TPS Posted December 21, 2018 Share Posted December 21, 2018 13 minutes ago, GG said: I'll let sherpa describe what he was referring to, but my interpretation is that while the Fed sets the FF, and that essentially controls the stated Prime rates, there is a loose correlation between them and the market rates, because you are not factoring the risk spreads. You only talk about the regular 2.75 -3.00 spreads between FF and Prime. The bond and loan markets work on risk spreads, which fluctuate much more than the central bank rates. What maturities are you talking about in the bond and loan markets? As I stated in one post, Buffett will get a different rate than you--I thought that would be clear it was related to risk? Link to comment Share on other sites More sharing options...
/dev/null Posted December 21, 2018 Share Posted December 21, 2018 So if we should have been thinking Obama for the string economy of the last two years, should we now blame Obama for the DJIA current travails? Link to comment Share on other sites More sharing options...
Chef Jim Posted December 21, 2018 Share Posted December 21, 2018 1 hour ago, plenzmd1 said: BTW, I did not say my wife was gonna retire too...have to maintain my lifestyle after all My wife is 7 years older so the plan is for her to retire first. She can’t wait. Every day to do whatever she wants.....without me! 15 minutes ago, /dev/null said: So if we should have been thinking Obama for the string economy of the last two years, should we now blame Obama for the DJIA current travails? BLASPHEMY!! Link to comment Share on other sites More sharing options...
TPS Posted December 21, 2018 Share Posted December 21, 2018 34 minutes ago, Buffalo_Gal said: Look for another painful day in the market The Q3 GDP was revised down to 3.4% from 3.5%. Q4s outlook stands at 2.8% (still considered very good). I don't believe that small of a revision will have an impact on stocks today, especially since stock prices are forward looking. Any pain today will be driven by the current chaos coming out of DC... Link to comment Share on other sites More sharing options...
GG Posted December 21, 2018 Author Share Posted December 21, 2018 35 minutes ago, TPS said: What maturities are you talking about in the bond and loan markets? As I stated in one post, Buffett will get a different rate than you--I thought that would be clear it was related to risk? It's not just the maturity but relative risk of the borrower. The bond spreads relative to the Treasuries are much more important indicators than FF rates. Link to comment Share on other sites More sharing options...
TPS Posted December 21, 2018 Share Posted December 21, 2018 9 minutes ago, GG said: It's not just the maturity but relative risk of the borrower. The bond spreads relative to the Treasuries are much more important indicators than FF rates. Now you are changing the discussion. I've focused on short-term rates all along. A change in the FFR leads to a change in the Prime and all other short rates. The majority of short-term and variable rate loans (credit cards, HELOCs, etc) in the US are marked up over Prime, which is marked up over FFR. Of course the rate for an individual firm or HH will be based on credit risk, but everything relates back to the benchmark. The original point: the FED controls the FFR, not the market. When you are the monopoly supplier of reserves, you control the rate. [The FED changes its target based on its inflation target] Link to comment Share on other sites More sharing options...
sherpa Posted December 21, 2018 Share Posted December 21, 2018 3 hours ago, TPS said: We simply disagree. Yep. We do. Nothing wrong with that. It's what makes markets. Link to comment Share on other sites More sharing options...
GG Posted December 21, 2018 Author Share Posted December 21, 2018 2 hours ago, TPS said: Now you are changing the discussion. I've focused on short-term rates all along. A change in the FFR leads to a change in the Prime and all other short rates. The majority of short-term and variable rate loans (credit cards, HELOCs, etc) in the US are marked up over Prime, which is marked up over FFR. Of course the rate for an individual firm or HH will be based on credit risk, but everything relates back to the benchmark. The original point: the FED controls the FFR, not the market. When you are the monopoly supplier of reserves, you control the rate. The Fed controls the statutory short term FF rate. It doesn't control the effective short term rates that the real world pays. That's why you have inverted yield curves. The majority of majority of short-term and variable rate loans in the US are most certainly NOT marked up over Prime. You're thinking of unsecured consumer debt. The vast majority of all debt in the US is based off Libor, plus a spread. Link to comment Share on other sites More sharing options...
TPS Posted December 21, 2018 Share Posted December 21, 2018 1 minute ago, GG said: The Fed controls the statutory short term FF rate. It doesn't control the effective short term rates that the real world pays. That's why you have inverted yield curves. The majority of majority of short-term and variable rate loans in the US are most certainly NOT marked up over Prime. You're thinking of unsecured consumer debt. The vast majority of all debt in the US is based off Libor, plus a spread. Yes, I was focused on Consumer debt which is mostly based on prime. As we covered, we'll see how much longer libor lasts... The YC inverts because of the Fed raising its FFR target. Link to comment Share on other sites More sharing options...
TPS Posted December 23, 2018 Share Posted December 23, 2018 What's driving current economic growth? Link to comment Share on other sites More sharing options...
Tiberius Posted December 23, 2018 Share Posted December 23, 2018 2 minutes ago, TPS said: What's driving current economic growth? Quote And the economy is, in fact, expanding pretty fast –- but not necessarily for the reasons Trump said it would. The president promised to squeeze more American growth out of businesses and foreigners. Instead it’s the government, deploying its balance sheet via deficit-spending, that’s doing the work. You don't say! That explains why all the demands for austerity by the GOP congress and why they can care less now Link to comment Share on other sites More sharing options...
Kemp Posted December 23, 2018 Share Posted December 23, 2018 Trump used to pat himself on the back when the stock market was going up. I know that everyone is shocked that he is not taking credit for the YUGE downturn. Worst December since the Great Depression. On another shocking economic front, the tax cut for the corporations and the rich has resulted in stock buy-backs rather than the cash trickling down. Who could have seen that coming? 1 Link to comment Share on other sites More sharing options...
sherpa Posted December 23, 2018 Share Posted December 23, 2018 1 hour ago, Kemp said: On another shocking economic front, the tax cut for the corporations and the rich has resulted in stock buy-backs rather than the cash trickling down. Who could have seen that coming? So what happens to the money from stock buy backs? Link to comment Share on other sites More sharing options...
TPS Posted December 24, 2018 Share Posted December 24, 2018 1 hour ago, sherpa said: So what happens to the money from stock buy backs? It Is reallocated into other financial assets Of the wealth-holder's portfolio. Link to comment Share on other sites More sharing options...
billsfan89 Posted December 24, 2018 Share Posted December 24, 2018 21 hours ago, sherpa said: So what happens to the money from stock buy backs? Some might get into the consumer level but most is just going to end up in wealthy people buying more assets which might inflate asset prices in the short term but it won't generate economic activity that will actually produce consumer demand. The investor class is getting a big wet kiss from these tax cuts but your are a fool to think that it will actually generate significant economic activity. Link to comment Share on other sites More sharing options...
Q-baby! Posted December 24, 2018 Share Posted December 24, 2018 Where are Trump’s tweets apologizing for the market? He sure loved to take credit when it was on the way up. That’s how narcissistic liars work! Link to comment Share on other sites More sharing options...
TH3 Posted December 24, 2018 Share Posted December 24, 2018 1 hour ago, BigMcD said: Where are Trump’s tweets apologizing for the market? He sure loved to take credit when it was on the way up. That’s how narcissistic liars work! DT get out of jail free card get smaller everyday..... Link to comment Share on other sites More sharing options...
Tiberius Posted December 25, 2018 Share Posted December 25, 2018 Is da wrong? Quote “It’s Christmas Eve and President Trump is plunging the country into chaos. The stock market is tanking and the president is waging a personal war on the Federal Reserve — after he just fired the Secretary of Defense,” House Minority Leader Nancy Pelosi (Calif.) and Senate Minority Leader Charles E. Schumer (N.Y.) said in a joint statement shortly after markets closed Monday. https://www.washingtonpost.com/business/economy/us-markets-continue-sharp-sell-off-ignoring-efforts-by-the-trump-administration-to-stabilize-stock-prices/2018/12/24/59d4eae8-078e-11e9-85b6-41c0fe0c5b8f_story.html?utm_term=.858c62e04999 “The only problem our economy has is the Fed,” the president said in a tweet. “They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch — he can’t putt!” Link to comment Share on other sites More sharing options...
Tiberius Posted December 25, 2018 Share Posted December 25, 2018 _____ Hey! Nothing to worry about! OMG we are doomed!! Quote Mnuchin, who is reportedly vacationing in a luxury resort in Cabo San Lucas, Mexico amid the government shutdown, reassured investors Sunday that he'd spoken to the heads of six major banks: Bank of America, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo. All of them, he reassured in the least reassuring way possible, had confirmed that they have “ample liquidity.” The treasury secretary also boasted of “strong economic growth in the U.S. economy with robust activity from consumers and business,” apparently in an attempt to prevent a stock selloff. Buried beneath the rosy assessments in his statement was also the bombshell announcement that he’d be convening the the president’s working group on financial markets—a group more widely known as the “plunge protection group” that was set up in the wake of the October 1987 stock market crash. The group, which was also convened in 2009 amid the fallout of the 2008 financial crisis, includes officials from the Federal Reserve and the Securities and Exchange Commission. https://www.thedailybeast.com/trump-attacks-the-fed-even-as-mnuchin-tries-to-calm-market?ref=home Link to comment Share on other sites More sharing options...
DC Tom Posted December 25, 2018 Share Posted December 25, 2018 This is great. I've been waiting for a buying opportunity for two years. Link to comment Share on other sites More sharing options...
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