7 ms·

You think we've reached bottom? Given the various global economic shocks we've already experienced and are likely to experience later this year, a long, relati

You think we've reached bottom? Given the various global economic shocks we've already experienced and are likely to experience later this year, a long, relatively slow bear market decline is more likely than one giant drop. Keep in mind Russia is only starting to cut off Western Europe (which is only starting to cut off itself), so oil and gas prices still have lots of room to go up if Putin doesn't relent (which he won't). Also we've yet to price in impacts to food from the global fertilizer shortage. And those are just the obvious 1st order effects in the pipeline. The last time wheat prices went through the roof in North Africa it kicked off the Arab Spring and subsequent Syrian Civil War as side effects. There's going to be all sorts of fun coming out of this year, and I imagine a lot of stocks reliant on global supply chains are going to be ground down by hit after hit after hit. That's not even touching on domestic demand destruction and interest rates.

recursivedoubts 4y ago
i do not think we have hit the bottom i expect a secular change as rates increase and all sorts of things that worked in a declining interest rate environment stop working, coupled with increasing global trade issues i do not have a crystal ball
TheCoelacanth 4y ago
I'm not sure we're at the bottom, but I'm quite certain that stocks won't drop any farther in the first half of 2022.
- hpkuarg 4y ago
  Is this a statement on the fact that the first half of 2022 is over? ;-)
  - cercatrova 4y ago
    That is the joke, yes.
mschuster91 4y ago
> Keep in mind Russia is only starting to cut off Western Europe (which is only starting to cut off itself), so oil and gas prices still have lots of room to go up if Putin doesn't relent (which he won't). > Also we've yet to price in impacts to food from the global fertilizer shortage. The US at least can protect itself from rising prices by prohibiting oil and food exports and thus increase domestic supply - they are a net exporter for both. The European Union however is completely dependent on either Russia or the OPEC oil sheiks, we will be hit real hard (but that shouldn't bother US stocks all too much). > The last time wheat prices went through the roof in North Africa it kicked off the Arab Spring and subsequent Syrian Civil War as side effects. That one will be the real interesting part, but again, it's mostly us Europeans who will feel the impact the most - the US can simply send off a bunch of soldiers to the Mexican border and continue treating people fleeing from utter poverty even worse than us Europeans manage to do. The US doesn't care all too much about Africa, Arabia and most of Asia except China and Russia any more, no matter what goes down there they won't involve themselves. The problem for us Europeans is that our leaders are ineffective and the crises are accumulating: - the UK government is outright collapsing at the moment and its society fracturing up, not to mention the economic consequences of Brexit or the potential split-offs of Scotland and Northern Ireland. I don't even want to speculate when they will have a stable-ish government with sane policies again. - France is headed for difficult times, similar to Obama's last six years Macron will have to live without a parliamentary majority - The Dutch government is still unstable and it's highly unlikely Rutte will survive his term - Germany... well, Olaf Scholz is no leader, doesn't want to be a leader and frankly he should resign. The coalition itself is beginning to tear apart, particularly because of the financially extremist FDP. - Europe still doesn't have any sort of common concept on how to deal with immigrants and refugees, partially because Viktor Orban and the Polish PiS keep blocking anything that would require them to house their fair share of migrants or even pay in solidarity. Meanwhile at the borders, horrible crimes against humanity are reported regularly (beatings and illegal pushbacks at the Poland-Belarus border, refugees being extorted by Greek border police to aid in illegal pushbacks at the Turkish sea border, refugees dying at the Spain-Maroccan border in Melilla, people drowning at sea because aid ships are regularly seized by Italian police, ...). The Turkish dictator Erdogan keeps using refugees or the threat of sending them as a political way of extortion. - Germany has long undermined any sort of independency from Russian gas and oil, and now we're doing dirty deals with Qatar instead of forcefully modernizing industry and housing or doing anything to meaningfully conserve energy. - Prices in the EU are exploding: rent, energy, food. And our politicians don't have the will or the financial power to assist those in poverty. Europe is getting fucked hard, the US may escape that same fate if Biden and especially his Democrat Senators get their shit together.
jliptzin 4y ago
In my experience we’ve hit bottom when everyone agrees we haven’t yet hit bottom. Which seems to be around now. In other words everyone who was going to sell has already sold. Unless more surprise bad news comes out.
- nostrademons 4y ago
  If everyone agreed we haven't yet hit bottom, we wouldn't be having this conversation. You just argued that we've hit bottom because everyone agrees we haven't yet hit bottom. It's like how on the cryptocurrency subs everyone's always debating whether we're in crypto-winter yet. Having been through 3 crypto boom/bust cycles, we aren't in crypto-winter, because people stop posting on r/cryptocurrency when it's real crypto-winter. It's the same with other markets: it's not about sentiment, it's about abandonment. When we're in a real bear market, everybody forgets about their stock portfolios and gets a real job because they need the money to survive.
- TimTheTinker 4y ago
  That's assuming you can time the market based on what people are saying... which may work to predict short-term outlook but will have no bearing on what happens in the world next week (or month).
jillesvangurp 4y ago
There are short term effects and long term effects. The short term effect is basically a lot of uncertainty, supply chain issues, and the market re-adjusting to not being able to depend on Russian energy exports. Chaos in other words. Putin's ability to induce more chaos is however declining. Except for going nuclear and starting WW III, he's basically played most of the cards he had. And given how his army performs in the Ukraine, that seems ill advised. The long term effect is enormous investments in energy and defense spending. E.g. Germany just announced enormous public spending on both. That's after decades of not doing much public spending at all. Other countries are likewise accelerating investments on both fronts. That is a lot of money that is flowing into the economy in the next years. And also a classical recipe for boosting economic growth. We're only a few months into this crisis and it has already unlocked hundreds of billions of funding in Germany alone. Normally, spending that big is going to have an impact on economies. There are companies that will benefit from this. And there are effects on employment, etc. Investors of course are a mixed bag of headless chickens, snake oil sellers, amateurs and the occasional level headed person with a bit longer view on things. I'd offer advice, but I don't qualify as anything more than an absolute amateur. But the one thing I know is that the short term behavior of stock markets is perplexing and irrational. I wouldn't read too much into it other than that "there's a thing going on and it's impacting the stock market". I would not expect anything less given the thing that is going on. What matters is what happens when that thing is in the past. IMHO, this situation is a blessing in disguise. It got world + dog moving a lot more aggressively on cutting their dependence on fossil fuels. I think that's a good thing. Going cold turkey on Russian gas is going to suck for a lot of countries short term but the current situation simply leaves no other choice. High prices are a great incentive for moving quickly. The good news is that there are companies itching to step in the void with solutions and they now have the full attention of investors and governments with very deep pockets.
cloutchaser 4y ago
Keep in mind that at 10% inflation in the US, 20% inflation worldwide, nominal earnings will probably be increasing in most companies. And eventually the stock market will build the money devaluation into the prices (i.e. nominal stock prices will go up) So while the market might only be down 25% which isn't the biggest drop ever, 10-20% inflation on top that makes the actual drop larger. It also might mean the bottom in closer than it would normally be.

recursivedoubts 4y ago

i do not think we have hit the bottom i expect a secular change as rates increase and all sorts of things that worked in a declining interest rate environment stop working, coupled with increasing global trade issues i do not have a crystal ball

TheCoelacanth 4y ago

I'm not sure we're at the bottom, but I'm quite certain that stocks won't drop any farther in the first half of 2022.

hpkuarg 4y ago
Is this a statement on the fact that the first half of 2022 is over? ;-)
- cercatrova 4y ago
  That is the joke, yes.

mschuster91 4y ago

> Keep in mind Russia is only starting to cut off Western Europe (which is only starting to cut off itself), so oil and gas prices still have lots of room to go up if Putin doesn't relent (which he won't). > Also we've yet to price in impacts to food from the global fertilizer shortage. The US at least can protect itself from rising prices by prohibiting oil and food exports and thus increase domestic supply - they are a net exporter for both. The European Union however is completely dependent on either Russia or the OPEC oil sheiks, we will be hit real hard (but that shouldn't bother US stocks all too much). > The last time wheat prices went through the roof in North Africa it kicked off the Arab Spring and subsequent Syrian Civil War as side effects. That one will be the real interesting part, but again, it's mostly us Europeans who will feel the impact the most - the US can simply send off a bunch of soldiers to the Mexican border and continue treating people fleeing from utter poverty even worse than us Europeans manage to do. The US doesn't care all too much about Africa, Arabia and most of Asia except China and Russia any more, no matter what goes down there they won't involve themselves. The problem for us Europeans is that our leaders are ineffective and the crises are accumulating: - the UK government is outright collapsing at the moment and its society fracturing up, not to mention the economic consequences of Brexit or the potential split-offs of Scotland and Northern Ireland. I don't even want to speculate when they will have a stable-ish government with sane policies again. - France is headed for difficult times, similar to Obama's last six years Macron will have to live without a parliamentary majority - The Dutch government is still unstable and it's highly unlikely Rutte will survive his term - Germany... well, Olaf Scholz is no leader, doesn't want to be a leader and frankly he should resign. The coalition itself is beginning to tear apart, particularly because of the financially extremist FDP. - Europe still doesn't have any sort of common concept on how to deal with immigrants and refugees, partially because Viktor Orban and the Polish PiS keep blocking anything that would require them to house their fair share of migrants or even pay in solidarity. Meanwhile at the borders, horrible crimes against humanity are reported regularly (beatings and illegal pushbacks at the Poland-Belarus border, refugees being extorted by Greek border police to aid in illegal pushbacks at the Turkish sea border, refugees dying at the Spain-Maroccan border in Melilla, people drowning at sea because aid ships are regularly seized by Italian police, ...). The Turkish dictator Erdogan keeps using refugees or the threat of sending them as a political way of extortion. - Germany has long undermined any sort of independency from Russian gas and oil, and now we're doing dirty deals with Qatar instead of forcefully modernizing industry and housing or doing anything to meaningfully conserve energy. - Prices in the EU are exploding: rent, energy, food. And our politicians don't have the will or the financial power to assist those in poverty. Europe is getting fucked hard, the US may escape that same fate if Biden and especially his Democrat Senators get their shit together.

jliptzin 4y ago

In my experience we’ve hit bottom when everyone agrees we haven’t yet hit bottom. Which seems to be around now. In other words everyone who was going to sell has already sold. Unless more surprise bad news comes out.

nostrademons 4y ago
If everyone agreed we haven't yet hit bottom, we wouldn't be having this conversation. You just argued that we've hit bottom because everyone agrees we haven't yet hit bottom. It's like how on the cryptocurrency subs everyone's always debating whether we're in crypto-winter yet. Having been through 3 crypto boom/bust cycles, we aren't in crypto-winter, because people stop posting on r/cryptocurrency when it's real crypto-winter. It's the same with other markets: it's not about sentiment, it's about abandonment. When we're in a real bear market, everybody forgets about their stock portfolios and gets a real job because they need the money to survive.
TimTheTinker 4y ago
That's assuming you can time the market based on what people are saying... which may work to predict short-term outlook but will have no bearing on what happens in the world next week (or month).

jillesvangurp 4y ago

There are short term effects and long term effects. The short term effect is basically a lot of uncertainty, supply chain issues, and the market re-adjusting to not being able to depend on Russian energy exports. Chaos in other words. Putin's ability to induce more chaos is however declining. Except for going nuclear and starting WW III, he's basically played most of the cards he had. And given how his army performs in the Ukraine, that seems ill advised. The long term effect is enormous investments in energy and defense spending. E.g. Germany just announced enormous public spending on both. That's after decades of not doing much public spending at all. Other countries are likewise accelerating investments on both fronts. That is a lot of money that is flowing into the economy in the next years. And also a classical recipe for boosting economic growth. We're only a few months into this crisis and it has already unlocked hundreds of billions of funding in Germany alone. Normally, spending that big is going to have an impact on economies. There are companies that will benefit from this. And there are effects on employment, etc. Investors of course are a mixed bag of headless chickens, snake oil sellers, amateurs and the occasional level headed person with a bit longer view on things. I'd offer advice, but I don't qualify as anything more than an absolute amateur. But the one thing I know is that the short term behavior of stock markets is perplexing and irrational. I wouldn't read too much into it other than that "there's a thing going on and it's impacting the stock market". I would not expect anything less given the thing that is going on. What matters is what happens when that thing is in the past. IMHO, this situation is a blessing in disguise. It got world + dog moving a lot more aggressively on cutting their dependence on fossil fuels. I think that's a good thing. Going cold turkey on Russian gas is going to suck for a lot of countries short term but the current situation simply leaves no other choice. High prices are a great incentive for moving quickly. The good news is that there are companies itching to step in the void with solutions and they now have the full attention of investors and governments with very deep pockets.

cloutchaser 4y ago

Keep in mind that at 10% inflation in the US, 20% inflation worldwide, nominal earnings will probably be increasing in most companies. And eventually the stock market will build the money devaluation into the prices (i.e. nominal stock prices will go up) So while the market might only be down 25% which isn't the biggest drop ever, 10-20% inflation on top that makes the actual drop larger. It also might mean the bottom in closer than it would normally be.