Tesla Investor's General Macroeconomic / Market Discussion

[kenliles]

for background to a concern I have regarding Fed policy for interest rates in coming months:
Dudley reinforces Fed expectation of US inflation rebound

The Fed has been positioning based on expectation that tight labor markets will increase wages in coming months. I'm not convinced this is a good assumption- but regardless I hope they don't raise rates (and tighten monetary via balance sheet) too fast due to inflation expectation (rather than reacting to data); bears close watch--

Current Yield curve and other data running flat - continue current Yellow watch alert- no change

speak of the devil and sure enough, he shows up:
U.S. Inflation Remains Subdued as Core Index Lags Forecasts
"<
The U.S. inflation slowdown may be getting longer, even after most economists and Federal Reserve policy makers judged it to be transitory. A more sustained ebb in price pressures could make it tougher for the central bank to stay on course for one more interest-rate increase this year.
>"

Here is one indexed measure of financial easing and tightening

The sudden fall off (from Fed related moves and other)- this is what happens when the Fed, moves too fast on projected data- but the projections don't show up on time;
not a huge deal if they pull the reigns and hold up for a while- but that's what we need them to do.
Watch for Fed statements around holding off on further increases - for sure if they continue balance sheet offloads...
This is a key part of the delicate balance in our low growth but generally healthy economy;

Combine too much Shock&Awe with Fire&Fury and you get Funk&Wagnall
be careful out there boys&girls

 

[MitchJi]

Here is a phenomenal synopsis of the North Korea situation on reddit, of all places:

Trump: If North Korea Escalates Nuclear Threat, 'They Will Be Met With Fire And Fury' • r/worldnews

I'm not sure about that. Mostly he seems to be claiming that we don't have much to worry about because we can depend on Kim to behave rationally and we can depend on trump to respond rationally. The fact that he is responding to a lot of comments to the contrary are indications that we have a problem.

I don't believe that we can count on either of those things. What makes anyone believe that we can depend on trump to behave rationally? I don't even believe that we can count on the rest of the U.S. to behave rationally! Where is the outcry over trump's insanity? I think that his threats of nuclear destruction should be grounds for impeachment because he's clearly not fit for office.

Because his statements are clear evidence of insanity. If the American public can't figure that out what makes anyone believe that trump can figure that out?

What will happen if kim follows through on his threats to fire some middles into the ocean near Guam. Can we depend on trump to exercise restraint , or will he take it as a personal affront?!

 

[SwTslaGrl]

In the beginning of the year the U.S. administration didn't comment much on N.K. but now the response is a bit much. IMHO, the best action would be to just say "we are aware and taking necessary steps". Right now N.K. loves the attention and media coverage.

 

[GoTslaGo]

What will happen if kim follows through on his threats to fire some middles into the ocean near Guam. Can we depend on trump to exercise restraint , or will he take it as a personal affront?!

Well, if this were to happen, I suspect that Pyongyang would cease to exist. If Pyongyang ceases to exist, then the next chess move would likely be that China would invade North Korea...except it would be called an assistance program.

Kim has everything to lose with firing a missile at Guam. He has everything to gain by SAYING he will. IMHO, his rhetoric is entirely for domestic consumption. He's the new dictator. He had to purge all of the old guard and install his cadre. Now he has to build his reputation and win the support of his people (or actually his military, the people don't really matter). His bellicosity is needed for him to galvanize and solidify his military behind HIM, and Trump's responses is what he needs to coalesce his forces around him--always better to have a significant outside threat to unite the forces.

The key is that the US and allies do NOT shoot first. This will neuter any action from NK, since if NK provokes a war, they will be wiped out... first by US nukes. Then by the Chinese PLA. Then NK will become a province of China... although not one anyone will really want to live in at that point. And boy would it suck to be downwind...

Of course this is my opinion, but I am confident Xi at this point, does not like Kim.

Edit: if one studies the history of dictators (look at Rome), this is a typical modus operandi of how they work. Back in those days (Rome) a new dictator pretty much equaled a new military campaign. Since Kim can't really afford that, a rhetorical war with an enemy that actually shouts back is pretty damn good.

 

[Intl Professor]

US Foreign Policy has always been based on what psychologists call “projection,” especially since Wilson. I am misusing the term slightly here since what I mean is we tend to confuse our wishes about reality with an accurate and rational assessment of what is actually happening. Of course it is a common human failing.

A wise man once counseled let your fear be tempered by reason, not the reverse. As my two principal mentors on American diplomatic history (on opposite coasts of the country) taught: “the U.S. made almost no mistakes in diplomacy until the Spanish-American War.”

Small, insignificant powers, especially those blessed with two liquid assets like the Atlantic and Pacific, are like ants and must watch out for the feet of giants. Hence pragmatism is the order of the day. Our policy about standards for recognizing another country illustrate the point.

The newly formed United States faced this dilemma early on. Should we recognize the revolutionary government in France? Jefferson proposed what became known as the de facto standard. Recognize the authority in control of the territory. Clearly a pragmatic standard. That rule was overturned by Wilson in favor of the de jure principle: recognize the legal government. Hence we did not recognize the Bolshevik government until 1933! (Admittedly who actually governed the country was not clear until the early 20’s, but still…. And, of course, we invaded the country at Murmansk and Vladivostok for differing reasons.)

In the case of North Korea today what is different now is not North Korea’s actions, whose leaders have been specifically announcing Guam as a target for years. What is different is the testosterone deprived/depraved cretin in the White House. Pragmatic presidents have ignored the tantrums of whatever Kim was in charge. Recognizing the similarity of himself in Kim, Trump is just acting out in kind, abetted, of course, by the chorus of media. He truly is a pretend president. What remains to be seen is how pragmatic are the people at large or in government as history proceeds at an ever quickening pace. I am not hopeful.

We really do need God to bless America. As Marcuse has noted, hope is invented by people who need it.

 

[kenliles]

In the case of North Korea today what is different now is not North Korea’s actions, whose leaders have been specifically announcing Guam as a target for years. What is different is the testosterone deprived/depraved cretin in the White House. Pragmatic presidents have ignored the tantrums of whatever Kim was in charge. Recognizing the similarity of himself in Kim, Trump is just acting out in kind, abetted, of course, by the chorus of media. He truly is a pretend president. What remains to be seen is how pragmatic are the people at large or in government as history proceeds at an ever quickening pace. I am not hopeful.

+100

 

[Intl Professor]

Bullies are always confused about power. "Power is the capacity to produce intended effects." --Bertrand Russell

 

[kenliles]

Bullies are always confused about power. "Power is the capacity to produce intended effects." --Bertrand Russell

Yes, but there's no confusion there.
Bullies have no 'intended effects';
By definition, they exert power as a defensive;
That's why, in the face of power, they must back down;
Creating a new defense mechanism feedback loop;
Which in turn, begins another round of defensive offense;

The only solution for the counter crowd, is to disengage entirely,
And let the Bully collapse under the weight of their own delusion--

 

[MitchJi]

The Federal Reserve's looming attempt to shrink its mammoth portfolio of bonds comes with an ugly track record: Virtually every time the central bank has tried it in the past, recessions have followed… The Fed has embarked on six such reduction efforts in the past — in 1921-1922, 1928-1930, 1937, 1941, 1948-1950 and 2000. Of those episodes, five ended in recession according to research from Michael Darda, chief economist and market strategist at MKM Partners. –Jeff Cox, “The Fed’s About to Try Something that Almost Always Has Ended in Recession,” cnbc.com, August 2, 2017.
Not a good track record.

Anyone know how long it took for those recessions to start?

About how long they lasted?

Former Federal Reserve Chairman Alan Greenspan issued a bold warning Friday that the bond market is on the cusp of a collapse that also will threaten stock prices… the long-time central bank chief said the prolonged period of low interest rates is about to end and, with it, a bull market in fixed income that has lasted more than three decades. "The current level of interest rates is abnormally low and there's only one direction in which they can go, and when they start they will be rather rapid," Greenspan said…” – Jeff Cox, “Greenspan: Bond Bubble About to Break Because of ‘Abnormally Low’ Interest Rates,” cnbc.com, August 4, 2017.

 

[strangethingintheland]

US Foreign Policy has always been based on what psychologists call “projection,” especially since Wilson. I am misusing the term slightly here since what I mean is we tend to confuse our wishes about reality with an accurate and rational assessment of what is actually happening. Of course it is a common human failing.

A wise man once counseled let your fear be tempered by reason, not the reverse. As my two principal mentors on American diplomatic history (on opposite coasts of the country) taught: “the U.S. made almost no mistakes in diplomacy until the Spanish-American War.”

Small, insignificant powers, especially those blessed with two liquid assets like the Atlantic and Pacific, are like ants and must watch out for the feet of giants. Hence pragmatism is the order of the day. Our policy about standards for recognizing another country illustrate the point.

The newly formed United States faced this dilemma early on. Should we recognize the revolutionary government in France? Jefferson proposed what became known as the de facto standard. Recognize the authority in control of the territory. Clearly a pragmatic standard. That rule was overturned by Wilson in favor of the de jure principle: recognize the legal government. Hence we did not recognize the Bolshevik government until 1933! (Admittedly who actually governed the country was not clear until the early 20’s, but still…. And, of course, we invaded the country at Murmansk and Vladivostok for differing reasons.)

In the case of North Korea today what is different now is not North Korea’s actions, whose leaders have been specifically announcing Guam as a target for years. What is different is the testosterone deprived/depraved cretin in the White House. Pragmatic presidents have ignored the tantrums of whatever Kim was in charge. Recognizing the similarity of himself in Kim, Trump is just acting out in kind, abetted, of course, by the chorus of media. He truly is a pretend president. What remains to be seen is how pragmatic are the people at large or in government as history proceeds at an ever quickening pace. I am not hopeful.

We really do need God to bless America. As Marcuse has noted, hope is invented by people who need it.

Some relevant historical observations to bring perspective to what is clearly not such a good situation.

 

[MitchJi]

Scary stuff:
8 Times The World Narrowly Avoided A Potential Nuclear Disaster | HuffPost
8 Times The World Narrowly Avoided A Potential Nuclear Disaster
We’ve survived a disturbingly long list of nuclear near-misses.

Oct. 5, 1960
NORAD went on high alert after radars in Greenland mistook reflections from a moonrise over Norway for an intercontinental ballistic missile attack against the U.S. launched by its Cold War foe the Soviet Union.

As the Union of Concerned Scientists explains, Soviet leader Nikita Khrushchev was in New York at the time, which stirred doubts that an attack was truly happening. This likely prevented a nuclear retaliation.

Jan. 24, 1961
During a routine flight over North Carolina in 1961, a B-52 bomber spun out of control and dropped two atomic bombs on the city of Goldsboro.

The only thing that prevented a nuclear detonation that day was a safety switch that had been known to malfunction, official documents show. One bomb broke apart upon impact, and the other endured minimal damage.

“By the slightest margin of chance ― literally the failure of two wires to cross ― a nuclear explosion was averted,” Robert McNamara, who was then the defense secretary, reportedly said.

 

[kenliles]

The Federal Reserve's looming attempt to shrink its mammoth portfolio of bonds comes with an ugly track record: Virtually every time the central bank has tried it in the past, recessions have followed… The Fed has embarked on six such reduction efforts in the past — in 1921-1922, 1928-1930, 1937, 1941, 1948-1950 and 2000. Of those episodes, five ended in recession according to research from Michael Darda, chief economist and market strategist at MKM Partners. –Jeff Cox, “The Fed’s About to Try Something that Almost Always Has Ended in Recession,” cnbc.com, August 2, 2017.
Not a good track record.

Anyone know how long it took for those recessions to start?

About how long they lasted?

Former Federal Reserve Chairman Alan Greenspan issued a bold warning Friday that the bond market is on the cusp of a collapse that also will threaten stock prices… the long-time central bank chief said the prolonged period of low interest rates is about to end and, with it, a bull market in fixed income that has lasted more than three decades. "The current level of interest rates is abnormally low and there's only one direction in which they can go, and when they start they will be rather rapid," Greenspan said…” – Jeff Cox, “Greenspan: Bond Bubble About to Break Because of ‘Abnormally Low’ Interest Rates,” cnbc.com, August 4, 2017.

I don't have the references immediately available, but agree with the general perspective of your post. Given what the Fed has to do here, the odds of some sort of recession seems inevitable to me. Part of the reason no firm answer to your question exists, is that balance sheet growth size (and now necessary shrinkage) has never before been attempted in history (even on a relative basis).
Given the cross massive (positive)disruption though of technology and energy, I don't think the magnitude or timing of recession is effectively traded and currently advise against it. Instead a steady core of shares with perhaps a layer of traded DITM LEAPS seems more appropriate to me. JMHO

 

[Intl Professor]

Scary stuff:
8 Times The World Narrowly Avoided A Potential Nuclear Disaster | HuffPost
8 Times The World Narrowly Avoided A Potential Nuclear Disaster
We’ve survived a disturbingly long list of nuclear near-misses.

Oct. 5, 1960
NORAD went on high alert after radars in Greenland mistook reflections from a moonrise over Norway for an intercontinental ballistic missile attack against the U.S. launched by its Cold War foe the Soviet Union.

As the Union of Concerned Scientists explains, Soviet leader Nikita Khrushchev was in New York at the time, which stirred doubts that an attack was truly happening. This likely prevented a nuclear retaliation.

Jan. 24, 1961
During a routine flight over North Carolina in 1961, a B-52 bomber spun out of control and dropped two atomic bombs on the city of Goldsboro.

The only thing that prevented a nuclear detonation that day was a safety switch that had been known to malfunction, official documents show. One bomb broke apart upon impact, and the other endured minimal damage.

“By the slightest margin of chance ― literally the failure of two wires to cross ― a nuclear explosion was averted,” Robert McNamara, who was then the defense secretary, reportedly said.

Read the link, could not find a "political" one they missed. Most accounts of the Cuban Missile Crisis note Kennedy was advised one option was to use a direct "surgical" attack against the missiles in Cuba. We learned later through the Kennedy Center's seminars by officials on both sides involved in decision-making that the local Soviet commander in Cuba felt he was authorized to use nuclear weapons to defend himself if attacked. That might have been the ball game.

And then there's the one about the SAC general who was concerned about his "precious bodily fluids," no, that was in another timeline!

 

[GoTslaGo]

IMHO a good article about N.Korea:

Kim Jong Un is a survivor, not a madman

 

[Intl Professor]

On the other hand, our pretend president does not really know much about the meaning of the powers of the office. A recent example is his immediate response to Charlottesville. He gives new meaning to bully pulpit. Today he tries to cover. To quote his favorite sweet-tweet, "Very sad."

Thank God he focussed first, and most importantly, on the accomplishments of the American economy under his administration. Unfortunately, he had nothing to do with it.

 

[kenliles]

On the other hand, our pretend president does not really know much about the meaning of the powers of the office. A recent example is his immediate response to Charlottesville. He gives new meaning to bully pulpit. Today he tries to cover. To quote his favorite sweet-tweet, "Very sad."

Thank God he focussed first, and most importantly, on the accomplishments of the American economy under his administration. Unfortunately, he had nothing to do with it.

As of mid-August of 1st term: (Gallup)
Obama approval
white: 46%
nonwhite: 73%

Trump approval:
white: 46%
nonwhite: 15%


US population:
Current:
The percentage of non-Hispanic white people in the U.S. population has reached an all-time low: 63%.

Future:
According to the U.S. Census Bureau, in 2014 there were more than 20 million children under 5 years old living in the U.S., and 50.2 percent of them were minorities.


Gonna make meaningful economic policy accomplishment near impossible-
unless you're in Russia (<<<snark-remark)

 

[kenliles]

On the other hand, our pretend president does not really know much about the meaning of the powers of the office. A recent example is his immediate response to Charlottesville. He gives new meaning to bully pulpit. Today he tries to cover. To quote his favorite sweet-tweet, "Very sad."

Thank God he focussed first, and most importantly, on the accomplishments of the American economy under his administration. Unfortunately, he had nothing to do with it.

some leadership exists- just not at the elected Presidential level
Google cancels Neo-Nazi site registration soon after it was dumped by GoDaddy

 

[kenliles]

Interesting sideline
Buffett's Berkshire sells entire stake in General Electric

 

[kenliles]

Merck CEO quits Trump
Merck CEO Quits Trump Advisory Council in ‘Stand Against Intolerance and Extremism’

Then Under-Armour CEO quits Trump
Under Armour CEO adds his name to those leaving Trump's manufacturing council

Now Intel CEO quits Trump
The exodus is on: Intel CEO becomes third to quit Trump's manufacturing council in less than a day


I'll note Elon was in front of all this
(even if for different reasons- I suspect his leadership was not lost on these gentlemen)

 

[sundaymorning]

North Korea Backs Off Threat to Hit Guam