Monitoring US Economy

cannonfodder

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Thread to monitor US economy post Covid-19 ramifications.

US fed has printed 20% of total currency to tackle pandemic and the printer is still ON. I don't believe in doom scenario though as US companies are posting record results thanks to all currency injections.

//3.5Trillion for green infra proposal o_O
 
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fire starter

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Thread to monitor US economy post Covid-19 ramifications.

US fed has printed 20% of total currency to tackle pandemic and the printer is still ON. I don't believe in doom scenario though as US companies are posting record results thanks to all currency injections.

//3.5Trillion for green infra proposal o_O
And they are transferring that inflation to other countries.
 

FalconSlayers

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Nothing is gonna happen, sub chunga si.
 

cannonfodder

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Two diverse set of opinions:
1. Optimists: Current inflation data is transient i.e. most of them are supply demand constraints. Things will come back as production line comes back, people get back to working and so on. The US economy will be deflationary in long term. Will post CPI data discussion etc.
2. Dooms day: Asset/Real Estate inflation at very high level. FED has pumped up the markets and creating an bubble. It may led to devaluation of $ and we may see the ripple effects sooner or later.

I will post informational videos from both point of views on inflation data etc.
 

cannonfodder

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Big shills for Dooms Day: Neil McCoy



Thesis is same: Fed piling up debt and assets having no basis in evaluation like unemployment rate, affordability.

Peter Schiff: Dooms day


Mostly same thesis + buy hard assets like Gold/Silver kind of guy. He is not on favor of govt spending and printing. Note that its not financial advice - just putting out different views.

World Debt: India is not that down far just 6th in position
1626481461337.png
 

SKC

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Big shills for Dooms Day: Neil McCoy



Thesis is same: Fed piling up debt and assets having no basis in evaluation like unemployment rate, affordability.

Peter Schiff: Dooms day


Mostly same thesis + buy hard assets like Gold/Silver kind of guy. He is not on favor of govt spending and printing. Note that its not financial advice - just putting out different views.

World Debt: India is not that down far just 6th in position
View attachment 100205
All major economies will always have National Debt. Having debt does not directly means Gloom and Doom.
 

cannonfodder

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All major economies will always have National Debt. Having debt does not directly means Gloom and Doom.
It not about just debt creation. It is also excessive printing that may devalue the $$ in the long run and led to rise in inflation.

1626744297552.png


I think the inflation is transient and rate should go higher till Sept-Nov and start going down thereafter (non-dotted red line).
But If it goes on increasing there will be hyper inflation (dotted red line) and US stock market will most likely suffer as revenues may take hit with rising prices. It will be spiral thereafter as one thing leds to another.

Big Unknown: How bad the delta variant/others affects world economies. Currently affecting only non-vaccinated population primarily (like 90%+) in US.
 
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cannonfodder

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^^ Inflation is still going strong (following dashed line highlighted below):

1. Car/Silicon shortage still keeping prices high
2. Supply chain are still disrupted and keeping retail prices high.

Between:
1. US stock is still keep improving and keeps higher. Companies still recording good profit numbers
2. Real Estate is holding up and going up.

Some of it still Covid related supply chains as it keep disrupting Asian production (that US is very reliant on).

Major events in coming months:
1. US FED tapering may happen in Nov/Dec. That is FED will decrease bond purchase program and reduce liquidity, interest rate will be higher.
2. Debt ceiling to be increased by US Govt by December one way or the other this will happen.
3. Infrastructure Bill may pass although an reduced version like 1.5 or 1.9 T.
 
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cannonfodder

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1639542430752.png

US inflation the highest rate and it continues. FED has drop transitory reference to inflation meaning looks like it is here to stay for longer than anticipated. Food/Rent/Cars seen high rise in prices. FED tapering and capital easing may decrease by FED followed by increasing interest rate to control inflation.

1639542723679.png


Commentary: Top S&P 500 - large cap has highest P/E. The P/E is extremely high and top 5-6 stock aka AAPL, MSFT, GOOGLE, FB(META). TESLA , NVIDIA and ADOBE etc are top capital holders.

The rest of Mid Caps and Small Caps have been very much beaten down from last 2-3 months.
 

cannonfodder

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News update:

1. Market fear omicron dominant variant now in US.
Initial study suggest less potent than delta but highly transmissible. Market FUD may be true or false.. only more data will tell how much hospitalization and death impact.

https://www.bloomberg.com/news/arti...s-to-nearly-three-quarters-of-u-s-virus-cases

2. 2 Trillion Build back better (BBB) plan falls with Manchin backing out.
Concerns: Too much spending will invite higher inflation. In reality it may be partially political partially some deal falling off due to lobbying.

https://www.forbes.com/sites/davidb...manchin-just-kill-the-build-back-better-bill/

1640121827168.png


High volatility due to uncertainty on a) Omicron b) inflation c) BBB fallout
 

cannonfodder

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Inflation CPI data reading still going high in Dec 2021/Jan 2022. Dec reading was 7.1% and its believed that true inflation is much higher.
1644263862759.png


Fed is hawkish and can guide to increase interest rates for more than previous estimates this March, 2022. US Stock market will be volatile and still unstable due to unclear monetary policies.

Prevailing circumstances:
1. Fed still printing money/ monetary policy easing. The financial tightening has started but still above pre-pandemic levels
2. Stimulus + high monetary easing creating huge demand and consumption. Higher demand is causing inflation to drive upwards further.
3. Labor shortage is also causing salary increases hence higher capital for industries to produce goods and services.
4. Semiconductor shortage and omicron are further catalyst to drive prices up.

In short, Fed can take drastic steps to curb inflation by increase rates. This can also impact Indian stock exchanges in my opinion. @Haldilal @FalconZero @FalconSlayers people who I think trade be-aware.
 

FalconSlayers

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Inflation CPI data reading still going high in Dec 2021/Jan 2022. Dec reading was 7.1% and its believed that true inflation is much higher.
View attachment 136514

Fed is hawkish and can guide to increase interest rates for more than previous estimates this March, 2022. US Stock market will be volatile and still unstable due to unclear monetary policies.

Prevailing circumstances:
1. Fed still printing money/ monetary policy easing. The financial tightening has started but still above pre-pandemic levels
2. Stimulus + high monetary easing creating huge demand and consumption. Higher demand is causing inflation to drive upwards further.
3. Labor shortage is also causing salary increases hence higher capital for industries to produce goods and services.
4. Semiconductor shortage and omicron are further catalyst to drive prices up.

In short, Fed can take drastic steps to curb inflation by increase rates. This can also impact Indian stock exchanges in my opinion. @Haldilal @FalconZero @FalconSlayers people who I think trade be-aware.
It already is, the fears alone is causing decline in global markets.
 

cannonfodder

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It already is, the fears alone is causing decline in global markets.
Speculation is that US market can fall significantly more if Fed policy is not inline with Wall street expectation (25 base point increase in March to be specific). Many experts believe Fed cannot bailout economy anymore and it needs to go much higher to have any impact with higher inflation.
 

FalconSlayers

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Speculation is that US market can fall significantly more if Fed policy is not inline with Wall street expectation (25 base point increase in March to be specific). Many experts believe Fed cannot bailout economy anymore and it needs to go much higher to have any impact with higher inflation.
Everything is screwed with the dollar printing
 

cannonfodder

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CPI Data for Jan 2022:


"In January, the Consumer Price Index for All Urban Consumers rose 0.6 percent, seasonally adjusted, and rose 7.5 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.6 percent in January (SA); up 6.0 percent over the year (NSA)."

To be clear, I don't want US economy to tank or go under recession. But the inflation is going out of control and if interest rate hikes are kicked down the line by Fed, things will get really bad. Expect atleast 2.5+ % interest rate end of year in US Treasury and US markets may correct further for an while.
 

cannonfodder

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https://www.marketwatch.com/story/coming-up-u-s-jobs-report-for-february-11646399014

U.S. gains 678,000 jobs in February and unemployment drops to 3.8% despite labor shortage


https://www.politico.com/news/2022/...ne-invasion-could-speed-up-inflation-00013831

'People will feel that': Fed's Powell says war could fuel inflation

Still Fed planning only 25bps point interest rate hike in March 2022. Current Jan 2022 data 7.5% and Oil/Brent + commodity price increase can further increase inflation. o_O
 

cannonfodder

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February CPI data release:

The all items index rose 7.9 percent for the 12 months ending February. The
12-month increase has been steadily rising and is now the largest since the
period ending January 1982. The all items less food and energy index rose 6.4
percent, the largest 12-month change since the period ending August 1982. The
energy index rose 25.6 percent over the last year, and the food index increased
7.9 percent, the largest 12-month increase since the period ending July 1981.


https://www.bls.gov/news.release/cpi.nr0.htm

CPI data release does not include crude price increase after Russia-Ukraine conflict. This has the potential to drive inflation higher with huge demand and supply chain issue. Rent+Food inflation can potentially affect lower income families in US.

Between FED decision link: FED increase rate to 0.25

This looks inadequate to pull the inflation down and not sure what the FED is thinking overall. US FED are targeting upto 1.75 - 2.00% interest rate increase by end of Dec. Markets are cheering the 0.25 percent rate hike for now,. o_O
 
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ezsasa

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what does this mean? can someone explain
==========
As a Kid had heard the story of अंधेर नगरी चौपट राजा, टका सेर भाजी टका सेर खाजा In the Mad Town of Chaupat Raja Dry Fruits and Vegetables are available at the same price. Didn't know this will come true in the US Debt Market

1648229801446.png


 

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