The Trump Economy

[IDBillzFan]

18 hours ago, Koko78 said:

 

Hey now, just because he didn't bother to read the playbook that one time...

 

Just because OJ had ONE BAD DAY....

[Deranged Rhino]

 

[RochesterRob]

2 hours ago, ALF said:

Ford debt has been downgraded to junk

 

https://www.cnn.com/2019/09/10/business/ford-downgrade-junk/index.html

 

hmmm

  The automotive industry has had more downs than ups over its history and seldom has there been a tie to who was sitting in the White House.  The business model has been terrible as of late with leasing intended to reach those who would have never been in a position to acquire a new vehicle even if on a temporary basis.  Now the auto builders are seeing a build up of lease returns that need to be sold so that puts pressure on new vehicle sales.

[Koko78]

1 hour ago, IDBillzFan said:

 

Just because OJ had ONE BAD DAY....

 

Well, it's not like anyone died... oh wait.

[row_33]

i think OJ has a LOT of bad days in that marriage

 

[keepthefaith]

5 hours ago, ALF said:

Ford debt has been downgraded to junk

 

https://www.cnn.com/2019/09/10/business/ford-downgrade-junk/index.html

 

hmmm

Well, Ford has had 4+ straight years of increasing revenue but decreased earnings recently due mostly to overseas losses and some materials cost increases.   They cut a lot of heads this year, slashed overseas workforces and facilities, re-organized the engineering group in Dearborn and they have a lot of new vehicles just or soon to be introduced which include the 2020 Explorer and Escape and Transit van.  The 2019 Ranger pickup is selling extremely well.  2021 they will begin to sell the new Bronco and there are others including more hybrids and electrics coming.  Moody's IMO is late to expressing concern.  Ford's made a ton of changes which should help financially next year.  The auto industry though will see declining sales overall if/when the economy flattens out or recesses. 

Edited September 10, 2019 by keepthefaith

[DC Tom]

6 hours ago, ALF said:

Ford debt has been downgraded to junk

 

https://www.cnn.com/2019/09/10/business/ford-downgrade-junk/index.html

 

hmmm

 

Yeah...but it's less "Pinto" than "Escort."

[row_33]

is today the 27,000 day on the DJIA?

 

still waiting for the big boys to take their slice for their enjoyment during this incredible Trumpian growth.

 

usually done every 5-6 years, union pension funds are never on top of this

 

put it in cash if you can't withstand the plunge....  thank me later

Edited September 11, 2019 by row_33

[B-Man]

 

It's not the tax cuts. It's the spending.

 

 

 

Why Did the Deficit Just Top $1 Trillion? Here’s Another Clue For You All

 

Original Article

[ALF]

6 hours ago, B-Man said:

 

It's not the tax cuts. It's the spending

  

Who is spending ?  All of Congress first 2 years ( R ) and WH all.  

 

The US deficit topped $1 trillion. The year's not even over yet

 

Washington (CNN Business)The US budget deficit widened to $1.067 trillion for the first 11 months of the fiscal year, an increase of 19% over this time last year, the Treasury Department reported Thursday.

 

The current shortfall exceeds the full-year deficit for fiscal 2018, which was $898 billion.

President Donald Trump, who promised during the 2016 campaign to eliminate the federal debt, has instead overseen a dramatic increase in deficits.

 

https://www.cnn.com/2019/09/12/business/us-federal-deficit-august/index.html

 

Did Trump ever veto a budget? 

Edited September 12, 2019 by ALF

[jrober38]

1 hour ago, ALF said:

  

Who is spending ?  All of Congress first 2 years ( R ) and WH all.  

 

The US deficit topped $1 trillion. The year's not even over yet

 

Washington (CNN Business)The US budget deficit widened to $1.067 trillion for the first 11 months of the fiscal year, an increase of 19% over this time last year, the Treasury Department reported Thursday.

 

The current shortfall exceeds the full-year deficit for fiscal 2018, which was $898 billion.

President Donald Trump, who promised during the 2016 campaign to eliminate the federal debt, has instead overseen a dramatic increase in deficits.

 

https://www.cnn.com/2019/09/12/business/us-federal-deficit-august/index.html

 

Did Trump ever veto a budget? 

 

The US is going to be in major trouble them the economy inevitably slows down and revenues fall.

Edited September 13, 2019 by jrober38

[keepthefaith]

33 minutes ago, jrober38 said:

 

The US is going to be in major trouble them the economy inevitably slows down and revenues fall.

 

Yes, I've been saying this.  Spending will continue to rise, revenues fall some during an economic pullback and then all of the sudden there will be re-newed concern for debt which erodes confidence among consumers, the financial markets and debt holders present and future. 

[jrober38]

12 hours ago, keepthefaith said:

 

Yes, I've been saying this.  Spending will continue to rise, revenues fall some during an economic pullback and then all of the sudden there will be re-newed concern for debt which erodes confidence among consumers, the financial markets and debt holders present and future. 

 

Exactly.

 

This seems to be setting things up for another disaster. If the deficit is currently $1.1 trillion, in a recession, unless spending is drastically cut (which would further reduce GPD growth), the deficit could balloon to $1.4, maybe $1.5 trillion without factoring in any stimulus. 

 

In my estimation, the Fed isn't being aggressive reducing interest rates, because if they do that now and the economy falls into a recession in a couple years, they'll have zero tool available to them to stimulate the economy when the time comes. 

 

What Trump has done with the economy has been extremely reckless. Ballooning the deficit, and ramping up military spending at a time when the US isn't at war with anyone while reducing taxes. 

 

When the economy is great, countries should get their house in order, and start paying off their debt. The US has done the exact opposite under Trump.

 

It's like they just had their best year ever due to performance related bonuses at their job, and instead of saving money, they moved into the house they previously couldn't afford and leased a couple cars they didn't need. When the business cycle changes, and revenues fall, the US will be in a terrible situation where they'll have to slash spending, or raise taxes, at a time that it would further damage the economy. 

 

There's a reason 30 year treasuries have dipped below the 2 year multiple times over the past couple months. The smart money knows what's going to happen. 

Edited September 13, 2019 by jrober38

[B-Man]

You know what wasn't a topic at last night's Democrat debate ? THE ECONOMY.

 

Wonder why?

by Glenn Reynolds

[Warren Zevon]

8 minutes ago, B-Man said:

You know what wasn't a topic at last night's Democrat debate ? THE ECONOMY.

 

Wonder why?

by Glenn Reynolds

 

Fascinating

[Deranged Rhino]

 

[Hedge]

4 minutes ago, Deranged Rhino said:

 

 

During a trade war is a bad time for swine fever to make China's pork prices go haywire. One less lever for them to pull. 

 

[B-Man]

13 minutes ago, Deranged Rhino said:

 

 

 

 

Wait.................

 

Pork AND Beans ?

 

 

 

 

Yum.

 

 

.

[Tiberius]

Oil prices spike 12% 

[Chef Jim]

2 hours ago, Tiberius said:

Oil prices spike 12% 

 

And this has to do what exactly with Trump??  

[Tiberius]

34 minutes ago, Chef Jim said:

 

And this has to do what exactly with Trump??  

Can't you just figure it out, it's not that complicated and I have already explained it. 

[TPS]

2 hours ago, Tiberius said:

Oil prices spike 12% 

And the deficit topped $1 trillion, though it may drop slightly below for the fiscal year as September is a tax payment month.

[Chef Jim]

31 minutes ago, Tiberius said:

Can't you just figure it out, it's not that complicated and I have already explained it. 

 

I missed your explanation. Give to me again here. 

 

Actually your post would probably fit better under the Iran economy thread. If one such thread existed.

Edited September 16, 2019 by Chef Jim

[/dev/null]

1 hour ago, Chef Jim said:

 

And this has to do what exactly with Trump??  

Because #orangemanbad

[Buffalo_Gal]

I stole this from another site as it is very interesting:

real time global marine traffic  (tankers are in red)

 

[jrober38]

1 hour ago, TPS said:

And the deficit topped $1 trillion, though it may drop slightly below for the fiscal year as September is a tax payment month.

 

Remember when Trump said he'd eliminate the deficit?

[Tiberius]

2 minutes ago, jrober38 said:

 

Remember when Trump said he'd eliminate the deficit?

And all the factories would return....GM workers go on strike in part to protest closing of factories 

[Warren Zevon]

3 minutes ago, jrober38 said:

 

Remember when Trump said he'd eliminate the deficit?

 

Give the guy a break - he said he'd eliminate it within 8 years!

[jrober38]

2 minutes ago, Tiberius said:

And all the factories would return....GM workers go on strike in part to protest closing of factories 

 

Yeah. 50,000 people protesting plant closures and jobs moving to Mexico as GM looks to cut costs.

1 minute ago, Gary Busey said:

 

Give the guy a break - he said he'd eliminate it within 8 years!

 

True. 

 

Things should get under control when the economy goes into a recession, revenues fall and the deficit balloons to around $1.5 trillion a year. 

[TPS]

15 minutes ago, jrober38 said:

 

Remember when Trump said he'd eliminate the deficit?

I think the one truthful statement he made was, "I could stand in the middle of 5th Avenue and shoot someone, and I wouldn't lose any voters...."

[jrober38]

1 minute ago, TPS said:

I think the one truthful statement he made was, "I could stand in the middle of 5th Avenue and shoot someone, and I wouldn't lose any voters...."

 

He'd lose voters, but he wouldn't lose his base. They'd keep rocking their MAGA hats proudly. 

[B-Man]

 

 

 

 

 

 

 

 

 

.

[B-Man]

TEXAS SAYS, YOU’RE WELCOME, AMERICA: 

 

Saudi oil attacks didn’t spark a U.S. fuel crisis. Thank Texas.

 

 

 

 

 

.

 

 

[Buffalo_Gal]

Industrial Production Rebounds 0.6% in August, Easily Beating Forecasts

Manufacturing Production More Than Recovers Losses In July

The Federal Reserve reported industrial production rose 0.6% in August after declining 0.1% in July, easily beating the forecast range and consensus. Forecasts for the total index ranged from a low of -0.5% to a high of 0.6%.

The consensus forecast was just 0.2%.

</snip>

[TPS]

Should be an interesting couple days with the Fed meeting and announcement. A lot of turmoil in the money markets this week. While I expect them to cut its target rate by 25 basis points, I (as would Trump) would really like to see a more dramatic move of 50. It would provide a boost to the stock market, bring the $ down a bit (and help with trade issues), and Trump wouldn't grump so much at Powell.

 

This is a good piece on some of the issues. https://www.bloomberg.com/news/articles/2019-09-18/divided-fed-reluctant-to-forecast-more-cuts-decision-day-guide

 

the last paragraph explains what was behind my post from a couple months ago stating the Fed would/should cut by 50 BP.

 

Added: This guy agrees... https://www.bloomberg.com/opinion/articles/2019-09-18/the-fed-should-cut-interest-rates-more-than-expected?srnd=premium

 

Edited September 18, 2019 by TPS

[GG]

1 hour ago, TPS said:

Should be an interesting couple days with the Fed meeting and announcement. A lot of turmoil in the money markets this week. While I expect them to cut its target rate by 25 basis points, I (as would Trump) would really like to see a more dramatic move of 50. It would provide a boost to the stock market, bring the $ down a bit (and help with trade issues), and Trump wouldn't grump so much at Powell.

 

This is a good piece on some of the issues. https://www.bloomberg.com/news/articles/2019-09-18/divided-fed-reluctant-to-forecast-more-cuts-decision-day-guide

 

the last paragraph explains what was behind my post from a couple months ago stating the Fed would/should cut by 50 BP.

 

Interesting is the operative word for an outfit that isn't reliant on the market to set interest rates or that QE unwinding will be painless because it's just an accounting entry on the banks' balance sheets  (according to some)

 

 

Quote

 

For the first time in more than a decade, the Federal Reserve injected cash into money markets Tuesday to pull down interest rates and said it would do so again Wednesday after technical factors led to a sudden shortfall of cash.

The pressures relate to shortages of funds banks face resulting from an increase in federal borrowing and the central bank’s decision to shrink the size of its securities holdings in recent years. It reduced these holdings by not buying new ones when they matured, effectively taking money out of the financial system.

….

Fed policy makers set their target range to influence a suite of short-term rates at which banks lend to each other in overnight markets—but those rates are ultimately determined by the markets. If various operations in the markets fail, the fed-funds rate can deviate significantly from the target.

In the short run this likely affects only market participants who borrow in the overnight markets, but if the strains last long enough it can affect the rates other businesses and consumers pay.

Such deviations also undercut the Fed’s ability to keep the economic expansion on track through monetary policy, such as by lowering rates to provide a boost and raising them to prevent the economy from overheating.

...

 

 

[TPS]

35 minutes ago, GG said:

 

Interesting is the operative word for an outfit that isn't reliant on the market to set interest rates or that QE unwinding will be painless because it's just an accounting entry on the banks' balance sheets  (according to some)

 

 

 

I thought this would tempt you...

the Fed's target rate is the Fed Funds Rate which is set in a band that's 25 BP wide, and (of course) during the day there are temporary liquidity squeezes that force it to intervene as necessary So that it stays within target at the end of each day--that's the Fed's primary role day-to-day, ensuring the liquidity of the payments system.

 

Given the legacy of reserves from QEs, the Fed had to start paying interest on those bank reserves (ioer) as a way to manage supply in the FFR market. The impact of those reserves on the FFR market also mean the repo market has become as much if not more important than the FFR market--the repo market is now where most of the demand for day-to-day liquidity is met.  While the Fed is much more active in the repo market, it has not (as yet) implemented a formal policy there. Under normal conditions the two are tied by arbitrage. Given this temporary cash squeeze in the repo market, the Fed is acting--$50 bil yesterday, and committing $75 bill today. Until (if?) we get back to a world of minimal excess reserves, I guarantee the Fed will provide the liquidity in the repo market to keep its rate tied to the FFR. And, It may become a formal part of its policy set (which includes ioer) to manage short rates. 

 

Regarding QE winding down, as I've always stated, there is no economic reason (it's more philosophical) for the FEd to shrink its balance sheet. In fact, what this shows is that by doing so they've come into conflict with their day-to-day role. It's a temporary blip and a simple solution: 1) slow or stop the wind down; 2) provide all the temporary liquidity the system needs day-to-day in order to meet your short term rate target. 

 

while the goals of reducing its BS and maintaining short rates can conflict at times, the latter will always take precedent because that's its most important role--ensuring the liquidity of the payments system.  If they really believe they need to reduce their BS, they could still do it gradually over time via mbs payoffs. 

 

 

[ALF]

The rate on overnight repurchase agreements hit 5% on Monday, according to Refinitiv data. That's up from 2.29% late last week and well above the target range set in July by the Federal Reserve, which is 2% to 2.25%. The surge continued Tuesday, with the overnight rate hitting a high of 10% before the NY Fed stepped in.

 

The spike in overnight borrowing rates forced the New York Federal Reserve to come to the rescue with a special operation aimed at easing stress in financial markets.

The funding markets are clearly stressed."

It was the NY Fed's first such rescue operation in a decade, the last occurring in late 2008.

 

https://www.cnn.com/2019/09/17/business/overnight-lending-rate-spike-ny-fed/index.html

[TPS]

50 minutes ago, ALF said:

The rate on overnight repurchase agreements hit 5% on Monday, according to Refinitiv data. That's up from 2.29% late last week and well above the target range set in July by the Federal Reserve, which is 2% to 2.25%. The surge continued Tuesday, with the overnight rate hitting a high of 10% before the NY Fed stepped in.

 

The spike in overnight borrowing rates forced the New York Federal Reserve to come to the rescue with a special operation aimed at easing stress in financial markets.

The funding markets are clearly stressed."

It was the NY Fed's first such rescue operation in a decade, the last occurring in late 2008.

 

https://www.cnn.com/2019/09/17/business/overnight-lending-rate-spike-ny-fed/index.html

The target rate is in the Fed Funds market, which is not the same as the Repo market.  There were spikes during the day in the FFR market, but the FED always intervenes in the market where it sets the target.  The Fed is now intervening in the Repo market to relieve the temporary liquidity issues.

[GG]

15 minutes ago, TPS said:

The target rate is in the Fed Funds market, which is not the same as the Repo market.  There were spikes during the day in the FFR market, but the FED always intervenes in the market where it sets the target.  The Fed is now intervening in the Repo market to relieve the temporary liquidity issues.

 

If always means once a decade, then I agree with you