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Old 12-10-2017, 02:01 PM   #51
juan valdez
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Re: BFI Macro and Events Thread

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Originally Posted by verneer View Post
Not trolling - sorry if the article is bad. I've followed Josh for a while and he seems to be pretty well grounded. Def doesn't strike me as the tinfoil-conspiracy type. I don't think he's saying the market will crash, but that the possibility of Trump removing Mueller is something that will have a much bigger expected effect than people are accounting for.

Guess I gotta discriminate better in terms of reading.
i don't know who they are but this article is in a different galaxy from grounded. its actually scary to think people hand over their savings/ future to people like this
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Old 12-10-2017, 03:18 PM   #52
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Re: BFI Macro and Events Thread

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Originally Posted by BrianTheMick2 View Post
Trading on political figures is always silly, except that it occasionally offers some decent opportunities to fade the initial reaction from people who think it does matter.
You manage to be wrong in most things you say, which is quite a feat*, but sometimes, you outdo even your own idiocy and contradict yourself.

If you can fade the initial reaction then you can also play the initial reaction if you get in fast enough - and it's a lot more profitable because vol hasn't spiked yet. The Trump fake news about Flynn was a perfect example - it was a 15 bagger if you bought puts on the news with 5 minutes and a 70 bagger if you bought it within 2 minutes.

*And hilarious since you're going for a kind of grandpa wisdom vibe, despite never having traded anything other than selling a bit of vol
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Old 12-11-2017, 01:33 AM   #53
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Re: BFI Macro and Events Thread

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You manage to be wrong in most things you say, which is quite a feat*, but sometimes, you outdo even your own idiocy and contradict yourself.

If you can fade the initial reaction then you can also play the initial reaction if you get in fast enough - and it's a lot more profitable because vol hasn't spiked yet. The Trump fake news about Flynn was a perfect example - it was a 15 bagger if you bought puts on the news with 5 minutes and a 70 bagger if you bought it within 2 minutes.

*And hilarious since you're going for a kind of grandpa wisdom vibe, despite never having traded anything other than selling a bit of vol
So, I know this guy who trades almost purely on news and events, and I am 1) sure that he reads pretty well and 2) I am almost positive that he didn't put 1% of his bankroll into this 70 bagger or he'd be jumping for joy with his bankroll up 70% for the day. Maybe he secretly hates money.

Or were those numbers just for illustrative purposes of what you can do on a trade if you have magical abilities to enter and exit trades exactly the right instant? If so, do you know how much you'd be up if you were long SPX on all the up days and short on all the down days? I mean, you could just be long on all the up days and short on all the down days.
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Old 12-13-2017, 01:41 AM   #54
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Re: BFI Macro and Events Thread

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That blog post is one of the dumbest things I've read in a long time. And I read BrianTheMick posts. It has to be satire.

1. Bizarre tinfoil Trump-as-dictator conspiracy theories
2. Certainty that Trump colluded with the Russians despite no evidence
3. Certainty that strong evidence will be found for (2) by Mueller
4. Certainty that Trump will stymie it and the GOP will not impeach (i.e. nothing will happen)
5. Despite (4) above, the market will crash
You know the special counsel is about much more than Russia, right?
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Old 12-13-2017, 02:03 AM   #55
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Re: BFI Macro and Events Thread

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You know the special counsel is about much more than Russia, right?
Doesn't matter either way.
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Old 12-13-2017, 11:40 AM   #56
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Re: BFI Macro and Events Thread

Tooth butchered this thread. We have trading and politics threads/forums for a reason.

Anyway, after today's FOMC, Fed Funds will be at 1.25%-1.50%, and Fed futures predict another hike in March. S&P dividend yields are around 1.80%. Not sure how much growth the market is baking in to keep current levels sustainable.

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Old 12-13-2017, 11:54 AM   #57
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Re: BFI Macro and Events Thread

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Tooth butchered this thread. We have trading and politics threads/forums for a reason.
I'm not to blame here, I started this thread for macro news. Trump is a big part of that and I made perfectly reasonable/non-political comments about the only sane way to view and trade it. Then the morons came in, including some who don't even post in this forum. Not the first time they've done that in BFI.
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Anyway, after today's FOMC, Fed Funds will be at 1.25%-1.50%, and Fed futures predict another hike in March. S&P dividend yields are around 1.80%. Not sure how much growth the market is baking in to keep current levels sustainable.
I'm not sure comparing dividends with fed funds is fruitful. As long as corporate profits keep rising then that's largely irrelevant. And previous bulls have run much higher while sitting on 4+% rates and similarly high valuations.
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Old 12-13-2017, 05:03 PM   #58
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Re: BFI Macro and Events Thread

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I'm not to blame here, I started this thread for macro news. Trump is a big part of that and I made perfectly reasonable/non-political comments about the only sane way to view and trade it. Then the morons came in, including some who don't even post in this forum. Not the first time they've done that in BFI.
I'll ask a mod if they can move all that discussion to the trading thread. I think this thread is more attractive if it focuses on macro news/numbers.

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I'm not sure comparing dividends with fed funds is fruitful. As long as corporate profits keep rising then that's largely irrelevant. And previous bulls have run much higher while sitting on 4+% rates and similarly high valuations.
Yeah I realized that after I posted. At a glance, looks like dividend yields were around 1.70% in 2007. They must have baked in a lot of growth to justify forgoing 4% Fed Funds or 5% 10-yr yields.

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Old 12-13-2017, 05:08 PM   #59
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Re: BFI Macro and Events Thread

Good idea on the move. Move to the low content thread rather than the trading thread. There was one ages ago. This is a good thread and we should keep it professional.

And yeah looking at previous bubbles is instructive. Makes you realize how off things can get at the end of bubbles. You could get 5% on your money, risk free, right before the crash, and few wanted it.
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Old 12-13-2017, 07:08 PM   #60
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Re: BFI Macro and Events Thread

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Originally Posted by :::grimReaper::: View Post

Anyway, after today's FOMC, Fed Funds will be at 1.25%-1.50%, and Fed futures predict another hike
What's the highest they could raise in the Spring?
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Old 12-13-2017, 10:49 PM   #61
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Re: BFI Macro and Events Thread

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What's the highest they could raise in the Spring?
Close to coin-flip they raise to 150-175bps in March. Check out CME Fed Watch.
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Old 12-14-2017, 01:04 AM   #62
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Re: BFI Macro and Events Thread

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Originally Posted by :::grimReaper::: View Post
Yeah I realized that after I posted. At a glance, looks like dividend yields were around 1.70% in 2007. They must have baked in a lot of growth to justify forgoing 4% Fed Funds or 5% 10-yr yields.

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You would want to look at earnings yield (or maybe operating cash flow to price*), not dividends, I think. Even then, I don't think that that there is any historical support for worrying about Fed Funds being raised from low levels to slightly less low levels.

The Fed balance sheet being unwound is probably more of something to worry about. At the risk of sounding slightly zerohedge-y, we don't know how that will affect markets.

*or maybe even shareholder yield (net buybacks + dividends) if you want to split the difference
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Old 12-14-2017, 05:09 AM   #63
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Re: BFI Macro and Events Thread

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The Fed balance sheet being unwound is probably more of something to worry about. At the risk of sounding slightly zerohedge-y, we don't know how that will affect markets.
Potentially in the medium-run.

I can't speak to retirement funds or equities, but at least in fixed income, everything is put on a repo line (financed), which is a loan, and loans increase money supply. So as long as markets are thriving, it's not clear how big of an impact shrinking the balance sheet by $10b/mo would be in the short run. To put in perspective, the S&P market cap is $20T+, so a 1% fluctuation is $200B+ in market cap. I'm not sure what fraction of that impacts money supply, but an impact of at least $10B sounds reasonable
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Old 12-14-2017, 05:47 AM   #64
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Re: BFI Macro and Events Thread

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The Fed balance sheet being unwound is probably more of something to worry about. At the risk of sounding slightly zerohedge-y, we don't know how that will affect markets.
Yellen explicitly said yesterday that they will move back to QE if the economy weakens. So I don't see how the unwinding matters if that's the case. If the gradual unwinding starts to have an effect they simply reverse course and prop the markets up again
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Old 12-14-2017, 12:26 PM   #65
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Re: BFI Macro and Events Thread

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Potentially in the medium-run.

I can't speak to retirement funds or equities, but at least in fixed income, everything is put on a repo line (financed), which is a loan, and loans increase money supply. So as long as markets are thriving, it's not clear how big of an impact shrinking the balance sheet by $10b/mo would be in the short run. To put in perspective, the S&P market cap is $20T+, so a 1% fluctuation is $200B+ in market cap. I'm not sure what fraction of that impacts money supply, but an impact of at least $10B sounds reasonable
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Yellen explicitly said yesterday that they will move back to QE if the economy weakens. So I don't see how the unwinding matters if that's the case. If the gradual unwinding starts to have an effect they simply reverse course and prop the markets up again
I'm pretty sure we are in agreement that Yellen retiring doesn't make any difference to the theoretical framework they will be using to make their policy decisions.

My point was that we have raised rates in the past (from low levels to slightly less low levels) and it was bullish for both stocks and the economy. We haven't wound down QE in the past, so there is at least some chance that it will have some sort of effect. Maybe.
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Old 12-14-2017, 12:28 PM   #66
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Re: BFI Macro and Events Thread

No ****. We are all on the same page up to that point. The point being that if it DOES have that effect you're suggesting it might, the fed has made very clear (and again yesterday) that they will step in and not just stop selling but resume QE.
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Old 12-14-2017, 12:34 PM   #67
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Re: BFI Macro and Events Thread

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No ****. We are all on the same page up to that point. The point being that if it DOES have that effect you're suggesting it might, the fed has made very clear (and again yesterday) that they will step in and not just stop selling but resume QE.
They've also made it very clear (over many, many years) that they will raise and lower overnight rates in response to the economy. That hasn't always worked out favorably.
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Old 12-14-2017, 12:48 PM   #68
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Re: BFI Macro and Events Thread

Fair point - I'd be interested on your views on what exactly could happen. But to me, QE is different to rates. It's a direct reliable bid from a large entity. Whereas rates are still dependent on individual confidence to keep a bid up, so they can fail as a mechanism.
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Old 12-14-2017, 01:41 PM   #69
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Re: BFI Macro and Events Thread

I doubt much at all happens. We've seen what happens when they stopped adding to their balance sheet already. Reducing the balance sheet should have the same effect as an extra $10b of new mortgage backed securities and treasuries (combined) hitting the market each month. Unless there is a liquidity event of some type, the economy should be able to handle it, I think.

The "unless" is the issue, and how quick they are to respond would make a difference.
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Old 12-19-2017, 03:24 AM   #70
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Re: BFI Macro and Events Thread

After the tax bill passes, I'm curious to know what positive news the market has to look forward to in early 2018 in order to sustain such elevated prices. On the consumer side, how much can spending increase? We're already at full employment, and I can't imagine the average person spending more with an ~$100 on a biweekly paycheck. Meanwhile, aside from crude, most commodity prices are still depressed, and high yield spreads are near historical lows.
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Old 12-19-2017, 04:19 AM   #71
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Re: BFI Macro and Events Thread

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I'm curious to know what positive news the market has to look forward to in early 2018 in order to sustain such elevated prices
Potentially very strong earnings, a strong Trumpconomy. But the tax bill has been the carrot dangling in front of the bull, for sure.
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Old 01-19-2018, 09:25 AM   #72
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Re: BFI Macro and Events Thread

Today brings the shutdown...any opinions here?

Shutdowns are on average negative for the stock market. I think as the day progresses without a resolution (which is looking remote given the gridlock in the senate) we'll see a little bit of selling going into the weekend. Some people will decide to sell at these highs ($279.10 SPY), rather than hold long through a shutdown weekend.

Not taking any action until I see a broad based pullback happening, which I expect later in the day. Far from a sure thing but worth watching for. Options will be cheap so the odds will be there to take <50% plays

Last edited by ToothSayer; 01-19-2018 at 09:31 AM.
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Old 01-19-2018, 09:28 AM   #73
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Re: BFI Macro and Events Thread

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Today brings the shutdown...any opinions here?

Shutdowns are on average negative for the stock market. I think as the day progresses without a resolution (which is looking remote given the gridlock in the senate) we'll see a little bit of selling going into the weekend. Some people will decide to sell at these highs ($279.10 SPY), rather than hold long through a shutdown weekend.

Not taking any action until I see a broad based pullback happening, which I expect later in the day.
Should be interesting. I won't sell anything, but I do have new cash that I haven't invested yet, so a short-term shutdown related pullback would be fine and dandy.



Any thoughts on the Apple news of re-investment and re-repatriation of money? That sure seems like a dream reaction to tax reform. The first of many?

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Old 01-19-2018, 09:40 AM   #74
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Re: BFI Macro and Events Thread

Yeah I think the first of many.

I think Trump doesn't get enough credit for the cutting of regulations that he's done, as well as deal making behind the scenes. Businesses would prefer to be in the US despite higher wages for a number of reasons, but needless regulations that increase complexity, decrease certainty and slow down development, as well as high tax, have made it too unattractive. The trend has been toward constantly increasing regulations for a decade which chokes business confidence both for present and future investment. There's a large body of academic work on the GDP throttling effect of excessive regulations and bureaucracy. Trump's shifted the balance toward decreasing regulations, which has in turn shifted the balance in favor of the picking the US to invest and grow. It's an enormous thing for the economy and US wealth and the stock market recognizes it even if the non-business, hard left media class can't. It will also lift wages through available labor scarcity, which in turns lifts spending which in turns lifts GDP.

So we're in for good times. I think the stock market's reaction has been rational so far. The opinion of serious investors and traders seems to be that the good times will roll on.
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Old 01-19-2018, 09:47 AM   #75
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Re: BFI Macro and Events Thread

Interesting tweet just out from CNN's White House correspondent.

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