Bad economic news today ...

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BigDave
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Bad economic news today ...

Post by BigDave »

There is bad economic news today (drop in durable orders) but the stock market is up because bad news means the Fed is more likely to print more money.

This is just insane ... the market drops on good news and goes up on bad news.

http://www.bloomberg.com/news/2013-08-2 ... rises.html
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Re: Bad economic news today ...

Post by awesome guy »

BigDave wrote:There is bad economic news today (drop in durable orders) but the stock market is up because bad news means the Fed is more likely to print more money.

This is just insane ... the market drops on good news and goes up on bad news.

http://www.bloomberg.com/news/2013-08-2 ... rises.html
This is a sham market rally. Makes the 90% correction people look more believable. I'm saving up for that collapse and then jumping back in. Come on correction, let the discounts begin!
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Re: Bad economic news today ...

Post by Hokie CPA »

awesome guy wrote:
BigDave wrote:There is bad economic news today (drop in durable orders) but the stock market is up because bad news means the Fed is more likely to print more money.

This is just insane ... the market drops on good news and goes up on bad news.

http://www.bloomberg.com/news/2013-08-2 ... rises.html
This is a sham market rally. Makes the 90% correction people look more believable. I'm saving up for that collapse and then jumping back in. Come on correction, let the discounts begin!
I agree... looking for a nasty correction come October. Why October? I dunno... just seems like the worst stock market drops happen in October. I know we're due for one Hell of a drop. The market has been overpriced for some time now.
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BigDave
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Re: Bad economic news today ...

Post by BigDave »

Why this October (and not next October or October 2015, 16, etc)?

I'm really expecting them to hold it together (with duct tape) through the 2016 elections.
Hokie CPA wrote:I agree... looking for a nasty correction come October. Why October? I dunno... just seems like the worst stock market drops happen in October. I know we're due for one Hell of a drop. The market has been overpriced for some time now.
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cwtcr hokie
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Re: Bad economic news today ...

Post by cwtcr hokie »

yea, some stuff happening is not good, the sham unemployment figures are catching up to them, people are not finding jobs, they are just dropping out of the calculation, it has to catch up to econ activity eventually. Bigger problem I see coming is the large amount of mortgage folks (that work in the mortgage field) getting laid off. My neighbor who does mortgage work just got laid off, in paper on Friday that Wells Fargo was cutting a bunch of mortgage folks out of staff. The reason is the slight uptick in rates, people are not re-financing now and what I read last week was housing starts are slowing way down as people back off buying due to the increase in rates...... So what does Obama do to keep the one piece of the economy that had finally started to get better from tanking again??
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Re: Bad economic news today ...

Post by TheH2 »

Hokie CPA wrote:
awesome guy wrote:
BigDave wrote:There is bad economic news today (drop in durable orders) but the stock market is up because bad news means the Fed is more likely to print more money.

This is just insane ... the market drops on good news and goes up on bad news.

http://www.bloomberg.com/news/2013-08-2 ... rises.html
This is a sham market rally. Makes the 90% correction people look more believable. I'm saving up for that collapse and then jumping back in. Come on correction, let the discounts begin!
I agree... looking for a nasty correction come October. Why October? I dunno... just seems like the worst stock market drops happen in October. I know we're due for one Hell of a drop. The market has been overpriced for some time now.
The Shiller P/E is higher than I thought - at about 23 (http://www.multpl.com/shiller-pe/) but certainly not epic collapse high. I wouldn't be shocked with a 7-10% correction - not saying it is likely - but wouldn't be surprised. Nothing close to a 90% correction or even 40% correction. The market has fought back every 3% correction we've had this year. This is while a lot of money is still going into bond funds so it isn't like there has been a mass exodus from debt to equities.

Another thing to consider is that companies are flush with cash. If one believes companies can get a return on cash consistent with the return on capital, in the future, then the valuation may be even more warranted. Or, at the very least, they should be able to fight the devaluation of share price with dividends.
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Re: Bad economic news today ...

Post by cwtcr hokie »

I agree with you, I am doubting a huge correction but this recovery is struggling mightily, personally I hope it gets better as soon as possible
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Re: Bad economic news today ...

Post by BigDave »

TheH2 wrote:Or, at the very least, they should be able to fight the devaluation of share price with dividends.
Silly question: wouldn't that just cause further devaluation of the share price? If Apple announces that it's going to pay a $50/share dividend with their massive amount of cash on hand, then wouldn't their share price just drop by $50 on the ex-dividend date?
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TheH2
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Re: Bad economic news today ...

Post by TheH2 »

cwtcr hokie wrote:yea, some stuff happening is not good, the sham unemployment figures are catching up to them, people are not finding jobs, they are just dropping out of the calculation, it has to catch up to econ activity eventually. Bigger problem I see coming is the large amount of mortgage folks (that work in the mortgage field) getting laid off. My neighbor who does mortgage work just got laid off, in paper on Friday that Wells Fargo was cutting a bunch of mortgage folks out of staff. The reason is the slight uptick in rates, people are not re-financing now and what I read last week was housing starts are slowing way down as people back off buying due to the increase in rates...... So what does Obama do to keep the one piece of the economy that had finally started to get better from tanking again??
I think it is a little bit of a two edged sword. Yes, refinances will go down which has driven the lending business recently. Aside: my lender for refinance was a POS and deserves to lose his job (I actually don't want him to lose his job). As interest rates rise there is another aspect that people want to get in houses before rates rise more. Stock of unsold homes is low. After the initial jump in interest rates, home sales actually increased.
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Re: Bad economic news today ...

Post by awesome guy »

TheH2 wrote:
cwtcr hokie wrote:yea, some stuff happening is not good, the sham unemployment figures are catching up to them, people are not finding jobs, they are just dropping out of the calculation, it has to catch up to econ activity eventually. Bigger problem I see coming is the large amount of mortgage folks (that work in the mortgage field) getting laid off. My neighbor who does mortgage work just got laid off, in paper on Friday that Wells Fargo was cutting a bunch of mortgage folks out of staff. The reason is the slight uptick in rates, people are not re-financing now and what I read last week was housing starts are slowing way down as people back off buying due to the increase in rates...... So what does Obama do to keep the one piece of the economy that had finally started to get better from tanking again??
I think it is a little bit of a two edged sword. Yes, refinances will go down which has driven the lending business recently. Aside: my lender for refinance was a POS and deserves to lose his job (I actually don't want him to lose his job). As interest rates rise there is another aspect that people want to get in houses before rates rise more. Stock of unsold homes is low. After the initial jump in interest rates, home sales actually increased.
Seems to me they're just cannibalizing future sales. And that's really what people should be doing if they think their is a remote chance of them buying a house with a jumbo loan in the next 10 years. Get it now before interest drives the home out of reach. Or get into the minimalist/less is more mantra. Because that's all they're going to be able to get until rates go up and come back down again. On the other hand, they could save and use a bigger down payment to absorb the interest shock.
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TheH2
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Re: Bad economic news today ...

Post by TheH2 »

BigDave wrote:
TheH2 wrote:Or, at the very least, they should be able to fight the devaluation of share price with dividends.
Silly question: wouldn't that just cause further devaluation of the share price? If Apple announces that it's going to pay a $50/share dividend with their massive amount of cash on hand, then wouldn't their share price just drop by $50 on the ex-dividend date?
If they issued a 1 time dividend, then yes, I would think. Microsoft actually did this in 2004/2005 and BEA had to make an adjustment to national income because it was so large and made up a few percentage of wealth for the entire year (I forget the actual figure).

If a company like Intel said they were going to increase their dividend from what amounts to a 4% yield (currently) to a 5% yield (currently) then the value of the value of holding shares should increase.

Although if it was a "growth" company then it might actually decrease the stock price. The assumption in a growth company is that they are/will do something productive with their cash.
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