The Stock Market Thread

I guess new money spending it like water would cause inflation

 

Would be hard to pin down. I know a lot of the recent crypto surge was fueled by the same thing as the stock surge. Stimulus money and student loan pauses.

 

I'm shocked that people took their student loan pause and invested it. At least, enough people to make any impact. That shows a lot of good judgement. Now, when they then bought crypto or started thinking they could speculate, then they showed their normal judgement.

But what happened to just buying TVs and stereos?

 

Part of this is an oil supply issue. Inventories are dropping in the US quite rapidly despite the fact that we are releasing oil from the strategic petroleum reserve. Oil has come off but it is still quite high.

The price on energy in general is absurd right now. It started with low coal production during COVID and then a hard pivot to diesel and nat gas when both had lagging production due to COVID cutbacks. Then nat gas went from expensive to ridiculous Europe pushing them to more coal. Etc etc. The value on thermal molecules is just high across the board.

To IP’s point, crack spreads (the value of refinery products over the price of oil) is very high right now. That’s why gas is higher than it was in 14. Question is why are crack spreads across all these products so high? US refinery utilization is high and capacity is about equal to 14.

The only market based reasoning I can come up with are that the US is flooding SPr into the market but that’s just crude. So crude length may be perceived to be higher due to that in the market. But just because you are softening oil through strategic releases it doesn’t mean refined products come down until both cost of input and market tightness are resolved. We aren’t releasing refined products from the SPR so while we’ve lowered input costs, the high demand vs supply of refined products is still there. So yes, the SPR releases have handed refiners large margins. But they are running hard to produce product. The market is still pulling harder.

 

no, it was a symptom not the cause.

 

I think I agree. It didn't help, but it didn't "cause" it.

 

The US and world dramatically increased the monetary supply while cutting productivity during covid.

We already had asset inflation since the Great Recession due to QE but our Covid response caused it to spill out every where.

 

Oil is under 100, gas prices dipped back down a little from a mid June peak, and now wheat which was supposed to be spiking is dipping.

The 10 year inflation mark is still under 3%. In our information age, i wonder how much the echo of information and information overload manifests things and exaggerates fluctuations.

We may yet be in a recession, but things do not appear to be as dire as thought a few months ago. A glut on a lot of goods is forming that may get short term inflation under control.

The retrospective on this may be a lot more mundane than I would have guessed. Pandemic and war, nothing more, nothing less?

 

completely agree. it's interesting the market hasn't rallied off of this. the oil price is unsustainable at these levels. it has to drop imo

 

Bitcoin jumped, which is, to me, an indicator that the market is about to go up. It's not yet a well studied correlation of mine, but bitcoin to me is a confidence measure.

 

it's definitely a measure of people willing to speculate which is bullish. we've also seen some of the meme stocks rally.

 

No feds only get one more rate hike till it breaks something if the trend continues

 

I think it’s fairly sustainable at 100. It shouldn’t be but capital allocation is so screwed up it can. And the world can support 80-100 oil. That’s less true when the dollar is very strong.

 

Maybe it is a limitation of the English language, but can someone explain this to me:

What is a strong/weak dollar? By the language, you would think a strong dollar would be good for the USA, but I get the feeling this is not always the case.

 

Trump poignantly kept going back and forth about whether he was to be trying to weaken or strengthen the dollar, and which was "better." There are situational benefits to each, is my understanding.

A strong dollar is when there is a low exchange rate for it. I.e. it has a higher purchasing power. A weak dollar means it takes more dollars for the same amount of goods. If you exchanged currencies, you would get relatively less pesos or yuan or whatever per dollar if it is weak and more if it is strong.

And oil is tied to the dollar, so because the dollar is relatively weak right now, other countries can afford to buy more oil at 100 dollars a barrel than they could if the dollar was strong.

In general, a weak dollar helps US exports, and perhaps economic growth. It's good for many business interests. A strong dollar helps decrease the relative costs of imports and are good for the consumer.

You might say a strong dollar is good for main street, and a weak dollar is good for wall street. 20 years ago, the dollar was stronger than today. From 2002 to 2008ish, it weakened but has been trending up since. That may be why the US is feeling less inflation that much of the rest of the world.

 

Mortgage rates dropped from 5.7 to 5.3 week over week.

I'm far from convinced that we're out of recession woods yet. The comparisons to 08 are a bit much, but we may be in one or looking at one.

 

D'oh!

https://www.bloomberg.com/opinion/a...tter-view&utm_content=view&utm_source=twitter

 

to think people bought watches in 2019 then sold at 300% roi in 2021 or '22 is enviable. I was also thinking last night about the people who took BTC as payment when it was up around 50k. Some pro players have lost their asses

 

Not many companies really took btc as payment. Often they would have a service partner that would convert btc to dollars at time of payment. That service would then be immediately selling the btc. Not the same thing exactly as whole foods having a btc wallet themselves. It's part of the crypto scam in a way, to create the impression that more businesses are directly taking it as payment when they are not.

 

Didn’t Trevor Lawrence take pay in btc and it’s now worth 1/3 or did I get fake newsd again