Market Crash Watch Party

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Re: Market Crash Watch Party

Postby PufPuf93 » Sat Aug 14, 2021 1:39 pm

Belligerent Savant » Sat Aug 14, 2021 8:42 am wrote:
PufPuf93 » Sat Aug 14, 2021 10:07 am wrote:
Wombaticus Rex » Fri Aug 13, 2021 2:01 pm wrote:"How is your market crash watch party going?"

>THEY'RE MAKING A FUCKING COOKBOOK

"That's nice, dear"


Maybe a new thread then?

Piqued my interest.

We can talk about food and ways to cope and have some quality life in our immediate environs as society melts down; topics of practicality we can all get behind and perhaps reduce some of the current polarization at RI.


Yes. Let's do it. New thread. A topic that will become incrementally more important. But regardless of import i wanna hear more about Harvey's (and ideas/tips from others) hot takes on cooking with minimal/no 'budget', using (at least in part) locally foraged ingredients.

WRex's quip had me chuckle audibly to myself -- a rare event these days. He also has some intel/first-hand exposure on this 'food' topic (but don't want to 'out' him), given some of his book recommendations and anecdotes on outdoor living (invariably involving the working class staple, Budweiser, which by itself is a funny accent. Am I sounding like a stalker? Nah, just someone that pays attention to worthwhile tips).


Edit to add: very much appreciating drstrangelove's takes as well, and comments from others (Iam, etc) inspiring the replies.

Re: OP, the timing remains TBD -- and I for one would place my money (ha) on an incremental descent rather than sudden 'crash' given the manner in which the sausage is made these days -- but we shall see.


WR caused me a chuckle as well and chuckles are good and healthy.

I agree with incremental descent as well. The descent is happening all around us. Might be some big speed bumps given the facts of war and mass killing pandemic that are human history and destiny..
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Re: Market Crash Watch Party

Postby Elvis » Wed Aug 18, 2021 5:04 am

Iamwhomiam wrote:"The more money created, the more inflation needs to be hidden in the destruction of goods, services, and environment."

Perhaps Elvis can make sense of this for me. I do not see the interest on US bonds as inflationary, or as a cause of the destruction of goods, services, and environment. I do feel and have written here I feel the international bond market will collapse before the 4th quarter of next year, and that would precipitate the collapse of society.


Since you ask...

Injecting/investing money into the economy is like having wine with dinner: you don't get drunk when the wine is absorbed by the food. If added money is absorbed into real resources, it shouldn't cause serious inflation. Excesses are (ideally) drained by federal taxes and bond sales; taxes remove money, bonds sequester money.

I'm not sure why sovereign bonds markets would collapse; remember the "widow's trade" in Japan. Governments like Japan, the US, the UK, etc. are never at the mercy of "bond vigilantes."

The US could stop selling bonds tomorrow and all that would really happen is that opportunities to stash dollars in a safe place would greatly diminish—leading to some chaos in the financial sector, certainly, but collapse less certain. (The late-1990s budget surpluses drastically reduced the number of new Treasuries offered; where did investors put the money instead?—into the fraudulent mortgage bonds that just happened to be waiting with open arms.) The 'reserve drain' function of US government bonds is somewhat moot since 2008 when the Fed instituted the "ample reserves" regime and started paying interest on bank reserves. Treasuries auctions also kept the 'overnight' interest rate from falling to zero—but looks like ZIRP is vogue (and should stay that way).

Selling Treasuries maintains the illusion of the national government "borrowing" its own money, a neat trick that some say is impossible. More practically, Treasuries offer the private sector a safe place to keep large amounts of dollars (interest income or not).

I agree that paying interest on Treasuries is not inflationary, but we should probably examine who we're paying all that free money to, and whether doing that serves some public purpose.
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.” ― Joan Robinson
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Re: Market Crash Watch Party

Postby Elvis » Wed Aug 18, 2021 5:08 am

Heller fiscal 1968.jpg


Heller-Friedman policy 1968.jpg
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“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.” ― Joan Robinson
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Re: Market Crash Watch Party

Postby drstrangelove » Thu Sep 09, 2021 2:50 am

Wouldn't mind an update on things rex if you have one. Seems like delta prolonging the pandemic may have prolonged economic considerations.

Is cheap credit still flooding the stock and asset markets? Or has this tapered off? If so where is all this money coming from? Nothing's being produced and it seems to me that shipping and other logistical 'issues' are being used to cover this up.

I know you were spooked about something coming this fall.
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Re: Market Crash Watch Party

Postby drstrangelove » Wed Oct 06, 2021 2:11 pm



curtains drawn, political theatre begins. enjoy the show folks.
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Re: Market Crash Watch Party

Postby Wombaticus Rex » Tue Dec 14, 2021 2:45 pm

Clearly nothing happened this fall but all trend lines have continued get darker in the meantime.

ETF Inflows Top $1 Trillion for First Time
Record share of funds goes to actively managed ETFs; many have few assets


This is the exact bottleneck that broke the dot com bubble and the epitome of "picking up nickels in front of a steam roller" carry trades. The strategy is basically betting that the music never stops during a game of musical chairs. WSJ phrases it somewhat more charitably:

A historic surge of cash has swept into exchange-traded funds, spurring asset managers to launch new trading strategies that could be undone by a market downturn.

This year’s inflows into ETFs world-wide crossed the $1 trillion mark for the first time at the end of November, surpassing last year’s total of $735.7 billion, according to Morningstar Inc. data. That wave of money, along with rising markets, pushed global ETF assets to nearly $9.5 trillion, more than double where the industry stood at the end of 2018.

Most of that money has gone into low-cost U.S. funds that track indexes run by Vanguard Group, BlackRock Inc., and State Street Corp., which together control more than three-quarters of all U.S. ETF assets. Analysts said rising stock markets, including a 25% lift for the S&P 500 this year, and a lack of high-yielding alternatives have boosted interest in such funds.

“You have this historical precedent where you have tumultuous equity markets, and more and more investors have made their way to index products,” said Rich Powers, head of ETF and index product management at Vanguard.


Very Much Related, and germane to your larger point about the diffused centralization of global finance:

BlackRock to Pull $2 Trillion in Assets From State Street
State Street was sole custodian for the investing firm’s U.S. exchange-traded fund business for more than a decade

While custody work often involves staid tasks such as maintaining investment records and handling and valuing assets, it is crucial to the smooth functioning of Wall Street and its multitrillion-dollar ETF machine. Traders, pensions and central banks depend on ETFs to invest across stock and bond markets.

BlackRock, the world’s largest ETF manager, is now shifting some of the administrative and accounting tasks State Street had performed to Citigroup Inc., JPMorgan Chase & Co. and Bank of New York Mellon Corp.

The decision reflects both the market power BlackRock wields as the world’s largest money manager and the fierce competition among the coterie of banks that vie for investment firms’ servicing business. Custody banks have often fought for clients by cutting the fees they charge, a price war that has crimped profit margins. The shift to lower-cost investments has raised the fee pressure on money managers.

State Street warned its investors earlier this year that the move was coming.

BlackRock will make the changes in late 2022. The transition is expected to take 18 months.

BlackRock’s relationship with State Street is multifaceted, reflecting the money manager’s complex ties with Wall Street. The bank also provides custody services to BlackRock mutual funds and the manager’s private-markets business. They are also competitors.

State Street’s asset-management arm was a pioneer in the development of ETFs and remains a top competitor to BlackRock. The bank has been vying for a bigger slice of bond ETFs and recently reduced fees on several bond funds, undercutting BlackRock. Both firms also sell data services to other investors.


New sources of ubiquitous pressure:

U.S. Producer Prices Climbed Sharply in November
Prices that suppliers charge businesses and other customers jumped 9.6% last month from a year ago, the most on record

The higher-than-expected producer-price numbers suggest that consumer inflation, which hit a nearly four-decade high of 6.8% last month, will stay elevated into 2022 as price pressures persist.

The index, which generally reflects supply conditions in the economy, rose 0.8% from October, an acceleration from the 0.6% gain in each of the previous three months. Higher prices for energy, wholesale food, and transportation and warehousing contributed to the pickup in inflation.


And old classics make a comeback, too -- the current housing crunch is nothing compared to what's coming based on overall demographics and population pressure.

Millennials Are Supercharging the Housing Market

For years, conventional wisdom held that millennials, born from 1981 to 1996, would become the generation that largely spurned homeownership. Instead, since 2019, when they surpassed the baby boomers to become the largest living adult generation in the U.S., they have reached a housing milestone, accounting for more than half of all home-purchase loan applications last year.

The generation’s growing appetite for homeownership is a major reason why many economists forecast home-buying demand is likely to remain strong for years to come.

Rarely has the for-sale home market been more heated than in the past year. The median price of an existing home sold in October was nearly $354,000, close to a record and up about 13% from a year ago, according to the National Association of Realtors. Prices have climbed from a year earlier for a record 116 straight months, with double-digit percentage gains touching every corner of the U.S. this year.

The frenzy has eased a bit in recent months. More buyers are pausing their searches or walking away, discouraged by the prices and a shortage of homes for sale, real-estate agents say. Some market watchers expect home sales to flatten or decline from current levels. They say the Covid-19 pandemic produced a sudden, unforeseen spike in home buying that won’t be repeated, pulling forward sales that would have been spread out over a number of years.

But most housing analysts don’t expect a wave of sustained home price cuts for quite a while. They say the pandemic and the emergence of remote work accelerated millennial home-buying trends already under way. Young families living in apartments decided to buy houses in the suburbs or leave expensive cities for cheaper ones. Millennials who already owned homes traded up for more space. Forbearance on student-loan payments, federal stimulus checks and a booming stock market helped some first-time buyers afford a down payment.

The generation accounted for 67% of first-time home purchase mortgage applications and 37% of repeat-purchase applications in the first eight months of 2021, according to CoreLogic. And as the largest cohort of millennials turned 30 this year—below the median first-time buyer age of 33—those percentages could rise higher still. That’s especially true because millennials are getting married and having children later in life than recent prior generations, events that can often prompt a home purchase.


Urban real estate is increasingly dominated by purely financial plays to create condo towers that get held as pure assets by foreign owners and rural real estate is completely undeveloped aside from big money projects. The suburbs are rotting out, with both housing and infrastructure aging decades past the expiration date implied by their shoddy and rushed construction. The only efforts at scale to mitigate this is Federal pork that's being tied up in DEI and SDG metrics.

A lot of column inches have been expended on the Evergrande saga but I don't think that's going to be a systemic trigger. (It could definitely be blamed for it anyway, there are strategic considerations for treating an economic downturn as a Chinese attack, or at the very least, regulatory failure.) It's attracting so much attention because people want to see what the precedent will be. Foreign holders will get burned but not badly enough to set off bigger problems, and Chinese holders will be protected but they have much bigger domestic problems on the horizon. The Chinese economy is basically WeWork: The Sovereign State.
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Re: Market Crash Watch Party

Postby Iamwhomiam » Tue Dec 14, 2021 4:36 pm

Federal Deficit Trends Over Time

Image

Since 2001, the U.S. has experienced a deficit each year. Beginning in 2016, increases in spending on Social Security, health care, and interest on federal debt have outpaced the growth of federal revenue.
https://datalab.usaspending.gov/americas-finance-guide/deficit/trends/


The Federal Budget in Fiscal Year 2020: An Infographic
April 30, 2021Graphic
The federal deficit in 2020 was $3.1 trillion, equal to 14.9 percent of gross domestic product.
https://www.cbo.gov/publication/57170

U.S. Federal Budget Breakdown
Learn the budget's components and its impact on the U.S. economy

BY KIMBERLY AMADEO
Updated December 07, 2021

In May 2021, President Joe Biden released a $6.011 trillion federal budget proposal for fiscal year (FY) 2022. The U.S. government estimates it will receive $4.174 trillion in revenue, creating a $1.837 trillion deficit for Oct. 1, 2021, through Sept. 30, 2022.[1]

(Note: Before President Biden's budget proposal was released, the Congressional Budget Office predicted that the deficit would be $2.3 trillion.2 As a result of the American Rescue Plan, the new estimate is $3.4 trillion.[3])

Government spending is broken down into three categories: mandatory spending, budgeted at $4.018 trillion; discretionary spending, forecasted to be $1.688 trillion; and interest on the national debt, estimated to be $305 billion.[1]

Each category of spending has different subcategories.

continued ~ https://www.thebalance.com/u-s-federal-budget-breakdown-3305789

Elvis, I'll need to reread and digest your comment and the rest of the thread before replying more thoughtfully.
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Re: Market Crash Watch Party

Postby drstrangelove » Tue Dec 14, 2021 8:28 pm

So if I understand this correctly, an Exchange Traded Fund (ETF) is a publicly traded mutual fund made up of presumably the worst debt securities that can't be sold at face value on the market? And that mutual funds presumably funnel all kinds of middle class savings in the form of pensions into the stock of these publicly traded mutual funds?

So just a new kind of CDO? They just changed the name and gave some cosmetic surgery to the form.

Also seems similar to a SPAC, whereby people buy the SPAC stock, the SPAC then buys the corporate stock on behalf of investors and retains the voting rights to control the board.
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Re: Market Crash Watch Party

Postby drstrangelove » Tue Dec 14, 2021 10:28 pm

What we got going on here, amidst the hocus pocus is:

1) Further separation of ownership from control through new financial instruments like ETF and SPACs, so the institutional legacy of families like Rockefeller, Mellon, Rothschild can control the boards of almost every publicly traded corporation using capital made up of middle class savings. This allows them to control all new money and innovation which would threaten their established institutions. As all new money is made through the process of giving up control of their innovation, since their innovation is contained within a corporation and their money within its stock. So new wine in old bottles.

2) Further acquisition of private property through mortgage scam. Government deregulates. Banks give out mortgages. Poor people buy property. Banks sell mortgages to middle class. Poor people default and property is foreclosed. Middle class lose savings. Banks collapse. Government bails out banks in exchange for all the property. Government gives custody of property to custodian like Blackrock, who sells it to affiliates.

3) Leveraged mergers & acquisitions to reset corporate debt obligations which can never be met. This creates at each step, the amalgamation of debt within a monolithic corporate structure too big to fail. You know, like governments. Though this problem is solved through operation 4.

4) Central banks blowing bubbles in everything to assist in operations 1, 2 and 3, while the Bank for International Settlements works behind the scenes on preparing a de facto global currency of CBDC so it can become the blockchain equivalent of an all seeing eye. They never had to ban cash, they'll make people throw it in the trash themselves.

5) All these things crescendo into the precarious social framework constructed during the pandemic. But not in a way congruent to the detailed plans laid out by the WEF; as for ever hard they tried, their harvard behaviorists never did figure out how to separate control of the human body from the human personality. and pavlov's dog bites when the bell tolls. though if Pfizer actually managed to replace the human immune system with a synthetic one, then the majority would become very good dogs and all bets are off.

The big question is what role will military power structures play in all this. As force ultimately trumps all other forms of power, and the international banking fraternity have no army, only the spy agencies and mercenaries like Erik Prince.
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Re: Market Crash Watch Party

Postby Wombaticus Rex » Wed Dec 15, 2021 12:19 pm

drstrangelove » Tue Dec 14, 2021 7:28 pm wrote:So if I understand this correctly, an Exchange Traded Fund (ETF) is a publicly traded mutual fund made up of presumably the worst debt securities that can't be sold at face value on the market? And that mutual funds presumably funnel all kinds of middle class savings in the form of pensions into the stock of these publicly traded mutual funds?

So just a new kind of CDO? They just changed the name and gave some cosmetic surgery to the form.

Also seems similar to a SPAC, whereby people buy the SPAC stock, the SPAC then buys the corporate stock on behalf of investors and retains the voting rights to control the board.


No, no, and no, but it's not any less dangerous for the distinction. ETFs are built to track the overall market by maintaining specific configurations -- "baskets" -- that reflect the overall exchange, so these baskets have to be adjusted, day to day, week to week, as the market composition changes. On one hand, this means they can't go full CDO and just load up on trash paper. On the other hand, this puts them into the same problem mutual funds have always had, only on considerable steroids, because they have to acquire shares of the most desirable, highest momentum stock precisely when the price pressure is most acute. They are also compelled to dump losers after those losers start losing, so once again: fucked by momentum and timing, by design.

It could be argued -- by me, every day, for years now -- that between this and Fed policy, that's 99.9% of all stock market gains in the Western world explained on one single cocktail napkin. The easy gains they get to post attracts more money which has to be allocated which drives up prices which leads yet another quarter of easy gains.

A lot of pension funds were wary of ETFs for these structural reasons but they can only say no for so long and most of them have long since gotten onboard. ETFs get a huge portion of 401(k) allocations because they're easy decisions.

As ever, it will absolutely be the "middle class" holding the bag when the music stops.
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Re: Market Crash Watch Party

Postby stickdog99 » Wed Dec 15, 2021 3:28 pm

OK, so I have to move $6,000 into some "investment retirement account" to avoid paying taxes on it.

Any ideas of what I should move it into?

Note: Pretty much every "investment" I have ever made has ended up losing money, so I basically just stopped even trying. And I have $0 crypto for exactly this reason. My net worth is basically enough cash to survive a few ascetic years, assuming that cash does not also lose all of its value.
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Re: Market Crash Watch Party

Postby drstrangelove » Wed Dec 15, 2021 9:12 pm

Ok, but if the ETFs are pegged to a market index, they are buying and selling only within that index right? They sell from a loser within the index to buy into a winner within it, making stock prices within that index more volatile but the money never escapes. But if that index collapses altogether, say dot com 2000, then ETFs pegged to nasdaq for instance, wouldn't they be trapped within a sinking ship trying to pick which room it is best to drown in?

I'm not great with microeconomics. While ETFs amplify the velocity at which a certain market index gains, wouldn't it slow down the rate at which it crashes? Or do they mix debt securities into the ETF capital as an escape hatch or something if an entire index goes bust? Or do they just move all the capital into a new ETF?
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Re: Market Crash Watch Party

Postby drstrangelove » Wed Dec 15, 2021 9:30 pm

I moved savings into stock of a supermarket/food processing company. The food processing industry is a safe bet. Picking which part within it to protect against inflation and recession, not so much.
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Re: Market Crash Watch Party

Postby Joe Hillshoist » Wed Dec 15, 2021 11:03 pm

stickdog99 » 16 Dec 2021 05:28 wrote:OK, so I have to move $6,000 into some "investment retirement account" to avoid paying taxes on it.

Any ideas of what I should move it into?

Note: Pretty much every "investment" I have ever made has ended up losing money, so I basically just stopped even trying. And I have $0 crypto for exactly this reason. My net worth is basically enough cash to survive a few ascetic years, assuming that cash does not also lose all of its value.


Wholesale price coke?
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Re: Market Crash Watch Party

Postby stickdog99 » Thu Dec 16, 2021 2:14 am

Joe Hillshoist » 16 Dec 2021 03:03 wrote:
stickdog99 » 16 Dec 2021 05:28 wrote:OK, so I have to move $6,000 into some "investment retirement account" to avoid paying taxes on it.

Any ideas of what I should move it into?

Note: Pretty much every "investment" I have ever made has ended up losing money, so I basically just stopped even trying. And I have $0 crypto for exactly this reason. My net worth is basically enough cash to survive a few ascetic years, assuming that cash does not also lose all of its value.


Wholesale price coke?


LOL. One of my friends was just set up like a bowling pin on this investment.
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