Tesla Investor's General Macroeconomic / Market Discussion

[dmunjal]

We are absolutely not in a recession, based on the most common definition, which is two consecutive quarters of GDP decline.

The US economy is still growing and fundamentally sound with a few areas that could use improvement.

We may or may not be entering a bear market, which is a separate issue.

We didn't know we were in a recession in 2008 until six months after the fact.

 

[jesselivenomore]

We are absolutely not in a recession, based on the most common definition, which is two consecutive quarters of GDP decline.

The US economy is still growing and fundamentally sound with a few areas that could use improvement.

We may or may not be entering a bear market, which is a separate issue.

No one is saying we are in a recession. The question is whether we will enter one. That is up for debate. By the time you get two quarters of negative GDP and it is official, it will be the time to BUY.

 

[dmunjal]

1) Such as? Not disagreeing with you, I'm just unaware.

2) Again, not disagreeing with you, but would like some data.

3) Good point here.

Jesselivenomore covered it but I would also add holiday sales and the service sector (ISM) seeing declines last quarter.

 

[jesselivenomore]

We didn't know we were in a recession in 2008 until six months after the fact.

And 50% off the highs.

 

[theschnell]

1) Manufacturing is already in a recession. The risk is manufacturing and oil and gas industry drags the rest of the economy into recession.

Empire State weakens to recession-era lows - MarketWatch

2) What data? The fed plans to tighten 4 times this year after years of QE. That is the definition of credit expansion reversing.

1) Interesting, I didn't realize manufacturing had been hit so hard.

2) Plans of Fed tightening does not automatically indicate the reversal of credit expansion. People and businesses will still borrow if they see a good economy to expand into. On the other hand, demand and supply for debt drops significantly when the future income picture begins to look less positive.

 

[jesselivenomore]

2) Plans of Fed tightening does not automatically indicate the reversal of credit expansion. People and businesses will still borrow if they see a good economy to expand into. On the other hand, demand and supply for debt drops significantly when the future income picture begins to look less positive.

Right. It's more accurate to say loose credit is reversing. Which isn't a problem, and indeed necessary, if the economy is accelerating. Problem is, signs are pointing to the opposite. Which is exacerbated in a tightening credit environment. This is what leads to credit expansion reversing.

 

[dha]

No one is saying we are in a recession.

I believe we are in a recession right now.

Just saying we should be more careful with the language we throw around.

 

[jesselivenomore]

Just saying we should be more careful with the language we throw around.

Okay. *I didn't say we are in a recession.

But to dmunjal's point, by the time the official data confirms it, it will be after the fact. (And to my point, way too late to act on it)

 

[dmunjal]

Another data point I didn't like was the inventory to sales ratio. It peaks when businesses think sales will continue to ramp up but suddenly decline. We saw that in Q4. Businesses build up inventory in this anticipation but then have stockpile the following quarter which hits GDP growth.

The big number to watch is Q4 GDP which I think comes out on the 27th I believe.

 

[FluxCap]

I disagree. It's a very localized data point, but I live in a not-terribly-affluent neighborhood, and just since last november have seen lots and lots of renovations and landscaping action suddenly pop up. People around here are spending like crazy.

People are renovating in DC because existing home prices are so inflated, supply is so limited, and it costs less in transfer taxes to just blow up your own house and do it again. It's a very good time to be a contractor, not so great to be house shopping.

Jesse is correct that manufacturing moved past the technical definition of recession recently. It's just one indicator but it's one I'm watching closely.

 

[dmunjal]

Atlanta Fed lowers Q4 GDP growth forecast to 0.6%. The news came out after the close today.

https://www.frbatlanta.org/cqer/research/gdpnow.aspx?panel=1

The Atlanta Fed has been the most accurate forecaster of GDP growth.

 

[Lump]

Atlanta Fed lowers Q4 GDP growth forecast to 0.6%. The news came out after the close today.

https://www.frbatlanta.org/cqer/research/gdpnow.aspx?panel=1

The Atlanta Fed has been the most accurate forecaster of GDP growth.

Thanks for posting dmunjal, back on Nov. 1 their Q4 forecast was 2.6%, today it stands at .6%.

 

[dmunjal]

US recession probability highest since 2011: Survey
http://www.cnbc.com/id/103308151

 

[Lump]

Art Cashin has been on the NTSE floor for over 50 years, «It is very similar to what you get before you slip into a crisis» | International Selection | Finanz und Wirtschaft

 

[The Blue Owl]

Art Cashin has been on the NTSE floor for over 50 years, «It is very similar to what you get before you slip into a crisis» | International Selection | Finanz und Wirtschaft

Thanks for that link. Sobering read.

 

[dmunjal]

The Fed is not out of bullets. Right now, the market is pricing in 2-3 rate rises this year. They could postpone all of those and even reverse the last hike and do another round of QE. It might not be the right thing to do but very plausible in an election year.

 

[sundaymorning]

All this noise about oil just needs to go away. Last time I was at the pump I had a grin due to falling oil prices. Falling oil is good for consumers like me and puts extra cash in our pockets for spending. The fracking industry needs to go belly up, they've invested in the wrong business model, alternative is where it's at.

 

[Turing]

Let's say we do enter a business cycle downturn - mild recession in 2016 or 2017. How does this effect Tesla and its stock price? I'm assuming Tesla keeps marching along with it's goals, as it has been, more or less. But does a mild recession noticeably hurt sales? Does it make raising needed capital harder, thus slowing down company growth rates and pushing back deadlines on the model 3? Or could Tesla buck the market downward trend as it continues to gain momentum and model 3 makes the coming paradigm change more obvious.

 

[MitchJi]

Let's say we do enter a business cycle downturn - mild recession in 2016 or 2017. How does this effect Tesla and its stock price? I'm assuming Tesla keeps marching along with it's goals, as it has been, more or less. But does a mild recession noticeably hurt sales? Does it make raising needed capital harder, thus slowing down company growth rates and pushing back deadlines on the model 3? Or could Tesla buck the market downward trend as it continues to gain momentum and model 3 makes the coming paradigm change more obvious.

The question here is not if Tesla will be able successfully launch the M3 etc., but what will happen to the SP. Will it hold up in the short-term and is it a good time to buy for the long-term?

 

[pGo]

This Time, Cheaper Oil Does Little for the U.S. Economy



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Lower price of oil traditionally was considered stimulus for economy, but not so much this time around. Small businesses and Walmart kind of chains are not seeing the quick benefits, but instead the consumers learnt lessons in 2008 and are lowering debt instead of putting that money back in the economy.