OT- For the board's serious investors, market predictions for the next 12-18 months
Have the DOW/S&P hit their rock-bottom in March. Will there be another upcoming bottom that won't quite reach March's lows? Inflation v. deflation? Serious current values in sectors (oil/energy, gold, bitcoin, commodities, banks, airlines, cruise lines, medical)?
Will the deficit reach 10 trillion or higher?
Obviously, COVID holds many of the cards. Assuming a vaccine within 12-18 months, I'd say deflation for a period due to the tremendous loss of activity, followed by a decade of moderate inflation that will seem high by recent standards, low by 70's standards. Fed will pump another 5-10 trillion in. Bitcoin will shoot up in the next few years, as will the equity prices of food and energy. So I these as the places to find bargains, as well as travel, though I'm not sure those have bottomed out yet.
Thoughts?
I’m heavily invested in pork bellies, which should precede a slight inflationary period in my waistline.
I have my eye on frozen concentrated orange juice
Looking Good Billy Ray
I think it's going to oscillate for a while. When a company goes bankrupt it will go down, then it will gradually come back up. I expect that to repeat for a few months. But I'm also worried we're going to have a big spread again that makes everything shut down again and then I could see a crash. Too many people that are taking no precautions.
"Oscillating" is a great way to describe the likely market in next few months. Don't get cute trying to time the market. Overall, believe it is a little high overall currently, after rocketing back up from late March.
If you want to invest in some individual stocks right now, recommendation would be to stick with companies with strong balance sheets. If you want conservative investments today, I think JPM, XOM, and UPS will all be a minimum 10% higher by end of 2020. My favorite tech stock is NVDA - damn company is doing incredible things and its value is showing it.
Good luck.
The market definitely seems high right now given the actual economic data coming out, which is brutal. My fear is that the rebound was a sugar rush fueled by the stimulus act and will not be sustained in the near term.
a series of 'W's, bumping along. besides C-19 the november elections will have a huge impact. energy stays relatively low for that time period. i think a crunch, but not a destruction, of the airlines and cruise lines.
as a farmer i am curious what commodities and food prices will do. maybe not much, as if there is one thing we all agree on, its that eating is probably a good idea in the long run.
I sell software to industrial clients and the miners were the poor sisters of the sector until CV. They've been seeing margin compression for years and it is doubtful that reverses IMO. Phosphate miners, for example, have seen their profit forecasts get cut by 50% for this year due to CV but they haven't changed much yet for next year (not believable IMO).
However, at least the miners are not going to lose $8B this quarter like Ford. I think there is an odds-on chance the entire auto industry goes BK again.
I disagree that the November election will make much difference. Neither Trump nor Biden have the desire or political capital to do what will be necessary. They are basically the same with the only difference is Biden will talk about doing something but will not do it. We have 2 Hoovers and 0 FDRs to choose between.
I disagree entirely. I think Biden may in fact be an FDR in sheep's clothing. If he wins, keeps the House and takes the Senate, I think we'll see a massive nationwide recovery plan. Massive infrastructure plan, expanded healthcare access, and aid to state and local governments. Taxes on the wealthy and corporations will go up a bit, but not as much as they should.
The worst case scenario IMO is a Biden win, but with Moscow Mitch still running the Senate. They'll all become deficit hawks and hamstring the recovery just like in 2010.
I'm stuck between the two of you. I don't have all that high hopes of Biden with respect to his personal willpower to push reform (or Nancy Pelosi for that matter), but it would be interesting what others in his administration would push through if the Dems take the Senate. Biden would end up getting credit for it, which, fine by me.
I guess I’d be hopeful, but he is so captive to the status quo, institutions and centers of influence.
we will have to rethink our economic fundamentals at some point. There has been no real growth in 40 years, we have just been moving wealth from families to a small Kleptocratic class. 1/3 of this country will be unemployed or severely under employed by September, there will be poverty and hunger on a scale unseen in 85 years.
oh, and Biden helped create this system.
I read a piece last week that talked about Biden understanding his need to move left and propose bold solutions to our problems. He got together with Bernie to form working groups regarding this year's platform.
His VP pick will be telling.
Look, the House passed a $3T bill last week that did not include automatic relief valves, meaning that every time we need new stimulus, congress must pass a new bill. This means that if Biden wins, he will have to go to McConnel for money. McConnell has already proven he is fine hammering the economy to beat a Dem president and he will happily do it again, but Biden will think he can work with McConnell, which is bullshit. It will be 2010 but worse. Remember debt ceiling brinkmanship? You think idiots like McConnell and Gaetz will put country above politics?
Democrats are again showing to be useless. It should be easy as Republicans run the economy into the ground every time they have control
There is no free lunch there is no free lunch there is no free lunch.
Why stop at 3 trillion in new funny money? Lets go Bernie big. 100 trillion in unpaid debt now! Sponsored by a fake platinum coin sold by treasury of course!
There are ten Pub Senate seats at risk right now.
His VP pick won't tell us a single thing (about Biden), other than that is who his handlers felt would help him the most at the ballot box. That is not to say it is not an important pick, because that person has significant chance of succeeding Biden if he is declared incompetent once safely elected.
"No real growth in 40 years."
Aside from the outright lie, I'll play along.
Gee, I wonder what happened in 1971 under Nixon that might've caused such a decoupling.
Gold standard for $500 Alex!
There was an FDR type in the primary. He lost.
Biden's policies will be fundamentally identical to Trump's, he'll just "trans lives matter" or some shit and the libs will pat themselves on the back and go back to brunch.
Amen, there is no real Econ policy difference between Ds and Rs. Both distract with culture wars while they send jobs overseas and shovel money to billionaires.
Hey Commie High, we agree on something!
Ah yes, FDR. The man who interned Americans in camps and kept a Gestapo-like list of wealthy American "enemies" to target with his IRS. Great man. Such a "unifier". Oh, and he praised Benito Mussolini at various times for being such a solid central planner. The brilliance that was FDR!
Oh, and the current dollar cost of the "New Deal"? About 900 billion in today's "dollars/funny money". A little bit over what President Barack spent on his "stimulus" in 2009. When we were only 9 trillion in debt. Not 25.
But hey, what is 25 trillion anyways? 100 trillion like Bernie proposed. The debt will pay for itself. Tax cuts will pay for themselves just like Keynesian spending pays for itself. The future pays for itself LOL.
There is reason rat is at end of democrat. I am John Galt. Hear me roar.
From an investing standpoint a Biden election, assuming he is still at least 50 percent coherent by then, will make a huge difference. If you think he will win then the easiest strategy is to try to find companies associated with, doing business, with and reliant on China, as the trade war will be over and China will have won.
As to other matters, the answer is less clear. It's hard to believe that the Fed can pump up Wall Street any more than they already have under first Obama, and now Trump, but under a President Biden, they will certainly give it a go.
All things being equal (no treatment or vaccine) I see the market revisiting the lows just as was the case a decade ago. Some sectors will do better than others and tech will continue to outperform IMO. But the S&P is trading at 22x forecasts for next year (which aren't really believable IMO).
There are shoots of inflation in the economy now (food) but, overall, it ought to be reigned in for now.
I own one BTC and think it ought to shine in this environment as federal deficits will be through the roof around the world (pick a number for the US).
I'll probably buy into some TIPS later in the year as they will spike the minute a treatment or vaccine arrives on the scene.
TIPs are a good idea, I’d also say to hedge with strips at 1/2 as there could be deflation
We no longer have capital markets governed by laws - https://twitter.com/CGrantWSJ/status/1264360077345071104
Moderna may or may not have the silver bullet but what happened last week was purely criminal.
So many small companies in the vaccine space have spiked on little news and, at best only a few companies will succeed. I think even those that succeed will be under heavy pressure to offer their treatments to the world at highly affordable pricing and the profits might be muted.
Most companies will fail.
I've been thinking about shorting a whole basket of them (via options) over the last week and will start to put my list together soon -- it's definitely tulip time in the space.
So far I've shorted Gilead and Moderna on just such ridiculous emotional events. Last week was a no brainer, though I wish I would have committed more to the short. Moderna is well behind multiple vaccine makers around the world that are already well into phase II. Suddenly Moderna goes up 30% because 45 patients in a phase don't get sick on the vaccine. Absurd.
I'm thinking put spreads and/or short ratio backspreads.
Check out Innovio (INO). Promising IMO, and they are going about it in a more ethical way than MRNA despite hit jobs and market manipulation keeping their stock down for now. I think it soars soon, but hedge accordingly of course.
A lot depends on whether Trump gets reelected or not. Markets are choppy but net up over a 12-18 period. Some exceptions, like under Bush 43 and Reagan's second term.
If you look at market performance over the past 100 years you'll find the markets have done appreciably better under Dems than Pubs (and it ain't even close -- probably because it seems the Pubs are always been in charge during massive market implosions).
That stat is true, but if you factor out the Great Depression it is tied or even if you adjust the range back more than 100 years you can tie it that way too. I personally think both parties have inflated bubbles and popped bubbles. I've heard a lot of people across the political spectrum say that QE has built this current bubble. Trump had a net negative QE before Covid-19 hit. The bulk of the QE had been from the previous 9 years or so before Trump came in and started demanding more QE to keep the bubble inflated.
I think the Fed manipulates the markets too much in order to avoid a crash just making a bigger bubble and politicians cheer it on so their party doesn't get stuck with the popped bubble and the blame. Candidate Trump had bashed QE as making a bubble; that is until he won and then President Trump demanded more QE.
This is true.
Why would Trump being elected matter? The President has zero effect on the markets for more than a day or two after the election. Example: The market has gone up for the the next 24 months after tax increases by Regan, Bush, Clinton and Obama and also gone up under tax cuts under Nixon, W and Trump.
Trump would keep regulations at a minimum for one. And for two, he'd keep corporate taxes low. Third, he's advocating more manufacturing jobs which good for the blue collar worker. Fourth, this also helps small business grow.
It's all about policy. Under Clinton, the stock market did very well in the mid to late 1990s. Today's dems are all about much more regulations, higher corporate taxes, less manufacturing since overseas labor is much cheaper. Things have actually flipped on the political and policy aspect in today's world. It's very unfortunate. I always believed the dems were better for the stock market until Trump came along.
Meh, industrial jobs are largely a thing of the past. Not even 3rd world labor can compete with robotics and Industry 4.0 will spawn an entire retrofit of factories with new, AI-enabled robots.
China has been losing manufacturing jobs for a number of years now.
To me the corporate tax cuts were just another supply-side maneuver and there would have inevitably been a bust irrespective of CV as there was too much debt in the system. that pales in the face of our current run rate, though. I think it would be good for the economy and stock market to stimulate demand among the masses the old fashioned way -- via badly needed infrastructure projects. Either we do it or there will be people dying in the streets.
Kidnapping was a big thing during the Great Depression.
I think very little of the economy can be attributed to a president in the short term, good or bad. Of the things that Trump has done that you could argue had a shorter-term impact, I'm fearful that they could go into the category of "bad profits" (to borrow a term from Fred Reichheld). He certainly seems willing grab low-hanging fruit at the expense of longer-term considerations like the environment. Following Trump as POTUS will be like taking the kids back after a week with the grandparents.
MRunner, lifting regulations has uniformly only helped the very rich. Real wages have fallen during the deregulation (era of which the Dems have happily participated with). I find it funny how all the bougie people on this board don’t understand that the economy includes people besides the investor claw and CEOs. Think for a minute why populism is gaining in most western democracies
MRunner, lifting regulations has uniformly only helped the very rich. Real wages have fallen during the deregulation (era of which the Dems have happily participated with). I find it funny how all the bougie people on this board don’t understand that the economy includes people besides the investor class and CEOs. Think for a minute why populism is gaining in most western democracies
Two strange things in your post: you mention the size of the deficit, and imply higher inflation. In a post about the market. Why? Deficits haven't mattered in a long time, and deflation is a more likely, and more dangerous scenario in the 12-18 month period you're interested in. Sounds like you actually read the WSJ editorial page.
China has been trying to unseat the fiat currency status of the greenback for years now (for example, having oil priced in yuan).
Deficits haven't mattered much but that doesn't mean they won't in the future.
The reserve status of US currency has destroyed American manufacturing. Not clear why China would care to change that, but I guess Chinese technocrats have their own weird prejudices too.
The WSJ is not what I read. And, as I posted, I'm expecting deflation followed by inflation. Those things matter a great deal in how one invests. Just the simplest of the simple, economic growth tends to be slower with high inflation, affecting equities. Equity growth also loses real value relative to inflation while many safe havens tend to be better sinks for money.
Deficits only matter to those who are Republicans when the president is a Democrat.
and vice versa.
Simply, utterly not true. But you are an ideologue and likely believe in MMT, which is basically unlimited funny money printing to spend on cronies and "acceptable" (to you and fellow Bernie bots) spending like green New schemes or planting a trillion trees or...unicorn carts or whatever. And that's fine. At least you are open and honest about that part.
But to say blanket statements like republicans only care about deficits when D's are in power is a lie. Read the bulwark, check out Brian reidl on Twitter. Heck, rand Paul proposed a penny plan budget last year. It was supported only by Rs, no D's and it failed. It would have simply limited govt spending to a 1% increase each year. But D's rejected it.
Tax cuts clearly don't "pay for themselves". Neither does Keynesian spending on steroids. Dr. Doug Holtz-Eakim, a Dem, went in front of senate subcommittee to clearly and precisely explain how this out of control debt hurts America. This isn't a partisan issue. It is math. Bring back math.
While I agree with some of what you say- Commie Highs basic point is right and the proof is an the actions and votes of Republican lawmakers, not the rhetoric of a few GOP never Trumpers.
Rand Paul's plan was simple, and easily understandable but if R's thought it actually had a chance of passing, more would have opposed it.
Trump is so threatening to the establishment of both parties which had become comfortable in their roles. Dems in power and using their brand of crony capitalism with the GOP being lovable (or not lovable), losers, both parties scratching each others back and pushing through plenty of pork with nary a care for American workers.
The elite loved immigration expansion, voters for Dems and cheap labor for Dem and GOP elites alike. What happened when the GOP got control of both houses and the Presidency? They no longer maintained their comfortable fiscal hawk posture, now that they were actually accountable.
Trump is a big spender, has never been a conservative, but his focus on the impacts of immigration and the sell out to China and their twin impacts on American workers resonated.
The Swamp will eventually reclaim its leadership either this cycle with a Biden win or in 4 years with whomever wins.