Thread: Trade War

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  1. #1
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    Trade War

    Was watching a show on the trade war. They interviewed some former members of the Presidents inner circle. I’m beginning to think this will continue through the election next year and if the polling looks unfavorable for Trump that we may see some escalation on the Chinese end. If this happens I think the market and maybe the economy really start to struggle. Anyone think this is going to last longer than many initially thought?

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    #2
    Quote Originally Posted by NitroZ7 View Post
    Was watching a show on the trade war. They interviewed some former members of the Presidents inner circle. I’m beginning to think this will continue through the election next year and if the polling looks unfavorable for Trump that we may see some escalation on the Chinese end. If this happens I think the market and maybe the economy really start to struggle. Anyone think this is going to last longer than many initially thought?
    This will last until there is no political gain in it anymore, just like the wall.

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    Yeah, I'm afraid you're right.

  4. Stocks/Investments Moderator boneil's Avatar
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    #4
    The more the media tells me a prolonged trade war is a negative, will put us into a recession, tax on consumers, the more I think a prolonged trade war isn't that negative. I think companies will be quick to move manufacturing and I think the consumer will think more about where they're buying their products from.

    Im not sure what happens first, the rest of tariffs go into affect or the G20 meeting, but we could get some good selloffs in the coming months. Of course all it takes is one tweet about a trade deal with China and we're off to new highs. Thats why we have to be invested and have money to buy more at lower levels.

    The only thing I am certain of is that I am enjoying trading all the headlines and tweets. Just can't leave the computer screen.
    Thanos was the hero

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    #5
    China trade is just political theater. Watch out for the real danger, Iran. When the first shot is fired the markets will get hit.

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    #6
    Looks like a Judge in California just decided to fire another shot at tech. QCOM getting hammered.

  7. Stocks/Investments Moderator boneil's Avatar
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    #7
    Can anybody believe that we are in the middle of a trade war with China, and on the brink of a recession according to the TV experts, and here we are just 2% off of highs after a huge rally from a week ago.

    One thing for sure, I will never make investment decisions based on anything I see in the news, unless I'm going to do the opposite of what they are saying.
    Thanos was the hero

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    #8
    Yeah, it's ridiculous

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    #9
    Last week a “ Tweet” was sent out stating future tariffs of 5-25% on Mexico. It dominated the news and the stock markets. We had a great week of gains, so I think it is all political theater. This talk will continue through the 2020 cycle until there is no political gain left in it. I think that changes like this that really change the financial security of the US have to be done with more than a tweet.

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    #10
    The thing that concerns me is that our economy is so strong yet it can’t endure a Fed Funds rate of 2.75 or a 10 year yield over 3 percent. The unemployment rate is low but so is the participation rate. With rates this low for this long I think we will be building a bubble. I think the big political game is not China it’s the Fed. I would rather see the economy cool now than keep propping it up but the election is next year so we are not going to see anything approaching normal until it is over.

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    #11
    We are building a housing bubble. In the area that we live you cannot hardly find a house to buy. In addition to that, the houses are way over priced, plus loans are easy to obtain.

    Our economy is strong, but it is strong on the back of cheap debt.

  12. #12
    We are building all kinds of bubbles fueled by debt, both public and private. Student loan debt is alarming to me. Even though the economy is strong, I see more people struggling with debt more right now than ever. The next recession will be ugly.

    Tariffs are passed on as a consumer tax. I would be all for putting 30% tariffs on everything imported, if there was a way to rebate all collected tariffs back to our consumers who paid them.
    Last edited by mossie3; 06-17-2019 at 05:02 PM.

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    The bears have been talking about bubbles fueled by debt for the last 2500 points in the S&P. Would love to know why it actually matters. And show me the data on tariffs being passed onto the consumer and having an affect on them

    Investors can't get enough of our debt, The dollar is strong so the consumer has strong buying power, Consumers don't have to buy Chinese, China is subsidizing their products so prices aren't rising, Companies are moving supply chains,

    All that really matters is the Fed and what they do and say. I hope they are a little hawkish tomorrow and we can sell off nicely.
    Thanos was the hero

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    #14
    Quote Originally Posted by boneil View Post
    The bears have been talking about bubbles fueled by debt for the last 2500 points in the S&P. Would love to know why it actually matters. And show me the data on tariffs being passed onto the consumer and having an affect on them

    Investors can't get enough of our debt, The dollar is strong so the consumer has strong buying power, Consumers don't have to buy Chinese, China is subsidizing their products so prices aren't rising, Companies are moving supply chains,

    All that really matters is the Fed and what they do and say. I hope they are a little hawkish tomorrow and we can sell off nicely.
    Here is the issue that bothers me. The fed can cut but what is the appetite for more debt given the debt levels we have now? This cut may be good news for the market but if it fizzles for the economy it may be just another sugar rush. This cut may have more to do with the trade war than it does fundamentals. I’m not selling but I’m not adding either. Things seem unbalanced.

  15. #15
    Everything looked great in October 2007 with the S&P at all time record highs. 5 quarters later the S&P had lost over 1/2 its value. Don't believe it can't possibly do that again. This time with interest rates only 1/2 of what they were then, and income tax rates now much lower than back then, there will be less options, cuts, and QE measures, to implement to prop the country up. Downturns happen quickly, and all it takes is for a few things to align, (tariffs, housing bubble, pension crisis, student loan debt overload, market pressure, etc) to get the ball rolling.

  16. Stocks/Investments Moderator boneil's Avatar
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    Quote Originally Posted by NitroZ7 View Post
    Here is the issue that bothers me. The fed can cut but what is the appetite for more debt given the debt levels we have now? This cut may be good news for the market but if it fizzles for the economy it may be just another sugar rush. This cut may have more to do with the trade war than it does fundamentals. I’m not selling but I’m not adding either. Things seem unbalanced.

    I don't know alot about bonds and treasuries, I don't understand the whole negative yield thing going on around the world so maybe my hypothesis is incorrect, but since yields keep falling, doesn't that show demand for our debt? Even with the Fed raising rates and QT, yields keep falling as investors buy up our debt. Even China has been selling their debt holdings and yields keep falling.

    I can't imagine them cutting, but if they do, the market will sky rocket. My uneducated guess would be that the bond investors will have to chase this market higher. With yields so low now, I'm guessing they may start chasing regardless of a rate cut or not.
    Thanos was the hero

  17. Stocks/Investments Moderator boneil's Avatar
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    #17
    Quote Originally Posted by mossie3 View Post
    Everything looked great in October 2007 with the S&P at all time record highs. 5 quarters later the S&P had lost over 1/2 its value. Don't believe it can't possibly do that again. This time with interest rates only 1/2 of what they were then, and income tax rates now much lower than back then, there will be less options, cuts, and QE measures, to implement to prop the country up. Downturns happen quickly, and all it takes is for a few things to align, (tariffs, housing bubble, pension crisis, student loan debt overload, market pressure, etc) to get the ball rolling.

    In terms of retirement, 20 years away, I would be happy with a downturn and 50% haircut in the S&P. I want lower prices. And a recession only lasts a year or two. In terms of whats in the Fed tool bag, rates could go lower than last time. We would probably do more bailouts like last time, bail out State pensions and student debt loads. Implement more QE, NIRP,(negative interest rate policy) and ZIRP (zero interest rate policy). They probably have tools that none of us can even begin understand unless you have a degree in financial wizardry
    Thanos was the hero

  18. #18
    I'm retired now, and have moved more into cash, and more stable dividend paying utility sector stocks that should weather the storm of a recession better than the high flying tech sector, and other sectors that depend more on people's disposable income.

    It was tough seeing my retirement funds loose over 40% of their value in 2008. I added to my equity positions several times during the plunge. The market would drop 10%, I'd buy more, then see that drop another 10%, and I'd buy more, then drop again. It was stressful, and I was wondering when it would turn around. I did persevere, but I'm not going through that again, not during my retirement years.

    It's a lot easier to talk about buying stocks during fire sales while your accounts plummet, than it is to actually go through it, stay the course, keeping those anxiety and stress levels under control.

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    #19
    Quote Originally Posted by boneil View Post
    In terms of retirement, 20 years away, I would be happy with a downturn and 50% haircut in the S&P. I want lower prices. And a recession only lasts a year or two. In terms of whats in the Fed tool bag, rates could go lower than last time. We would probably do more bailouts like last time, bail out State pensions and student debt loads. Implement more QE, NIRP,(negative interest rate policy) and ZIRP (zero interest rate policy). They probably have tools that none of us can even begin understand unless you have a degree in financial wizardry
    I have about 15 years and a big drop would certainly help me pick up some artificial high yielders when my short term treasuries mature.

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    Quote Originally Posted by mossie3 View Post

    It's a lot easier to talk about buying stocks during fire sales while your accounts plummet, than it is to actually go through it, stay the course, keeping those anxiety and stress levels under control.
    That was one of the first things I figured out whenever I started. Very true

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