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Thread: Getting very Late in the Game...

  1. #151

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    Quote Originally Posted by brutus2 View Post
    Margin debt went way higher in August to a record amount.

    Guess I can relax about my hedging if this correlation is to be trusted.

    https://www.finra.org/investors/lear...gin-statistics


    https://www.finra.org/investors/lear...gin-statistics

    Margin debt is at a record again. It is at a record in nominal terms or inflation adjusted terms,
    It is also at a record in terms of leverage. Total Margin debt divided by Free Credit Balances in cash Accounts + Margin accounts.

  2. #152

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    10 year bond rate should average around the nominal GDP increase.
    It has historically, and this makes sense from a common sense perspective.
    That is absent the central planning by the Central banks.

    It will return to normal at some point. It will be forced on the CB`s.
    There are a lot of potential reasons, the current one, and the most probable, is inflation, but it could be many others.

    Here is an old article about the relationship. It seems to run in generational spurts of 20 year trends or so. ( over and under)
    Under, building up inflationary pressures, and over relieving those pressures. It takes a while to manifest fully, which makes sense

    We are at the end of a 20 year cycle, and guess what, inflation is starting to boil again. It has very little to do with supply shocks.
    World GDP is fully recovered from the so called pandemic, so just as many goods and services being consumed, actually more, as before Covid.

    It is really simple. rates lower than nominal GDP, in this case crazy low, reward credit expansion ( money expansion). Lot more money chasing slightly more goods

    As long as rates stay significantly below nominal GDP and they increase massive programs like SS by 5.9% per annum, as well as adding other social program spending directly to spenders
    you can be sure we will get asset inflation. ( may be some dips along way but the trend is definitely up). Caveat to that is if something unforeseen happens to nominal GDP ( to greatly reduce it)

    http://blog.yardeni.com/2013/06/the-...p-excerpt.html

  3. #153

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    Quote Originally Posted by brutus2 View Post
    wow - talk about a high correlation. ( margin debt and stock market)

    Scarier still is that a decrease in margin debt after a build up seems to happen just before a sharp sell off in market
    Margin debt went down in July. If it goes down in August, I will increase hedging in anticipation of correction.

    https://www.advisorperspectives.com/...e-in-15-months

    Margin debt has fell for last 2 months and has fell for last 7 months, except for a very small increase in Feb/22
    It is at its lowest level since Nov 2020.
    This is not normally a very good sign for the stock market.
    Question is, did this reduction in margin debt already indicate the selloff we just experienced, or is this very significant trend indicate
    more to come. It does present logically, as less debt directly into stocks less demand. ( at least from this source which is around 773 billion. )

    https://www.finra.org/investors/lear...gin-statistics

  4. #154

    Default

    Quote Originally Posted by brutus2 View Post
    10 year bond rate should average around the nominal GDP increase.
    It has historically, and this makes sense from a common sense perspective.
    That is absent the central planning by the Central banks.

    It will return to normal at some point. It will be forced on the CB`s.
    There are a lot of potential reasons, the current one, and the most probable, is inflation, but it could be many others.

    Here is an old article about the relationship. It seems to run in generational spurts of 20 year trends or so. ( over and under)
    Under, building up inflationary pressures, and over relieving those pressures. It takes a while to manifest fully, which makes sense

    We are at the end of a 20 year cycle, and guess what, inflation is starting to boil again. It has very little to do with supply shocks.
    World GDP is fully recovered from the so called pandemic, so just as many goods and services being consumed, actually more, as before Covid.

    It is really simple. rates lower than nominal GDP, in this case crazy low, reward credit expansion ( money expansion). Lot more money chasing slightly more goods

    As long as rates stay significantly below nominal GDP and they increase massive programs like SS by 5.9% per annum, as well as adding other social program spending directly to spenders
    you can be sure we will get asset inflation. ( may be some dips along way but the trend is definitely up). Caveat to that is if something unforeseen happens to nominal GDP ( to greatly reduce it)

    http://blog.yardeni.com/2013/06/the-...p-excerpt.html

    Amazing:

    Nominal GDP has averaged 4.25% per year in past 22 years ( start of Century)

    3rd Q of 2000 was 10.318 trillion
    3rd Q of 2022 is 25.663 trillion

    What do you know, Fed is being forced to let 10 year rate try to normalize. ( getting very close to this rate - fluctuating around 4% currently)

    Another amazing fact:

    If you buy into a 3.5% average inflation rate for those 22 years ( basically average of all prices just slightly more than doubling in 22 years.)
    we know that population growth has been .75% on average for those 22 years. So that equals 4.25%

    So we get 0 growth in 22 years ( start of century) per capita in USA. Imagine all the debt that was taken on to produce 0 real growth per person, in that period of time.

    Now we know that the top dogs did far better than 0, and they represent a big piece of the pie, so what does that say about the average guys piece of pie.

    Of course, I am not saying anything that most already did not know.

  5. #155

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    It seems to be getting late in the game for Zuckerberg. Meta stock is off roughly 70% from it's highs just over a year ago. This past week saw a roughly 30 point hit that put his stock back under 100 for the first time in many years.

    Amazon is down about 40% from it's highs. Netflix saw a similar drop. So did Google. It seems that the teeth are being removed from the FANG stocks.

    Twitter is up roughly 6% in the last week or so. Musk has already started firing some big fish there.

    Is there really change afoot?

    Does the fact that the broader markets are not off as badly as the tech wrecks mean that the real economy is still trying to be productive, despite the challenges that are present?
    “The Federal Reserve is not currently forecasting a recession.”
    Fed Chairman Ben Bernanke, January 2008
    This is no longer posted in the Fed Minutes of January 2008, but still quoted here - https://www.nbcnews.com/id/wbna22592939. The FOMC minutes still quote MR. Reifschneider. as stating the same thing.

  6. #156

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    http://charleshughsmith.blogspot.com...ral-banks.html
    This guy seems to think that the era of central banks is over. While I agree with much of what he says, I believe that his end conclusion is a bit unrealistic. The scoundrels that run those big banks are very good at what they do. I expect them to persist for longer than I live. They may need to reinvent themselves, but they will not disappear.
    “The Federal Reserve is not currently forecasting a recession.”
    Fed Chairman Ben Bernanke, January 2008
    This is no longer posted in the Fed Minutes of January 2008, but still quoted here - https://www.nbcnews.com/id/wbna22592939. The FOMC minutes still quote MR. Reifschneider. as stating the same thing.

  7. #157

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    Quote Originally Posted by SilverPalm View Post
    http://charleshughsmith.blogspot.com...ral-banks.html
    This guy seems to think that the era of central banks is over. While I agree with much of what he says, I believe that his end conclusion is a bit unrealistic. The scoundrels that run those big banks are very good at what they do. I expect them to persist for longer than I live. They may need to reinvent themselves, but they will not disappear.

    Good article but I agree with you. It is all about the 4th estate, ( owning it, by its own willingness or fear) and bread and circuses. It can go nicely for 'them,' if they play their cards right, for quite awhile.

  8. #158

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    I am left to wonder, is it really late in the game, or just late in this particular chapter?
    “The Federal Reserve is not currently forecasting a recession.”
    Fed Chairman Ben Bernanke, January 2008
    This is no longer posted in the Fed Minutes of January 2008, but still quoted here - https://www.nbcnews.com/id/wbna22592939. The FOMC minutes still quote MR. Reifschneider. as stating the same thing.

  9. #159

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    Quote Originally Posted by SilverPalm View Post
    I am left to wonder, is it really late in the game, or just late in this particular chapter?
    Like everything, it depends. So many variables, and the players and their final designs can only be speculated on with certainty.

  10. #160

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    Quote Originally Posted by brutus2 View Post
    And the beat goes on. $103.9 billion more of treasuries and mortgages bought by Fed this week ( that is a 5.4 trillion annualized rate),
    but everyone says great demand for US treasuries etc.

    The question is why is the Fed continuing to buy at these levels when lots of liquidity in system, inflation too,
    stocks, bonds and RE are at or near record highs and the economy is rebounding strongly for months?

    My pet peeve, what ninny would buy the over 1 year to 5 year treasury, seems to be correct again.
    Treasuries increased 22.6 billion of which 23 billion was the over 1 year to 5 year category ( some of others had small reduction) - rest was mortgages.

    I am a fixed income investor ( primarily) and there is no conceivable scenario where you would buy this range at this price.
    You could make arguments for most of other ranges. Parking for short term, and foreign buying( Europe and japan) with cheap currency hedges for long term.

    All the Central banks are pumping like crazy, this late in the game. Something does not make sense.

    Always remember who created the high inflation unnecessarily. Why can members at this site know this and not all the experts? Interesting question.

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