Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[petegz28]

Originally Posted by wutamess

Will it be a volatile down swing (you think) or swift and steady?

All downswings are volatile. Think of tearing down a house. You don't do it brick by brick. My target on the downside at the moment is between 2730 -2790 on the SP500.

If you ever look at a downturn in the market look at a chart of the VIX. You will quickly see that increased volatility and down markets go hand in hand.

[Discuss Thrower]

Took two hours to fill a couple of shares of the Schwab large cap ETF. I probably didn't set the stop price at the optimal level but w/ever. Commission free trades.

[petegz28]

Heard a great analysis today on CNBC by a Treasury trader who said this entire inversion crap goes back on the shoulders of the Fed and their aggressive rate hiking last year. Now they actually need to start dumping their $2.4t worth of 10 years and cut rates to get the curve back to normal.

[Hog's Gone Fishin]

I like this guy . I've watched several of his videos and i have to say I agree with 99% of what he says. Maybe that's why I like him.

[TwistedChief]

Originally Posted by petegz28

Heard a great analysis today on CNBC by a Treasury trader who said this entire inversion crap goes back on the shoulders of the Fed and their aggressive rate hiking last year. Now they actually need to start dumping their $2.4t worth of 10 years and cut rates to get the curve back to normal.

Sorry, but that’s an entirely ridiculous analysis.

Term premium - or the amount investors are compensated for investing in longer maturity interest rates - is low. A portion of that is a function of the Fed’s large holdings of Treasury securities. But a larger portion is the fact that 30y German bonds are yielding -0.20% (exerting a global pull lower in yield) and a portion is a function of lower inflation expectations than we’ve faced in many, many decades. So it’s a lot easier

You’ll hear a lot about how the inverted yield curve is an indicator of a coming recession. And while that may be true, there are lots and lots of reasons why it could easily be giving a false positive in this environment given the much reduced term premium mentioned above (ie, inversion has a much lower bar) and a sort of self-fulfilling quality to it all as the Treasury rally tends to accelerate when it inverts because of its alleged meaning. I’d also mention that liquidity - that is, the ease with which one buys and sells - in Treasuries is abysmal right now (JPM released a paper today mentioning that it declined by a factor of 3 this month), and August is seasonally a month very favorable to a flattening of the yield curve.

In any case, if the Fed actually started selling Treasury securities as per the trader you saw on CNBC (I wanna LOL at that), equities would be down 10% tomorrow.

The Fed hasn’t been the problem here, no matter what Trump tells you.

[lewdog]

Originally Posted by petegz28

You **** off...the vast majority of traders use an SMA, tard ****er.

Now you tell me!!!

Thanks a lot asshole!

[petegz28]

Originally Posted by TwistedChief

Sorry, but that’s an entirely ridiculous analysis.

Term premium - or the amount investors are compensated for investing in longer maturity interest rates - is low. A portion of that is a function of the Fed’s large holdings of Treasury securities. But a larger portion is the fact that 30y German bonds are yielding -0.20% (exerting a global pull lower in yield) and a portion is a function of lower inflation expectations than we’ve faced in many, many decades. So it’s a lot easier

You’ll hear a lot about how the inverted yield curve is an indicator of a coming recession. And while that may be true, there are lots and lots of reasons why it could easily be giving a false positive in this environment given the much reduced term premium mentioned above (ie, inversion has a much lower bar) and a sort of self-fulfilling quality to it all as the Treasury rally tends to accelerate when it inverts because of its alleged meaning. I’d also mention that liquidity - that is, the ease with which one buys and sells - in Treasuries is abysmal right now (JPM released a paper today mentioning that it declined by a factor of 3 this month), and August is seasonally a month very favorable to a flattening of the yield curve.

In any case, if the Fed actually started selling Treasury securities as per the trader you saw on CNBC (I wanna LOL at that), equities would be down 10% tomorrow.

The Fed hasn’t been the problem here, no matter what Trump tells you.

First of all this has nothing to do with Trump so talk about idiotic analysis, you just said the most idiotic thing I've heard in a while. Secondly I don't disagree with anything you said save the part of excusing the Fed. Thirdly I agree that if the Fed started selling it would put pressure on equities but that was not the point this person was making. A Fed cut and a dump of 10 years would in fact right the curve. The fact it would impact equities negatively however is expected. You can LOL all you want but newsflash, just because you are in the business doesn't mean you are the only one in the business.

[petegz28]

Originally Posted by lewdog

Now you tell me!!!

Thanks a lot asshole!

Meh, keep using your EMAs of they work for you. But I am just saying when you hear the talking heads spattering about averages they are using SMAs.

[TwistedChief]

Originally Posted by petegz28

First of all this has nothing to do with Trump so talk about idiotic analysis, you just said the most idiotic thing I've heard in a while. Secondly I don't disagree with anything you said save the part of excusing the Fed. Thirdly I agree that if the Fed started selling it would put pressure on equities but that was not the point this person was making. A Fed cut and a dump of 10 years would in fact right the curve. The fact it would impact equities negatively however is expected. You can LOL all you want but newsflash, just because you are in the business doesn't mean you are the only one in the business.

If you think the inverted yield curve has nothing to do with Trump, you don’t know as much as you think you do about markets.

And further, what’s so great about an analysis (your words) that speak to actions the Fed can take to force the yield curve steeper that would actually increase the odds of a recession? The whole issue of an inverted yield curve is what people think it represents given that historically it often - but not always - presaged recession. If the Fed decided to torque the yield curve by itself, you’d just lose the signal while doing nothing to treat the disease. Correlation <> causation.

[petegz28]

Originally Posted by TwistedChief

If you think the inverted yield curve has nothing to do with Trump, you don’t know as much as you think you do about markets.

And further, what’s so great about an analysis (your words) that speak to actions the Fed can take to force the yield curve steeper that would actually increase the odds of a recession? The whole issue of an inverted yield curve is what people think it represents given that historically it often - but not always - presaged recession. If the Fed decided to torque the yield curve by itself, you’d just lose the signal while doing nothing to treat the disease. Correlation <> causation.

You've said a lot of nothing. How has Trump inverted the yield curve? I have not heard one person claim that so you have the stage.

[TwistedChief]

Originally Posted by petegz28

You've said a lot of nothing. How has Trump inverted the yield curve? I have not heard one person claim that so you have the stage.

I don’t know whom you speak to. I worked at Goldman Sachs for a decade and was a managing director on the US Treasury Desk. Since then I’ve worked at a hedge fund as a portfolio manager. I can assure you that people I speak to on a daily basis think Trump is a prime reason the curve has inverted. And why? Simply, his trade policies have put a crimp in the global supply chain, increased uncertainty, and slowed global growth. If you want to go deeper, he crafted a stimulus package that was completely unnecessary (and in the end also far less effective) when the economy was at or near ‘full employment,’ which prompted the Fed to raise rates faster than they otherwise would’ve done. This did nothing to increase ‘trend growth’ or the supply side of the economy as had been promised.

I’m no fan of Trump and I realize I’m arguing with somewho would has a sig celebrating him, but this is my view as a market participant, not as someone who is politically biased.

[petegz28]

Originally Posted by TwistedChief

I don’t know whom you speak to. I worked at Goldman Sachs for a decade and was a managing director on the US Treasury Desk. Since then I’ve worked at a hedge fund as a portfolio manager. I can assure you that people I speak to on a daily basis think Trump is a prime reason the curve has inverted. And why? Simply, his trade policies have put a crimp in the global supply chain, increased uncertainty, and slowed global growth. If you want to go deeper, he crafted a stimulus package that was completely unnecessary (and in the end also far less effective) when the economy was at or near ‘full employment,’ which prompted the Fed to raise rates faster than they otherwise would’ve done. This did nothing to increase ‘trend growth’ or the supply side of the economy as had been promised.

I’m no fan of Trump and I realize I’m arguing with somewho would has a sig celebrating him, but this is my view as a market participant, not as someone who is politically biased.

I've heard all that before from a few and I call bullshit. That just sounds like partisan bullshit. Your opinion on his "stimulus policy" is just that. Your political bias was injected several posts back and again at the end of your post here. The Fed raised too far, too fast and it had little to do with any tax cuts or trade policies. AS usual, the Fed ****ed up and they have a history of doing so. Not to mention the trillions of $'s in negative yields globally that existed before Trump. Europe has been a shit hole for a long time. I think in a previous post you eluded to negative rates being a reason for inversion and you should stick more to that than a President wielding power to invert the yield curve.

We'll just have to agree to disagree here as you are apparently unable to have a debate on the matter without accusing those who may disagree with you of doing it out of political bias. Then again you blasted me the night all the Reek news broke claiming I was ignoring all this "evidence" and just rushing to defend Reek because I said from the off that something about the story was not right. And we saw how that worked out.

Clearly you're a professional in the game but there are lots of professionals in the game. Many with differing opinions than yours.

[Hog's Gone Fishin]

As much as I like Trump for standing up for America. I have to tell you my daughters economics professor says Trump is a complete idiot.

[scho63]

Originally Posted by Hog's Gone Fishin

As much as I like Trump for standing up for America. I have to tell you my daughters economics professor says Trump is a complete idiot.

And you are surprised how.......???

[scho63]

Originally Posted by TwistedChief

I don’t know whom you speak to. I worked at Goldman Sachs for a decade and was a managing director on the US Treasury Desk. Since then I’ve worked at a hedge fund as a portfolio manager. I can assure you that people I speak to on a daily basis think Trump is a prime reason the curve has inverted. And why? Simply, his trade policies have put a crimp in the global supply chain, increased uncertainty, and slowed global growth. If you want to go deeper, he crafted a stimulus package that was completely unnecessary (and in the end also far less effective) when the economy was at or near ‘full employment,’ which prompted the Fed to raise rates faster than they otherwise would’ve done. This did nothing to increase ‘trend growth’ or the supply side of the economy as had been promised.

I’m no fan of Trump and I realize I’m arguing with somewho would has a sig celebrating him, but this is my view as a market participant, not as someone who is politically biased.

Great post and I have a single question:

What is the perception of the trade war with China as it pertains to China's complete theft of our intellectual property, the manipulation of the currency and the complete trade imbalance?