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Gotta point. Yet The Orange Criminal did assert, falsely and ridiculously--- that Harris is responsible for the latest 2 or 3-day market meltdown. Not a word out of his mouth corresponds to actual reality. From that angle, such remarks in response are extremely difficult to avoid; it's no one else's fault that he has become a political figure--- ostensibly to save himself from being required to wear a matching orange jumpsuit.
Is Dell really going to let over 10,000 associates go? Super micro margins going down down down....this is not good news for the markets, nor the Ai bubble...
Is Dell really going to let over 10,000 associates go? Super micro margins going down down down....this is not good news for the markets, nor the Ai bubble... Could get interesting over the next few weeks....
I won’t wade into AI / Tech / Consumer staples or other specific sectors. But sometimes I get tired of people talking about “the markets” as if they are all unified and all move in sync. At any given time there are stocks or other assets that are overpriced and other stocks or assets that are reasonably priced or even underpriced. “Verification” is always in hindsight months or years afterward. If we knew for sure what was going to be up 6 months or a year from now and what would be lower 6 months from now investing would be a dream. We’d all be incredibly rich.
Thank you to the vast majority here who have kept politics largely out of the investing forum. Much appreciated. Let’s focus on making money, long term financial health and having some fun together. There are always lively political discussions in the OT section and we who hang out there were recently privileged to have longtime mfo member @Graust, an R, drop by for some civil chatter which takes a lot of balls to do because it’s a bit on the liberal side over there. Perspective from those who disagree is always appreciated.
Just 1 political comment here. I spoke to a neighbor yesterday who “unloaded” on the USA. The country’s “shot” / ”going to hell in a hand-basket”. The government, politicians and public servants are “all crooks”. Everything’s “rigged.” There isn’t a candidate on the ticket of either party that’s worth voting for. To top it all off, he’s so upset with things he will not vote in November!
I thanked him saying, “For every person who chooses not to vote … that makes my vote count a bit more.”
Hey @OJ, here are the very simple terms in which I understand the whole thing. The FRED high yield spread measure is the yield difference between junk corp bonds and Treasuries. (There's lots of detail on what's counted in the text below the graph.) Junk of course is more credit risky, so you expect a premium in yield to put your $ into junk.
The premium (spread) has been historically small for quite a while, falling from ~6% 2 years ago to ~ 3% recently, which has meant really juicy returns for hi yield over that time. For a while, just about every week, the talking heads on Bloomberg Real Yield have chatted about when and if those spreads will "widen" (increase) and slow down those juicy returns.
Now the spread has shot up to nearly 4% in a matter of days. It took roughly 8 months to go down from 4% to the low 3's.
Just for reference, back ~ 20 years ago when I was learning about and investing in some HY, the common wisdom was that the spread hitting 4% (on the way down) was a pretty definite sell signal for HY. Recent years have blown that assumption out of the water. But what's next?
Sure feels like a phase shift could be happening. Or maybe it's just another big market freakout. In any case, it's unusual to see that much change in only about a week.
The truth, however, is that we don’t know why stocks fell. ... it probably doesn’t matter much
Fire ten shots into the air from different positions in a semicircle surrounding a herd of cattle and you'll get a stampede. But you won't know which direction to expect nor which shot or shots set the cattle a-runnin'.
Furthermore, if fears of a U.S. recession drove this stock slump, why did Japanese stocks fall so much more than stocks here?
Effective rhetoric, but possible explanations do exist. In the news section of the NYTimes we find one possible explanation that the news editors felt worth mentioning.
When the Bank of Japan raised interest rates last week ... the decision coincided with forecasts [due to fear of a U.S. recession?] that the Fed was preparing to cut rates soon. This narrowed the gap between market rates in Japan and the United States, and the yen spiked.
The suddenly stronger yen also threatened to become a drag on corporate profits for Japanese firms, especially the big companies that rely on exports. That spooked investors in Japan’s stock market, stoking fears that a stronger yen would spell the end of a more-than-yearlong rally.
The U.S. recession fear was actually a double whammy on the large Japanese companies: (1) the sudden increase in price of exports (due to spike in Yen), and (2) the expected decline in demand for Japanese exports (independent of exchange rates) due to a feared U.S. recession. The U.S. is Japan's biggest export market (2023).
Do we know that these factors related to the fear of a U.S. recession caused Japan's market to tumble? No. Is it a possible explanation for the sharper, faster drop in the Nikkei 225 than in the S&P 500? Yes.
Now that retail investors have been trained to buy the dips, does that offer a new floor on any market pullbacks? It's a bit of a change in herd mentality, but retail doesn't make up much of the daily volume. A few more consecutive trading sessions of -3% drawdowns would probably shake that dipper mentality out.
It might run ad-infinitum the way @Crash’s “Buy / Sell” thread does.
An excellent discussion from the members. But the whole idea suggests how short term focused we have become, The crash of ‘07 - ‘09 was short by historical standards, Somewhere in the 15-16 month area. Yet every single month the markets ground lower felt like an eternity, There is a natural human tendency to assume that the present (whatever it is) will continue.
Volatility. It's real. I still don't LIKE it. When the election is behind us, that might help. Warren Buffett owns more T-Bills than the FED now. What does THAT tell ya? Oy.
Actually, I dunno what that tells me. Maybe that he likes T-Bills?
That's a ton of money, and it's not in the Market. We all know the FED has been tapering off with the bonds on its own balance sheet. But these have to be MASSIVE numbers. I guess it says something about the heft of Berkshire, over against the gigantic Federal Reserve Bank. Buffett is a DECENT man. What if all those T-Bills were in unfriendly, unethical hands, eh? My two cents.
Comments
Best regards
Baseball fan
Could get interesting over the next few weeks....
Thanks- OJ
Thank you to the vast majority here who have kept politics largely out of the investing forum. Much appreciated. Let’s focus on making money, long term financial health and having some fun together. There are always lively political discussions in the OT section and we who hang out there were recently privileged to have longtime mfo member @Graust, an R, drop by for some civil chatter which takes a lot of balls to do because it’s a bit on the liberal side over there. Perspective from those who disagree is always appreciated.
Just 1 political comment here. I spoke to a neighbor yesterday who “unloaded” on the USA. The country’s “shot” / ”going to hell in a hand-basket”. The government, politicians and public servants are “all crooks”. Everything’s “rigged.” There isn’t a candidate on the ticket of either party that’s worth voting for. To top it all off, he’s so upset with things he will not vote in November!
I thanked him saying, “For every person who chooses not to vote … that makes my vote count a bit more.”
The premium (spread) has been historically small for quite a while, falling from ~6% 2 years ago to ~ 3% recently, which has meant really juicy returns for hi yield over that time. For a while, just about every week, the talking heads on Bloomberg Real Yield have chatted about when and if those spreads will "widen" (increase) and slow down those juicy returns.
Now the spread has shot up to nearly 4% in a matter of days. It took roughly 8 months to go down from 4% to the low 3's.
Just for reference, back ~ 20 years ago when I was learning about and investing in some HY, the common wisdom was that the spread hitting 4% (on the way down) was a pretty definite sell signal for HY. Recent years have blown that assumption out of the water. But what's next?
Sure feels like a phase shift could be happening. Or maybe it's just another big market freakout. In any case, it's unusual to see that much change in only about a week.
https://messaging-custom-newsletters.nytimes.com/dynamic/render?campaign_id=116&emc=edit_pk_20240806&instance_id=130920&isViewInBrowser=true&nl=paul-krugman&paid_regi=1&productCode=PK&regi_id=22268089&segment_id=174340&te=1&uri=nyt://newsletter/ed712733-6278-5409-b774-fc90061110fa&user_id=83d45440ead1d14c2a89a1e7221337d1
The U.S. recession fear was actually a double whammy on the large Japanese companies: (1) the sudden increase in price of exports (due to spike in Yen), and (2) the expected decline in demand for Japanese exports (independent of exchange rates) due to a feared U.S. recession. The U.S. is Japan's biggest export market (2023).
Do we know that these factors related to the fear of a U.S. recession caused Japan's market to tumble? No. Is it a possible explanation for the sharper, faster drop in the Nikkei 225 than in the S&P 500? Yes.
Side note: Futures are up again today.
”Is Mr. Market Happy or Upset today?”
It might run ad-infinitum the way @Crash’s “Buy / Sell” thread does.
An excellent discussion from the members. But the whole idea suggests how short term focused we have become, The crash of ‘07 - ‘09 was short by historical standards, Somewhere in the 15-16 month area. Yet every single month the markets ground lower felt like an eternity, There is a natural human tendency to assume that the present (whatever it is) will continue.
Dell proposed layoffs (allegedly)