Board index » The IRISH PROPERTY BUBBLE » The Central Bank

Post new topic Reply to topic  [ 30 posts ]  [Go to page]   Previous  1, 2, 3
Author Message
 Post subject: Re: GFC 2.0 ? or not?
PostPosted: Thu Dec 27, 2018 12:57 am 
Offline
Nationalised

Joined: Nov 6, 2006
Posts: 9012
Location: Hollywood
Huge 5% rally

US stock markets rally after pre-Christmas slump - http://www.bbc.co.uk/news/business-46690452


Top
 Profile  
 
 Post subject: Re: GFC 2.0 ? or not?
PostPosted: Thu Dec 27, 2018 1:35 am 
Offline
Holiday Home Owner

Joined: Sep 9, 2017
Posts: 336
So not a speculative bubble. No way. No sirree

_________________
“....the power to dream, to rule, to wrestle the earth from fools”


Top
 Profile  
 
 Post subject: Re: GFC 2.0 ? or not?
PostPosted: Thu Dec 27, 2018 7:09 am 
Offline
Of Systemic Importance

Joined: Sep 13, 2012
Posts: 5474
Epicurus wrote:
So not a speculative bubble. No way. No sirree

Why do you think there is a speculative bubble, and how do you define such a thing?

2018 has seen somewhat of a return to normality. Stimulus tapering, interest rates being dragged off the floor, volatility returning, expensive tech stocks getting a disproportionate beating. We're not near historical normality, but it's difficult to know what represents normality given the long term decline in inflation and interest rates.

The analysts I read have been predicting low returns from stocks for the next few years, however that may manifest itself in short term movements.

Still a lot of zombie companies around though, and investors not understanding the meaning of "junk".

_________________
"It's easy to confuse what is with what ought to be, especially when what is has worked out in your favour"
Tyrion Lannister


Top
 Profile  
 
 Post subject: Re: GFC 2.0 ? or not?
PostPosted: Thu Dec 27, 2018 9:12 pm 
Offline
Holiday Home Owner

Joined: Sep 9, 2017
Posts: 336
Eschatologist wrote:
Epicurus wrote:
So not a speculative bubble. No way. No sirree

Why do you think there is a speculative bubble, and how do you define such a thing?



I don't know, down 600 points tonight. Nothing fundamental happening these days. Has this sort of volatility been seen before.

30%+ jump in the DJIA between the Trump election and the end of 2017. 35% in a little over a year for God's sake. Again, little in the fundamentals to back this up. Jobs figures look good, but what about job security? Phenomenal levels of debt being carried by the US. Massive military spending. Good luck riding that buck.

_________________
“....the power to dream, to rule, to wrestle the earth from fools”


Top
 Profile  
 
 Post subject: Re: GFC 2.0 ? or not?
PostPosted: Tue Jan 01, 2019 1:47 am 
Offline
Nationalised

Joined: Nov 6, 2006
Posts: 9012
Location: Hollywood
Image

https://www.macrobusiness.com.au/2019/0 ... uary-2019/


Top
 Profile  
 
 Post subject: Re: GFC 2.0 ? or not?
PostPosted: Fri Jan 04, 2019 2:13 am 
Offline
Nationalised

Joined: Nov 6, 2006
Posts: 9012
Location: Hollywood
https://www.moodysanalytics.com/-/media ... -rally.pdf

Quote:
The world is now incapable of shouldering a 10-year Treasury yield above 3%. A remedial decline by the
U.S.’ benchmark interest rates will be critical to rejuvenating global business activity and stabilizing
financial markets. Otherwise, the corporate earnings outlook might deteriorate by enough to sink the
market value of U.S. common stock by another 20% and swell the now 552 basis point high yield bond
spread to 800 bp.
Regardless of forthcoming increases in outstanding U.S. Treasury debt, recent Fed rate hikes, as well as
the Fed’s intention to passively inject annually as much as $360 billion of Treasury bonds and $240
billion of agency MBS debt into the publicly-traded bond market, the 10-year Treasury yield plunged
from a November 8, 2018 high of 3.24% to a recent 2.57%. An unfolding slowdown by global business
activity now more than offsets the upward pressure put on interest rates by the Fed’s unprecedented
firming of monetary policy on two fronts and a federal deficit inspired acceleration of U.S. Treasury debt
relative to GDP.
In all likelihood, benchmark U.S. Treasury yields will continue to decline until interest-sensitive spending
in the U.S. improves prospects by enough to materially increase risk tolerance. According to fourthquarter 2018’s 1.1% year-over-year drop by mortgage applications from potential homebuyers and
December 2018’s deepest monthly decline by the ISM index of U.S. manufacturing activity since October
2008, a bottom for Treasury bond yields does not yet impend.
As often is the case amid stable inflation expectations, benchmark interest rates function as a regulator of
business activity. Notwithstanding the anticipated course of Fed policy and federal borrowing, benchmark
interest rates will subside when expenditures slow and vice versa.


Top
 Profile  
 
 Post subject: Re: GFC 2.0 ? or not?
PostPosted: Fri Jan 04, 2019 2:29 am 
Offline
Nationalised

Joined: Nov 6, 2006
Posts: 9012
Location: Hollywood
Quote:
Why is the 10-year Treasury yield so important?
The importance of the 10-year Treasury bond yield goes beyond just understanding the return on investment for the security. The 10-year is used as a proxy for many other important financial matters, such as mortgage rates.


This bond, which is sold at auction by the U.S. government, also tends to signal investor confidence. When confidence is high, the 10-year bond's price drops and yields go higher because investors feel they can find higher returning investments and do not feel they need to play it safe.

A Treasury bill is a certificate representing a loan to the federal government that matures in three, six or 12 months. A Treasury note may mature in one to 10 years or more. A Treasury bond matures in more than 10 years. Because Treasurys carry the full backing of the U.S. government, they are viewed as the safest investment.

But when confidence is low, the price goes up as there is more demand for this safe investment and yields fall. This confidence factor can also be explored in non-U.S. countries. Often the price of U.S. government bonds is impacted by the geopolitical situations of other countries with the U.S. being deemed a safe haven, pushing the prices of U.S. government bonds up (as demand increases) and lowering yields.

Another factor related to the yield is the time to maturity such that the longer the Treasury bond's time to maturity, the higher the rates (or yields) because investors demand to get paid more the longer the investment ties up their money. This is a normal yield curve, which is most common, but at times the curve can be inverted (higher yields at lower maturities).


https://www.investopedia.com/articles/i ... matter.asp


Top
 Profile  
 
 Post subject: Re: GFC 2.0 ? or not?
PostPosted: Fri Jan 04, 2019 6:13 am 
Offline
Of Systemic Importance

Joined: Sep 13, 2012
Posts: 5474
Yeah, as I've posted before we're at the tail end of decades of falling interest rates. Capitalism has eaten itself.

Anyway...

"So what explains the flash crash? Cole concedes that Apple's revenue announcement was a catalyst simply because the market is worried about Chinese growth, but mostly it had to do with "unusually shallow markets". Local Japanese investors are still on holiday (the stock market is closed through tomorrow), and the moves happened at a time when trading is typically quiet"

https://ftalphaville.ft.com/2019/01/03/ ... h-crash--/

_________________
"It's easy to confuse what is with what ought to be, especially when what is has worked out in your favour"
Tyrion Lannister


Top
 Profile  
 
 Post subject: Re: GFC 2.0 ? or not?
PostPosted: Fri Jan 04, 2019 6:18 am 
Offline
Nationalised

Joined: Nov 6, 2006
Posts: 9012
Location: Hollywood
Yeah I think some of the scale involved in the large ups and downs recently have been due to 'shallow' markets. It has been quite volatile for alot longer than the holidays though. Moodys are predicting a bit of a slowdown but no recession in the US anyway, they talk about Trumps stimulus money only reaching some parts of government now and being spent over the next few months which will boost or mask falls in GDP.


Top
 Profile  
 
 Post subject: Re: GFC 2.0 ? or not?
PostPosted: Fri Jan 04, 2019 6:33 am 
Offline
Of Systemic Importance

Joined: Sep 13, 2012
Posts: 5474
Well I guess we'll find out if there really is a bubble, because bubbles are easy to pop.

I think not.

A weird thing about modern capitalism is that you'd expect growth in emerging markets, but who is capturing the profits from that growth? Is it showing up in profits of US multinationals?

It's amazing that something like half of Apple's revenues are from the US, when the US has only a tiny fraction of the world's population.

_________________
"It's easy to confuse what is with what ought to be, especially when what is has worked out in your favour"
Tyrion Lannister


Top
 Profile  
 



Display posts from previous:  Sort by  
Post new topic Reply to topic  [ 30 posts ]  [Go to page]   Previous  1, 2, 3

    Board index » The IRISH PROPERTY BUBBLE » The Central Bank

Who is online

Users browsing this forum: No registered users and 7 guests


You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum

Jump to:  

Follow, Retweet @dailypinster



Pyramid Built, Is Better Built! - Latest Property Discussions www.thepropertypin.com