My absolutely not an economist opinion: the world economy is pretty resilient if some outside factor hurts us but we all cooperate and approach with a good-faith effort to get around it. We get hit by a meteor that destroys some country? We would hurt, but we’d band together to get through it.
But this is deliberate damage and chaos caused by the center of the financial and economy world. That’s an entirely different sort of problem. Trust is lost, forever. Good will and good faith is lost forever. We’re not overcoming a problem forced upon us, we’re shooting ourselves and everyone else in the foot.
The US will be disproportionately affected and the rest of the world won’t be affected as negatively as us. However, given that we’re a center for investment, a center for storing your money in treasury bonds, the world reserve currency, and basically occupying a position of extreme trust that’s going away entirely, even if the other countries could manage to recover most of their trade with each other, the fact that the US is going to economically collapse is going to take the rest of the world with it. It’s not just trade, it’s also financial markets, and the world’s debt that’s going to be massacred all at once. And this isn’t even accounting for the damage that the retaliatory actions will have, like if China stops buying US securities and the debt crisis that will cause.
My take is the stock markets are screwed everywhere, but doubly screwed in the USA.
The so-called “real economy” of all the countries that are not the USA can continue to trade with one another while ignoring the temper tantrum happening over here in trumpland. There is really no asset we possess, no strategic material, no strategic product that is only made here that the rest of the world’s real economy can’t readily do without.
Wild military adventurism by Russia or China could further upset the apple cart, but if they can keep their wits about themselves in that department they can clean up economically by occupying much of the hole in the world economy the USA is about to leave.
Not because the USA collapses, at least not immediately. But because it is deliberately turning its back on the trading and financial world, a la North Korea.
You think Russia has that chance despite the Ukraine invasion and its effects both internally and externally? Do they have at least a shot just because they’re big?
I mentioned this story earlier, but because I bid $1.66 on a vix call instead of a $1.70 (the market moved when I was drawing it up) - the value of those contracts is up 720% since then in two days. My contracts only got partially filled because of that. I cost myself $35000 because I saved 4 cents paying the going rate of 10 seconds ago instead of the current going rate. That would’ve been, by far, my biggest stock market win and I blew it with being careless and not double checking that it was filled.
I would’ve made it a market order, but contracts don’t work like that, at least not on fidelity, and I didn’t double check that the orders got filled.
I think Russia has a chance to really fuck themselves and the world by going even more military adventurist.
Or they can show some patience, and wait for the USA to finish scoring their own goal. And during that time get back fully into the raw material exporting business.
Will they “clean up?” No. that’s for the Chinese.
Will they be able to rewind to more or less a pre-2022 place in the economic, if not diplomatic, world? Sure, as soon as the US walks away from all the sanctions. IF they’re smart enough to go for the money instead of going for imperial glory.
Will they be that smart? Hellifino. The possibility exists is all I’m able to confidently say.
I completely agree. It’s not too late to make this an embarrassingly self-inflicted correction. But if he doesn’t change course soon there is a significant chance (I couldn’t begin to quantify it) that we are heading into a true disaster. I think we’ve learned enough to avoid a repeat of the 1930s, but I wouldn’t be shocked to revisit the 1970s.
And there is a part of me that’s considering taking some more out and putting it on the sidelines. I’d lock in a 20% loss from highs, but I have holdings back 30 years which are nicely in the green nonetheless.
5% from a bond fund is starting to look positively rich.
Nitpick: The NATO-ex-US would really like to have a couple of AWACS, some nuclear powered submarines with frightening long range missiles, and some comparable aircraft carriers.
That is why we need those weapons I just mentioned. We really do. And that takes longer than we can afford. Damned!
Economically I agree with you, but politically I am not sure.
NATO has their own AWACS. Both theirs and USAF’s are largely obsolete / falling apart. Building the next-gen equivalent capability is a priority for everyone but will probably be a satellite, not a plane.
Britain & France have nukes enough to hammer Russia more than they’re rationally willing to be hammered. But … you can’t deter irrationality; you can only punish it after the fact.
But yeah, more would be better in that department. More and especially newer; the entire Western nuclear weapon establishment is creakingly ancient and desperately in need of comprehensive recapitalization, modernization, and expansion. Sez the aging nuclear Cold Warrior.
Aircraft carriers are for projecting power far from your borders. And are really pinpricking weapons on a big country scale. If your adversary is Belgium-sized, a full-up USN type aircraft carrier can f*** them up. If the adversary is Germany-sized or Russia-sized the effects are proportionally smaller.
If your adversary is already nearby, an aircraft carrier is simply a stupid extravagance. The same spending buys 2 or 3x as much land-based tactical and strategic aviation.
Agreed. But I’m also not sure more weapons makes the situation better.
Tomorrow is probably the big day. If he goes through with it, we’re going to have a great depression style crash. I’m well set up to profit, but I say that with a little bit of guilt and regret, because I’d prefer not to root for a catastrophe that’s going to hurt us all. If he calls it off at the last second, I’m going to take a beating. But at this point I’m like 25% in gold, and everything else is short. Mostly Tesla, but also a lot of consumer discretionary.
Well I admire your willingness to swing big. I hope don’t mind too much that I’m rooting for you to lose a fair amount tomorrow. Other than on your bets against Tesla, just because, and your gold position, as my portfolio, while not as heavily weighted to it as yours, is still at a healthy 8 to 9% share.
Okay, another question: I know of the concept of “buy and hold.” Does the opposite have its own phrase too? Like if you bet on the market or a stock going down at specific timing, and it doesn’t, but you still believe that it’s coming, so your financial position is correct to maintain, is that a “sell and hold” ( which I realize doesn’t make sense as a phrase, but you get what I mean)?
I can’t think of a phrase that means that, but I guess “short and hold” makes more sense than sell and hold.
My fidelity account is up $3000 in the last few hours, since like 3 hours after market closed. I can’t think of a reason why it would go up after trading. I don’t think it factors in after-market trading, and all of my position stats are from market close. Any ideas?
I have a new specific stock tip: short PinDuoDuo, Nasdaq PDD (is an American ADR version)
It’s easier just to link to the reddit thread about it, but essentially there’s an executive order killing an exception on small items directly mailed to the consumer for tariffs. This massacres drop-shipping of chinese products and PDD (who own temu) basically has this as their entire business model. They are going to get pretty wrecked by this.
I’m not a financial advisor blah blah don’t count on my advice, I’m some idiot that takes random advice from meme subreddits. My ex was a financial advisor and I think she’d probably be horrified at the shit I’m doing. I should text her a pic of my portfolio.
I should say – that’s a Chinese company. ADR just means there’s an American fund that matches the performance of that stock but that you can trade on an American market. Chinese stocks are often manipulated and I don’t fully understand the implications of that. So take that recommendation as an idea with caution.
In case anyone is worried I wouldn’t talk about Tesla for a day, this site makes a case that the demand for the new model Y is not high.
A lot of Tesla believers tried to explain that orders were low over the last few months because people were waiting for the updated model Y to release. That’s probably not the case.
Earnings is April 22. I’m gonna be on a cruise ship in the middle of Atlantic throwing an anti-Tesla party.
I wonder - if Tesla gets beat down with the rest of the market tomorrow, how much will it still go down for earnings? I’m excited to see.
(Or… the market crashes tomorrow and Tesla somehow rises to $600. I think there’s at least a 20% chance of this because nothing makes sense when it comes to Tesla. Ever.)
The Economist is very concerned about the sudden surge in the yield of the 10 year, at a time when falling markets should bring the yield down, it’s skyrocketing.
April 9th the yield on ten-year American Treasuries leapt to 4.5% (see chart), with 30-year bonds rising even higher. Early on April 7th the ten-year yield had been just 3.9%. Such yields normally fall when share prices plunge and panic is in the air, since they move inversely to bond prices and investors usually flock to the safety of America’s government debt in times of anxiety. Now stockmarkets are in freefall and yields have jumped anyway.
Of all the lines that could have rebounded, this might be the worst. During Asian trading hours on April 9th the yield on ten-year American Treasuries leapt to 4.5% (see chart), with 30-year bonds rising even higher. Early on April 7th the ten-year yield had been just 3.9%. Such yields normally fall when share prices plunge and panic is in the air, since they move inversely to bond prices and investors usually flock to the safety of America’s government debt in times of anxiety. Now stockmarkets are in freefall and yields have jumped anyway.
It is the most worrying sign of financial distress yet—and there have been plenty. Traders are paying soaring premiums to protect themselves against volatility, businesses are facing increasingly bad terms on borrowing and a dash for cash has sent the gold price down. Spiking Treasury yields are even more ominous, since they drag up other borrowing costs with them. In short, they are not just a symptom of market stress—they are a cause of more to come.
The Economist’s gift links are only available to one person, not the whole board, but I believe you’re allowed a couple of free articles a month. The whole thing is much longer and worth a read.
Well this was quite an unexpected day. I don’t even know what to say, except this is probably a false pump and we’ll probably end the day in the red. Actually implementing the tariffs, china increasing tariffs to 54%, and Trump increasing tariffs to 104%, and the market is in the green?
I guess we gotta see the actual economy breaking down and consumer products being unavailable and/or twice as expensive before we accept that this really is happening.
On the plus side for me, after a slump, gold sprung back as I predicted and just in time for me too, I had a gold put at $281 expiring today. Turned a $4000 loss into a $5000 profit. I’m still down overall because Tesla surged $10 (what POSSIBLE FUCKING REASON) but I expect that to come back down.
As a phrase. As a tactic? Shorting has built in extra costs. Holding a short position longer term is expensive I think. Plus, at least historically, buy and hold long enough for the index overall pays off. Shorting it requires timing it with expertise that is hard for the most experienced and expert to pull off.
I took a year off between High School and college and was initially going business undergrad. I worked that year at the Board of Trade as a runner. Two traders personal boy. Trading, and futures were always leveraged, in contracts shorts were as rational as buy contracts. Takes a disposition I do not have. Minute by minute huge changes in fortune. I have a high volatility tolerance only because, even at 65, I am thinking in terms of a longer timeline. Maybe stupidly but still do. In out like you do it? Couldn’t do it.
And not over yet, with the leap a couple of hours ago.
As LSLGuy says, we really seem to be playing Calvinball nowadays!
I’m still trying to figure out how to navigate this.
If I thought there was a strategic basis for a collapse direction to the market (as in 2008), I’d hold my nose and liquidate almost everything.
But at the moment the signal to noise ratio is so bad that it it is impossible to make any useful predictions…?
Other than on your bets against Tesla, just because, and your gold position, as my portfolio, while not as heavily weighted to it as yours, is still at a healthy 8 to 9% share.