5 ms·

3M is a staple in American Industry. I wonder if this is foreshadowing anything broader for the USA.

by jak92 7y ago

supernovae 7y ago
Seems companies are starting to tighten the belt a bit but the market certainly isn't watching for that yet... (or is just ignoring it)
- abakker 7y ago
  A lot of companies are really tightening their belts to deal with the cheap debt they accrued over the last few years that they now need to pay off.
- dragontamer 7y ago
  > market certainly isn't watching for that yet On the contrary. US Treasuries are plummeting in yield. 10-year is 2.53%. People are keeping their money in stocks because the bond market is also pretty messed up. Where exactly do you put your money? Treasury Yields suck, Stocks are risky. And Real Estate caused the last crash.
  - raverbashing 7y ago
    Hence the rush to "investing" in gimmicks
  - NTDF9 7y ago
    Yup. So much printed money in the hands of "investors", who are all chasing yields. No one wants to invest to create actual products. QE has been a failure
    - AnthonyMouse 7y ago
      > QE has been a failure It did what it was intended to do, which was to shore up housing prices and prevent mass defaults. The problem now is that we have a huge prickly slow motion debt crisis. We need interest rates to get back to something normal, but if you raise interest rates when people are in huge debt, they go bankrupt because they can't pay the interest. That was the original problem -- we kicked the can down the road but we never solved it. What you need is for people to have more money to pay their debts at the same time as you raise interest rates. One way to do that is for real wages to rise, but there are a lot of reasons that's difficult right now, not least due to competition from other countries for jobs. Another way is to have another round of QE but instead of using it to buy treasuries like before, we use it to fund a UBI while we raise interest rates. Then people have the incentive to pay down debts (higher interest rates) at the same time as they have the money to pay them with (UBI), and you don't compromise competitiveness because the money comes from QE rather than increased domestic labor costs. It also allows for a certain amount of asset price inflation, which is necessary to rebalance general prices against the prices of things like housing and education (and stocks) without causing nominal housing or stock prices to decline and thereby cause a bunch of defaults and malaise.
      - petra 7y ago
        >>It did what it was intended to do, which was to shore up housing prices and prevent mass defaults. So to prevent cheap housing in order to save the banks and prevent a depression ? Isn't cheap housing an amazing thing, an historical opportunity to reduce poverty etc ? And if so, doesn't it worth some sacrifice ?
        AnthonyMouse 7y ago
        > So to prevent cheap housing in order to save the banks and prevent a depression ? Not even just the banks -- all the dumb entities that had been holding toxic mortgaged-backed securities. This was everything from insurance companies (who then wouldn't have been able to pay claims) to pension funds. > Isn't cheap housing an amazing thing, an historical opportunity to reduce poverty etc ? It is -- that's the problem. Right now you have millions of people who have overpaid for a home. They paid $400K for something that should have cost $200K, and then over the past decade have paid more than $200K in just down payment and monthly payments, but still owe more than $200K of principal. If you just reset housing prices and do nothing else, all of those people are wiped out -- they still owe more than their house is worth even though they've already paid enough that they should own it outright by now. Moreover, they would end up underwater and have no reason not to default, with all the downstream consequences of that. The nominal cost they're paying for housing is already sunk -- it was set at the time they bought the house. The only way to reduce it for all of those people is for the real cost of housing to decline without changing the nominal cost. In other words, there needs to be inflation, so that nominal housing prices stay where they are and people don't end up underwater, but wages and everything else rise to catch up to them. And then people can pay back their existing mortgage more easily. That's what QE was intended to do, but it only did half the job. It kept nominal housing prices up but it didn't result in wage growth because the money went into the housing and bond markets rather than into the pockets of regular people, and that in turn drove investors from the bond market into the stock market. So now we've got a housing bubble and a stock bubble. Whee. And again, the way to deflate either of them without a big depression-inducing pop is to let their nominal prices stay where they are while adopting policies to raise nominal wages and the nominal prices of everything else back to parity.
ryansmccoy 7y ago
This looks like more a company specific issue rather than issue with broader market.
- 0xDEFC0DE 7y ago
  TBF there have been a lot of layoffs recently https://www.cnbc.com/2019/04/04/job-layoffs-surge-35percent-to-highest-level-to-start-a-year-in-a-decade.html https://www.cnbc.com/2019/04/04/job-layoffs-surge-35percent-...
  - ryansmccoy 7y ago
    Typically, when companies are having trouble generating top line growth they cut costs. And, unfortunately, since people are often the highest component of costs, they are among the first to be cut. Also, it makes sense that the amount of people being laid off is at an all time high, there are more people working now then ever before. https://www.statista.com/statistics/192356/number-of-full-time-employees-in-the-usa-since-1990/ https://www.statista.com/statistics/192356/number-of-full-ti... In other words: "There are three kinds of lies: lies, damned lies, and statistics."
    - rlucas 7y ago
      And to further complicate things, neither jobs performance nor broader economic performance (i.e. GDP growth) correlate really well with the stock market. So beware trying to market-time on macro indicators alone -- sometimes bad times for workers can be good times for corporate profits and hence shareholders.
dragontamer 7y ago
Auto sales significantly slowing. We had a yield inversion event, and now 3M is lowering output. Things certainly don't look good.
- m0zg 7y ago
  This is a layoff affecting approximately 2% of their workforce. I don't see why it's even in the news.
  - dragontamer 7y ago
    The drop in profitability is a big deal, which likely caused the 11% instantaneous drop in their stock price. Big reliable companies like MMM don't usually move 10%+ in a single day. Anything that makes them move this much is definitely a newsworthy event.
jcadam 7y ago
The housing market is starting to feel like 2007 again. I've been trying to sell for 6 months. Prices are stagnant (or slowly falling), nobody's buying.
- LarryDarrell 7y ago
  Depends on the price point and locale, right? Where I'm at (a very average 500,000 person city), anything sub-$250k in a OK neighborhood is snatched up in a day. Meanwhile, anything $300k+ (unless it is in the super-cool hip neighborhood close to 3rd wave coffee and hobo poop) is just languishing.
- wil421 7y ago
  Maybe your area? I just bought a house and 3 other houses just sold in my Neighborhood. Another 2 on my street alone are coming up for sale after their kids finish school in May. One already has a buyer and sold by owner. No Zillow or any marketing. I’m in Atlanta. What’s weird is I’ve seen about 10-15 houses Zillow bought and then upped by by $10-15k. Zillow’s been sitting longer than others but are selling with the premium they put.
  - lotsofpulp 7y ago
    It's area related, at least according to the data so far. Places with older houses, high (and increasing taxes), and undesirable weather with low or stagnant job growth are going to have a hard time selling.
    - okmokmz 7y ago
      Seattle is full of "older houses, high (and increasing taxes), and undesirable weather" but I guess the job prospects make up for it. Again, not sure what I did to deserve downvotes considering Seattle is full of old and historic buildings, neighborhoods, and districts and has pretty crappy whether. The taxes aren't the worst in the country, but they are certainly not low either. Seems like the downvote feature on this site is used as a "diagree" button similar to reddit, which I don't believe is the intent. Not even sure how I managed to hurt feelings in this case, considering I was just saying Seattle sucks based on those criteria but no one is having a hard time selling as was stated

3M is a staple in American Industry. I wonder if this is foreshadowing anything broader for the USA.

by jak92 7y ago

3M is a staple in American Industry. I wonder if this is foreshadowing anything broader for the USA.

Seems companies are starting to tighten the belt a bit but the market certainly isn't watching for that yet... (or is just ignoring it)

abakker 7y ago
A lot of companies are really tightening their belts to deal with the cheap debt they accrued over the last few years that they now need to pay off.
dragontamer 7y ago
> market certainly isn't watching for that yet On the contrary. US Treasuries are plummeting in yield. 10-year is 2.53%. People are keeping their money in stocks because the bond market is also pretty messed up. Where exactly do you put your money? Treasury Yields suck, Stocks are risky. And Real Estate caused the last crash.
- raverbashing 7y ago
  Hence the rush to "investing" in gimmicks
- NTDF9 7y ago
  Yup. So much printed money in the hands of "investors", who are all chasing yields. No one wants to invest to create actual products. QE has been a failure
  - AnthonyMouse 7y ago
    > QE has been a failure It did what it was intended to do, which was to shore up housing prices and prevent mass defaults. The problem now is that we have a huge prickly slow motion debt crisis. We need interest rates to get back to something normal, but if you raise interest rates when people are in huge debt, they go bankrupt because they can't pay the interest. That was the original problem -- we kicked the can down the road but we never solved it. What you need is for people to have more money to pay their debts at the same time as you raise interest rates. One way to do that is for real wages to rise, but there are a lot of reasons that's difficult right now, not least due to competition from other countries for jobs. Another way is to have another round of QE but instead of using it to buy treasuries like before, we use it to fund a UBI while we raise interest rates. Then people have the incentive to pay down debts (higher interest rates) at the same time as they have the money to pay them with (UBI), and you don't compromise competitiveness because the money comes from QE rather than increased domestic labor costs. It also allows for a certain amount of asset price inflation, which is necessary to rebalance general prices against the prices of things like housing and education (and stocks) without causing nominal housing or stock prices to decline and thereby cause a bunch of defaults and malaise.
    - petra 7y ago
      >>It did what it was intended to do, which was to shore up housing prices and prevent mass defaults. So to prevent cheap housing in order to save the banks and prevent a depression ? Isn't cheap housing an amazing thing, an historical opportunity to reduce poverty etc ? And if so, doesn't it worth some sacrifice ?
      - AnthonyMouse 7y ago
        > So to prevent cheap housing in order to save the banks and prevent a depression ? Not even just the banks -- all the dumb entities that had been holding toxic mortgaged-backed securities. This was everything from insurance companies (who then wouldn't have been able to pay claims) to pension funds. > Isn't cheap housing an amazing thing, an historical opportunity to reduce poverty etc ? It is -- that's the problem. Right now you have millions of people who have overpaid for a home. They paid $400K for something that should have cost $200K, and then over the past decade have paid more than $200K in just down payment and monthly payments, but still owe more than $200K of principal. If you just reset housing prices and do nothing else, all of those people are wiped out -- they still owe more than their house is worth even though they've already paid enough that they should own it outright by now. Moreover, they would end up underwater and have no reason not to default, with all the downstream consequences of that. The nominal cost they're paying for housing is already sunk -- it was set at the time they bought the house. The only way to reduce it for all of those people is for the real cost of housing to decline without changing the nominal cost. In other words, there needs to be inflation, so that nominal housing prices stay where they are and people don't end up underwater, but wages and everything else rise to catch up to them. And then people can pay back their existing mortgage more easily. That's what QE was intended to do, but it only did half the job. It kept nominal housing prices up but it didn't result in wage growth because the money went into the housing and bond markets rather than into the pockets of regular people, and that in turn drove investors from the bond market into the stock market. So now we've got a housing bubble and a stock bubble. Whee. And again, the way to deflate either of them without a big depression-inducing pop is to let their nominal prices stay where they are while adopting policies to raise nominal wages and the nominal prices of everything else back to parity.

ryansmccoy 7y ago

This looks like more a company specific issue rather than issue with broader market.

0xDEFC0DE 7y ago
TBF there have been a lot of layoffs recently https://www.cnbc.com/2019/04/04/job-layoffs-surge-35percent-to-highest-level-to-start-a-year-in-a-decade.html https://www.cnbc.com/2019/04/04/job-layoffs-surge-35percent-...
- ryansmccoy 7y ago
  Typically, when companies are having trouble generating top line growth they cut costs. And, unfortunately, since people are often the highest component of costs, they are among the first to be cut. Also, it makes sense that the amount of people being laid off is at an all time high, there are more people working now then ever before. https://www.statista.com/statistics/192356/number-of-full-time-employees-in-the-usa-since-1990/ https://www.statista.com/statistics/192356/number-of-full-ti... In other words: "There are three kinds of lies: lies, damned lies, and statistics."
  - rlucas 7y ago
    And to further complicate things, neither jobs performance nor broader economic performance (i.e. GDP growth) correlate really well with the stock market. So beware trying to market-time on macro indicators alone -- sometimes bad times for workers can be good times for corporate profits and hence shareholders.

dragontamer 7y ago

Auto sales significantly slowing. We had a yield inversion event, and now 3M is lowering output. Things certainly don't look good.

m0zg 7y ago
This is a layoff affecting approximately 2% of their workforce. I don't see why it's even in the news.
- dragontamer 7y ago
  The drop in profitability is a big deal, which likely caused the 11% instantaneous drop in their stock price. Big reliable companies like MMM don't usually move 10%+ in a single day. Anything that makes them move this much is definitely a newsworthy event.

jcadam 7y ago

The housing market is starting to feel like 2007 again. I've been trying to sell for 6 months. Prices are stagnant (or slowly falling), nobody's buying.

LarryDarrell 7y ago
Depends on the price point and locale, right? Where I'm at (a very average 500,000 person city), anything sub-$250k in a OK neighborhood is snatched up in a day. Meanwhile, anything $300k+ (unless it is in the super-cool hip neighborhood close to 3rd wave coffee and hobo poop) is just languishing.
wil421 7y ago
Maybe your area? I just bought a house and 3 other houses just sold in my Neighborhood. Another 2 on my street alone are coming up for sale after their kids finish school in May. One already has a buyer and sold by owner. No Zillow or any marketing. I’m in Atlanta. What’s weird is I’ve seen about 10-15 houses Zillow bought and then upped by by $10-15k. Zillow’s been sitting longer than others but are selling with the premium they put.
- lotsofpulp 7y ago
  It's area related, at least according to the data so far. Places with older houses, high (and increasing taxes), and undesirable weather with low or stagnant job growth are going to have a hard time selling.
  - okmokmz 7y ago
    Seattle is full of "older houses, high (and increasing taxes), and undesirable weather" but I guess the job prospects make up for it. Again, not sure what I did to deserve downvotes considering Seattle is full of old and historic buildings, neighborhoods, and districts and has pretty crappy whether. The taxes aren't the worst in the country, but they are certainly not low either. Seems like the downvote feature on this site is used as a "diagree" button similar to reddit, which I don't believe is the intent. Not even sure how I managed to hurt feelings in this case, considering I was just saying Seattle sucks based on those criteria but no one is having a hard time selling as was stated