Day of Trumps SotU speech the DOW drops like a stone, ABOUT $2000 DROP IN WEEK

Discussion in 'Politics, Religion, Social Issues' started by PracticalMac, Jan 30, 2018.

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  1. PracticalMac, Jan 30, 2018
    Last edited: Jan 30, 2018

    PracticalMac macrumors 68030

    PracticalMac

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    #1
    Yesterday it dropped ~140, today it is -340 and struggling to go anywhere.

    Live results here.

    (I know, a petty anti-trump post)
     
  2. samcraig macrumors P6

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    #3
    Is it the SOTU or the recent cluster-you-know what between the investigation and Nunes memo
     
  3. Dmunjal macrumors 65816

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    #4
    It's interest rates. Regardless of Trump's policies, this is the one thing that can kill the economy. Obama enjoyed low interest rates for 8 years courtesy of the Fed. Because of the $20T debt overhang, a 4% rate (10 Year Bond) would cripple the government and most of the bubble economy.
     
  4. PracticalMac thread starter macrumors 68030

    PracticalMac

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    #5
    Thanks for informing us of that, had to be something real.

    I knew it was not Trump, but given how much he brags about it, the timing could not be better.

    Fully expect will rebound in a month
     
  5. Dmunjal macrumors 65816

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    #6
    What's funny is that the Fed didn't raise rates at all for 8 years under Obama but have already raised it 4 times since he won the election. March is supposed to be the 5th time.

    Establishment conspiracy theory?
     
  6. MarkusL macrumors 6502

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    #7
    I once overheard George Soros and Hillary Clinton discussing the Fed rates at an Obamacare death panel meeting in Davos.
     
  7. Dmunjal macrumors 65816

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    #8
    You don't think Janet Yellen (appointed by Obama) is a Democrat? Do you really believe politics don't play a role in Fed policy?
     
  8. forcesteeler macrumors 6502

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    #9
    They have to raise rates because of the republican tax bill, Alot of companys are bringing back billions of dollars overseas. Most of the cash will be used to do Stock Buybacks.

    With all that influx of cash coming in from overseas, If you have all that money in circulation

    You need to raise rates or they will be massive inflation.
     
  9. Dmunjal macrumors 65816

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    #10
    But the four raises happened before Trump even signed the tax bill.
     
  10. rdowns macrumors Penryn

    rdowns

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    #11

    The Fed raised rates in December 2015.

    Not sure why you're tying rate hikes to Trump. They were triggered by an improving economy and lower unemployment.
     
  11. Dmunjal macrumors 65816

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    #12
    You're right. That was the one time under Obama.

    Four since more since the election.

    The last two quarters of 2016, the GDP growth rate was under 2%. Was that really a growing economy?

    2017 was about the same as 2016 overall (2.3% vs 2.2%) yet there were more hikes?

    Obama also had better GDP growth years than 2017 (2015 I believe was close to 3%) with zero rate hikes.

    Why the discrepancy?
     
  12. rdowns macrumors Penryn

    rdowns

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    #13
    Above my pay grade, bro.
     
  13. PracticalMac thread starter macrumors 68030

    PracticalMac

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    #14
    You do not need a tax bill for a massively pro-business get rid of regulation and erase environmental protections president.

    Yes, rates should have started creeping up earlier in Obama, but certainly in face of Trump and "Irrational exuberance" that was obvious the day of election.
    Or maybe rational exuberance

    Oh, as Trump says, the economy (read: the Dow) is on a rampage!
     
  14. Zombie Acorn, Jan 31, 2018
    Last edited: Jan 31, 2018

    Zombie Acorn macrumors 65816

    Zombie Acorn

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    #15
    The left has proven their inability to predict market trends after Trump's election, don't make yourself look ignorant by trying to attribute non related things to normal market corrections after unprecedented growth.S&P 500 was up 5% for the year by the 23rd of January, if you think that was just going to continue I have a bridge to sell you.
     
  15. mudslag macrumors regular

    mudslag

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  16. appleisking macrumors 6502a

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    #17
    It’s called coincidence. The Fed felt safe to raise rates more agressively in 2017 due to more consistent job growth. That happened to be around Trumps time. Unless you think trumps new chairman pick is gonna suddenly reverse this policy...
     
  17. vrDrew macrumors 65816

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    #18
    The Federal Reserve does not set interest rates. Those are determined by the market. If the US Government sells 30 year bonds, the price, and the effective interest rate, are determined by supply and demand. And right now there is so much idle cash in the world, people are willing to accept very low interest rates in exchange for the security of US Government debt.

    The Fed's rate hikes, and ability to influence monetary policy, are - at best - a minor check on overall economic activity. By raising the discount rate (ie. the interest rate banks pay to borrow short-term from the Fed to maintain adequate cash reserves) the Federal Reserve is merely signaling to the market that it believes economic activity is picking up steam.

    Rising interest rates do take a hit on the stock market. Why? Partly because companies may have to pay higher interest on the funds that they borrow. But mainly because when individuals are able to get a guaranteed 3% return on their money buying T-Bonds, they sell shares in companies, whose return is very much less assured.

    RE: Inflation. People have been crying doom-and-gloom about inflation for a decade now. None of it has come to pass. And for a very good reason: Right now there is excess capacity, both in labor markets, and factory output, for pretty much every good and product out there. There is little expectation that prices, or wages will rise sharply. Inflation, and especially high inflation, is just not going to happen in the foreseeable future.
     
  18. s2mikey macrumors 68020

    s2mikey

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    #19
    Exactly - they are hell-bent on making everything all doom & gloom when reality says otherwise. There are jobs out there, there are binuses being paid to people and the tax cuts are doing good things. Of course, tax cuts piss of some congress people because its less money they can piss away on their BS.

    Its like - lets just see how things end up in a few years before we jump to conclusions. Ya know?
     
  19. mudslag macrumors regular

    mudslag

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    #20


    If only the Right held that view during the Obama years.
     
  20. samcraig macrumors P6

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    #21
    The funny thing is trying to insinuate that the left doesn't understand trends. The very fact that you admit it's a trend indicates that that this growth isn't "spontaneous" because of Trump or his administration - but that over time, this has been where the market has been going.

    And once again - the stock market is not an indicator of how our economy is doing.
     
  21. CaptMurdock Suspended

    CaptMurdock

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    #22
    Various posters on this board have proven their ability to not only completely misremember history, but to also see intricate patterns in tea leaves while ignoring elephants in a broom closet. Economic trends have been misread, misrepresented and mis-predicted (yes, not really a word, I'm taking alliterative license) by so-called conservatives for decades. Any bridges for sale from such people I wouldn't cross without surveyor's tools and a lifejacket.
     
  22. Carnegie macrumors 6502a

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    #23
    Yeah, we got pretty much what we expected, before President Trump was elected, when it comes to rate hikes in 2017.

    FOMC participants do projections at every other meeting. Included in those projections is what they think will be the appropriate target range for the federal funds rate by the end of the next few years. At the last meeting before the election where such projections were made, the September 2016 meeting, 6 out of 15 participants projected 4 or more rate increases (i.e. to a target range of 1.25 to 1.50%) would be appropriate by the end of 2017. That's what we got, 4 rate increases.

    One of those 6 projected that 7 rate increases would end up being appropriate, two more projected 6 increases and two more projected 5 increases. Of the remaining 9 participants, 7 projected 3 increases, 1 projected 2 increases, and 2 projected 1 increase. So the median projection was for 3 increases, the mode projection was for 3 increases, and the mean projection was for 3.9 increases.

    I'd also note that (based on the advance estimate we got last week) GDP growth over (not for) 2017 was at the top of the range of projections made by FOMC participants at that September 2016 meeting. And the average unemployment rate for the fourth quarter of 2017 was below the bottom of the range of projections made by participants at that meeting. In other words, the GDP and employment data was better than it was expected to be. That would make it more likely that the federal funds rate was raised more than had been projected to be appropriate (in September 2016).

    I'd say this... I follow the FOMC fairly closely. If you'd told me before the 2016 election what the economic data (e.g. relating to employment and inflation) for 2017 would end up showing, and asked me how many rate increases we'd get by the end of 2017... I'd likely have said I was fairly confident there'd be 3 to 5 rate increases (or a total increase of .75 to 1.25% in the target range), with my best guess being that there'd be 4 (or a total increase of 1% in the target range). That expectation would be without regard for who might be President.
    --- Post Merged, Jan 31, 2018 ---
    The Federal Reserve has a significant effect on supply and demand realities when it comes to U.S. Treasuries though. It is the largest holder of (marketable) U.S. Treasuries. Its choice to buy more such securities (e.g. as part of a quantitative easing) affects the supply-demand balance and thus the effective yields for those Treasuries. Likewise, its choice to sell such securities (or let those it holds mature without replacing them with new ones) affects that supply-demand balance.

    I'd also say that much of the slack in the U.S. labor market in general has been taken up. We've recently seen historically high levels of job openings. That's why we're seeing meaningful wage inflation. Average (private) hourly earnings were up 2.9% from December 2015 to December 2016 and another 2.5% from then to December 2017.

    I would agree though that concerns about too-high inflation have been, as it's turned out, misplaced.
     
  23. vrDrew macrumors 65816

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    #24
    I think we're in agreement that higher wages don't necessarily lead to higher retail prices.

    For one thing, globalization means that traditional constraints on supplies, especially of most consumer goods, are largely a thing of the past. Attempts by retailers or manufacturers in one market to raise prices significantly would almost instantly invite competition from outside that market to undercut them That's Amazon, and Wal-Mart, and China in a nutshell.

    I think its also worth noting that while overall inflation has been pretty much non-existent over the past decade or more, there have been some items that have increased dramatically in price: college educations; US medical care; and high-end real estate in places like Manhattan and London.

    The inflation that occurred in those places had next to nothing to do with deficits, interest rates, or quantitive easing. It has to do more with the fact that those particular commodities are very severely constrained. The AMA makes sure we don't create too many doctors. And they aren't making any more land in Manhattan or Central London.
     
  24. Plutonius macrumors 604

    Plutonius

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    #25
    Most of it was profit taking on the run up this year. People are also waiting on the quarterly results from some major companies (Apple included) and the results of the Fed meeting.
    --- Post Merged, Jan 31, 2018 ---
    The people who took their money out of the stock market after Trump got elected, really got hurt.
     

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101 January 30, 2018