Investing Thread

[Hards Alumni]

Isn't unemployment ticking up?

[SoCalEagle]

Isn't unemployment ticking up?

Let's hope so.  By that I mean to say that with full employment and strong gdp numbers like we are getting, the fed aint cutting rates at all.  My view is that the fed funds rate is a little too high right now, but I don't think we need to cut back down to zero, or anything close to that.  Maybe getting back to 3% or something like that would be good.  In order to do that, the fed would have to see higher unemployment, weak gdp numbers, or a combination of both.  Therefore, "slightly" higher unemployment wouldn't be a bad thing for the economy, even though I hate it when people lose their jobs. 

[MUBurrow]

What about the current economy suggests we need to get back to 3%?

[Hards Alumni]

What about the current economy suggests we need to get back to 3%?

High rates slow new business growth and favor companies with cash on hand.  This promotes consolidation instead of competition.

Lower rates make taking on new debt more possible/palatable for entrepreneurs.

[MUBurrow]

Thanks Hards, I like that answer. 

I think part of what I'm striking at is what is the "new normal" for interest rates?  While rates are at an all time high for the last 20 years or so, they're by no means historically high.  And there's a downside to lower rates too - lower fixed income returns, juiced equity and real estate values, etc. Are we actually seeing a reduction in demand for credit?

[TSmith34, Inc.]

Things are humming along quite nicely, that's for sure.
https://www.nytimes.com/2024/07/25/business/economy/2025-economy-president.html?

Not true. I listen the Maria Bartiromo screechfest and I can tell you the economy has never been worse.

[SoCalEagle]

What about the current economy suggests we need to get back to 3%?

Never said we NEED to get back to 3%, just that it would be a good place to settle.  I think lower from here is better and probably inevitable.  If inflation settles between 2% and 3% for the long term, the fed funds rate will follow. 

[MU82]

Isn't unemployment ticking up?

Still quite close to all-time lows. SoCalEagle gave a really good answer.

Not true. I listen the Maria Bartiromo screechfest and I can tell you the economy has never been worse.

Let's try not to let this get political if possible. I know I know ... I'm one to talk. But we have a good discussion going on here.

[SoCalEagle]

Thanks Hards, I like that answer. 

I think part of what I'm striking at is what is the "new normal" for interest rates?  While rates are at an all time high for the last 20 years or so, they're by no means historically high.  And there's a downside to lower rates too - lower fixed income returns, juiced equity and real estate values, etc. Are we actually seeing a reduction in demand for credit?

MUBurrow, I've been thinking a lot about this, too.  Maybe rates remaining higher for longer is better for the economy in the long run.  I'm good if we stay here, but if forced to predict where we are going I would think it's lower from here.  18 months out, I would be surprised if we don't have a five handle or lower.  But keep in mind, I have no clue what will actually happen.  Just happy that the economy is in the place that it is currently. 

[MuggsyB]

Whoa.  I guess I recouped all the coin I lost a few days ago.     

[TSmith34, Inc.]

Let's try not to let this get political if possible. I know I know ... I'm one to talk. But we have a good discussion going on here.

LOL, good one.

[MU82]

Fed signals that a rate cut is coming, quite possibly at the next (Sept. 18) meeting.

Mr. Market, who already was happy in the session, started jumping for joy.

[Shaka Shart]

Bill Ackman is doomed

https://x.com/unusual_whales/status/1818722710874472647?s=46&t=G2FhP_F2kWewaBOpvRv5lg

[Pakuni]

Bill Ackman is doomed

https://x.com/unusual_whales/status/1818722710874472647?s=46&t=G2FhP_F2kWewaBOpvRv5lg

I doubt he cares.
His true calling these days is cross-checking references in Harvard professors' 30-year-old theses.

[Uncle Rico]

Bill Ackman is doomed

https://x.com/unusual_whales/status/1818722710874472647?s=46&t=G2FhP_F2kWewaBOpvRv5lg

Hahahahahahahahagahahagahahahahagagaggahahahahahahahahahahahahahahahagahahahaha

*catches breath*

Hahahahhahshshahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahagahahahahahahhahahhahahhaahhahhahahah

[4everwarriors]

Well, someone should have done it in the vetting process, hey?

[Shaka Shart]

Well, someone should have done it in the vetting process, hey?

For ipo investors? Yeah probably. 8% of your funding target isn't very good

[TSmith34, Inc.]

Bill Ackman is doomed

https://x.com/unusual_whales/status/1818722710874472647?s=46&t=G2FhP_F2kWewaBOpvRv5lg

Bill has become utterly unhinged recently, I mean Eloon levels of unhingedness.

[Skatastrophy]

NM

[rocket surgeon]

High rates slow new business growth and favor companies with cash on hand.  This promotes consolidation instead of competition.

Lower rates make taking on new debt more possible/palatable for entrepreneurs.

I love this answer...hardy, I'd kiss you on the lips for this one, but an air kiss will have to suffice

[jficke13]

I doubt he cares.
His true calling these days is cross-checking references in Harvard professors' 30-year-old theses.

Yep, dude has a case of being terminally online.

[MU82]

Andrew Ross Sorkin, who puts out the NYT's daily DealBook e-newsletter, said this:

One of the strangest I.P.O. run-ups in recent memory is over, for now: Pershing Square USA, an investment fund led by Bill Ackman, said it was withdrawing its offering, after a series of missteps.

The move puts on ice Ackman's dream of creating a new Berkshire Hathaway, backed by his social media followers. It was the latest instance of Ackman taking a big swing that led to a big miss.

A recap: Pershing Square USA was designed as a closed-end fund that would make concentrated investments. It was essentially a counterpart to Pershing Square Holdings, a similar fund listed in London and Amsterdam, but open to U.S. investors.

Ackman repeatedly cut expectations. At the outset, the financier floated the possibility of raising as much as $25 billion, which would have made it one of the biggest I.P.O.s of all time. Underpinning that assumption was the belief that Ackman could translate his prominent and often divisive social media presence into investors.

But after a series of I.P.O. pitch meetings, Ackman told some investors in his hedge fund that the new fund would come in at between $2.5 billion and $4 billion. That later shrank to $2 billion.

Mistakes and technical issues may have dented Ackman's efforts:

++ Ackman wrote an unusually candid letter to his hedge fund's backers (that he didn't initially believe had to be disclosed publicly). It laid out his expectations and detailed orders some investors had placed. One of those, Baupost Group, later backed out.

++ Pershing Square USA was structured as a closed-end fund, which is meant to be more tax-friendly for shareholders but which usually trades at a discount to its assets.

++ Despite the focus on drawing retail investors, most of the I.P.O.'s potential buyers were institutions more interested in whether the fund traded well.

Pershing Square USA said it's taking a pause. The fund suggested that potential investors were more interested in buying in after the offering. (Or: They didn't want to take the risk of paying up for the I.P.O., only to see its shares fall.) Ackman will reconsider the fund's structure "to make the I.P.O. investment decision a straightforward one," it said.

It's unclear what that might look like; a spokesman for Pershing Square USA declined to comment. But given that the fund was meant to lay the groundwork for Ackman's hedge fund itself going public, Ackman has good reason to try again.

[Jay Bee]

Not true. I listen the Maria Bartiromo screechfest and I can tell you the economy has never been worse.

Hott or knot tho??

[Skatastrophy]

The street doesn't like Apple and Amazon earnings day, apparently.

[rocky_warrior]

The street doesn't like Apple and Amazon earnings day, apparently.

And the headlines don't even make sense... "The Dow plunges 600 points as jobless claims rise, killing hopes for interest rate cuts" - uhh...