RE: The 2023 economy...your thoughts? - 3

Zitat von wessie im Beitrag #29

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Zitat von JAG im Beitrag #27

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Not read them but looking at the length and number of replies this thread has created leaves me with two thoughts:-
1.0-has this thread created more wpd’s (words per day) than any other?
2.0-Eccepting our American friends who are in this awful cold period, why aren’t you Brits out riding your bikes. 178 miles today of quiet roads, bit of rain, lots of mud and puddles but a big grin. A great time of the year to ride
Don’t have the knowledge to answer your question BEARR but sadly neither do the politicians.
Happy New Year to you all.
John

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Love to be out on the bike but I've been working today, so was taking a break when posting earlier. Although I have detected more inertia to riding compared to winter in previous years. I guess it has been colder, wetter and windier this month compared to the last few years. That must be a factor but so is the cost of fuel and the cost of the fish & chips I used as an incentive to get out. I should just forego a bottle of white Burgundy or claret which would cover the cost but once a middle class alcoholic one has standards to keep

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Zitat von wessie im Beitrag #29

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Zitat von JAG im Beitrag #27

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Not read them but looking at the length and number of replies this thread has created leaves me with two thoughts:-
1.0-has this thread created more wpd’s (words per day) than any other?
2.0-Eccepting our American friends who are in this awful cold period, why aren’t you Brits out riding your bikes. 178 miles today of quiet roads, bit of rain, lots of mud and puddles but a big grin. A great time of the year to ride
Don’t have the knowledge to answer your question BEARR but sadly neither do the politicians.
Happy New Year to you all.
John

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Love to be out on the bike but I've been working today, so was taking a break when posting earlier. Although I have detected more inertia to riding compared to winter in previous years. I guess it has been colder, wetter and windier this month compared to the last few years. That must be a factor but so is the cost of fuel and the cost of the fish & chips I used as an incentive to get out. I should just forego a bottle of white Burgundy or claret which would cover the cost but once a middle class alcoholic one has standards to keep

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Are the economy and stock market truly unrelated? I've heard that argument before, but when the market booms it seems the economy does, too. And when it goes bust, people stop spending and the economy falters. Maybe it's coincidence, but I doubt it.

And a look at a 30-year chart of the market tells me the current situation is setting up just as 2000 and 2008 did, with a breakdown in relative strength and moving-average deterioration. These things, on such a long time scale, take time to develop, but an observer once remarked that "risk happens slowly, then suddenly". If I had to make a prediction, it would be for the market to fall around 30% or more from here by the end of Q1, 2023. I could easily be wrong, but the setup compared to those 2 prior bear markets would have to be wrong...and that would be unusual.

This is a great thread, not because I started it, but because you guys are clearly well-informed and have given this subject some thought. Thanks!

Zitat von wessie im Beitrag #24

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Zitat von Becksy im Beitrag #21

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Zitat von wessie im Beitrag #20

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as long as it does not descend into personal attacks like on the GS forum, then commentary about the impact of Brexit are legitimate to this thread. We are far enough along the track to see some of the impact on the economy and labour market, and the unresolved challenges that remain such as the Northern Ireland situation, a US trade deal and harmony with the EU. Our new prime minister seems to remain very quiet on these subjects and after his most recent Vox pop with the homeless person, I think he might go back to wearing his invisibility cloak.

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The GS forum can get a bit fiery for some reason...

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it seems to have a dozen or so very noisy, sociopathic trolls in the loosely moderated bit behind the paywall. Endlessly trotting out the same old tropes as in the last thread that morphed into rage for and against Brexit, immigrants or vaccines. It remains the premier source of information on European travel and that section is not behind the paywall fortunately. I may allow my subscription to lapse when renewal is requested.

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Zitat von BEARR im Beitrag #33

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Are the economy and stock market truly unrelated? I've heard that argument before, but when the market booms it seems the economy does, too. And when it goes bust, people stop spending and the economy falters. Maybe it's coincidence, but I doubt it.

And a look at a 30-year chart of the market tells me the current situation is setting up just as 2000 and 2008 did, with a breakdown in relative strength and moving-average deterioration. These things, on such a long time scale, take time to develop, but an observer once remarked that "risk happens slowly, then suddenly". If I had to make a prediction, it would be for the market to fall around 30% or more from here by the end of Q1, 2023. I could easily be wrong, but the setup compared to those 2 prior bear markets would have to be wrong...and that would be unusual.

This is a great thread, not because I started it, but because you guys are clearly well-informed and have given this subject some thought. Thanks!

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Zitat von BEARR im Beitrag #33

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Are the economy and stock market truly unrelated?

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Zitat von zer0netgain im Beitrag #37

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Zitat von BEARR im Beitrag #33

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Are the economy and stock market truly unrelated?

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Not entirely, but largely. The stock market doing well or poorly because of day traders and speculators produce a distorted view of the health of the economy. People jobless and homeless, but the stock market is booming.

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The mantra since 2008 has been "Don't fight the Fed"...and it worked. And it has always worked. What's truly astonishing to me is that we now clearly have a Fed that is in tightening mode, yet the players are still playing the "buy 'stonks' " game as if the Fed were still accomodative. Cracks are developing in the structure, but it might be that they're just not obvious yet. If so, a reckoning awaits.

Home prices have clearly declined, so I'd expect consumer spending to decline as well. And you can't run an economy purely on bloated defense spending.

If stocks decline 30% or more, I doubt the economy will shrug it off...

Great stuff here...you guys are more intelligent than members of the average motorcycle board!

Zitat von BEARR im Beitrag #39

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The mantra since 2008 has been "Don't fight the Fed"...and it worked. And it has always worked. What's truly astonishing to me is that we now clearly have a Fed that is in tightening mode, yet the players are still playing the "buy 'stonks' " game as if the Fed were still accomodative. Cracks are developing in the structure, but it might be that they're just not obvious yet. If so, a reckoning awaits.

Home prices have clearly declined, so I'd expect consumer spending to decline as well. And you can't run an economy purely on bloated defense spending.

If stocks decline 30% or more, I doubt the economy will shrug it off...

Great stuff here...you guys are more intelligent than members of the average motorcycle board!

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Well, not strictly true. For example, the UK ETF (which mimics the UK market) fell by over 50% in both 2000 and 2008. Same for the Germany ETF. Same for Japan ETF. I guess it depends on the definition of "impacted".

And if 2023 is bad in the US, it'll be difficult for the world to shrug it off, I believe. We'll see...maybe a miracle will happen and crypto, NFTs, "meme" stocks and stimulus checks will make a comeback and everyone can "quiet quit" and get rich at the same time...lol!

Interesting conversation, guys.
I happen to read something apropos recently.

There's an interesting piece in the New York Times by Jeff Sommer, "Forget Stock Predictions for Next Year. Focus on the Next Decade." 12-16-2022.
He reminds us of the work of Robert Shiller, an economist in the 1980s, who essentially proved that stock market projections of years duration have much greater accuracy than those of the next 6 months or a year. Worth a read. He is saying invest with uncertainty. No one knows or can no what will happen in a year's time.

The economy and stocks feel very weird. It feels like people who are earning well but battling inflation biting into their lifestyle (or worse trying to make ends meet buying groceries, insurance, school needs and housing costs) are turning to the stock market to somehow make returns to win back some of their lost purchasing power. But the stock market is sputtering, faltering, tormenting us with "is it a hard or soft landing recession and when will the bottom come??", " are only Johnson & Johnson, Caterpillar, ADP, Apple, Altria, - huge companies with huge earnings, the ones to be in, and you should sell all the losers that were high flyers just weeks ago at a huge loss??" kinds of questions. And you wonder if Americans, anyway, if they have any money left over after endless pocket picking expenses are turning to buy and prop up the very stocks of companies who then pass on high prices and costs to consumers- hence why those stocks have great earnings and increasing share price. Vicious circle.

I wonder if the Fed is not only saying "we need a soft labor market and frankly a little pain with lost jobs and income, unfortunately to bring demand to heel and bring prices down", but also implying, "we need people to stop buying stocks for now. We need the market to take a hard hit and the bubble to pop. Because that will cause the kind of pain to bring deflation, which in the long run will be better for the economy".

Who knows? I wish savings could capitalize in an environment like this. But, fat chance. It will stall and deflate probably.

Zitat von Richard230 im Beitrag #38

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Zitat von zer0netgain im Beitrag #37

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Zitat von BEARR im Beitrag #33

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Are the economy and stock market truly unrelated?

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Not entirely, but largely. The stock market doing well or poorly because of day traders and speculators produce a distorted view of the health of the economy. People jobless and homeless, but the stock market is booming.

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I don't think the U.S. stock market is booming lately.

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We won't have a firm "bottom" in stocks until CNBC and other financial media stop calling a "bottom" and start saying "sell". Right now they're still finding so-called "bargains" and touting them to viewers. The economy is still bloated, billionaires are only beginning to be recognized not as geniuses, but as fortunate recipients of cheap money (thanks to the Fed) who got lucky. Have you noticed how their "glow of omniscience" is fading? And then there's the crypto phenomenon - there are still believers who think the next HUGE move is about to occur. Tulips come to mind...

We're not there yet...and the economy has yet to feel the real pain that's inevitable when markets crumble...in my opinion. At least cash is earning something again....

Good dialogue here!

I started in Commercial Industry in 1981 as an engineer for a diversified heavy and agricultural equipment manufacturer. Most of my college classmates went to work for the various divisions Westinghouse, GE, US Steel and the US car companies. By 1985, most of us in commercial industry had changed jobs or seen staff, wage and benefit cuts. This was the period when the rust belt, rapidly, went downhill.

What did the stock market do?
DJIA 1975-1990.png - Bild entfernt (keine Rechte)
It appears to have risen.