5 ms·

This is one of those instances where everybody screams for a market crash and we may just not get it. Too many people are positioned to benefit from a crash rig

by fosk 4y ago

This is one of those instances where everybody screams for a market crash and we may just not get it. Too many people are positioned to benefit from a crash right now, which is exactly why it's not going to happen.

rewtraw 4y ago
have you seen the markets lately?
- jonas21 4y ago
  The ones that are up 50% over the last 3 years?
  - Izkata 4y ago
    Yep, food markets are up, don't think it's that bad yet though.
- neogodless 4y ago
  https://imgur.com/a/Fuwnmgn https://imgur.com/a/Fuwnmgn Yup - the growth the past 2 years has been great. Up 33%! Over the past 5 years, 70% growth. Looking at short timelines doesn't tell you much. There's some fear in the investment world, but the market is not "the economy." It's more of an indicator of what's going on in the minds of investors. They might think we're already in a recession, or are heading towards one, that doesn't make it so.
fullshark 4y ago
Yep people/firms with money have no where to put it and are salivating at companies becoming bargains after a chaotic summer, greed will overtake fear before you know it.
- walleeee 4y ago
  the idea that there's nowhere to put capital without a ballooning or nosediving market is a thread in the mental straitjacket that untethered us from reality in the first place there is an ocean of opportunity, it's just that investing in it is less likely to maximize alpha and more likely to benefit all our children and grandchildren at some immediate financial risk to ourselves and direct dependents
  - fullshark 4y ago
    Easy to say when it's not your money, I'm mostly hunting alpha and not surprised most institutions are as well... except maybe big educational / charity endowments who presumably have nobler goals.
jmoak3 4y ago
I'd wager more people are poised to lose from a crash than ever before. Roughly 1/3rd of America is over 55+ [1], the highest it's ever been (I believe), and the average baby boomer retirement savings are ~$200k [2]. Asset prices falling is an existential and imminent danger for these people. If prices stop rising, they will have to be supported directly by family or the state, or go out onto the street. For every working-age HN commenter calling for blood to run through Wall Street to be able to buy a starter home, there are just as many people terrified of the future. [1] https://www.populationpyramid.net/united-states-of-america/2022/ https://www.populationpyramid.net/united-states-of-america/2... [2] https://finance.yahoo.com/news/average-retirement-savings-baby-boomers-125500443.html#:~:text=According%20to%20the%20Transamerica%20Center,income%20of%20%248%2C000%20per%20year https://finance.yahoo.com/news/average-retirement-savings-ba.... [2 alt] https://www.fool.com/retirement/2021/08/24/heres-baby-boomers-median-retirement-savings-balan/ https://www.fool.com/retirement/2021/08/24/heres-baby-boomer...
- thebean11 4y ago
  $200k not including social security though, which won't be nearly as impacted by a crash in equities. I also wonder how much of that $200k is in stocks vs bonds / CDs / home equity (not sure if this is counted) etc.
  - jmoak3 4y ago
    Great observation, however Social Security only has 11 years before the system as we know it today has to cut payments [1]. I too would love to know the breakdown of the 200k. Even with Social Security payments however I still think a sharp fall in home prices or stock prices would be catastrophic for the retiring generation. [1] https://www.washingtonpost.com/business/2021/09/03/social-security-insolvency/ https://www.washingtonpost.com/business/2021/09/03/social-se... [1 skip paywall] https://archive.ph/OaBIv https://archive.ph/OaBIv EDIT: changed social security going from "bankrupt" to "cutting payments"
    - thebean11 4y ago
      There's a second option where they just raise social security taxes or inject other tax revenue into it. I think that's more likely, cutting payments seems politically unfeasible.
lamontcg 4y ago
Short term (3-6 months) I agree with you, and I think we've been seeing that for the past ~2 weeks with the stock market bouncing off its lows. Longer term, I'm pretty confident you're incorrect. The Fed is looking at the wage increases in the economy (which are blunting the effects of commodities inflation on the consumer) along with unionization drives and will definitely be hitting the brakes hard on the economy. So for example: "Fed Governor Christopher Waller says he's prepared to take rates past 'neutral' to fight inflation" https://www.msn.com/en-us/money/markets/fed-governor-christopher-waller-says-hes-prepared-to-take-rates-past-neutral-to-fight-inflation/ar-AAXT9co https://www.msn.com/en-us/money/markets/fed-governor-christo... But to really throw the brakes on the economy the yield curve should actually invert and short rates should be at least 3-4% or more. And I disagree with the title article that the recession is likely to be "mild" since the Fed is going to introduce significant amounts of pain and things like CMBS are pretty much primed to detonate and create a financial crisis (along with the likelihood of a massive crypto collapse). If the Republicans take over congress that will also create a lot more excitement than in 2008 since many of the Tea Party Republicans are ostensibly against bailouts and TBTF and will see economic chaos as a way to damage Biden.
- fosk 4y ago
  > Fed Governor Christopher Waller says he's prepared to take rates past 'neutral' to fight inflation Good cop, bad cop: "Bullard says U.S. Fed could cut rates in 2023, 2024 once inflation under control" https://www.theglobeandmail.com/business/international-business/us-business/article-bullard-says-us-fed-could-cut-rates-in-2023-2024-once-inflation-under/ https://www.theglobeandmail.com/business/international-busin...
  - lamontcg 4y ago
    "once inflation under control" is the key qualifier there. given the rise in wages and overhang in jobs i don't think getting inflation under control will be easy. "US fed could cut rates in 2023, 2024 once the economy has been pushed into a deep recession" is how I read that statement.

by fosk 4y ago

rewtraw 4y ago

have you seen the markets lately?

jonas21 4y ago
The ones that are up 50% over the last 3 years?
- Izkata 4y ago
  Yep, food markets are up, don't think it's that bad yet though.
neogodless 4y ago
https://imgur.com/a/Fuwnmgn https://imgur.com/a/Fuwnmgn Yup - the growth the past 2 years has been great. Up 33%! Over the past 5 years, 70% growth. Looking at short timelines doesn't tell you much. There's some fear in the investment world, but the market is not "the economy." It's more of an indicator of what's going on in the minds of investors. They might think we're already in a recession, or are heading towards one, that doesn't make it so.

fullshark 4y ago

Yep people/firms with money have no where to put it and are salivating at companies becoming bargains after a chaotic summer, greed will overtake fear before you know it.

walleeee 4y ago
the idea that there's nowhere to put capital without a ballooning or nosediving market is a thread in the mental straitjacket that untethered us from reality in the first place there is an ocean of opportunity, it's just that investing in it is less likely to maximize alpha and more likely to benefit all our children and grandchildren at some immediate financial risk to ourselves and direct dependents
- fullshark 4y ago
  Easy to say when it's not your money, I'm mostly hunting alpha and not surprised most institutions are as well... except maybe big educational / charity endowments who presumably have nobler goals.

jmoak3 4y ago

I'd wager more people are poised to lose from a crash than ever before. Roughly 1/3rd of America is over 55+ [1], the highest it's ever been (I believe), and the average baby boomer retirement savings are ~$200k [2]. Asset prices falling is an existential and imminent danger for these people. If prices stop rising, they will have to be supported directly by family or the state, or go out onto the street. For every working-age HN commenter calling for blood to run through Wall Street to be able to buy a starter home, there are just as many people terrified of the future. [1] https://www.populationpyramid.net/united-states-of-america/2022/ https://www.populationpyramid.net/united-states-of-america/2... [2] https://finance.yahoo.com/news/average-retirement-savings-baby-boomers-125500443.html#:~:text=According%20to%20the%20Transamerica%20Center,income%20of%20%248%2C000%20per%20year https://finance.yahoo.com/news/average-retirement-savings-ba.... [2 alt] https://www.fool.com/retirement/2021/08/24/heres-baby-boomers-median-retirement-savings-balan/ https://www.fool.com/retirement/2021/08/24/heres-baby-boomer...

thebean11 4y ago
$200k not including social security though, which won't be nearly as impacted by a crash in equities. I also wonder how much of that $200k is in stocks vs bonds / CDs / home equity (not sure if this is counted) etc.
- jmoak3 4y ago
  Great observation, however Social Security only has 11 years before the system as we know it today has to cut payments [1]. I too would love to know the breakdown of the 200k. Even with Social Security payments however I still think a sharp fall in home prices or stock prices would be catastrophic for the retiring generation. [1] https://www.washingtonpost.com/business/2021/09/03/social-security-insolvency/ https://www.washingtonpost.com/business/2021/09/03/social-se... [1 skip paywall] https://archive.ph/OaBIv https://archive.ph/OaBIv EDIT: changed social security going from "bankrupt" to "cutting payments"
  - thebean11 4y ago
    There's a second option where they just raise social security taxes or inject other tax revenue into it. I think that's more likely, cutting payments seems politically unfeasible.

lamontcg 4y ago

Short term (3-6 months) I agree with you, and I think we've been seeing that for the past ~2 weeks with the stock market bouncing off its lows. Longer term, I'm pretty confident you're incorrect. The Fed is looking at the wage increases in the economy (which are blunting the effects of commodities inflation on the consumer) along with unionization drives and will definitely be hitting the brakes hard on the economy. So for example: "Fed Governor Christopher Waller says he's prepared to take rates past 'neutral' to fight inflation" https://www.msn.com/en-us/money/markets/fed-governor-christopher-waller-says-hes-prepared-to-take-rates-past-neutral-to-fight-inflation/ar-AAXT9co https://www.msn.com/en-us/money/markets/fed-governor-christo... But to really throw the brakes on the economy the yield curve should actually invert and short rates should be at least 3-4% or more. And I disagree with the title article that the recession is likely to be "mild" since the Fed is going to introduce significant amounts of pain and things like CMBS are pretty much primed to detonate and create a financial crisis (along with the likelihood of a massive crypto collapse). If the Republicans take over congress that will also create a lot more excitement than in 2008 since many of the Tea Party Republicans are ostensibly against bailouts and TBTF and will see economic chaos as a way to damage Biden.

fosk 4y ago
> Fed Governor Christopher Waller says he's prepared to take rates past 'neutral' to fight inflation Good cop, bad cop: "Bullard says U.S. Fed could cut rates in 2023, 2024 once inflation under control" https://www.theglobeandmail.com/business/international-business/us-business/article-bullard-says-us-fed-could-cut-rates-in-2023-2024-once-inflation-under/ https://www.theglobeandmail.com/business/international-busin...
- lamontcg 4y ago
  "once inflation under control" is the key qualifier there. given the rise in wages and overhang in jobs i don't think getting inflation under control will be easy. "US fed could cut rates in 2023, 2024 once the economy has been pushed into a deep recession" is how I read that statement.