Sell

[svelte]

[quote=sdrealtor]
When this thread started the S&P was at 3000. Even with a 5% pullback the last few weeks it’s still 50% above June 2020. Another 10% drop would not even scratch the surface of getting us close to even from there let alone a major crash from that level. Now with the benefit of hindsight it was one of the worst calls ever on this site.[/quote]

Yikes! This thread did start in June 2020! For some reason I thought it was June 2021. Yeah SP500 is waaay up since June 2020….it’ll take some major event to ever see 3000 again.

[sdrealtor]

[quote=Rich Toscano][quote=sdrealtor]
The part that I think is hard to argue against is the fed stepping in and bolstering the economy rather than let it crash.[/quote]

That wasn’t the argument though… it was that the Fed would act to prevent a stock market crash, inflation be damned. (Or that’s how I read it anyway).[/quote]

I guess I read it differently and think we will have a Fed actively working to prevent major market and economy crashes for quite some time

[scaredyclassic]

[quote=The-Shoveler]Sure now that we are onto their game plan they will have to change Just kidding LOL.

I don’t know an economic downturn starts developing and push comes to shove I guess we will see like you said.[/quote]

I think everyone self included expects a crash won’t be allowed to happen and are placing bets accordingly.

When everyone agrees on something though or it seems self evident it’s generally exactly wrong

[The-Shoveler]

[quote=Rich Toscano][quote=sdrealtor]
The part that I think is hard to argue against is the fed stepping in and bolstering the economy rather than let it crash.[/quote]

That wasn’t the argument though… it was that the Fed would act to prevent a stock market crash, inflation be damned. (Or that’s how I read it anyway).[/quote]

Yep that was pretty much it, but I would throw housing and the economy in with stocks as well.

I Could be wrong, maybe they will thread the needle just right. Should be interesting either way.

[The-Shoveler]

I guess my main point is the fed (and TPTB) seem to be deathly afraid of any economic downturn lasting more that a few months, before 2008 you could have a recession, not anymore it seems.
IMO anyway.

[Rich Toscano]

[quote=The-Shoveler]I guess my main point is the fed (and TPTB) seem to be deathly afraid of any economic downturn lasting more that a few months, before 2008 you could have a recession, not anymore it seems.
IMO anyway.[/quote]

OK then I did misread it… I thought you were talking about a stock market decline.

[Anonymous]

[quote=Rich Toscano]I don’t think it’s hard to argue against that. They were able to stimulate so much in previous cycles because inflation stayed low. Now inflation has blown well past their target level. They can’t use the same playbook UNLESS inflation behaves and comes down on its own pretty quickly.

I disagree with the idea that the Fed doesn’t care about inflation and will just pump no matter what. They take inflation quite seriously; it’s 1/2 of their dual mandate (and it’s an issue voters care about, so politicians will hold their feet to the fire). They’ve been wrong about the transitory-ness so far, but making a mistake is different from not caring about it.

So, I think “the Fed is just going to print money and let inflation run wild” is actually a pretty easy thesis to argue against.

I guess we’ll see.[/quote]

Just realized the stock market is already starting to collapse (tech stocks for sure) and the Fed hasn’t even started tapering or raised interest rates one basis point. Talk about a taper tantrum!

I agree, it would really be politically dangerous of the Fed to start more money pumping now with inflation raging at 7% or more. What happens this year will be the true indicator if the Fed is really interested in doing their official job (controlling inflation), or their actual unwritten job (inflate asset prices and enrich their banker buddies).

With everyone getting Omicron now, there will be nobody left to infect so I expect Covid will be virtually over within a few months. In that case Fed can no longer use Covid as an excuse for their money printing and they can no longer claim inflation is “transitory”.

I honestly think they will (and have no choice) to let the stock market crash pretty significantly. I mean it has to crash first before they can “rescue the economy” which is code word for rescue their Wall St friends. Only question is how low will they let it go before doubling down on the money printing?

We all know their playbook. And QE is the only play in that book.

[svelte]

[quote=deadzone]
Just realized the stock market is already starting to collapse (tech stocks for sure) and the Fed hasn’t even started tapering or raised interest rates one basis point.
[/quote]

This often happens – the market reacts to the news and not the actual event. By the time the event happens, the market has already adjusted.

[quote=deadzone]
I honestly think they will (and have no choice) to let the stock market crash pretty significantly. [/quote]

I agree stock market will have to come down. Question is what is “significantly”? 10%? 20%? 30%?

Somewhere between 10 and 20 percent sounds about right to me, but then I’m no expert.

[sdrealtor]

Correct, the stock market is forward looking. Quite often when the event happens the market soars because it was not the worst case priced into the market

[The-Shoveler]

When you look at the red hot Job market etc…
In my mind You have to ask, Will the Fed really do what would be required to tame inflation.

Will they really really do it.

[Anonymous]

[quote=The-Shoveler]When you look at the red hot Job market etc…
In my mind You have to ask, Will the Fed really do what would be required to tame inflation.

Will they really really do it.[/quote]

I think the answer is no. I disagree with Rich here. I don’t think the Fed gives a rats ass about their actual “mandate” to control inflation at 2%. They’ve proven time and again that their main purpose is to boost asset prices at all costs. We’ll see shortly.

Regardless I think they have to let the market crash somewhat, in order to rescue it.

Short term, there are FOMC minutes coming out this week. If there is anything “dovish” hinting that they me back tracking on their balance sheet tapering, the market will rally big time this week. Personally I would sell the crap out of that rally.

[svelte]

Brutal out there this morning! SP500 down 2.3% and we’re only an hour in! Could find some buyers as the day goes on, but I bet a lot of newer investors might become rattled as this will be their first time seeing days and days of declines.

[Anonymous]

S&P is already 10% down from peak, Russell is 20%. But really this is nothing in the scheme of things. All those Pandemic related gains can and should be re-traced.

I think there will be significant bounce this week when Fed opens their mouths. But there is no way they will pull a 180 on taper talk like they did at the end of 2018 so this will be temporary bounce, an opportunity to sell or go short in my view.

[Coronita]

yawn…..

[XBoxBoy]

This thread just keeps on being one of the most interesting in a long time. To see all the pessimism and the cynicism that’s put out here is fascinating. Mind you I have no idea if now is a good time to be pessimistic or optimistic. All I know is that I don’t know and neither does anyone else on this thread. It’s just raw biases on display. And to me, that’s fascinating to watch.

And oh yeah, in addition to pessimism there’s a healthy dose of suspicion of conspiracies. Human nature clearly on display here if you care to see it.

[Author]

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