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Stock Market plunge

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  • Schmidt
    2018-02-05 04:38:00 PM
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    The Dow dropped 1,175 points today recovering a little bit from being 1,500 points down earlier in the trading session. This follows a 666 point drop on Friday.

    There are lots of factors, perhaps many more emotional than anything else. However, Trump has been raving about the stock market going up linking it directly to his policies, planned and proposed. I don't suppose he'll be willing to take any flack for the market going down the past few days since he said he was the one who made it go up. Maybe it's Obama's fault? Ha.
  • Chet Ruminski
    2018-02-05 05:51:58 PM
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    Schmidt Wrote:

    The Dow dropped 1,175 points today recovering a little bit from being 1,500 points down earlier in the trading session. This follows a 666 point drop on Friday.

    There are lots of factors, perhaps many more emotional than anything else. However, Trump has been raving about the stock market going up linking it directly to his policies, planned and proposed. I don't suppose he'll be willing to take any flack for the market going down the past few days since he said he was the one who made it go up. Maybe it's Obama's fault? Ha.

    "There are lots of factors, perhaps many more emotional than anything else."

    Schmidt, There are not a lot of factors in the market drop. Just one, over valued. All the factors you are talking about are excuses to keep people jnvesting. Same with 2008, They justified selling houses to people without jobs because the dreamers said the market would keep appreciating and the bad loans would be sold off before they defaulted.
  • Chet Ruminski
    2018-02-05 05:56:14 PM
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    Both Dutch and I have been saying a correction is overdue.
  • Schmidt
    2018-02-05 07:57:49 PM
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    If the market only moved strictly on economic performance of the Dow Jones companies in the mix, then you would see far fewer sharp ups and downs. Yes the market has been overpriced. That's a no brainer. Many economists have been stating that for a long time calling for a correction that didn't seem to happen until now when finally fear (an emotion) set in about the potential effects on corporate profits of likely higher interest rates. The fear is infectious, and it then becomes kind of a herd mentality squashing the exuberance of the so called "bull market".
  • Chet Ruminski
    2018-02-05 10:03:38 PM
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    "happen until now when finally fear (an emotion) set in about the potential effects on corporate profits of likely higher interest rates. The fear is infectious"

    Schmidt, Are you agreeing that the correction was inevitable or do you think the market is more a victim of ignorance?
  • wwjd
    2018-02-05 11:39:11 PM
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    Schmidt Wrote:

    T Maybe it's Obama's fault? Ha.

    {humor}Of course it's Obama's fault, it's obvious. If you read the Deep State Manifesto, one of Obama's major objectives for 8 years was to cause the Stock Market to crash just to make trump look bad. Obama even designed it to drop exactly 666 points as a secret message that he is a follower of Satin Himself.

    trump will be releasing the Deep State Manifesto, very very soon, so soon, you'll be shocked. It has been encrypted using an unbreakable 1 billion bit cipher, known as the DSM cipher, but Devin Nune's cracker jack team of deep state investigators (DSIs) have broken the unbreakable cipher, and decoded the evil manifesto.
  • wwjd
    2018-02-05 11:55:38 PM
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    On a more serious note, it is being pointed out from many mainstream news sources that if the memo had been a true bombshell, the whole thing would have been taken away from Nunes, and handled by someone with a highly credible, and unbiased, reputation. As it stands it looks like Bozo the clown (Nunes) handing over classified intel to The National Inquirer.
  • Schmidt
    2018-02-06 12:39:30 AM
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    Chet Ruminski Wrote:

    "happen until now when finally fear (an emotion) set in about the potential effects on corporate profits of likely higher interest rates. The fear is infectious"

    Schmidt, Are you agreeing that the correction was inevitable or do you think the market is more a victim of ignorance?

    Just about every reputable economist has been talking about the market being overvalued and a correction necessary for the past year. I believed them. I read what they write and it makes sense to me. That's where I am coming from -- and not trying to score points on the Democratic Hub.

    Trump meanwhile has been touting the market gains day after day all year long as a "report card" of his administration's policies. I do indeed give credit to Trump for some of that market exuberance...call it greed, call it ignorance, call it blind faith. It was not driven by the underlying economic factors such as Price/Earnings ratios or all the other factors that economists cite in saying the market is overvalued.

    The market will probably drop some more as fear continues, and then start back up more slowly, perhaps getting back more on the longer tem "Obama trend". At least I hope so...fear can turn to panic. The "Obama trend" by the way had less to do with Obama's policies (other than the initial stimulus...that was real) over the eight years of his administration than just natural market conditions in the recovery after the panic of the Great Recession.

    Presidents are given way more credit (and blame) for stock market changes than they deserve.

  • Carlitos
    2018-02-06 06:47:59 AM
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    A weaker dollar, higher interest rates, and higher inflation all increase the discount rate by which financial agents value future incomes. So if the discount rate goes up, future income is worth less today. This is all driven by expectations (predictions about what’s going to happen). So you got a weaker dollar and an administration apparently committed to putting the exporters in charge and a regime change at the Federal Reserve with a now assumed higher interest rate bias supported by economic data that is interpreted or believed to show inflation on the horizon (from higher wages). Meanwhile, stocks are believed by many to be way over priced and the reality is that employment growth, bank lending growth, and many other indicators have been moving downward for 3 years since the shale oil/fracking bust (so the over priced people are probably right). So you got this belief that the economy is about to overheat, when it’s probably at or close to stall speed without the non-sustainable expansion of unsecured consumer credit. Plus, you got a bunch of morons with unfounded fears about rising government deficits (this also adds to the discount rate). So you have a rising discount rate and lower future incomes. That’s bad for stocks.
  • Schmidt
    2018-02-06 08:11:47 AM
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    Thanks Carlitos. You make good sense. Now I am also wondering about the psychological effects of many non-economic factors like Trump's seemingly getting more and more uptight about the Mueller investigation. Republican support for him has its limits, but it may be a while yet before he is let go as "the leader of the pack".

    On another note, we have a possible shutdown looming over DACA, the debt ceiling being reached a month earlier (March) because of the tax cuts (See NYT article), but also a sense that the employment pool of potential qualified hires is shrinking...a factor in the shrinking employment growth that you cited.

    The deficit hawks have been somewhat quiet I suppose many of them counting on the much heralded corporate tax cuts to lead a surge in economic growth. When that doesn't happen, then the blame game starts at the top. I just hope fear doesn't lead to panic in a big way. Finally, when spending cuts are put on the table, will the "build the wall" coalition hold?
  • Dutch
    2018-02-06 08:41:13 AM
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    As predicted; the market lost 4 trillion and probably more loss today on top of that. As a matter fact it means that companies have much less capital to do things. Thus in other words it may even out the Trump's tax cuts or make it worse if the losses at certain companies force them to reduce staff or plans. It is a no win for Trump with his short term view. More things are likely to unravel; an top down economy never has worked; the GOP never will learn from their past mistakes.
  • Schmidt
    2018-02-06 08:47:49 AM
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    As per the NYT article above,

    "On Monday, Treasury said that the United States will need to borrow $441 billion in privately held debt this quarter, the largest sum since 2010, when the economy was emerging from the worst downturn since the Great Depression."

    This will get the deficit hawks squirming as the national debt has also topped $20 trillion.
  • Schmidt
    2018-02-06 09:07:34 AM
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    Oh and I suppose first salaries on the spending cuts will be those like that secretary at a public school in Pennsylvania who is taking home $1.50 more per week as a result of the Trump tax cut. Paul Ryan tweeted about that $1.50 per week raise, and then deleted his own tweet as he actually started to think again.
  • Dutch
    2018-02-06 09:18:01 AM
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    Schmidt Wrote:

    As per the NYT article above,

    "On Monday, Treasury said that the United States will need to borrow $441 billion in privately held debt this quarter, the largest sum since 2010, when the economy was emerging from the worst downturn since the Great Depression."

    This will get the deficit hawks squirming as the national debt has also topped $20 trillion.

    That deficit will increase a lot more; I guess they forgot the millions Trump spends on himself and his outings for nothing.
  • that guy in AZ
    2018-02-06 11:12:17 AM
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    Guys:

    LOTS of good comments so far on this topic. The only comments I will add are these:

    1) Sean Hannitty DID say that the stock market drop was Obama's fault because its increase had been driven by "cheap money"

    2) when Trump was in Davos, he told the attendees that the stock market had increased 50% in the last year
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