Currency adjusted wealth

We are well aware of a number of economic factors:

The US stock market has been deteriorating since the beginning of the year (https://www.marketwatch.com/market-data/us?mod=currencies-market-data)

Most other currencies have been dropping in value when compared to the USD (Currencies Market Data - MarketWatch). Some are in distress due to the perception that their deficits will be too high based on a reduction of taxes and an increase of spending (Britain), some because of a concern with increased challenges due to war-based energy issues (EU), some due to the reduction of their markets because of a combination of global recession and/or dysfunctional Chinese manufacturing (Australia, Japan) and so on.

Gold and silver are at their lows for the year.

AND, in the US, inflation is up.

So what does this mean?

The US dollar, with the US’s geographic removal from the Eurasian continents, independent energy supply and increasing interest rates is providing a haven for capitol from many sources. This is driving the USD higher.

The stock market (a small market compared to either the bond market or the forex market) is being influenced by a number of factors:

  1. When foreigners sell equities to go to US dollar’s implied safety, there is a downward pressure on stock prices.

  2. When the assets and future sales growth/profit is calculated for multi-national firms it is greatly influenced by the reduction (in terms of USD) of assets/sales made in terms of depreciating foreign currencies.

  3. There is a wide expectation of an interest rate induced recession starting in 2023 (some say it has started already) and the stock market is a leading indicator. This recession, accelerated by the Russo/Ukraine War, European energy shortage and Chinese financial/social/COVIID problems is expected to be global in nature.

  4. The expectation that the US Federal Reserve Bank may continue to increase interest rates higher than we currently expect if the economy keep churning out inflationary numbers.

So, how long will the pull-back last and how low can it go? Well, much depends on the timeframes of the factors above, but I would say at least through 2023 and low enough that the S&P P/E ratio will be sub-20 (even considering the reduced stock prices). That’s one heck of a drop from here.

The only good news is for those USians who travel abroad, locally produced stuff will seem like its a bargain. If you reevaluate your wealth in terms of Euros or British Pounds, it won’t seem as if you have been financially damaged nearly as much. For those with patience, after making sure you are not catching a falling knife, there are interesting long-term investments in currencies which might re-appreciate in the future.

Jeff

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Jeff,

One day does not make a trend, that said, BTC and Eth are up today. I am not surprised. I just do not know if there will be follow through longer term. BTC and Eth in some regards are very underpriced. Valuing them is flakey, and that is the problem with such a statement.

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Leap,
As the graphs show, this is not a single day issue, but has been building for nearly a year. It also won’t go away in a day or two, but as I pointed out, may take over a year to resolve.

While others may disagree, crypto currency is not money and is not even related as a derivative to money, but is in the category of precious metals as a means of people to hold “something of value” under stress, rather than defining what that value is. It is easier to evaluate the “worth” of a share of Berkshire Hathaway than a Bitcoin.

Jeff

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Yeah, I don’t see how you can attach any valuation to BTC and Eth other than pointing to where the market is valuing them at the moment as the current valuation. You may think they are underpriced, and they are compared to prior highs, but I think they are GROSSLY overpriced because I don’t see any real value there other than rank speculation that someone may pay you as much or more in the future.

PS: the quoting function in this software is nice, as is the message composition frame being paired with a ‘what it looks like’ frame. It’s going to take a while to sort out navigation etc … but I suppose this will work if enough of us give it a chance. :^D

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It will take a while for this current cluster fudge to unwind. European energy stumbles, China’s lockdowns and the US policy failures including the Fed will take a heavy toll.

Norm

Jeff and Ben,

I was not speaking to the rest of the market just cryptos.

The cryptos are up today. It is interesting with all that red. It may well continue on.

I can not put numbers on the value of BTC or Eth, and they may change places in value with Eth leading the way in the next few years.

Digital scarcity is a very real and complex thing. A huge paradox that creates a vehicle unlike metals or money or equities or bonds. I have a friend here in CT who is a younger professor trying to write and get published. He keeps writing things that are well studied by others. I suggested writing on cryptos and he immediately equated them to bonds, then he realized in truth they are nothing like bonds. It is a new field of economics.

One of the values is the number of people trading online. In other words we need value. Just like you need the dollar to have value. It is only cotton with ink. We need our government to have value to back the dollar. This is for people to do trade.

As I am saying we have moved online. We have moved to computer trading. We need value in those digits. It is as much or not a Ponzi scheme as some would claim the USD is a Ponzi scheme.

If you say it has no value you have not bought in.

My position is I want less volatility. I will buy equities with anything coming out of my efforts with NFTs.

Britain - I think it goes far beyond this. The most openly inept & openly corrupt group of politicians in charge that has ever been seen in UK politics - emphasis on inept, in fact hopelessly, appallingly, embarrassingly clueless - because corruption allied with competence has long been tolerated here - even quietly celebrated. (Please don’t wonder if I’m talking my personal political angle here, this goes light years beyond any personal politics I have.)

And then you have - A housing bubble that the central bank is terrified to burst and rather a lot of variable rate mortgages and personal debt. The ongoing and worsening impact of brexit on business at all scales. A very sizeable % of the population literally starving/freezing due to 2022 living costs rapidly dwarfing pay - stories of working poverty that would make even Ayn Rand weep. The national health service collapsing from mismanagement, bad wages - imminent strikes, plus covid burnout causing many to quit. Various strikes week after week affecting public transport, waste collection, etc. Teaching, policing, underfunded, understaffed and unable to cope. Literally it feels like everything is falling apart, the streets were filling with trash recently.

The other day my doctor apologised as he had found I had gluten-sensitive antibodies in a blood test ‘but it will be currently at least 241 weeks before the first appointment is available with any gastrologist to begin to check up if you’re actually gluten intolerant and give you advice on what to do next’.

To provide context on just how catastrophic the politics are in the UK just now, the newly promoted leader Liz Truss has been issuing her first policies for less than a week (due to the impact of the Queen’s death & funeral) - but already members of parliament in her own party are sending in formal demands for her resignation (due to policy incompetence) that may trigger a new immediate leadership contest. This is totally unheard of.

The slide in the GBP today was historically catastrophic! I was staring at it, 2AM in the morning, gasping ‘oh my god!’ over and over with my hand over my mouth. There was a slide of >3% on Friday and almost a further 5% in just two hours on Monday morning. That’s over 8% in less than 26 hours of currency trading.

This is a big deal. For context, Black Wednesday (1992) was a currency crisis ultimately resulting in a 1-day 4% slide in the pound - and that slide radically altered British politics & economics for 2 full decades afterwards. There aren’t many economic events that can be found in the long-term memory of the average Brit, but Black Wednesday was a national trauma. Nearly replayed it today, too. The BOE was considering intervening in the currency market - they said they wouldn’t, I suspect they actually did. But the last time they publicly went against the market to set a value for the pound, Soros broke them and it permanently destroyed the idea of the £ as an important global currency (and the idea of the BOE as an all-powerful being of economic might). Black Wednesday was the final stake through the heart of what remained of British Empire. And last night was numerically far worse in both depth and velocity - I think people are still struggling to take in just how bad it is. The FT are running quite a few interesting articles though if you’re curious.

Out of 151 currencies in the world, the £ ranked 150 today in terms of relative strength. (Register to read | Financial Times)

But wait! It gets worse. This article is absolutely gob-smacking. If you read any part of this post - read this.

https://archive.ph/xaLQd

"“The gulf between the free-marketeers and what the free market actually thinks of the free-marketeers is hilarious,” said a former Downing Street aide who now advises City bosses. “The City boys don’t have any confidence they know what they are doing in Downing Street.”


A source who was present at a dinner attended by hedge-fund managers a week ago revealed: “They were all supporters of Truss and every one of them was shorting the pound.” Several made small fortunes on Friday betting against the currency."

To sum up, watch this video of the new British PM and ask yourself if you would trust this person to carve up the Christmas turkey, never mind manage simultaneous complex economic/war/political crises of historical magnitude.


Australia - absolutely colossal housing bubble popping (mostly variable rate mortgages). Also unusually inept/corrupt politicians, recently booted out. But I agree on reduced mineral demand from China, though Australia produces a lot of coal & LNG and those are in high demand currently everywhere. Australia is going to go through quite a bit of pain, and it’s going to come out alright in a few years I think.


EU. There’s a continent-wide housing bubble (though with fixed rate mortgages, probably it will pop slowly). Energy costs are gasp-inducingly, eye-wateringly high. There is a problem with some countries moving well towards the far right / fascism - most recently Italy this week where the far right just took majority control? because obviously Italy and Fascism can’t possibly go wrong. This political ‘diversity’ is causing some disunity (and the EU operates mostly by unanimity and consensus building, so this is a big deal). The big problem though is that many EU countries are still neck deep in debt and no growth, with no way out, and as you likely know, their debt costs are about to spiral out of control even at relatively low interest rates (e.g. Portugal, Italy, Greece, Spain, maybe Belgium). So the ECB can’t really raise rates. But it has to! Because Northern Europe really dislikes inflation, Germany most of all, and inflation is running towards 10%. The summertime kick-the-can was to set up a mechanism to try to force German and Italian (etc) bonds to trade more closely together in price. hmmmmm.

Basically a variety of interlocking, contradictory economic problems left simmering and unsolved for 20 years with kick-the-can solutions, and growing political disunity problems, plus external pressures of war & energy & inflation. Currently all getting worse at once, along with literal nuclear bomb & nuclear catastrophe & imminent Hordes from the Steppes on a daily basis in the news. And the deadlock and disunity caused by ‘a few’ is making it hard for fiscal or monetary policy to be enacted to address any of it. Raise rates? Pop the housing bubble everywhere and put the PIGS into absolute crisis, at a time when there’s already growing political deadlock and crisis (energy & war). Don’t raise rates to control inflation? The German public remember well what happened next in the 1930s when they tried that.


Japan, hard to see it as being in crisis, it’s arguably one of the best positioned advanced economies in the world just now. Allowing the Yen to devalue has enabled Japan to import US inflation this year - doing the US a huge favour and bringing about conditions the Japanese Central Bank has tried desperately to achieve for decades. It may even push Japanese companies to start spending their cash reserves or paying out dividends. In terms of debts, most companies have lots of cash and the government owes debt domestically, not internationally, so they can print their way out of trouble without difficulty as long as inflation allows them to.


All IMHO, of course. Enjoy the links.

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I’m guessing that cryptos are up because Russians who are leaving the motherland have no other easy way to take their fund with them because of Western financial sanctions. Once they are abroad, they can turn the cryptos into real money (of their choice).

They are up because, this week there are net buyers.

Jeff

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Also, try to imagine this. 10 days ago you’re a Brit with a variable rate mortgage, struggling to pay the bills. The base rate is 1.75%, and it’s been rising quickly and uncomfortably.

“Plunging pound may force Bank of England to raise interest rates to 3.25%”

Today the news is suddenly telling you the rate may be going immediately to 3.25%.

Not quite doubling in 10 days, but close enough. And then - again imagining yourself as an extremely worried Brit - you read this, linked directly from the above article…

Jeff,

No there were net sellers over the last couple of weeks because of the Eth 2.0 merge. The miners rebelled. Now the prices are going up from a low.

Hi Luxmain,

I haven’t figured out how to email from the new Fool site, so hopefully this reaches you).

I would be in favor of your idea to download the previous Fool’s messages into a searchable database. I’m meeting with WendyBG this weekend and I’m pretty sure I can get her to support the idea as well.

Jeff

The ‘sql dump’ command would need to be run by the TMF IT staff, with their agreement that they want to do it (they will already know how to do this). They are the people who need to be approached & asked here. I don’t know what database they’re using so I can’t speculate as to the exact format of the command, their IT staff will be more than capable since it’s more or less an ordinary backup but without passwords & personal details tables included.

I’m happy to help you get a history-preserving SQL dump placed onto the Internet Archive ‘for all time’, if you & Wendy are able to approach TMF’s IT and management teams and they are receptive to the idea (the data isn’t going to have commercial value anyway at this point).

Ultimately, it’s up to someone approaching TMF who is credible/worthy of making the request, then up to TMF if they want to agree to it.

Running the command itself is a 1 minute job, letting the command run is a few hours (at TMF’s side), downloading the data is a few hours probably. I can help you with arranging an intermediate site to hold data while moving it to The Internet Archive (we can set up a temporary “Linode” or similar VPS for a week - approx cost probably $10-20 depending on the size of the data). Or TMF staff may be willing to do the upload directly from their copy of the sqldump.

Hey @luxmain - The SQL dump command will work, but you’ll really need all of the DDL for the table structures as well. I also think that you would need to load the tables in order of reference data (board names, board structure, etc.), master data (user names, etc.) and then the posts. This may be a little harder than one might think!!!

'38Packard

DDL

I agree, in my original post on the other thread (“Hello and Thanks”) I mentioned schema would need to be dumped too (I’m from postgresql-world where a DB dump usually will include that automatically along with e.g. database user accounts etc).

An SQL dump file (in postgresql world) is usually structured so that by executing it, it creates schema, users etc as needed in the correct order (and can be set to overlook missing things if they have been excluded intentionally).

You’re right, usernames will be needed, user data won’t. So, might be necessary to clone the DB (or just the user data table(s)), then zero out/drop the relevant columns of the user data table other than username.


Alternatively: <— Ormont/Wendy, please read this bit. @OrmontUS @WendyBG

Ultimately, an SQL dump for historical preservation doesn’t have to be a fully working and coherent database from the get go, e.g. the existing database might have data sanity checks, triggers etc - it simply needs to contain enough of the data that a minimal website / working database can be reconstructed from it later on.

Even a crude materialised view of existing tables… i.e. something along the lines of

Select (username, recs, date_posted, board_posted_onto, subject, message text) from (join lots of things where …=…) into (a new table called) historical_archive.

This would be a dumbed down version of the database, denormalised etc into a single giant table, simply a collection of the written messages, each alongside the same info you’d find on a web page printout - but likely 100% adequate for the task of preserving history, and notably, complete.

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