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Markets don't seem to be discounting the conflict in Hong Kong....
MGLICKER
Posts: 7,995 ✭✭✭
or Ukraine or Syria/Iraq.
......I guess all will end well!
......I guess all will end well!
0
MGLICKER
Posts: 7,995 ✭✭✭
MGLICKER
Posts: 7,995 ✭✭✭
Comments
Knowledge is the enemy of fear
<< <i>How would gold or silver prevent or provide resolution to conflict? >>
They wouldn't. Opium though has been a factor in the past.
<< <i>Those conflicts are meaningless to the economies of the developed nations. >>
Do you believe that if Hong Kong ends in a fashion similar to the Tiananmen Square slaughter, that world economies won't be affected?
I am not suggesting that such an ending will occur but the possibility is there and we do owe the good Asians about $2,000,000,000,000.
<< <i>Those conflicts are meaningless to the economies of the developed nations. >>
doubtful
<< <i>The amount that we owe is in the form of bonds with specific due dates. It's not a debt in which the lender can call the loan because of some non-compliance with certain debt covenants or because they don't like U.S. politics. >>
They are certainly liquid on the secondary market. A massive dump would scorch the Dollar and create a jump in rates.
Criticism of China could easily be met by a US asset liquidation same way as Putin did after invading the Ukraine.
<< <i>
<< <i>Those conflicts are meaningless to the economies of the developed nations. >>
Do you believe that if Hong Kong ends in a fashion similar to the Tiananmen Square slaughter, that world economies won't be affected?
I am not suggesting that such an ending will occur but the possibility is there and we do owe the good Asians about $2,000,000,000,000. >>
Westeros owed the Iron Bank much more
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Sure, but what will they replace those assets with? Other paper assets of one sort or another that is mostly seen as less secure than holding U.S. bonds. And trying to liquidate that much will only harm themselves in a myriad of ways beyond just the short term declining prices of those bonds as they dump too much on the market at one time. >>
Your points are logical and make sense in an ideal world.
Otherwise rational nations have a long history of doing harm to themselves. Germany and Japan in WWII are two examples. North Korea and Russia are current examples.
China is deadly afraid that the Hong Kong protests regarding free elections will spread to the mainland and create the equivalent of an Arab Spring. Most likely any effort on the part of the West to address the abuse of the protesters will result in a mind your own business response and just enough asset dumping to get the attention of DC.
Any type of trade war will be a true economic disaster as every US retailer of size would require a bailout.
I am not proposing that all this will happen, but the possibility is real, yet the equities guys are just humming right along.
<< <i>It's not in an "ideal world" that my perspective makes sense. But in THIS very temporal plane. While what you suggest may very well happen, THAT is VERY UNLIKELY so my comments are actually rooted in REALITY while your's comes from either fear mongering or pondering worst case scenarios. >>
I always ponder worst case scenarios when investing. All risk can be properly accounted for.
Hong Kong was not an issue a week ago, but today it is. A meltdown may or may not occur, but the risk of such needs to be considered by prudent investors.
We have enjoyed a Teflon like stock market since 1981 or so. Each time equities took a drubbing, they almost magically rose to new highs. I understand the confidence of 2 generations of investors that have never witnessed a long term painful decline, but this market is priced for perfection, meaning no inflation, robust earnings and stability in the world. We have the inflation, instability and at best the accounting is suspect.
<< <i>I agree markets are probably overvalued. But the meltdown you suggest is a binary event. Investors can and should consider it but at the end of the day, it happens or it doesn't and the investor invest or they don't. >>
As I type this, the SP is down 7 points for the week or about 1/3% of a percent. Certainly the risk coming out of China is greater than that paltry discount. Several importers got slammed after the 1989 uprising and that was when US-China business was in its infancy.
January 2014, Ukraine, Isis and Hong Kong were off the map conflict wise. Today any of the three can cause great economic calamity. Bubble markets are always spectacular and of course "different this time". Then they crash and a new set of people shockingly examine their statements and ask "what happened"?
<< <i> The p/e of that market and this market are SO drastically different and it is further exacerbated in today's favor by the benign interest rates relative to the decent returns you got in bonds and savings accounts back then. >>
......Nasdaq hit 5000 in that market and dropped to about 1000 before beginning a looooong recovery. You are correct, that was an historic bubble, but does that mean that one does not exist now? Though artificially manipulated interest rates were higher then, inflation is higher today. That will ultimately determine interest rates and reasonable P/E valuations. I urge you to check the dividend yields today on the SP500 and Nasdaq. That is real money which is returned to investors, not the hocus pocus stuff which is touted as accurate by the accounting industry.
SP500 div yield is under 2% and Nasdaq is at 1%. Take out the biggies like Apple and Microsoft and the number is a pittance. Numbers are very close to 150 year lows and will get whacked as rates rise.
Proceed with caution.
<< <i>Westeros owed the Iron Bank much more
MJ >>
Classic MJ!
I can't wait for the next season!!!
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<< <i>
Nice shot, Renski. My brother will be passing through in a couple of weeks.
<< <i>The biggest weighted companies like Apple, Microsoft, Oracle and even the Googles, Facebooks, and those companies sell at what many would consider "reasonable" and in some cases still, cheap valuations >>
Please take the time to examine earnings a bit deeper than the convenient P/E numbers listed on every business website. Numbers are seriously skewered. One time charges are virtually ignored, though taken quarterly and overseas income which cannot be repatriated without a 35% tax hit are not discounted as they should.
Interest rates are 5-7% below the inflation rate depending on maturity. To asses market valuation based on the present return on debt instruments rather that the future return is unwise.
<< <i>
<< <i>
<< <i>The biggest weighted companies like Apple, Microsoft, Oracle and even the Googles, Facebooks, and those companies sell at what many would consider "reasonable" and in some cases still, cheap valuations >>
Please take the time to examine earnings a bit deeper than the convenient P/E numbers listed on every business website. Numbers are seriously skewered. One time charges are virtually ignored, though taken quarterly and overseas income which cannot be repatriated without a 35% tax hit are not discounted as they should.
Interest rates are 5-7% below the inflation rate depending on maturity. To asses market valuation based on the present return on debt instruments rather that the future return is unwise. >>
I do all of those things but it would take hours to even begin to discuss the indept financials of even one of those companies, and I seriously have my doubts (with all due respect) that you could keep up. Even assuming a tilted scenario as you just blanketly assume without providing ANY justification to support ANY of your suppositions, the valuations are STILL not anywhere near what most people would consider "bubble" levels.
As for future returns on debt instruments, if you really are that confident about your abilities to prognosticate that, you should be making a FORTUNE and be a billionaire in no time. People have been crying loudly about rates rising for YEARS now and the rates have either come down or continue to languish at low levels. >>
Excellent summation.
<< <i>I do all of those things but it would take hours to even begin to discuss the indept financials of even one of those companies, and I seriously have my doubts (with all due respect) that you could keep up. >>
Maybe not.....but my stack up chips went up handsomely today.
Attending Walsh College in Detroit in the late 1970's I was bored with the tedium of learning double entry accounting, but was fascinated with the library which contained the annual reports of all of the fortune 500 companies. I spent many hours studying the financials of these goliaths of industry.
Our finance prof was a great proponent of owning gold. With the Dow at 8 times earnings (real earnings, not the fabricated crap of today), I saw the opportunity in equities and invested as heavily as my side job would allow.
Stocks certainly serve as a legitimate asset vehicle today but sadly one must be more vigilant now as the numbers are grossly manipulated and a handful of insiders in NYC and DC control the playing field.
<< <i>Thank you Baseball.
Attending Walsh College in Detroit in the late 1970's I was bored with the tedium of learning double entry accounting, but was fascinated with the library which contained the annual reports of all of the fortune 500 companies. I spent many hours studying the financials of these goliaths of industry.
Our finance prof was a great proponent of owning gold. With the Dow at 8 times earnings (real earnings, not the fabricated crap of today), I saw the opportunity in equities and invested as heavily as my side job would allow.
Stocks certainly serve as a legitimate asset vehicle today but sadly one must be more vigilant now as the numbers are grossly manipulated and a handful of insiders in NYC and DC control the playing field. >>
Who are the insiders in DC and NYC who control the playing field?
I give away money. I collect money.
I don’t love money . I do love the Lord God.
<< <i>Who are the insiders in DC and NYC who control the playing field? >>
Start with Bernanke/Yellen and the 19 bankers that meet off the mic with the POTUS
Meeting with 19 execs
The fed in bed with Goldman.
$250,000 Wall Street Dinner with Bernanke.
Geithner new President of Warburg Pincus.
Please tell us exactly what your investments are which did so well today.
I would appreciate the specifics as most "financial experts" usually are often way wrong.
I could use some financial advice today.
If you are hesitant to list in this thread for some reason then PM me.
But, in general, if you boast you should not hesitate to share.
Thanks!
<< <i>PM sent. >>
Much thanks Mark...you backed up your statements and it is appreciated.
Some people need to learn to live by their sig lines.....Play ball.
Too many positive BST transactions with too many members to list.
Start with Bernanke/Yellen and the 19 bankers that meet off the mic with the POTUS
Meeting with 19 execs
The fed in bed with Goldman.
$250,000 Wall Street Dinner with Bernanke.
Geithner new President of Warburg Pincus.
What? No snappy comeback?
Well, well! Tax Cheat Timmy done made good after his stint at Treasury. Imagine my surprise.
I knew it would happen.
<< <i>
<< <i>The biggest weighted companies like Apple, Microsoft, Oracle and even the Googles, Facebooks, and those companies sell at what many would consider "reasonable" and in some cases still, cheap valuations >>
Please take the time to examine earnings a bit deeper than the convenient P/E numbers listed on every business website. Numbers are seriously skewered. One time charges are virtually ignored, though taken quarterly and overseas income which cannot be repatriated without a 35% tax hit are not discounted as they should.
Interest rates are 5-7% below the inflation rate depending on maturity. To asses market valuation based on the present return on debt instruments rather that the future return is unwise. >>
Like what you wrote is unknown to the stock market?
Maybe the markets have discounted these "realizations" and, absent these findings, the market would be much higher.
Knowledge is the enemy of fear
If you are assuming that the market is factoring in higher rates, I believe that you are wrong.
I think the mistake of the investor community is a hypnosis that the federal reserve has absolute control over short, mid and long term rates.
Several years of the debt instrument markets jumping on every Bernanke/Yellen/Fisher remark have reinforced this thinking.
Wall Street is thinking ok, a gradual climb of 25 basis points every couple of meetings commencing in mid 2015. Nice and safe and nobody gets rattled. Fed is way behind the inflation rate and trust me, the numbers will be rising a whole lot faster than the market expects.
You also think the FED has absolute control of rates. I do not, nor does the market, but it is smart enough to know where to get a free lunch. Suppose you are at a party, who realizes the food is gone or has spoiled first, the host or the guests? You vastly overrate the FED and grossly underrate the market.
You are so consumed by rates rising in this country that you havent considered what is happening in the rest of the world. The 10yr rate in Germany is 0.85%. In Spain and Italy are 2.07 and 2.28 respectively. In the US are 2.40%. Each of those countries has a worse demographic and economic profile than the US. Rates in the US will not go up unless they go up in Europe first. In fact, one could argue that rates in the US could drop another 1% before they rise 1%.
How high do you actually think rates could go?
Knowledge is the enemy of fear
The discussions here are often stimulating and sometimes heated, but it is best to leave the insults behind.
<< <i>You also think the FED has absolute control of rates. I do not, nor does the market, but it is smart enough to know where to get a free lunch >>
Cohodk, please reread my post previous to yours. I do not believe in any way that the fed has absolute control over rates, especially as maturities lengthen. Seems though that the investment community as a group (certainly not everyone) has been placated by the repeated false declarations by the fed chair and her surrogates that inflation is under 2%.
I disagree with but also admire the concerted efforts by most of the deeply indebted major economic nations to print steep piles of currency and also keep rates low.....artificially low.
Japan is the best example as the 10 year yields are well under 1% while the Yen dropped by 25% under a massive monetary expansion program. It would take some very liberal accounting to not think that Japan which is a large importer of food and oil, to not suffer close to a double digit jump in the CPI. Yet we are assured that inflation is still stubbornly non existent in the land of the rising sun and interest rates will remain near zero forever.
It is not always easy to see the end game in an arena of such devious monetary collusion. But sure as today when Mario Draghi of the EU just created another $1T in free money, the house of cards of unbacked, unsupported currency will spiral into worldwide unbridled inflation and the debt instruments will be as valuable as a pre WWII Notgeld.
1) debt creation
2) interest rate swaps
3) magic
Take your pick. They all work the same.
I knew it would happen.
<< <i>My "position" is supported by FACTS. Your's are just merely conjecture or even worse, misunderstandings and misinterpretations . >>
Fortunately I have found a sympathetic banker that will accept my deposits, just the same.
Hope that your investments turn around so that you can get a smile back on your face.
<< <i>My "position" is supported by FACTS. Your's are just merely conjecture or even worse, misunderstandings and misinterpretations >>
All you have to do is read (and chuckle) the posts that he started. There are to many to list, but I've listed the most current ones. Gives you an idea of his mindset.
"Markets don't seem to be discounting the conflict in Hong Kong"
"Forum member inflation report."
"Will Janet Yellen be a fan of SP500-2000?"
"Guess we have to bail out Radio Shack."
"What will bust the World Stock and Bond markets!!!"
"Ukraine may dictate the metals markets for a few weeks."
"Inflation and the $15 fast food employee. "
Glad to give you a laugh or two, OPA.
Our financial wel lbeing is critical and at time folks here get a bit would too tight. A touch of wit is always a plus.
<< <i>I've stated many times in these forums that I DON'T currently own any stocks or mutual funds. >>
Perhaps your anger and frustration comes from missing the stunning market moves. That happens to many folks. They are both afraid to get in and afraid to get out.
Hope you have a nice weekend.
This is a nice, relaxing image from up on Mt Lemmon. Let me know if you ever get to Tucson, we can head up to 9000 feet and have a few shots of good whiskey!