Tesla Investor's General Macroeconomic / Market Discussion

[Intl Professor]

I wonder how much of the labor shortage is a result of the administration's anti-immigrant policies. Even before Trump I heard of skilled welder shortages in the southwest so many of them were imported.

 

[Intl Professor]

Note:
Using Comcast's On demand feature it's possible to watch this series any time.

AT&Ts works as well. I had a page of notes about the first episode which I will get around to elaborating soon. As the Russians would say, this "bird's eye view" of how the world sees us is required for all Americans. It is quite clear our filter, even for so-called experts like myself, is conditioned in a large way by our media. Like fish in our foreign policy water, we don't see the water.

 

[FluxCap]

Food for thought and a possible counterpoint re: Ken's excellent analysis of yield curve flattening as a bearish indicator:

Flattening is Not Threatening

 

[MitchJi]

Thanks Flux!

Food for thought and a possible counterpoint re: Ken's excellent analysis of yield curve flattening as a bearish indicator:

Flattening is Not Threatening

Here’s the thing, though – you can have a flat yield curve for a long time without an outright inversion. In fact, a flatter yield curve has historically been associated with a mid-cycle period of rising stock prices and continuing economic growth. It is not a “Four Horsemen of the Apocalypse” or “Canary in the Coalmine” sort of affair.

Flatter Curve Not a Threat to the Cycle

The combination of tighter monetary policy by the Fed, which should lift the short-end of the US yield curve, and accommodative policy overseas, which should anchor the long-end, argues for additional curve flattening, by our analysis. However, we see below-average recession risk until the curve inverts. As it stands, the direction and the level of the yield curve is on par with the mid-1990s and the mid-2000s—prior bull market periods.

A flatter yield curve is nobody’s idea of a good time. Banks make less money and are arguably more risk-averse about funding longer-term projects when there is less spread (profit) to be earned because of this “term structure” of money. However, flattening is not threatening. It’s not inverting. It’s just flattening.

There is no one who can definitively tell you for how much longer the curve can remain flattened, or what might suddenly cause a change in this trend. Further, there is not sufficient evidence from which to draw any ironclad conclusions about stock prices as a result of this activity.

 

[FluxCap]

Another worthwhile read re: the FANGs, sometimes TANGs for us:

AQR - Still (Not) Crazy After All These Years<span style="vertical-align: super; line-height: 0;font-size:0.5em;">1</span>

 

[FluxCap]

Nice 538 read today:

Why Is Trump Causing Chaos In Washington But Not In The Stock Market?

 

[Starno]

Macro is fine, economic growth around 3-4%, low interest rates, growth in consumption ... we're in mid cycle.
In 2-3 years it will start to overheat, then we'll have a few months to a year of slowed growth (uncertainty), and then a crash.

 

[RobStark]

That's true, for the FBI director-
Mueller as a Special Prosecutor is not part of the Executive Branch, although reports to the Justice Dept which is. So requires the firing to be done by a willing head of the Justice Dept.

1)Special Prosecutors are part of the Executive.

2) There is no current Special Prosecutor Law in effect.

3) The current rules governing special prosecutors are regulations that were promulgated by Janet Reno. They can be changed without Congressional consent.

 

[dmunjal]

Macro is fine, economic growth around 3-4%, low interest rates, growth in consumption ... we're in mid cycle.
In 2-3 years it will start to overheat, then we'll have a few months to a year of slowed growth (uncertainty), and then a crash.

Where do see 3-4% economic growth? We've averages 1.2% the last 8 years. 1% last quarter.

 

[Starno]

Where do see 3-4% economic growth? We've averages 1.2% the last 8 years. 1% last quarter.

World

 

[dmunjal]

World

Thanks. Missed that.

 

[FluxCap]

It appears that this morning's sharp dip followed the release of the Supreme Court opinion on Trump's Travel Ban:

High Court Mostly Revives Trump Travel Ban, Will Hear Appeal

https://www.supremecourt.gov/opinions/16pdf/16-1436_l6hc.pdf

I don't think the market has processed the potential effects of this yet. I haven't either.

 

[FluxCap]

Fed Heads Appear to Be Targeting Stock Market Valuations; Fischer & Williams Comment

This could be contributing to the tech sell-off today.

 

[Starno]

What is a shame though is that the author of this article Tesla Inc (TSLA) Stock Is a Bubble Stock, Plain and Simple
and all the other shorts screaming out loud Tesla is worthless, will be forgotten once Tesla hits massive profitability with wide margins an no competitors coming close.

What I'd suggest doing is that they must be remembered for the rest of their life that they were wrong, and not be forgotten. They tried to ruin the stock, their career must be ruined

 

[Starno]

YELLEN : Don't expect an other crisis in our lifetime.

It should reassure markets

 

[GoTslaGo]

Fed Heads Appear to Be Targeting Stock Market Valuations; Fischer & Williams Comment

This could be contributing to the tech sell-off today.

So they added stock market P/E ratio to their mandate of 2% inflation and low employment?!

 

[FluxCap]

So they added stock market P/E ratio to their mandate of 2% inflation and low employment?!

Fed members have commented on stock valuations before, and traders have been spooked. QE has indeed inflated US equity valuations, but the question is how long the era of "rates so low that stocks are the only investment choice" really lasts. It could last a very long time indeed, or not. No one really knows.

U.S. Stocks Sink Most Since May, Treasuries Slide: Markets Wrap

 

[GoTslaGo]

Fed members have commented on stock valuations before, and traders have been spooked. QE has indeed inflated US equity valuations, but the question is how long the era of "rates so low that stocks are the only investment choice" really lasts. It could last a very long time indeed, or not. No one really knows.

U.S. Stocks Sink Most Since May, Treasuries Slide: Markets Wrap

Ok, dumb question. So the stock market valuations are "through the roof" according the fed. But isn't there a bit of a conflict of interest here? Since the fed is planning to off-load their Trillions of dollars of holdings (most bonds and definitely NOT stocks), wouldn't it behoove them to "encourage" the market to buy their offerings by making these kinds of statements and being hawkish? Or am I being too conspiratorial?

 

[dmunjal]

YELLEN : Don't expect an other crisis in our lifetime.

It should reassure markets

(June 10, 2008) “The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.” - Ben Bernanke

 

[FluxCap]

Well, my 1 buck VIX calls sure came in handy today. This doesn't feel like a minor dip, but who knows. They might BTFD in the morning, again, or not.