Bad Economic Predictions

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TheCatt
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Bad Economic Predictions

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Bad Economic Predictions

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Shitty day in the market today. https://www.cnbc.com/2018/10/10/a-rare- ... l-too.html

Down + S&P down 3%, NASDAQ down 4%.AMZN down 10% in 5 days.

Stocks have been on such a run that a correction isn't a big surprise. S&P still up 4% YTD.
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Vince
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Bad Economic Predictions

Post by Vince »

It was kind of funny listening to business channels yesterday. Lots of words to say "we're really not sure, a combination of a few things. Probably."
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TheCatt
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Vince wrote: It was kind of funny listening to business channels yesterday. Lots of words to say "we're really not sure, a combination of a few things. Probably."
There's a few things: China, Italy, interest rates rising. But mostly I think it's a case of taking profits, and not wanting to be the one holding the bag. There's been a tremendous run up in tech this year.
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Down another 545 points (2%) for the Dow.

Tech actually only down 1%
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Leisher
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Post by Leisher »

I forget, is Trump using the tariffs to force balanced trade and/or is he demanding China actually crack down on pirates there?
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TheCatt
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Leisher wrote: I forget, is Trump using the tariffs to force balanced trade and/or is he demanding China actually crack down on pirates there?
Former, as far I know. I've heard a little about the latter, but like 90/10
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TheCatt
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Bad Economic Predictions

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Economy did well in Q3
The US economy grew at an annualized rate of 3.5% in the third quarter, the government said Friday.

That's still strong, though lower than the 4.2% clip the economy grew during the second quarter. It was the sixth consecutive quarter with growth above 2%.
...
Real disposable personal income grew at an annual rate of 2.5%, the same as last quarter. That's slightly above the 2.35% average growth since the end of the last recession in late 2009. But it's considerably less than the 4.0% increase in consumer spending.
...
The personal consumption expenditures price index, a measure that the Federal Reserve watches carefully when deciding whether to raise interest rates, rose only 1.6% in the third quarter. That's down from 2.0% from last quarter, and considerably short of the Fed's inflation target.
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Post by GORDON »

A good economy?

This is not normal.
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TheCatt
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Stock market today:

Let's go up 300 points!

Wait, but what if we went down 300 points instead?
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Economy added 250k jobs, wages up 3.1% 10 yr bond up 0.05 to 3.19%

This will keep pressure on the Fed to keep rates rising, as wage increases could become inflationary. Expect auto loans, mortgages, etc to keep going up. I'd hold to modest returns for the stock market through 2018-2019, especially as yields increase, and the impact of the tax cuts slows.

Recession 2020? I'd say more likely than not.
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Post by Leisher »

TheCatt wrote: Recession 2020? I'd say more likely than not.
That'd be perfect timing for another tax cut.
“Every record been destroyed or falsified, books rewritten, pictures repainted, statues, street building renamed, every date altered. The process is continuing day by day. History stops. Nothing exists except endless present in which the Party is right.”
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Leisher wrote:
TheCatt wrote: Recession 2020? I'd say more likely than not.
That'd be perfect timing for another tax cut.
Depression 2025!
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Then a new wave of government spending!
“Every record been destroyed or falsified, books rewritten, pictures repainted, statues, street building renamed, every date altered. The process is continuing day by day. History stops. Nothing exists except endless present in which the Party is right.”
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Leisher wrote: Then a new wave of government spending!
Breakdown in civil order 2029!

Sadly, the same year I plan to retire.
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Post by GORDON »

I was assured during the Obama administration that debt spending was the only way to fix an economy, and not cutting spending, because that's 100% racist. Therefor, Leisher's suggestion is sound.
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Post by Leisher »

TheCatt wrote: Breakdown in civil order 2029!
I was, literally, listing the government's go to plays for each scenario. (Or did I get them backwards?)

Speaking of all this, I was stunned that my Economics book actually gave the Bush (W) administration props for its handling of the fallout from the Dot Com bust, and lightly blasted the Obama administration for not making the right moves in the Great Recession. To that point, it had typically not weighed in politically one way or another.
“Every record been destroyed or falsified, books rewritten, pictures repainted, statues, street building renamed, every date altered. The process is continuing day by day. History stops. Nothing exists except endless present in which the Party is right.”
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Post by TheCatt »

I've never been a fan of crediting Presidents with economic growth, so this works.

Image
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TheCatt
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Bad Economic Predictions

Post by TheCatt »

TheCatt wrote: Unemployment hits 3.9%.. WSJ did a big article about the last time this happened. Hint: not good news

That being said, they were comparing a single event, and the dotcom bust was pretty different from now. I would still expect stocks to be sideways, absent a trade war or strangley exceptional stock news. And interest rates to continue to climb
7 months later... the stock market is down 2% YTD. That's a whole lot of sideways
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