. European QE has further to go and that will perhaps provide a boost to the European equities. With the continued strength in the US dollar and decline in emerging market currencies, will the Fed be really able to raise the Fed Funds rate? Isn't the Fed supposed to be raising rates only if the US economy is steaming hot? With the US economy growing so slowly, the Fed would be a blockhead (using Gundlach's words) to raise rates. Summer and Dalio are already talking about QE4. What happens if the Fed gives indication that they will not be raising rates in the near term due to all the global concerns? Will that lead to a rally in the equities? What happens if they don't raise rates at all in 2016 due to the upcoming elections? Will that lead to a rally in the equities?

 

The Chinese economy has been slowing down since long. There's no new information about it lately to have caused such a decline in the US equities market. Also, we all saw how the Chinese equities markets were going up in a parabolic manner, with barbers and taxi drivers all jumping in. We all knew that it was a bubble and that it would burst at some point of time.

 

The worldwide growth is low. That should keep rates low. In such an environment, will equities not be the only game in town. And if rates do rise, that would be if the economy is doing well. That should lead to increased earnings which could mitigate some of the headwinds due to P/E multiples normalizing.

 

You too had a hard time engaging the enemy after you lost Goose. 

 

There is something to be feared in fear itself, as the economy is in part a confidence thing.  Large market collapses and currency crises can feed into the real economy.  Will they?  Well, we'll see.  The odds are higher with a collapse rather than without one.

.

 

Lol and most of that was just flight school!  reflexivity baby

[CorpRaider]

I don't know why the Fed has to do anything. They back themselves into a corner bc of their verbage. For some reason they feel they have to respond to the markets. They could have just sit back and said we may sit still for a long time we may not, and just leave it at that. There is no perfect time to raise rates but when it becomes obvious ie inflation, out of control growth its the right time to do it. Trying to time it like they have is a fools game. There is no perfect time when the economy is what it is.

 

As a young (early 30's) investor Im happy as a pig in $hit with the recent drop. Just wish I kept more dry powder as always. Sucks to look at the net worth but it will be worth it in the end.

 

As value investors we should live for these moments and get giddy for 20% drops. Some I'm sure are but for some reason as Buffett says its perverse that lower prices scare people. Maybe its the red on the screen, or the scary forecasts. If it was hamburgers everyone would be loving it.

. I gotta admit i love it when they put up the screen in screen cut away to the like old school diode/scoreboard of the dow when it is tanking.