Tesla Investor's General Macroeconomic / Market Discussion

[FluxCap]

I am not saying your wrong, I don't believe you are but I find new home sale data to be worthless

1. New homes that are ordered upto a year or more before completion are recorded as sales when closed. So upto year old data
2. New homes purchased out of existing inventory not recorded until after close which can take 3 months so again history

Huh? I wasn't stating opinion, I was just making an observation -- the market indices went vertical at 10am when this data was released. I don't really have an opinion on whether or not this data "should" move the market. I just know that it often does. Many traders, including bots, trade on data releases like this, particularly when actual numbers beat or miss consensus estimates in a statistically significant way.

Now whether or not TSLA tracks the NASDAQ is another story. Sometimes it does, sometimes it doesn't. This week it has not.

 

[Chickenlittle]

Huh? I wasn't stating opinion, I was just making an observation -- the market indices went vertical at 10am when this data was released. I don't really have an opinion on whether or not this data "should" move the market. I just know that it often does. Many traders, including bots, trade on data releases like this, particularly when actual numbers beat or miss consensus estimates in a statistically significant way.

Now whether or not TSLA tracks the NASDAQ is another story. Sometimes it does, sometimes it doesn't. This week it has not.

Read the post. I agreed with you. I also believe it to be a poor indicator not because the market doesn't respond but because it reflects condition several months old when decisions to buy the homes were made

 

[Auzie]

Wow -- 504k New Home Sales, just released, is a huge beat of consensus estimates. This is going to be a good day for the market. Consumer confidence beat as well.

QQQ is rocketing up as of 10am. TSLA moved up independently of the market over last few days, but this kind of market news can lift all boats. We shall see.

Aah I just love market craziness and irrationality on the way up, it makes me feel so at home :biggrin:

 

[Auzie]

More music to my ears

Hiring is strong and jobless rate declines to 6.1%

Highlights:

Employers added 288k jobs in June, the fifth month in a row that job numbers topped 200k. The unemployment dipped to 6.1%, the lowest rate since GFC.

Many segments of the economy have rebounded - corporate profits, housing market, Wall Street.

Market indices, DJ, S&P500, hit new highs whilst Nasdq hit its highest level since 2000.

The economy is still a long way from its peak before the GFC.

The industries hiring are broad based: health care, manufacturing, financial services, retailing.

There were encouraging gains in well paid sectors, middle level sectors and low wage sectors.

Fed's program of buying bonds to stimulate the economy is on track to end in October. Economists predict that the first increases in short term rates would not come until the summer of 2015.

 

[FluxCap]

Agreed, very good jobs numbers coming out. Hopefully these are lasting signs of strengthening. I am particularly concerned about the plight of younger adults / recent grads relative to their older peers, and the quality of jobs being added, as is Chairwoman Yellen, so the jury is still out on whether or not we are seeing meaningful underlying improvement in the jobs situation for everyone.

 

[Auzie]

Job changes by sectors

It is interesting that manufacturing shows the most pronounced loss of jobs, most other sectors grew in size, some more some less. Health care is shooting up.

If people want meaningful employment, they may need to get meaningful skills. Continuous reskilling and upskilling are the ways of the future.

 

[Robertj]

In my opinion the biggest issue the US has is the Reserve Bank policy
Post GFC the policy of quantitative easing or better known as money printing , has kept interest rates low.
However , having got on the treadmill , how do you get off. The US cannot afford higher interest rates due to high national debt caused by the QE .
The long term solution is to inflate the problem away . Meaning today's dollars borrowed will be worth less as
inflation rises to 6 or 8% pa . Inflation is not easily measures , as the administration does not want to measure this accurately,
and in inflation is something that is in part driven by population belief.

The last time I think the US did this was about 1978 / 80 when the IMF
had to rush to the aid of the dollar.

US monetary policy is a global problem and will result in a crash in the US dollar , it is just a matter of when!

 

[FluxCap]

In my opinion the biggest issue the US has is the Reserve Bank policy
Post GFC the policy of quantitative easing or better known as money printing , has kept interest rates low.
However , having got on the treadmill , how do you get off. The US cannot afford higher interest rates due to high national debt caused by the QE .
The long term solution is to inflate the problem away . Meaning today's dollars borrowed will be worth less as
inflation rises to 6 or 8% pa . Inflation is not easily measures , as the administration does not want to measure this accurately,
and in inflation is something that is in part driven by population belief.

The last time I think the US did this was about 1978 / 80 when the IMF
had to rush to the aid of the dollar.

US monetary policy is a global problem and will result in a crash in the US dollar , it is just a matter of when!

This is what many talking heads in the mainstream press have been saying for a very long time, and we have seen no such thing. In fact, we are not at risk of inflation, we are at risk of deflation, as we are still in a liquidity trap. I'm with Paul Krugman on this.

Edit: here's an even better retort to this theory. Krugman should be running our economy.

 

[kenliles]

This is what many talking heads in the mainstream press have been saying for a very long time, and we have seen no such thing. In fact, we are not at risk of inflation, we are at risk of deflation, as we are still in a liquidity trap. I'm with Paul Krugman on this.

Edit: here's an even better retort to this theory. Krugman should be running our economy.

Short on time, but registering my agreement with Flux. I'm in this camp on this issue. ie as expressed by Krugman point of view

 

[Auzie]

In my opinion the biggest issue the US has is the Reserve Bank policy
Post GFC the policy of quantitative easing or better known as money printing , has kept interest rates low.
However , having got on the treadmill , how do you get off. The US cannot afford higher interest rates due to high national debt caused by the QE .
The long term solution is to inflate the problem away .
US monetary policy is a global problem and will result in a crash in the US dollar , it is just a matter of when!

If US sneezes, we little ones on the world periphery get the flu. That is how it is. US can print as much money as they wish and get away with it, for as long as USD is default world currency.
ANZ part of the world is pretty good place to be, even with the flu:wink:

This is what many talking heads in the mainstream press have been saying for a very long time, and we have seen no such thing. In fact, we are not at risk of inflation, we are at risk of deflation, as we are still in a liquidity trap. I'm with Paul Krugman on this.

Edit: here's an even better retort to this theory. Krugman should be running our economy.

Another Krugman fan here. Following Krugman is my portfolio protection strategy.

 

[Robertj]

I wish I had your confidence that Krugman's theories will work

History shows what happened last time , and I have my doubts that politicians or bankers learn

Inflation commenced in 1965 in the US with LBJ financing the Vietnam war.The Fed accommodated this.
Inflation gradually rose from 2 & 3 % to 6 % in 1970 , peaking at 13 % in 1980.
The lesson here is that it took 9 years before inflation becam a political issue in 1974.
In 1978 the US dollar was not wanted by any buyers, the US government had to issue bonds in Swiss Francs
and the IMF rushed to support the US dollar
Next time IMF won't rescue the Fed

 

[sleepyhead]

I don't follow Krugman, but I agree with FluxCap that deflation is the near-term risk that we need to fight like a plague.

Once worker wages start going up at a much more significant pace will we only be able to say that we are out of this deflation risk. That is when we will need to start focusing on inflation.

Japan is still waiting for inflation; 3 decades later...

 

[kenliles]

I don't follow Krugman, but I agree with FluxCap that deflation is the near-term risk that we need to fight like a plague.

Once worker wages start going up at a much more significant pace will we only be able to say that we are out of this deflation risk. That is when we will need to start focusing on inflation.

Japan is still waiting for inflation; 3 decades later...

and EU not much better-
inflation is the least of our issues- and it has so many hawks now- a repeat of no action inflation doesn't seem viable. we need to pull money out of the horde into the worker class to really get the economy back in gear

 

[FluxCap]

and EU not much better-
inflation is the least of our issues- and it has so many hawks now- a repeat of no action inflation doesn't seem viable. we need to pull money out of the horde into the worker class to really get the economy back in gear

Exactly. And that shows no signs of happening at all, in fact the opposite is true - wages/incomes are decreasing for those that need it most nearer the bottom of the scale, where it could kickstart our economy, while wages/incomes are increasing for the top 1% and .1%, which provides very little market-wide value, unless you believe in the old trickle-down theory. Which I pretty much don't.

 

[kenliles]

Exactly. And that shows no signs of happening at all, in fact the opposite is true - wages/incomes are decreasing for those that need it most nearer the bottom of the scale, where it could kickstart our economy, while wages/incomes are increasing for the top 1% and .1%, which provides very little market-wide value, unless you believe in the old trickle-down theory. Which I pretty much don't.

the only trickle I've ever witnessed defies gravity

 

[Auzie]

Fed's Janet Yellen to keep stimulus in place until US job picture improves

Extracts:

US Federal Reserve chair Janet Yellen said American labour markets are far from healthy and signaled the Fed will keep monetary policy loose until hiring and wage data show the effects of the financial crisis are "completely gone."


Despite strong recent jobs reports and other signs of continuing recovery, Yellen emphasised in testimony to the Senate Banking Committee that she won't conclude the economy has recovered until wages start rising and discouraged workers return to the labor force.

Yellen said the one thing that might prompt the central bank to raise rates earlier or faster is if hiring and wages take off in an unexpected way. So far, there is little evidence that is happening in a country with still high unemployment, and labour force participation at its lowest level in a quarter century.

"While we are making progress in the labor market we have not achieved our goal," Yellen told the committee. "There have been substantial headwinds holding the recovery back ... Until they are completely gone it calls for an accommodative monetary policy."

Wage increases "have been nonexistent," she said. "We have seen a steady shift of national income from labor to capital, and there is room for wage gains before we are worried" about inflation.

 

[kenliles]

Fed's Janet Yellen to keep stimulus in place until US job picture improves

Extracts:

US Federal Reserve chair Janet Yellen said American labour markets are far from healthy and signaled the Fed will keep monetary policy loose until hiring and wage data show the effects of the financial crisis are "completely gone."


Despite strong recent jobs reports and other signs of continuing recovery, Yellen emphasised in testimony to the Senate Banking Committee that she won't conclude the economy has recovered until wages start rising and discouraged workers return to the labor force.

Yellen said the one thing that might prompt the central bank to raise rates earlier or faster is if hiring and wages take off in an unexpected way. So far, there is little evidence that is happening in a country with still high unemployment, and labour force participation at its lowest level in a quarter century.

"While we are making progress in the labor market we have not achieved our goal," Yellen told the committee. "There have been substantial headwinds holding the recovery back ... Until they are completely gone it calls for an accommodative monetary policy."

Wage increases "have been nonexistent," she said. "We have seen a steady shift of national income from labor to capital, and there is room for wage gains before we are worried" about inflation.

exactly Bernanke policy- Krugman would concur -
keep on Yellen!


thanks for posting that up Auzie--

 

[FluxCap]

Big GDP and jobs numbers coming tomorrow morning. Unless they fall right on the money for consensus estimates, I'm actually expecting significant movement one way or another in the general market after these news items print.

Also, consumers are happier consuming these days:
Bespoke Investment Group - Think BIG - Consumer ConfidenceSurges

 

[Auzie]

The economy has grown faster under democratic presidents

New study by Alan Blinder and Mark Watson, Presidents and the US Economy has some interesting findings.

Summary:

The U.S. economy has grown faster—and scored higher on many other macroeconomic metrics—when the President of the United States is a Democrat rather than a Republican. For many measures, including real GDP growth (on which we concentrate), the performance gap is both large and statistically significant, despite the fact that postwar history includes only 16 complete presidential terms. This paper asks why. The answer is not found in technical time series matters (such as differential trends or mean reversion), nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior TFP performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future. Many other potential explanations are examined but fail to explain the partisan growth gap.

Some interesting findings:

Under Democratic presidents, per capita GDP has been higher; job creation has been stronger; decreases in unemployment have been greater; the S&P 500 has been higher; corporate profits have been bigger; and real wages and labor productivity have increased.

From presidents Truman through Obama, average annualized GDP growth has been 3.3 percent, but Blinder and Watson find a Democrat–Republican performance gap of 1.8 percentage points. Given the average, that’s “just enormous,” Blinder said. (Because of the lagging nature of economic conditions, the economists take care to attribute the first quarter of each president’s term to the previous president.)

Statistical analysis showed that partisan control of 1600 Pennsylvania Avenue explained the performance gap in GDP; Blinder’s long-noted casual observation was correct, and when they saw the data, Blinder said, other economists stopped chalking up the partisan variance to mere coin tossing.

The obvious explanation for partisan-variant performance, Blinder said, would be monetary and especially fiscal policy, since the latter is explicitly political. But the partisan difference there was small.

Next, the authors considered variables that might not be policy-related, or at least not directly. The most salient variable they found was oil shocks. Oil prices have gone up more under GOP presidents.

Productivity shocks are the second biggest explanation for the partisan gap, said Blinder; productivity contributes more to growth under Democrats than Republicans.

The third factor is foreign economic growth. When Europe grew faster, for example, so did the United States. It just so happened that Democrats occupied the White House during more favorable international economic periods.

As the authors point out, only Canada, and no European parliamentary democracy, exhibits similar partisan performance gaps as the U.S.

 

[renim]

so what, in most households the economic activity is higher when it burns onto the credit card, its when its time to pay off the debt that the pain really starts.
last fiscally responsible US president for was Clinton, Bush was fast to spend, Obama crazy fast to spend.
current fiscally responsible government is China
The debter is servant to the lender.
(my kids are at Saturday Mandarin classes as I type.)