I think the key difference here is that normally FED would intervene with lower rates if they believed something unplanned (that could not be avoided) happened and now they need to solve the issue
But now they are dealing with a totally one man made crisis driven purely by personal belief system and FED needs to decide if they should intervene to avoid damage done by bad policy or they should ask Trump to revert policy
Sometime back I mentioned that there was a study done to review performance of companies versus media life of their CEOs. The more media savvy CEOs lead a scenario where rather than CEO working for company, company ends up working for the CEO. Such cases lead to lower performances over long term.
Similar stuff is happening in US. Trump wants to be always in news, solve all problems himself and assume himself to be the the smartest one around. So now he expects all US institutions work to make his policies work and not challenge anything.
Arenât these bits contradictory? What I understand youâre saying (or, I say I understand because the below is my plan, so Iâm biased!) is:
I time the market by buying (+/- more than usual) because of the opportunity to make more on the upswing (which can take some years) is too good to miss
I do nothing now because it hasnât played out, yet
Howâd you know when to buy more though, the fabled âcapitulationâ? I admit Iâm planning to use some voodoo of moving averages.
What do you mean by âstrategies do not work in bear marketsâ? Isnât waiting followed by buying a strategy? And in essence if youâre not selling anything (why would anyone do that unless they had to) a strategy too?
This is classic Trump. Always find someone to blame
Inflation was higher in Feb because of Biden.
Ukraine war was not solved in 24 hours because Biden didnât stop it, then it was Zelenskyâs fault, now its fault of everyone else that there is no ceasefire.
Now economy is going to tank because Powell is not acting fast enough to react to damage caused by Trump
Of course you are right, my strategies, purely mechanical, do have a bear market clause and that did work nice the last few bear markets. It is based on a lot of measurements to decide when the bear market is over.
Moving averages are part of the measurements, I want to see some indices and more than half of the SP500 stocks over, say, the 50 day average.
In backtests the VIX future contango was a nice indicator too.
One of Trumpâs stated goals is to rebuild US manufacturing and to close the trade deficit in goods.
So youâd probably want low rates and a low dollar to stimulate investments and exports, plus avoid a recession that would hit your fan base. What better way than to publicly attack your head central banker and work towards ousting him if he doesnât play ball?
Thereâs a limited amount of method to the madness, everyone else be damned. Of course, there might be more Truss-moments in our future.
Normally trade deficit leads to country with trade surplus buying US securities (debt, stocks, RE etc). This means that the money from Trade surplus is anyways invested in American companies or debt.
Now Trump wants to force companies to invest in US to make the same goods they would typically import. So rather than investing in US stocks or debt, countries have two options
invest specifically in the manufacturing capacity rather than other assets
Reduce the surplus by simply not selling
In both cases capital needs to flow from US treasuries or US stocks to either manufacturing capacity or out of country. I think in both cases it is bad for US assets because they are already inflated
I have read conflicting info about whether the Fed chair can be fired or not. Then again Trump is a convicted felon who tried to overthrow democracy so whatâs a few more laws/customs to violate?
I doubt the market would go insane, if anything I feel (again, just feels) that the market is more rational than it was this time last year, where my social media feeds were full of âDEATH OF US EQUITIESâ, âSKY IS FALLING TOMORROWâ. YeahâŠdidnât fall did it? If anything I now see it was all fear mongering without a cause. Now we have a cause, but not one anyone predicted.
I hold my opinion that when earnings come out weâll have more clarity. People have been dumbed down by social media that everything happens instantly, well, it donât. If it did Iâd like to have long hair again without going through the phase of having a mop for hair for 1.5 years, wife wonât let me
If Powell is fired, I think investors might not sell out completely but US PE multiples will need to be reduced as investors will demand higher risk premium (similar to other countries where central bank is not independent)
As usual outperformance in equity is driven by unexpected events (the so called not priced in stuff). Who would have thought Trump policies would lead to sell America trade. Itâs completely unexpected outcome. Except for Buffet of course
Exactly, then given the S&P500 is still overvalued you just look at what number it will no longer be that overvalued and thatâs, in my opinion, the bottom. 4000-4200 in my opinion as posted above.
Anyone who actually bothered to read Project 2025, itâs all in there. The idea that âhe canât possibly do that!â is somewhat valid, but people need to move on and accept the fact heâs a rich old narcissist with not many years left blighting the earth, likely not getting any anymore so he needs to play with something to keep entertained and have a legacy. Pity this is the POTUS but at the same time oh well. He literally has nothing to lose and doesnât care about anyone other than himself. Politics and party donât matter to him. Total loose cannon.
No idea, Iâm not that smart and didnât study why the lost decade was a lost decade. Maybe I should though!
Edit: the ChatGPT overlord says there are some potential parallels with the lost decade
âThe U.S. economy during the 2000s had consumers with damaged balance sheets, stagnant wages, and rising uncertainty â all of which led to weak spending and subpar earnings growth for businesses. Even when profits returned in the later years, they were often the result of cost-cutting rather than strong top-line growth.â
Thereâs a lot to chew and think about, there are parallels but itâs not at all one for one. Iâd also wonder if the instant gratification of today with regards to people buying stuff they donât need (watch âBuy Nowâ on Netflix, itâs great) can be reversed.
At least the SPY is afaik only denominated in USD, and probably most other tickers / ETFs are as well, given theyâre issued by Blackrock (iShares) ⊠so not sure if your question is serious?
I donât know and personally wouldnât dwell on the details - they may or may not be, the message is more that a ton of markets are doing better than the US YTD.
âI have no intention to fire Powell. I never said thatâ
âWe will have a deal with China. Tariffs wonât be as high as 145%, they would be substantially lower. They wonât be zero but they would not be as highâ
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