Post by TTPost by SawfishPost by TTPost by Pelle SvanslösThe U.S. labor market heated up in December, adding more jobs than
expected and stoking optimism that higher interest rates and slower
growth abroad won’t stop the steady march of economic growth and
wage gains for American workers.
With low unemployment, rising incomes and inflation down to a third
of its peak in 2022, it raises the question of just how good an
economy President-elect Donald Trump stands to inherit when he
enters office in less than two weeks.
“President Trump is inheriting an economy that is about as good as
it ever gets,” Mark Zandi, chief economist at Moody’s Analytics,
told the New York Times last week. “The U.S. economy is the envy of
the rest of the world, as it is the only significant economy that is
growing more quickly postpandemic than prepandemic.”
Trump is also returning to the Oval Office in the midst of a
scorching run for the stock market, with the S&P 500 gaining 23.3%
in 2024, according to FactSet — better than any clip for a calendar
year preceding a White House transition since Reagan took office in
the wake of a 25.8% climb for the S&P in 1980.
Even the inflation rate — the great political weakness of President
Joe Biden — has come down significantly and remains well within the
historical norm.
The latest reading of the consumer-price index in November showed
prices rising at a 2.7% annual rate. That’s a bit above the average
rate since 2000 of 2.6% but below the rate of 3.3% experienced since
1980.
But ...
“Inflation expectations are up as people wait to see the impact of
tariff walls … on consumer prices, the impact of a reduced labor
force after undocumented immigrants are sent home, and the effects
of of cutting taxes in an economy already at full employment,” he
added. “Things are fine right now, and confidence is improving, but
who knows what the future will bring?”
It would be a shame if US wasn't able to exploit illegals to prop the
competitiveness.
Post by Pelle Svanslöshttps://www.marketwatch.com/story/is-donald-trump-inheriting-the-
best- economy-in-history-bef59427
Trump gets another ride on the coattails of a Demmie fixed economy.
TT, here's my take, for whatever it's worth...
Post by TTActually, a recession could be coming, if it isn't already there.
I don't see this. I've been following the "mood" of the economy here
for years, because I'm tied into it indirectly for income, and
directly for int rates.
Fair enough.
They say that economy has imbalances; strong somewhere, weak elsewhere.
I'm very sceptical on official figures on gdp & unemployment. They seem
to make drastic corrections on the figures well after the fact.
Elections may have played a role in those.
Agreed. I don't trust compiled official figure from government agencies.
They have reasons to make the numbers appear certain ways that can be
self-serving.
This leaves independent investment houses and your own gut feeling.
It's scary, but it's what you've got to work with and you can either
roll up in a little, sniveling ball, or do the best you can.
Post by TTAlso there are competing numbers/polls on unemployment, which have
diverged some time ago. Fed uses the better ones.
Not to mention government hiring with debt...
IMO, what's happening in US employment is that service-type jobs--low
paying, mostly--are in good shape for now, and as you note, for
better-paying jobs, it's an expanded government sector.
Anecdotally last year my daughter applied for a data analytics position
for the city's DEI department. The position was to check that the
historically underprivileged are not paying more than a certain
percentage of their income for public services.
Post by TTPost by SawfishThe "feel" of the economy is neither optimistic nor deeply worried. It
underscores the observation that Trump did not win due to the
economy, he won *in spite* of the fact that the economy was pretty
comfortable, historically.
At least optimism was high...
https://coinmarketcap.com/currencies/fart-coin/
Post by SawfishThis then leaves two primary reasons: a) broad dissatisfaction with
social policies like DEI, trans support; student loan forgiveness; and
b) Harris really did not measure up as a credible candidate for
national leadership.
Kamala was just terrible candidate, literally.
From my perspective I started with the ideas that a) she was likely to
be elected and b) I therefore hoped/wanted to believe that she was a
tough and competent political animal.
Very gradually this wore away of its own very obvious accord. She just
ended up appearing unconfident and anxious.
Exactly the person to talk face-to-face with Netayahu, Kim,Putin, etc. :^(
Post by TThttps://www.sanakirja.org/search.php?id=110516&l2=3
Post by SawfishPost by TTS&P500 is in a price bubble, while earnings have not increased in 3
years... which is something you hear media never even mentioning. The
news is always that companies beat Wall Street estimates.
The problem that worries me is not that PE ratios are not realistic in
historical terms, so much as the fact that there is no compensatory
reason for them to be. Back in super low int rates, it was
understandable that quite a bit of money that would normally go into
fixed income were driven into equities *simply to retain principal
levels at par or a bit above during inflation*.
To me, that would go a ways in explaining out-of-whack PE rations.
When rates rose, lower risk money should have flowed out of equities,
but apparently did not. (NOTE: This also would explain why the prime
was cut substantially, but the private lending rates did not follow
the prime down--I don't recall seeing this as much before.) Maybe it
was because of over-enthusiasm over AI, or maybe because the US
economy was better relative to other western economies. I don't know,
but it *feels* unstable now, and I'm concerned.
Well, US is good at looking after its own interests.
Also the entire world is investing in US - AND you have a system where
in addition to institutional investors normal people are saving their
retirement on stock market.
Yes, You *have* to if you have any sense, at all.
These retirement account investments are usually funded monthly, and
they tend to act as a stabilizer to market forces.
Post by TTAnd yes, AI is much hype... doesn't really validate the high valuations.
What's Tesla now... the last I looked it was P/E 120... :)))
Post by Sawfish Housing market
Post by TTis in a bubble as well, or at least apparently at unaffordable levels.
Part of it is in the past families would buy into bigger, better
houses. This was fine when your old rate on the house you're selling
was say 4.25% and the rate on the new house was maybe 5.75%. It was a
stretch, but not crazy.
So when this was in force, Family A wanted to get a bigger house
because they had more combined income than when they bought the first
house. This means that they'd end up selling to Couple B. It might be
their first house--their "starter home".
This is not happening now because family A likely has a 30 year fixed
at anywhere between 2.75 to 3.75, at most. If they sell the new house
will be 30 years fixed at almost 7%. They won't do this, most of them.
So you have more demand than supply. Not necessarily all due to a
shortage of existing houses as few old houses are being listed for sale.
Yup
Post by SawfishPost by TTUS debt at record levels and rising fast, there doesn't seem to be
much that can be done about it. Consumer credit card debt exploding.
Solution, print more money, tariffs, get inflation...
This is a very big danger. I can see this as more likely than not.
The market seems to agree today... 10y yield hovering at 4.8%...
I guess it's the possibility of tariff wars etc. Wednesday CPI is also
expected to come a bit higher than year ago. Started from last Fed
meeting, the projections were not to lower interest rates much this year.
I think markets are overreacting, though. The Fed is rarely correct (if
ever?) and Trump may not do the tariff war & DOGE /recession may reduce
inflation. Imo the inflation is still heading down in the long run.
Something I am beginning to learn about Trump--and I can't stand the
man, personally--is that everything he says should be first viewed as
the opening position of a negotiation.
He first demands EVERYTHING, and more, and then gradually drops demands
to appear reasonable as compared to his inflated rhetoric.
A great test is the confirmation process for his appointments. He
started maybe 1 week after he was elected by saying, apparently
seriously, that he expected to do them as recess appointments if they
were not approved in the normal process.
This was both revolutionary and scary, if you live in the US and
understand how the system works/has worked until now. It would be like
adding 15 new supreme court justices. There is no specific law
forbidding it, maybe only one pres in the early 19TH C. did this, and
from that point forward it has been used as a big scary stick, similar
to calling out the national guard to enforce state school integration.
My guess is that he will *not* do this, but will use it to get some of
the marginal appointments approved where they might not have been
approved without the threat.
We'll see. It will be a test, like the outright demand for Greenland...
Post by TTHaving said that, I did take some risk off today... however small the
risk of wild inflation is, it's still there.
Sold 20% of my long EU bond fund, probably stupid to sell at a small
loss in hindsight but better safe than sorry.
Agreed. If things go sour the cash can be a lifesaver.
Post by TTAlso sold couple minor positions on equities... Sweden & Korea, although
Korea was cheap too. Will wait for even better opportunities, which may
or may not come. Or simply put the money on global bonds. I think I'll
buy some global bonds tomorrow. I'm ok-ish at buying equities at the
bottom but I seem to NEVER get the bonds at cheapest price...
If I buy bonds tomorrow, 10y will be 5+ on Friday... :)
I see bond funds as a hedge, the way I use them. They are an income
source (not a very good one) and they *may* increase in share value--but
likely not, or by very much.
Individual bonds are to hard for me to keep track of because their asset
value is affected inversely to one's normal ideas of a commodity price.
It is their rate of return combined with the remaining term that make it
hard for me to keep a grip on.
Post by TTBut not selling US despite the valuations... I'm sticking with my US low
volatility funds to bitter end. It's only 20% of my equities portfolio &
10% overall.
After all they say that investment portfolio is like a bar of soap; the
more you touch it, move it around and fiddle with it, the smaller it gets...
But hey, I was just "fine tuning" it...
:^)
Post by TTPost by SawfishPost by TTSo it's a bubbly, propped up economy which may crash soon.
It began being REALLY propped as a result of COVID. Then the cash
programs were extended past the 2022 off-year election because the
party in power did not want to be in the position of telling many
voters-- often those who'd traditionally vote Demo--that their rent
protection ended.
"Nothing is so permanent as a temporary government program"
- Milton Friedman
--
"It is Pointless, and endless Trouble, to cast a stone at every dog
that barks at you."
--Sawfish
