Banks are getting a TEEENNNYYYY hit because they are exposed to lots of bad debt AND the real estate market...most of them really amped up their loan loss reserve numbers and that spooked the market and rightly so. Banks are hanging with their a$$ flapping with leverage and exposure to some serious losses and they are massively overpriced for the potential risks they WILL face let alone all the others which the market is discounting.
That Uncle Warren indicator is wrong for the same reason PE ratios and leverage ratios are wrong because there is only one thing that matters to this market...just one and it isnt market caps or GDP or what Mr Sweet tooth thinks, its the FED and interest rates...not much else.
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Banks are getting a TEEENNNYYYY hit because they are exposed to lots of bad debt AND the real estate market...most of them really amped up their loan loss reserve numbers and that spooked the market and rightly so. Banks are hanging with their a$$ flapping with leverage and exposure to some serious losses and they are massively overpriced for the potential risks they WILL face let alone all the others which the market is discounting.
That Uncle Warren indicator is wrong for the same reason PE ratios and leverage ratios are wrong because there is only one thing that matters to this market...just one and it isnt market caps or GDP or what Mr Sweet tooth thinks, its the FED and interest rates...not much else.
I don't own AMZN either, and never have.. It's always had a ridiculous PE ratio, which has always kept me away from it. Wall Street always gave Amazon a hall pass because it always showed tremendous growth in spit of big losses. They are really lucky to have flourished in this environment, because Wall Street is a bit more stringent in this "game" nowadays. It is no longer a "growth at all costs" game anymore... Also, AMZN now has its Amazon Web Services (AWS) division that carries a disproportionate amount of earnings. Credit to them for developing this , because the stuff they are known for to most people is an incredibly low margin business with hardly any earnings (compared to AWS).
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I don't own AMZN either, and never have.. It's always had a ridiculous PE ratio, which has always kept me away from it. Wall Street always gave Amazon a hall pass because it always showed tremendous growth in spit of big losses. They are really lucky to have flourished in this environment, because Wall Street is a bit more stringent in this "game" nowadays. It is no longer a "growth at all costs" game anymore... Also, AMZN now has its Amazon Web Services (AWS) division that carries a disproportionate amount of earnings. Credit to them for developing this , because the stuff they are known for to most people is an incredibly low margin business with hardly any earnings (compared to AWS).
Banks are getting a TEEENNNYYYY hit because they are exposed to lots of bad debt AND the real estate market...most of them really amped up their loan loss reserve numbers and that spooked the market and rightly so. Banks are hanging with their a$$ flapping with leverage and exposure to some serious losses and they are massively overpriced for the potential risks they WILL face let alone all the others which the market is discounting. That Uncle Warren indicator is wrong for the same reason PE ratios and leverage ratios are wrong because there is only one thing that matters to this market...just one and it isnt market caps or GDP or what Mr Sweet tooth thinks, its the FED and interest rates...not much else.
That surprises me a bit. I thought the Fed had an infinite number of bullets in the crisis, so now it's a concern that the banks can't be backstopped? That's a bit of a two face from the investment community, especially for a problem that was not of their making.
Regarding the Buffett Indicator, it's probably the most meaningful gauge we have. I know you over the years you've talked about how Dow should be at much lower levels, but curious to know if you use any metric to help. I agree w you in past discussions that fed intervention is artificially inflating asset prices, but by how much seems a difficult one to answer.
1
Quote Originally Posted by wallstreetcappers:
Banks are getting a TEEENNNYYYY hit because they are exposed to lots of bad debt AND the real estate market...most of them really amped up their loan loss reserve numbers and that spooked the market and rightly so. Banks are hanging with their a$$ flapping with leverage and exposure to some serious losses and they are massively overpriced for the potential risks they WILL face let alone all the others which the market is discounting. That Uncle Warren indicator is wrong for the same reason PE ratios and leverage ratios are wrong because there is only one thing that matters to this market...just one and it isnt market caps or GDP or what Mr Sweet tooth thinks, its the FED and interest rates...not much else.
That surprises me a bit. I thought the Fed had an infinite number of bullets in the crisis, so now it's a concern that the banks can't be backstopped? That's a bit of a two face from the investment community, especially for a problem that was not of their making.
Regarding the Buffett Indicator, it's probably the most meaningful gauge we have. I know you over the years you've talked about how Dow should be at much lower levels, but curious to know if you use any metric to help. I agree w you in past discussions that fed intervention is artificially inflating asset prices, but by how much seems a difficult one to answer.
I think I mentioned this earlier, but one of the most interesting indicators I like to like to look at is the "Buffet Indicator," or the percentage of total market cap (TMC) relative to the US GDP. I like it because it strips away "earnings" and all the financial games that companies play with their EPS. This breaks it down to simple goods & services sold. So , this indicator correctly predicted great buying opportunities in both prior recession periods, 2002 & 2009. The indicator went "negative" in these prior recessions. Where do we see the indicator today ?? Quite Expensive AND with a GDP figure that will be declining precipitously in the months ahead. Not good. So let's summarize . We have a market that is expensive , even by "normal" historical standards, AND with a virus left to its own devices. Let's just say a retest of March Bottoms (IMHO) has a greater probability of occurring before we see new highs. I'm even giving 5% juice, considering the market has now made up more than half of its losses. Lol.
Rush— have you ever read or studied any economic or monetary policy theory? Or is that not your thing? I understand if not. If so, I would recommend a guy for you to read. He has written some good articles you might be interested in. If not — no biggie.
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Quote Originally Posted by Rush51:
I think I mentioned this earlier, but one of the most interesting indicators I like to like to look at is the "Buffet Indicator," or the percentage of total market cap (TMC) relative to the US GDP. I like it because it strips away "earnings" and all the financial games that companies play with their EPS. This breaks it down to simple goods & services sold. So , this indicator correctly predicted great buying opportunities in both prior recession periods, 2002 & 2009. The indicator went "negative" in these prior recessions. Where do we see the indicator today ?? Quite Expensive AND with a GDP figure that will be declining precipitously in the months ahead. Not good. So let's summarize . We have a market that is expensive , even by "normal" historical standards, AND with a virus left to its own devices. Let's just say a retest of March Bottoms (IMHO) has a greater probability of occurring before we see new highs. I'm even giving 5% juice, considering the market has now made up more than half of its losses. Lol.
Rush— have you ever read or studied any economic or monetary policy theory? Or is that not your thing? I understand if not. If so, I would recommend a guy for you to read. He has written some good articles you might be interested in. If not — no biggie.
No, have not really studied any economic or monetary policy theory. That's a good question. I gotta feeling it might be real granular on the topic. I do understand the dual mandate by the Fed, at least by today's standards. Does this guy go deep into the inner workings of the Fed and its purpose ?
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No, have not really studied any economic or monetary policy theory. That's a good question. I gotta feeling it might be real granular on the topic. I do understand the dual mandate by the Fed, at least by today's standards. Does this guy go deep into the inner workings of the Fed and its purpose ?
No, have not really studied any economic or monetary policy theory. That's a good question. I gotta feeling it might be real granular on the topic. I do understand the dual mandate by the Fed, at least by today's standards. Does this guy go deep into the inner workings of the Fed and its purpose ?
Scott Sumner. He does very much go into the workings. But he also has a blog themoneyillusion that the average guy can understand. Pretty much the leading Market Monetarism guy. Good concise article also about the relationship between interest rates and monetary policy. Couple of good articles on the Federal Reserve System and how it works and why we have it. He wrote a good article some time back on prediction markets and NGDP connection.
I would recommend reading some of his stuff on QE, Fed, and Monetary Policy. Most of them are quick easy reads. There are some interviews with him as well.
There are serendipitous things, especially in the blog, about things like why West coast is doing better with Coronavirus than East coast — even though it hit there first, etc.
I an not trying to change your mind about what you say about the market. I just think it would be good reading for you. Like you say — you like a good read. I certainly understand if this is not your type of reading though. I’m not saying read his detailed stuff.
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Quote Originally Posted by Rush51:
No, have not really studied any economic or monetary policy theory. That's a good question. I gotta feeling it might be real granular on the topic. I do understand the dual mandate by the Fed, at least by today's standards. Does this guy go deep into the inner workings of the Fed and its purpose ?
Scott Sumner. He does very much go into the workings. But he also has a blog themoneyillusion that the average guy can understand. Pretty much the leading Market Monetarism guy. Good concise article also about the relationship between interest rates and monetary policy. Couple of good articles on the Federal Reserve System and how it works and why we have it. He wrote a good article some time back on prediction markets and NGDP connection.
I would recommend reading some of his stuff on QE, Fed, and Monetary Policy. Most of them are quick easy reads. There are some interviews with him as well.
There are serendipitous things, especially in the blog, about things like why West coast is doing better with Coronavirus than East coast — even though it hit there first, etc.
I an not trying to change your mind about what you say about the market. I just think it would be good reading for you. Like you say — you like a good read. I certainly understand if this is not your type of reading though. I’m not saying read his detailed stuff.
SPCE been working for me a Long shot >> RAFA at like .25cents has been hanging hard..1300 shares and i been hanging thru this mess ..i am in at 28 and 30.. reefer madness.
AMD ARKK MGM get down
bigFnPOO
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SPCE been working for me a Long shot >> RAFA at like .25cents has been hanging hard..1300 shares and i been hanging thru this mess ..i am in at 28 and 30.. reefer madness.
Raiders.. those articles really do get in the weeds of monetary policy and the Fed. It's just not my cup o' tea. I wish it were not the case , but the Fed should really be nothing but a silent observer in the function of markets. The fact that we are still discussing the role and intervention of Fed policy in our markets should give us pause. What happen to the good old ' days of raising and lowering rates within an economic cycle ? We are not in a good place when when we must talk (again) about unconventional Fed intervention
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Raiders.. those articles really do get in the weeds of monetary policy and the Fed. It's just not my cup o' tea. I wish it were not the case , but the Fed should really be nothing but a silent observer in the function of markets. The fact that we are still discussing the role and intervention of Fed policy in our markets should give us pause. What happen to the good old ' days of raising and lowering rates within an economic cycle ? We are not in a good place when when we must talk (again) about unconventional Fed intervention
Raiders.. those articles really do get in the weeds of monetary policy and the Fed. It's just not my cup o' tea. I wish it were not the case , but the Fed should really be nothing but a silent observer in the function of markets. The fact that we are still discussing the role and intervention of Fed policy in our markets should give us pause. What happen to the good old ' days of raising and lowering rates within an economic cycle ? We are not in a good place when when we must talk (again) about unconventional Fed intervention
Those were simpler ones. But there are for sure some more that get in the weeds. But I think if you read him a bit you can understand what he is saying better.
His blog is interesting because he gets into a wide variety of things and has good discussions.
There is always in the back of our minds a sense of trying to learn from the Great Depression.
I get time later I will isolate some material that explains this from someone else that has a similar perspective. I’m not even saying I agree with them. I just think it would help give you a better feeling on this.
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Quote Originally Posted by Rush51:
Raiders.. those articles really do get in the weeds of monetary policy and the Fed. It's just not my cup o' tea. I wish it were not the case , but the Fed should really be nothing but a silent observer in the function of markets. The fact that we are still discussing the role and intervention of Fed policy in our markets should give us pause. What happen to the good old ' days of raising and lowering rates within an economic cycle ? We are not in a good place when when we must talk (again) about unconventional Fed intervention
Those were simpler ones. But there are for sure some more that get in the weeds. But I think if you read him a bit you can understand what he is saying better.
His blog is interesting because he gets into a wide variety of things and has good discussions.
There is always in the back of our minds a sense of trying to learn from the Great Depression.
I get time later I will isolate some material that explains this from someone else that has a similar perspective. I’m not even saying I agree with them. I just think it would help give you a better feeling on this.
I thought I posted yesterday about the market in this thread, but apparently not ! Lol.
In any event, the action wasn't much different today from yesterday. What I am seeing is a "bifurcated" market between the haves and the have nots. The Mega stocks (FAANG + M) are excelling and doing great, with AMZN and NFLX hitting all time highs in recent days. They are really taking over in the "shelter in place" kind of times we are living in. Watch lots of TV, and have "even more" stuff delivered to people's homes. I get it. That makes sense, but this bifurcation can't go on much longer IMHO. They are doing most of the heavy lifting, while sectors like Banking & Energy are getting kicked in the knees... yet again. Just like yesterday.
Also , Boeing is starting to roll over again with a -8% loss on the day. They are down almost -25% from their March recovery high. Their predicament is a tough one. Airline cancellation orders and a 737 MAX that has no timetable for a return to service. I can't remember a company that was flying so high years ago (pun intended), and hit the crapper in such a short period of time.
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I thought I posted yesterday about the market in this thread, but apparently not ! Lol.
In any event, the action wasn't much different today from yesterday. What I am seeing is a "bifurcated" market between the haves and the have nots. The Mega stocks (FAANG + M) are excelling and doing great, with AMZN and NFLX hitting all time highs in recent days. They are really taking over in the "shelter in place" kind of times we are living in. Watch lots of TV, and have "even more" stuff delivered to people's homes. I get it. That makes sense, but this bifurcation can't go on much longer IMHO. They are doing most of the heavy lifting, while sectors like Banking & Energy are getting kicked in the knees... yet again. Just like yesterday.
Also , Boeing is starting to roll over again with a -8% loss on the day. They are down almost -25% from their March recovery high. Their predicament is a tough one. Airline cancellation orders and a 737 MAX that has no timetable for a return to service. I can't remember a company that was flying so high years ago (pun intended), and hit the crapper in such a short period of time.
Well, the Friday market had good follow-through from that 800 futures on Thursday ; the market ended up a little over 700 points. The disconnect between Main Street and Wall Street is only widening ! This can only continue for so long.. Not good !
And did anyone else catch that oil tanked almost -9% yesterday, while oil stocks ripped higher . Lol. It's almost as though stock investors have said a big "screw you" to the daily movements of oil. Obviously, the disconnect can't continue over long periods, but it is funny the oil stocks had a polar opposite direction for today.. What an absolute wild ride for those of us that chose to get in on some of these oil names last month. (it feels as though we've been through a whole year of price movements.. maybe more. Lol. )
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Well, the Friday market had good follow-through from that 800 futures on Thursday ; the market ended up a little over 700 points. The disconnect between Main Street and Wall Street is only widening ! This can only continue for so long.. Not good !
And did anyone else catch that oil tanked almost -9% yesterday, while oil stocks ripped higher . Lol. It's almost as though stock investors have said a big "screw you" to the daily movements of oil. Obviously, the disconnect can't continue over long periods, but it is funny the oil stocks had a polar opposite direction for today.. What an absolute wild ride for those of us that chose to get in on some of these oil names last month. (it feels as though we've been through a whole year of price movements.. maybe more. Lol. )
So, did anyone catch that Apple just released a lower-priced iPhone ($399). Lol. I know, who cares. No one gives a crap about this on the surface, but I think this could has long term repercussions for the company. They have just brought back from the dead this "SE" model phone. It was killed off earlier because it was such a lower-tier phone and that wasn't Apple's forte. But Now, Apple is recognizing they "must" bring back this phone due to the economy, but the problem I see it causing is "cannibalizing" higher priced phones. The talking heads on CNBC weren't concerned the least bit about Apple, but how could they not be concerned ?? They make their money selling over-priced gadgets . Main Street is on the verge of an economic depression, and we are to believe that this company isn't going to be effected ? Forget about the idea of buying a lower-priced phone ! How about the reality of people can't affording a new phone at all and hanging with the one they have ? How on earth is this company only -14% off its 52-week high ? Lol.
This company, out of any of the other big tech FAANG + M stocks , has big time exposure (wayyy more than the others) to a deep economic recession IMHO.. and I haven't even begun to talk about the manufacturing challenges this company will have in the years ahead. I talked about this a bit in Gamble's thread. China could really be a nemesis and a pain for Apple if our trade relations deteriorate further w/ China. No other company in the world is more levered to China than Apple, employing (indirectly) literally millions of Chinese Migrants by way of Foxconn.. I have a vested interest in Apple doing well since I own index funds , (and they are the 2nd biggest publicly traded company in the world)... Here's hoping they do well, but I just see Apple having BIG challenges in their future.
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So, did anyone catch that Apple just released a lower-priced iPhone ($399). Lol. I know, who cares. No one gives a crap about this on the surface, but I think this could has long term repercussions for the company. They have just brought back from the dead this "SE" model phone. It was killed off earlier because it was such a lower-tier phone and that wasn't Apple's forte. But Now, Apple is recognizing they "must" bring back this phone due to the economy, but the problem I see it causing is "cannibalizing" higher priced phones. The talking heads on CNBC weren't concerned the least bit about Apple, but how could they not be concerned ?? They make their money selling over-priced gadgets . Main Street is on the verge of an economic depression, and we are to believe that this company isn't going to be effected ? Forget about the idea of buying a lower-priced phone ! How about the reality of people can't affording a new phone at all and hanging with the one they have ? How on earth is this company only -14% off its 52-week high ? Lol.
This company, out of any of the other big tech FAANG + M stocks , has big time exposure (wayyy more than the others) to a deep economic recession IMHO.. and I haven't even begun to talk about the manufacturing challenges this company will have in the years ahead. I talked about this a bit in Gamble's thread. China could really be a nemesis and a pain for Apple if our trade relations deteriorate further w/ China. No other company in the world is more levered to China than Apple, employing (indirectly) literally millions of Chinese Migrants by way of Foxconn.. I have a vested interest in Apple doing well since I own index funds , (and they are the 2nd biggest publicly traded company in the world)... Here's hoping they do well, but I just see Apple having BIG challenges in their future.
Any opinion on the market going forward? Suprised by the 25% run up so far especially with all the bad economic news
It's just not sustainable IMHO... You can't have all this pain in the real world (and getting worse), and have the markets fly higher. Here's something that should give everyone pause. Small businesses make up almost 50% of all workers in this country, and all that money that was geared up in the CARES ACT for Small Business has already been exhausted this week ($349B). Where is the help for these business owners ? The Fed has done their part and helped Wall Street (sarcasm). Where is Congress to further help and support the people of Main Street ?
Of course anything is possible when you have the Federal Reserve at your back, but I just can't see how this disconnect between Main Street and Wall Street can continue much longer. It seems as though Investors are just looking at their March 2009 playbook and believing, ..... "" this was it! The worst is over, the Fed has our back and we can continue inflating asset prices again ! "" LOL.. I'm going to say if this disconnect continues, we're gonna see a lot of people pissed off on Main Street that will make Occupy Wallstreet in 2009 era look like Child's Play.
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Quote Originally Posted by mjm1012:
Any opinion on the market going forward? Suprised by the 25% run up so far especially with all the bad economic news
It's just not sustainable IMHO... You can't have all this pain in the real world (and getting worse), and have the markets fly higher. Here's something that should give everyone pause. Small businesses make up almost 50% of all workers in this country, and all that money that was geared up in the CARES ACT for Small Business has already been exhausted this week ($349B). Where is the help for these business owners ? The Fed has done their part and helped Wall Street (sarcasm). Where is Congress to further help and support the people of Main Street ?
Of course anything is possible when you have the Federal Reserve at your back, but I just can't see how this disconnect between Main Street and Wall Street can continue much longer. It seems as though Investors are just looking at their March 2009 playbook and believing, ..... "" this was it! The worst is over, the Fed has our back and we can continue inflating asset prices again ! "" LOL.. I'm going to say if this disconnect continues, we're gonna see a lot of people pissed off on Main Street that will make Occupy Wallstreet in 2009 era look like Child's Play.
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