Investing Thread

[pacearrow02]

Why are your benchmarks so extreme? Is there no room between "roaring" and "spinning its tires"?

Perhaps we have an economy that survived the pandemic recession fairly well comparative to others due to multiple capital infusions but still has fundamental concerns regarding its antiquated structure. Those concerns could be met midway with the further spending providing for a realignment of the labor market as we transition into a different environment ahead.

Ensuring the economy doesn't backslide into a recession by investing while at the same time seeing a quarter point here and a quarter point there to stave off inflation seems to be a note on both sides of the argument working in tandem.

If the economy is somewhere in the middle as you suggest (btw it was Yelen not me who characterized it as on the brink of overheating) then let’s have a somewhere in the middle federal response to it with say maybe a $1 trillion infrastructure package and call it a day?   

Something along those lines I think would pass with unbelievable bipartisan support.

[JWags85]

I wasn't the biggest fan of Bernanke, but my god I miss him.  Between Yellen, then Powell, and now Yellen is back in the mix as Sec of Treasury, we're working on 8 years of Fed Reserve Chair influence who, regardless of what their true beliefs or stances are, cannot communicate effectively and thus always appear wishy washy or unsure.  I hated Yellen's tenure, but somehow Powell was worse.  Dude was always a bumbling dope during any Q&A.  Yellen is back with her doublespeak with a vengeance.

[jesmu84]

If the economy is somewhere in the middle as you suggest (btw it was Yelen not me who characterized it as on the brink of overheating) then let’s have a somewhere in the middle federal response to it with say maybe a $1 trillion infrastructure package and call it a day?   

Something along those lines I think would pass with unbelievable bipartisan support.

US infrastructure needs at least triple the amount Biden wants to bring our infrastructure anywhere near the level needed.

The infrastructure bill, IMO, shouldn't be tied to economic recovery at all.

[Goose]

Wags

Powell has not gone anywhere.

[JWags85]

Wags

Powell has not gone anywhere.

You're correct, I meant more that she was back in a position of exerting influence.  So now we have both instead of just one.  I corrected it.  Either way, it sucks

[TSmith34, Inc.]

I wasn't the biggest fan of Bernanke, but my god I miss him.  Between Yellen, then Powell, and now Yellen is back in the mix as Sec of Treasury, we're working on 8 years of Fed Reserve Chair influence who, regardless of what their true beliefs or stances are, cannot communicate effectively and thus always appear wishy washy or unsure.  I hated Yellen's tenure, but somehow Powell was worse.  Dude was always a bumbling dope during any Q&A.  Yellen is back with her doublespeak with a vengeance.

LOL, do you remember Greenspan?

[Coleman]

I wasn't the biggest fan of Bernanke, but my god I miss him.  Between Yellen, then Powell, and now Yellen is back in the mix as Sec of Treasury, we're working on 8 years of Fed Reserve Chair influence who, regardless of what their true beliefs or stances are, cannot communicate effectively and thus always appear wishy washy or unsure.  I hated Yellen's tenure, but somehow Powell was worse.  Dude was always a bumbling dope during any Q&A.  Yellen is back with her doublespeak with a vengeance.

Greenspan and Bernanke did the same thing. I read Bernanke's book (really good, btw), and he spent a lot of time talking about how the Fed communicates and the tightropes they have to walk. That is just what Fed Chairs do. They have to try to communicate their strategy on interest rates and QE without promising anything, leaving room for flexibility, while trying to give the markets as much certainty as possible, because the markets hate uncertainty. All while attempting to remain independent from political pressures. It is really an impossible job.

Powell has been great, IMO, under both Trump and Biden.

[JWags85]

LOL, do you remember Greenspan?

This is entirely unsurprising out of you.

Powell has been great, IMO, under both Trump and Biden.

Its an incredibly difficult job, nobody is contesting that, but I don't know how he can be deemed "great" unless you're just referring to short term market gains and trying to pump employment.  Everyone I know in the financial industry has talked about him being one of the worst communicators for a highly visible financial talking head in their lifetimes and I dont think he can be judged favorably until inflation repercussions of the last 2 years are seen, cause the Fed money printer is churning like nobody has ever seen.  Powell is against MMT, but sees no issues with constantly pumping money into the system cause he claims they will be able to "control" inflation

[Coleman]

This is entirely unsurprising out of you.

Its an incredibly difficult job, nobody is contesting that, but I don't know how he can be deemed "great" unless you're just referring to short term market gains and trying to pump employment.  Everyone I know in the financial industry has talked about him being one of the worst communicators for a highly visible financial talking head in their lifetimes and I dont think he can be judged favorably until inflation repercussions of the last 2 years are seen, cause the Fed money printer is churning like nobody has ever seen.  Powell is against MMT, but sees no issues with constantly pumping money into the system cause he claims they will be able to "control" inflation

The Fed was the first and most important actor to stabilize the economy last March. Yes, fiscal relief via CARES Act made a big difference but the Fed stepped in to stop the bleeding. They backstopped corporate debt and became a lender of last resort. We could have been in a really dark place in late March 2020 without them. While the USA certainly didn't nail the public health response, the monetary and fiscal response to COVID is something people will be reading about in economics textbooks decades from now as a model response.

Inflation is coming, I don't disagree. But it will be 3-4% inflation and will last for a year or two. And the Fed has basically telegraphed this the entire time, rewriting the rules for its 2% target. They have actually been extraordinarily transparent, if you know how to read between the lines.

I'm not an MMT advocate, just an old school Keynesian, but our economy can easily support this level of money printing in the short term and it was worth it to avoid a severe, long recession.

[Goose]

Coleman

I agree with 99% of your post. My only issue with the Fed this time around is I think they have fallen asleep at the wheel. I think they should have begun scaling back on asset purchases a couple months ago and sounded the alarm that higher rates were coming later in the year. My confidence level of the Fed/government to be nimble is quite low.

My other concern is inflation being higher than 3-4% and lasting longer. They have tried to get inflation to 2% and have failed for a long, long time. I believe a rapid spike higher than 4% is coming and am afraid it is going to last longer than you do.

I cannot speak for other folks on here in the business world, but in my line of work folks are spending money like crazy. Not that anyone is happy with higher costs, but not stopping any of our clients from doing their daily business. I have seen booms and busts over my career and this time really feels different to me and that has my concern up.


Final thought, I agree they knocked out of the park, but I am bit more cynical on the topic. This is third "event" they have had to navigate over the past twenty years and they learned their lessons. I hate the Fed getting involved, but they did save the day last spring. Now it is time to get the hell out of the way and let us get back to business as usual.

[Coleman]

Coleman

I agree with 99% of your post. My only issue with the Fed this time around is I think they have fallen asleep at the wheel. I think they should have begun scaling back on asset purchases a couple months ago and sounded the alarm that higher rates were coming later in the year. My confidence level of the Fed/government to be nimble is quite low.

My other concern is inflation being higher than 3-4% and lasting longer. They have tried to get inflation to 2% and have failed for a long, long time. I believe a rapid spike higher than 4% is coming and am afraid it is going to last longer than you do.

I cannot speak for other folks on here in the business world, but in my line of work folks are spending money like crazy. Not that anyone is happy with higher costs, but not stopping any of our clients from doing their daily business. I have seen booms and busts over my career and this time really feels different to me and that has my concern up.


Final thought, I agree they knocked out of the park, but I am bit more cynical on the topic. This is third "event" they have had to navigate over the past twenty years and they learned their lessons. I hate the Fed getting involved, but they did save the day last spring. Now it is time to get the hell out of the way and let us get back to business as usual.

Goose, I also agree with 99% of your post. Fed should be scaling back asset purchases now.

Inflation is like fire. It is easy to contain...until it isn't. I don't think inflation higher than 4% is coming, but it is a risk. And as long as it is a risk it is worth paying attention to and hedging against.

[JWags85]

Goose/Coleman,
  I won’t quote cause those are big paragraphs, but I don’t disagree with you much. I hate how Powell does Q&A, but I don’t think he’s been a disaster or a bad Fed Chief, though I do have significant inflation concerns like Goose, and as you said, it’s not a problem until it is, and then it’s a wildfire.  I guess my issues and concerns go back to the communication.  You say it’s there if you read between the lines, but if that was the case, I feel it would be communicated more effectively, verbally or otherwise.  That’s further been stoked by the last few months of not scaling back and hurriedly correcting or walking back any indication of raising rates or tapering or stemming the flow of easy money.  It happened again today

I feel like the Fed has gotten a bit too concerning or responsive to short term stock market movements at the expense of a cohesive, well communicated long term strategy

[Goose]

Coleman

I agree that inflation should be easy to contain and I have been waited for the 2% for a long time. I always try and start my reasoning close to home and then move my thinking out into the real world. I have been helping US companies source product from SE Asia for over two decades and have seen my clients battle over pricing for most of that time. Over the past handful of months I have seen things slipping away and the Chinese gaining more and more power. Clients that once fought for 2-3% are accepting double digit increases, crazy freight costs and high marketing spends.

My fear is that things get out of control in the short term and that the Genie stays out of the bottle in regards to the Chinese power. Not that the Chinese needed confirmation, but 2020 proved to them, yet again, how reliant the USA is to their manufacturing capacity. I would have bet a lot of money that China's economy would tank a year ago and the Fed gave them a life vest as much as they saved our economy. They have renewed confidence that I have never seen and President Xi is leading the way.

To add to my concern, we are seeing crazy price increases across our entire client mix. We have done a very job of being generalists in regards to our client mix and we do not work with any two two companies buying/selling the same product mix. Over the years we seen sectors have spikes but never across the entire client mix. Our clients range from consumer goods, tier one auto parts, builders and range from startups to public traded/PE owned companies and everyone is feeling the pinch.

Again, there are times in history that things line up, good or bad, and can cause opportunities or busts and I think we may be on a verge of that in the near future. I have always kept a close eye on our need for China and how it will play out for our economic situation in the USA. At the moment, I do not like the balance of power.

[Goose]

Wags

The Fed has been way to concerned about the stock market, IMO and has added to the problem. Cheap money, stimulus money, crazy raw material costs, logistics bottlenecks and the wealth effect factor due to inflated stock prices is not a great combination, IMO.

Folks can talk about a great economic recovery all they want but at my house we are still probably down 60-70% on our non essential spending and we are normally very good for the economy. IMO there has been a lot of magic dust thrown around and hopefully more people took advantage of it than normally do.

[Golden Avalanche]

If the economy is somewhere in the middle as you suggest (btw it was Yelen not me who characterized it as on the brink of overheating) then let’s have a somewhere in the middle federal response to it with say maybe a $1 trillion infrastructure package and call it a day?   

Something along those lines I think would pass with unbelievable bipartisan support.

The forces at play are a deficit hawk dinosaur prone to hyperbole (Yellen), an eager CoS who wants to go DDE style big on infrastructure (Klain), proposed legislation that routinely polls in the mid to high 60s, a Congressional majority that's soon to be a minority, and a Congressional minority that has zero interest in governing. Ever.

The investment package, or packages, may very well end up being more of a middle of the road proposition depending on how the sausage is made. Regardless, as jesmu84 wrote, the investment no matter the scale will pale in comparison to what is needed and will be snickered at in a decade's time when we look back on the Covid pandemic's economic impact.

[TSmith34, Inc.]

This is entirely unsurprising out of you.

WTF does that mean?

[pacearrow02]

Thank you Goose, Wags, Coleman!!!  Not living in that “world” it was an interesting peek behind the curtain. 

[JWags85]

WTF does that mean?

A snarky, borderline condescending comment that adds little while also naturally shading AG who identifies as Republican and was always deemed to be chummy with GOP administrations.  Checked a lot of boxes

[TSmith34, Inc.]

A snarky, borderline condescending comment that adds little while also naturally shading AG who identifies as Republican and was always deemed to be chummy with GOP administrations.  Checked a lot of boxes

Oh, son...

First of all, Greenspan served under both Republican and Democratic administrations. My comment had zero to do with his politics. It was in comparison to you complaining about Yellen's "double speak". Greenspan may not have invented Fed Talk, but he was unquestionably and easily the GOAT.

Greenspan was quite open with the fact that he intentionally made his answers as dense and incomprehensible as possible. It was an open joke, and one that he was in on:

"What I've learned at the Federal Reserve is a new language which is called "Fed-speak". You soon learn to mumble with great incoherence."
— Alan Greenspan

Yellen is but a pale imitation of the Grand Master.

A fact you were either didn't know, or misunderstood.

[jesmu84]

Relevant, and potentially scary, video:

https://youtu.be/1HmGLV46L60

[Goose]

Greenspan took great pleasure in confusing his audience. He took it new levels every team he spoke.

[Coleman]

Good stuff everyone. I could talk about this all day.

[MU82]

Good stuff everyone. I could talk about this all day.

Yessir.  Very interesting dialogue about an important topic.

And it beats the heck out of 24/7 crypto talk. I was about to start an "everything other than crypto" investing thread.

[JWags85]

Oh, son...

First of all, Greenspan served under both Republican and Democratic administrations. My comment had zero to do with his politics. It was in comparison to you complaining about Yellen's "double speak". Greenspan may not have invented Fed Talk, but he was unquestionably and easily the GOAT.

Greenspan was quite open with the fact that he intentionally made his answers as dense and incomprehensible as possible. It was an open joke, and one that he was in on:

"What I've learned at the Federal Reserve is a new language which is called "Fed-speak". You soon learn to mumble with great incoherence."
— Alan Greenspan

Yellen is but a pale imitation of the Grand Master.

A fact you were either didn't know, or misunderstood.

Fair play.  And I think the difference between Greenspan and Yellen is self awareness. There is what Greenspan did, and what Yellen and Powell have done.  Greenspan had myriad faults and difficulties in the role, but he grasped the public facing game far better than the more recent pair.  JP and JY trend present apparent bewilderment in their public comments and speeches more than purposeful murkiness.  I’m still baffled that an lawyer/I Banker became the head of the banking engine of the US

[DegenerateDish]

Well after a strong Q1 report, it's doing well after hours.

I bought really, really high during the whole GME fiasco just to "feel" like I was participating in all that...like an idiot. Timing was never my strong suit. Fortunately, I didn't buy much. Hopefully it keeps heading in the right direction and maybe I can get back to even. That's a long way off, though.

I did not do well on the roulette wheel there. Ended up losing a few hundred bucks.

My wife had bought a good amount of DOGE at $.03 early this year with some fun money. Cool to see it at $0.64 now.