Economic, taxes, and tariffs discussion

[Bernie Brewer]

Is the Fed point of view still to attack/control inflation first? It appears that way to me, but you're a lot closer to that than I am.

Yes, and the Fed is likely to do another .25% increase before year end.

[revo]

Yes, and the Fed is likely to do another .25% increase before year end.

Plan is a raise in December followed by one more raise at some point next year.

[Bernie Brewer]

Plan is a raise in December followed by one more raise at some point next year.

Actually, in addition to December, we’re hearing that there is A possibility of as many as 3 more .25% increases next year, unless there is an economic set back of some recessionary kind. But the point is to avoid those were possible.

[cardboardbox]

Actually, in addition to December, we’re hearing that there is A possibility of as many as 3 more .25% increases next year, unless there is an economic set back of some recessionary kind. But the point is to avoid those were possible.

I hate you fed!

[Bernie Brewer]

I hate you fed!

Things will get a little more uncomfortable with HELOCs and credit cards tied to variable rates like Prime. But the goal is to get to pre-2007 rates again.

[onejayhawk]

When interest rates go up, bond prices go down. That will be good for the stock market, for a while. Not so good for the federal deficit.

J

[revo]

When interest rates go up, bond prices go down. That will be good for the stock market, for a while. Not so good for the federal deficit.

J

Can you explain your correlation between the price of bonds/interest rates with how that's good for the stock market?

[chancellor]

Can you explain your correlation between the price of bonds/interest rates with how that's good for the stock market?

It's a risky proposition, but I think I know where he's coming from. There's been two instances I know of in the last roughly 60 years where bond prices have fallen and the stock market has contra-indicationally risen. Both those instances were in cases of high growth and high corporate profit, which drove net money out of the bond market and into the stock market.

Seems like a very risky bet to me, as standard indication is that the stock market falls very soon after rates rise and bond prices go down.

[revo]

It's a risky proposition, but I think I know where he's coming from. There's been two instances I know of in the last roughly 60 years where bond prices have fallen and the stock market has contra-indicationally risen. Both those instances were in cases of high growth and high corporate profit, which drove net money out of the bond market and into the stock market.

Seems like a very risky bet to me, as standard indication is that the stock market falls very soon after rates rise and bond prices go down.

There certainly have been times when the stock market has risen during times of interest rate hikes, but the general rule of thumb is that the stock market is adversely affected.

[chancellor]

There certainly have been times when the stock market has risen during times of interest rate hikes, but the general rule of thumb is that the stock market is adversely affected.

Yup, we agree. It'd definitely be a contrarian move to put more money in the market, but given growth and corporate profits, I could see someone making a 3-6 month bet there. Won't be me, though.

[revo]

The point of tariffs, according to our "stable genius" president, was to ultimately get companies to move manufacturing out of China and back to the US. The problem is that by doing so, as I have discussed on this board ad nauseum, affected companies will have to either absorb the drastically higher costs of employing Americans and ultimately lay off workers, pass those costs along to consumers, or absorb them and lose profits. The workaround, it seems, is to simply move production out of China and into a neighboring country unaffected by tariffs instead, such as Cambodia. Ahh, the problems of doing things without putting any thought into them.....


Hong Kong (CNN Business)US tariffs are prompting companies to move some production out of China, but it's not going where President Donald Trump would prefer.

The trade war has made more than $250 billion of Chinese exports more expensive for Americans — from leather belts to refrigerators to motorcycles. The disruption to the world's biggest trading relationship has electronics manufacturers, industrial machinery makers and fashion brands working on shifting some of their assembly lines.

"We are flooded by inquiries," said William Ma, group managing director of Kerry Logistics, a Hong Kong-based firm that helps companies around the world manage their supply chains. "It all happens after the trade war."

Many firms are keeping much of their operations in China, which offers a giant domestic market and advantages that businesses struggle to find elsewhere. But those that are moving aren't flocking to the United States. Instead, they're looking to transfer work to other Asian countries.

Businesses that want to move their orders outside China face another problem: finding factories in the region that can accept them.

"I have factories that we work with in Vietnam that are booked up for the next year," Resnick said. "Their production lines are full. And so you really do, at times, have to hunt and find factories that still have capacity."

But when it comes to switching to US-based suppliers, there's little interest. "That's not even been a consideration for any of the companies that we work with," said Resnick.

https://www.cnn.com/2018/11/16/business/trade-war-us-tariffs/index.html

[nullnor]

is there a way to get companies to move manufacturing back to the US? can we just subsidize them? heh

[cardboardbox]

https://www.cnbc.com/2018/11/15/cramer-says-ceos-are-telling-him-off-the-record-the-economy-has-cooled.html

Cramer has been warning investors for weeks about a manmade slowdown in the U.S. economy, fueled by the two-pronged pressures of the Federal Reserve's interest rate hikes and the Trump administration's tariffs. Now, high-profile CEOs are worried about growth slowing so drastically that it could actually hurt the economy, he said.

If the Fed and Trump stay the course on their policies, the weakness will feed into the stock market as it did on Thursday, the "Mad Money" host warned. The action in shares of Walmart, Home Depot and Macy's told the story, he said: all three companies recently reported strong quarters, but subsequently saw their stocks plummet on economic fears.

"If the Fed changes course and says 'No more rate hikes ... next year unless the data gets more positive,' or if President Trump gets a trade deal with China or even does this kind of truce, then the end-of-cycle proponents may have to change their tune and the market can rocket higher," he said. "Otherwise, though, rallies like today are going to be used to re-position portfolios because the bears have the late-cycle microphone and they just will not let go."

[revo]

https://www.cnbc.com/2018/11/15/cram...as-cooled.html

Cramer has been warning investors for weeks about a manmade slowdown in the U.S. economy, fueled by the two-pronged pressures of the Federal Reserve's interest rate hikes and the Trump administration's tariffs. Now, high-profile CEOs are worried about growth slowing so drastically that it could actually hurt the economy, he said.

If the Fed and Trump stay the course on their policies, the weakness will feed into the stock market as it did on Thursday, the "Mad Money" host warned. The action in shares of Walmart, Home Depot and Macy's told the story, he said: all three companies recently reported strong quarters, but subsequently saw their stocks plummet on economic fears.

"If the Fed changes course and says 'No more rate hikes ... next year unless the data gets more positive,' or if President Trump gets a trade deal with China or even does this kind of truce, then the end-of-cycle proponents may have to change their tune and the market can rocket higher," he said. "Otherwise, though, rallies like today are going to be used to re-position portfolios because the bears have the late-cycle microphone and they just will not let go."

He's right on the money. Let's hope for a truce. China has reached out but hasn't budged on a few key issues. Companies are making key decisions on supply chains because they don't know what's going on. This has gone on much longer than anyone ever expected. Time to end it, Donnie.

[onejayhawk]

Can you explain your correlation between the price of bonds/interest rates with how that's good for the stock market?

As chancellor says, it's a short-term thing. Generally, lower prices in the bond market suck the money out of the stock market. However, continually rising interest rates make that a bad short-term play. You put your money into equities until interest rates stabilize.

J