Australian (ASX) Stock Market Forum

Inflation

over9k

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Lots of worry about a demand slowdown now - geopolitical tensions, economies with structural issues, perhaps seasonality playing a part too. Wild gyrations in gas thrown into the mix as well.

Absolutely zero supply side easing to speak of however.
 

moXJO

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Lots of worry about a demand slowdown now - geopolitical tensions, economies with structural issues, perhaps seasonality playing a part too. Wild gyrations in gas thrown into the mix as well.

Absolutely zero supply side easing to speak of however.
Looking ugly.
US jobs report tonight?
 
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fredgraph.png
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10yr -2 yr yields inverting (green). There doesn't seem to have been an instance where an inversion has happened and a recession hasn't followed (see above). Either the Fed is going to start pausing in September before reversing direction later or they're going to keep hiking into a recession. Interesting NDQ keeps falling during a recession, despite IR cuts...
If the 10-2yr inversion is to be trusted, then I don't think we've hit a bottom yet.

Does anyone else see an alternative viewpoint? I'm starting to smell permabear-y...

EDIT: I guess one alternative possibility is that the Fed will re-enter with stimulus... perhaps that could be fueling the recent NDQ run
 

moXJO

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View attachment 144975
View attachment 144976
10yr -2 yr yields inverting (green). There doesn't seem to have been an instance where an inversion has happened and a recession hasn't followed (see above). Either the Fed is going to start pausing in September before reversing direction later or they're going to keep hiking into a recession. Interesting NDQ keeps falling during a recession, despite IR cuts...
If the 10-2yr inversion is to be trusted, then I don't think we've hit a bottom yet.

Does anyone else see an alternative viewpoint? I'm starting to smell permabear-y...

EDIT: I guess one alternative possibility is that the Fed will re-enter with stimulus... perhaps that could be fueling the recent NDQ run
Everyone is saying "lower" from here.
A lot have whipped themselves into thinking a depression like crash is about to happen. Always makes me want to do the opposite....

Unemployment seems artificial low, is it due to no workers brought in from overseas? Business is starting to get the shts about it as well. It's affecting the whole chain of production and supply. Good for workers though

Business has amassed a decent war chest of cash. So they might try and weather out the storm and keep those hard workers in employment. May also prolong the uncertainty though.

They need to stomp inflation though. Recession wouldn't be a bad thing overall. Some of these big companies shedding employees, allows smaller businesses to get some experienced workers for cheap and grow their business. God knows we haven't had much innovation for the last decade and a bit.

A good wildfire will allow some of the smaller saplings to rise up. Also, I'm a tight ar5e that wants discounts. Unfortunately everyone may have to suffer a recession for it. But it's the price I'm willing to take.
 
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Everyone is saying "lower" from here.
A lot have whipped themselves into thinking a depression like crash is about to happen. Always makes me want to do the opposite....

Unemployment seems artificial low, is it due to no workers brought in from overseas? Business is starting to get the shts about it as well. It's affecting the whole chain of production and supply. Good for workers though

Business has amassed a decent war chest of cash. So they might try and weather out the storm and keep those hard workers in employment. May also prolong the uncertainty though.

They need to stomp inflation though. Recession wouldn't be a bad thing overall. Some of these big companies shedding employees, allows smaller businesses to get some experienced workers for cheap and grow their business. God knows we haven't had much innovation for the last decade and a bit.

A good wildfire will allow some of the smaller saplings to rise up. Also, I'm a tight ar5e that wants discounts. Unfortunately everyone may have to suffer a recession for it. But it's the price I'm willing to take.

Yep, I'm
Everyone is saying "lower" from here.
A lot have whipped themselves into thinking a depression like crash is about to happen. Always makes me want to do the opposite....

Unemployment seems artificial low, is it due to no workers brought in from overseas? Business is starting to get the shts about it as well. It's affecting the whole chain of production and supply. Good for workers though

Business has amassed a decent war chest of cash. So they might try and weather out the storm and keep those hard workers in employment. May also prolong the uncertainty though.

They need to stomp inflation though. Recession wouldn't be a bad thing overall. Some of these big companies shedding employees, allows smaller businesses to get some experienced workers for cheap and grow their business. God knows we haven't had much innovation for the last decade and a bit.

A good wildfire will allow some of the smaller saplings to rise up. Also, I'm a tight ar5e that wants discounts. Unfortunately everyone may have to suffer a recession for it. But it's the price I'm willing to take.

Agreed with pretty much everything. I just don't see a future economic environment conducive to NDQ at 16000, particularly when central bankers have pledged to fight inflation
 

bluekelah

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Everyone is saying "lower" from here.
A lot have whipped themselves into thinking a depression like crash is about to happen. Always makes me want to do the opposite....

Unemployment seems artificial low, is it due to no workers brought in from overseas? Business is starting to get the shts about it as well. It's affecting the whole chain of production and supply. Good for workers though

Business has amassed a decent war chest of cash. So they might try and weather out the storm and keep those hard workers in employment. May also prolong the uncertainty though.

They need to stomp inflation though. Recession wouldn't be a bad thing overall. Some of these big companies shedding employees, allows smaller businesses to get some experienced workers for cheap and grow their business. God knows we haven't had much innovation for the last decade and a bit.

A good wildfire will allow some of the smaller saplings to rise up. Also, I'm a tight ar5e that wants discounts. Unfortunately everyone may have to suffer a recession for it. But it's the price I'm willing to take.
I believe FED will cause a big recession from hiking rates. If you look historically the markets have plunged everytime FED tried to raise rates. They tried and everytime they had to PIVOT and the next time could only raise rates by half as much before everything fell apart. 1980s they did 15-20% to fight inflation, then 1990s 10%, then 2000 7% then 2007 5%+, then 2019 2.5%.

They are at 2.5% now and expected to hike another 0.5% next month+more QT as they reduce balance sheet, thats on the back of 30T in debt. IMHO we will probably see something break pretty soon whether it be a housing crash like GFC or stock market crash or bad recession.

Employment numbers are a lagging indictor and also if you look at participation rate it pretty low at 62%+, slightly lower than it was precovid. But yeah I wouldnt trust the US numbers too much as they are probably adjusted and fudged in some way, the trend is more important.
 

moXJO

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What do you think the market will do if Republicans take back senate?

I can't remember off the top of my head how it's gone historically.
 

over9k

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What do you think the market will do if Republicans take back senate?

I can't remember off the top of my head how it's gone historically.
Rally. Superior economic management and all that. Let's not kid ourselves, even the democrats are anticipating a wipeout.

Also worth noting that just after midyear is historically when the seasonal slowdown begins. Don't discount seasonality. The last couple of years bottomed around september-october iirc.

But yeah, things are a mess.
 

over9k

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Simple example of things:

Oil futures are up but oil company futures are down, which indicates that demand side is now seeing even more "problems" than supply side, and supply side ones haven't gone away.

This means that should the demand side sort itself out, inflation will get even worse. Prices increasing even when demand is dropping is some seriously bad juju.
 
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