Markets after Macron defeats Le Pen?
Mate27
TUSCL’s #1 Soothsayer!
Let's be honest, even if the obvious happens i hope the markets don't move much higher. Trillions of $$$ will need to accelerate from their parking spots. The slow grind up has been fortuitous to many who still have a time horizon.
This relief bump will likely lead to a summer doldrum. Gridlock politics in the US should keep the slow grind to dominate.
Merkel will be happy and so will SNL ratings with fresh Trump material almost weekly when the new season starts in the fall. Those are easier predictions than market direction. Cautious complacency has been the rule for the last 7 years and I see no change.
This relief bump will likely lead to a summer doldrum. Gridlock politics in the US should keep the slow grind to dominate.
Merkel will be happy and so will SNL ratings with fresh Trump material almost weekly when the new season starts in the fall. Those are easier predictions than market direction. Cautious complacency has been the rule for the last 7 years and I see no change.
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I believe the risk free rate needs to be closer to 4% before correction territory, and we are only half way there % wise.
When debt is no longer cheap, people stop refinancing and doing buy backs. Velocity slows and therefore when the shift of mind set takes place, shoring up large sums into cash and bonds, even on the short end makes much more sense. There will be a better buying opportunity, someday.
At these levels, which are still at historical lows, there's still a big incentive to avoid buying short (cash/bonds). The demand and incentive to purchase long will slow down. Again, maybe in another year or two when risk free rises to 4%, a 20% drop in equities. My two cents worth or a bold prediction.
Finally I think technological advances at this point may be making things inherently deflationary. To offset that I would support some money printing in the form of paying everyone basic incomes.
We all know it will happen, just like SJG and skibum constant broken clock predictions of doom and gloom, but if you're looking for one of the signals to watch out for, then this would be one of them. If the fed does a slow and gradual increase to normalize the effect will be slow and gradual. However, if the economy heats up and wages go up fast then rate increases will be quick to stagnant inflation, if they aren't too late. This is a clear sign of market correction in this scenario.
There is a likelihood at some point with all the baby boomers retiring that demand for labor will tighten even more. I know your AI theory is a pretty good one, but implementing AI will be a slow process. Wage inflation is coming in a few years, and I would bank on it, just unsure of the timing. My two cents...
Here's some charts people can look at to see if there is a correlation or not:
http://www.marketwatch.com/story/history…
I'm not convinced. Even if there was remember the correlation is causation. My other main theme is that the future is going to start being nothing like the past RSN.
I still think the EU falls apart but I guess they dodged it this year thanks to the economic boom.
There's even chatter of money leaving the US now to get in on Europe. Seems a little silly to me since the US is sill the AI/tech powerhouse of the world. It's just too bad that Trump can't get anything done. Funny the US should have more gridlock than Europe.
I have no insights on oil, other than the US is a bigger player on supplying the markets than we let on. It's crazy volitile, which makes it a god trade. With lower prices it bodes well for the economic boom for at least the short run. There comes a point where the producers decide it is cheaper to keep the product stored underground than pump it.
Gas and coal along with copper seem to be in the same basket. Who can tell where it goes and how much it affects the economy other than those who've leveraged their assets against it.
I was also thinking of AI and deflation some more today. If workers will increasingly be replaced by robot, we can, again, just look to econ 101: that shifts the supply curve right and means falling prices.
So I think the evidence is mounting that the future is looking deflationary. Oil might just be the first example of it.
Solutions are to print money: things like basic incomes, free health care, uses it for defense spending, or to build walls and infrastructure. I don't think the deficit and debt should be concerns. If the do, just print enough money to inflate them away.
http://www.veteranstoday.com/2013/12/01/…
I think it's might be time to fix global warming. Dump some inexpensive barges of iron ore powder into the worlds oceans and let plankton or plants swallow up so much carbon dioxide, we have global cooling. Problem partially solved. If global temps need to drop more, seems like someone could drop some fine soot into the upper stratosphere to block out some sunlight but that would be a last resort. Unfortunately to get sustained global cooling, we might need to curtail excessive releases of methane and co2. But if we're good with blocking out sunlight, doesn't help solar power generation or crops though, then that is another solution. Two big potential cons, ocean life could die due to lack of oxygen if too much plant growth takes all the oxygen out of the water, 2. A major volcanic eruption or a mile wide asteroid impact could throw up so much soot into the upper atmosphere, it could cause a nuclear winter that lasts for years, crops would die, most people would die as well. I heard today Nostradmus predicted an asteroid hit in 2069. No one is worrying about that.
We just need to invent methane eating microbes that produce oil or something else we'd rather have.
http://science.howstuffworks.com/environ…
I came up with a solution though. Self replicating solar powered mini flying drones super light, super small, very high in the atmosphere located over the oceans in sufficient quantity to reflect enough sunlight away to reverse global warming. We might not even need self replicating drones. I have no idea of the cost.
I've never thought of AI as a deflationary factor. Food for thought.... on one hand if there is basic income and printed money circulating it would bode for inflation. The other side of the coin is too many lazy asses just taking what's given to them with no hustle to produce or consume leading to prices falling.
I'm glad to see markets both in the US and overseas were not taking off like I thought they would after the election. The efficiencies are pretty strong in my opinion. This is a good sign, and if slow growth continues for the next few years, maybe interest rate hikes will be very slow and gradual.....
Still hoping for a 20% correction in another year or two, just to even things out a bit for the average investor like me. I'm never afraid of a market drop. It just makes me salivate knowing a lower price point for my future mongering self to take advantage of all of those strippers in high heels when I can afford them. I can afford them now, but my obligation to fund my future needs are battling it out. I know, planning is a gay topic and not too sexy.
The "rally" was after round one since there was some uncertainty there. Going into round 2 they had Macro around a 90% chance.
I did initiate a small short oil position. Small because I am a bit late too the party.