Inverted yield curve

[Run Silent]

Originally Posted by WestRace

The market has been tanking lately

Yup - it's just doing terrible. I mean people out in the streets rioting against the banks, trying to sell every security and go liquid to cash, people jumping out of office windows...mass hysteria...

Oh.....um........

[WestRace]

Mark my words. Sh$t will hit the fan unless the FED will drop 100 basis point or more. China deal as likely as pigs will fly.

[Run Silent]

Originally Posted by WestRace

Mark my words. Sh$t will hit the fan unless the FED will drop 100 basis point or more. China deal as likely as pigs will fly.

a) We shall see. I work in a similar field as you and don't see it.

b) China deal likely? Agreed, No freaking way.

c) Drop in the rate of 100 BP? Yeah, I can see the fed doing that realistically.

If they don't - the shit will hit the fan? Very Doubtful. I can see a market correction, to be sure, but nothing like the doom and gloom you've been spouting on about since this thread was created. What are you going to recommend next - for everyone to go buy gold? Good grief, I hope not.

[2000cs]

The basic thesis remains the same: The US is the safest haven for financial assets. Funds will continue to flow to US markets, as they have to the UST for example. Equities, over the long term, will continue to outperform.

If you’re a short-term investor, day trader, rapid trader, etc., then you may want to be short here and there, but if you’re a long-term investor these stock market dips, however severe they turn out to be, are buying opportunities.

My belief is that the Fed should not have raised in December - got caught in the squeeze between currency moves and unwinding QE so had to backtrack last month. May have to do it again before year end essentially for the same reasons. Economy is fundamentally strong with little sign of inflation or recession.

IMO: Biggest risk to the market is stupid fiscal policy like (a) major new taxes to fund Medicare for all, student loan relief, etc. (b) carbon tax to be redistributed (because the redistribution will happen but tax collections will be much less than estimated), or (c) industrial vilification which puts companies and execs in the crosshairs (when they don’t deserve it, for those that do, have at ‘em). Any of these could greatly slow growth or push the US into recession.

[dsad1]

I have to give credit to Obama for starting it and Trump following through with it. They made the U.S the new tax haven. It's now really easy to bring money into the U.S. and extremely hard to take it out. It's forcing companies/individuals to keep their money here. The U.S. has put a ton of pressure on other countries to scrutinize every single dollar they receive from the U.S, so people are forced to keep reinvesting here.

[CLABRO]

Originally Posted by dsad1

I have to give credit to Obama for starting it and Trump following through with it. They made the U.S the new tax haven. It's now really easy to bring money into the U.S. and extremely hard to take it out. It's forcing companies/individuals to keep their money here. The U.S. has put a ton of pressure on other countries to scrutinize every single dollar they receive from the U.S, so people are forced to keep reinvesting here.

I wouldn't say people are 'forced' to keep investing here in the U.S. It's more like people 'want' to keep investing in the U.S. Generally speaking, America is the best place in the world to invest and people who don't live in the U.S. know that as well and thus the reason they invest here.

[Fritzer]

Buy gold/silver.

[qba335i]

Originally Posted by WestRace

Mark my words. Sh$t will hit the fan unless the FED will drop 100 basis point or more. China deal as likely as pigs will fly.

1) China deal will not happen. It is all about global supremacy not some trade balance.
2) as long as we do not see increase in credit defaults inverted curve is not a big deal.

[WestRace]

The biggest risk is probably the FED itself. Lowering rate is effectively a way to redistributing but in reverse.

[Run Silent]

Originally Posted by Fritzer

Buy gold/silver.

Please don't.

[dsad1]

Originally Posted by CLABRO

I wouldn't say people are 'forced' to keep investing here in the U.S. It's more like people 'want' to keep investing in the U.S. Generally speaking, America is the best place in the world to invest and people who don't live in the U.S. know that as well and thus the reason they invest here.

That is the reason they initially invest here, but not necessarily why they are now keeping their money here. The taxes to bring the money back home are crazy, in some situations you could be triple taxed.

[Fritzer]

Originally Posted by Run Silent

Please don't.

Don't come crying when you stocked up on USD in your bank account and it's inflated even more when the next recession hits!!

[qba335i]

Originally Posted by Run Silent

Please don't.

Gold can be a very good/profitable trade. Gold/msci world has a pretty nice set up.

[Run Silent]

Originally Posted by Fritzer

Don't come crying when you stocked up on USD in your bank account and it's inflated even more when the next recession hits!!

No. Just no. If the world is so bad that the USD has collapsed, you should buy food, guns, and water - not gold.

Originally Posted by qba335i

Gold can be a very good/profitable trade. Gold/msci world has a pretty nice set up.

No again. Just no. It is in my professional opinion that gold is a terrible investment.

I have to go on this rant every year or so - so here you go:

Personally, I’m not a believer of precious metals as an investment. It’s a commodity, which translated means it creates no revenue. I invest in things that create revenue.

Bricks don’t create revenue, so I don’t buy bricks. I don’t buy cloth. I don’t buy commodities, and I don’t buy little gold or silver bricks either. The point is that the only thing which drives the market price of gold is demand. The only things that drive demand for gold are greed or fear. People feel like the price is going to go up, so they jump in. Greed might be too strong a word, so it might be speculation. You are estimating people’s emotions. That’s all that drives commodities because gold does not create revenue. The only way gold goes up in value is if more people want it. If less people want it, it goes down.

The gold thing is driven by fear, versus if I buy a piece of real estate. If I buy a $300,000 rental house, it will make me a certain number of dollars in rent. I have the rent, which I can analyze and say that if I do my job as a landlord and fill up the property, then that investment will create revenue. It’s not a brick. It creates revenue and it has the future to create revenue. It can also go up in value in addition to that. Some people are also speculating in gold, which would be on the greed side, or the profit motivation side. It’s fine to speculate in things if you want to, but I don’t like markets where the result is based on the quality of something that is not going on.

If I buy mutual funds, which have stocks in them, that creates revenue. If you do an analysis of Apple or DuPont or HP or McDonald’s or Home Depot, where you can analyze the level of debt they have, the growth level they have, their sales, profit-earnings ratio, you can look at those numbers and determine that the stock is going to go up and be worth more. It is predictable based on the math. It is not based on someone’s whim. Yes, on someone’s whim, that company could be mismanaged, but it’s pretty safe to say that Apple will be all right for a while. I buy in good growth stock companies in good growth stock mutual funds. But that’s an analysis of numbers; I’m not buying a brick, I’m buying cash. I put cash out and I get cash back.

In this case, you put cash out and you own a brick. Then you wait to see if fear drives the price of the brick up. The instant there is less fear, the price of the brick will come down. Gold has a horrible track record. Here’s another hint: If your investments are advertised right after a Snuggie ad, you are probably not in a good category of investments.

If Snuggie is on, and then right after that, catheters and then gold coins, something is wrong. Some people might say that real estate is on there, but it’s get-rich-quick real estate, which I don’t advocate at all. But owning real estate does make sense.

/Rant.

[Fritzer]

Originally Posted by Run Silent

No. Just no. If the world is so bad that the USD has collapsed, you should buy food, guns, and water - not gold.

I never said that it would collapse, just that it would inflate even more than it already has.

[Run Silent]

Originally Posted by Fritzer

I never said that it would collapse, just that it would inflate even more than it already has.

Then buy FOREX. Don't buy gold. Terrible investment.

[Fritzer]

Originally Posted by Run Silent

Then buy FOREX. Don't buy gold. Terrible investment.

Yeah but all forex pretty much follow the dollar. I'm not hedging 100% of my investments in bullion, about 10%. Not looking to make money, just preserve it.

[Run Silent]

Originally Posted by Fritzer

Yeah but all forex pretty much follow the dollar. I'm not hedging 100% of my investments in bullion, about 10%. Not looking to make money, just preserve it.

Same issue - a commodity isn't a hedge against inflation when the value of the commodity has no intrinsic worth.

If you want to invest in something other than the market, solid real estate is a solid option.

[WestRace]

When the market realizes the central banks and the FED can't save the economy, watch out below.

It's the battle between supply and demand economy. The FED thinks they can stimulate by using the demand side. But the supply side won't budge. I mean how many toasters can you buy?

[roastbeef]

Originally Posted by Run Silent

c) Drop in the rate of 100 BP? Yeah, I can see the fed doing that realistically.

what do you guys think this will do for mortgage rates? i've been holding off on a refi to see what happens on the 18th.

[2000cs]

Originally Posted by roastbeef

what do you guys think this will do for mortgage rates? i've been holding off on a refi to see what happens on the 18th.

I don’t watch mortgage rates very closely, but since they are tied to the long end of the curve I’d think they are about done moving down. Maybe a few more basis points but likely nothing dramatic.

That’s based on the thesis that the Fed is accommodating the trade wars (tariffs), but fundamentally the economy is strong and strongest in the developed world. Thus the Fed may ease again in Sept (or Dec) but that isn’t likely to move the long end of the curve much if at all.

If we get a deal with China and other major trading partners, then there is upside to rates and probably inflation.

If the economy is headed to recession or negative rates are on the horizon, long rates will fall more. I don’t think that is the case with full employment and an election upcoming.

[roastbeef]

interesting. the lender i'm talking to is urging me to hold off for a little bit longer. he's speculating the rates are going to go a little lower- and so far, he has been spot on since may when i approached him about rates and a refi. he seems to think there is a perfect storm brewing with the fed's involvement, an election coming up, and a possible trade war.