Has anybody here noticed the stock market has been doing a happy dance? Up 6% in five days. It seems as though the long-delayed recession has been delayed again and/or the Fed has finished raising interest rates.
Any thoughts?
DB2
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Only sometimes. Only sometimes.
DB2
I did not think this was one of those times.
I decided this summer that a recession wasn’t eminent, so I have been adding to my stock position weekly as the market has gone down (lowering my average cost).
DB2
** “Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.”**
Peter Lynch
To many people think they are smart and can call a recession but they are all wrong, not one of them is ever right, but people still believe them. When we finally get a recession it could be years away or months away, who knows, but those same people will say see I was right. Although they have been waiting two years or more for it to happen.
Predictions are fun but they are still just predictions.
Andy
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End of the strikes at the big three? As posted a couple days ago, I had been watching Parker Hannifin slowly rot away. They reported earnings and the stock flew 30 points in a day.
Maybe it’s a return to the “better than expected” narrative of Q1, 2009, when every report, no matter how horrible, was hailed by the media as “better than expected”, as if everyone had been handed the same script.
Steve
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I was expecting a rise into January.
Instead, we got a rise in to August. I have no faith in this market and no idea.
As my drunken grandfather would have said, “I will bet a bob either way on that man”. He was also penniless.
The money is in the bottom next spring. The bottom is not in.
If wave theory has any water in it, we are waiting for the entirety of the 5th wave from here. But who the blank knows? As I said I have no faith any longer. Isn’t that lacking of anything why people are buying?
Funny. I have been averaging my monthly SS checks in since February because I thought a recession was possible, if not probable over the next year or two, and because I knew I could not time it. Same action, very different reason.
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Today it looked like the stock market has decided that the Fed has finished raising interest rates. No cuts in the foreseeable future, but no raises either.
DB2
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Fed funds futures.
Probability of a change on 13-Dec-23 - near zero
Probability of decrease on 20-Mar-24 - 32%
Probability of decrease on 1-May-24 - 67.1%
Probability of decrease on 12-Jun-24 - 87.3%
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Mark,
If a decrease comes to pass it will be a major lift in the US manufacturing sector. It would be timely.
It would be well lined up by the powers that be.
The market would rise.
I’d be eating some crow. I’d be wrong on two counts no rate hike and the bottom in the markets would be in already.
These are very real possibilities.
I do not know. I can add it up as the best of all worlds it if comes to pass.
Meanwhile, more and more of the consumers are tapped out. Credit card defaults are rising.
I still see the real swing in the US economy happening by mid 2024. I do not know if that precludes my expectation of rate hike(s) and/or an equity market bottom.
At the same time the rate is only half of what it was back in the '90s. Any ideas why the change?
DB2
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It’s possible that credit card companies were more judicious regarding giving credit, and more importantly, how much credit they gave. This is actually more probable than possible because I recall reading something about credit card companies tightening lending standards a few years ago. I also don’t recall receiving as many offers of “18 months of zero or low rate” credit cards in the last 3-4 years. In the 2000s and early/mid 2010s, those offers would arrive weekly if not more frequently. A close relative received a crazy deal of “0% for life” in the mid 2000s, so they took the offer, almost maxed the card limit in month one, and then cut it up and never used it again. They then auto-paid the monthly minimum for years, even for a decade plus. That is literally a 0% long-term loan! What were those companies thinking? I too had plenty of offers like those, but never used them.
It’s also possible that we are early in the cycle and as we get closer to a possible recession, the numbers will go up. Related to the above, it’s also possible that employment is so high, and wages still rising, and people can mostly pay their credit card bills. If unemployment ticks up the numbers will surely go up.
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The baby boomers were gathering assets. Meaning they were taking risks. Today the assets are firmly with some baby boomers. The risk-takers have shaken out for the generation. Now it is the Millennial’s turn to take risks. Irony is credit cards are not the right risk. They are a side effect. The swoon in 2010 is the result of the last round of risk.
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