Jump to content

Please consider disabling your adblocker for CreditBoards if you have not already done so.  This site depends on advertising revenue to stay online.


Economy Watch Thread

Recommended Posts


You might think that higher oil prices are bad for the economy because of higher fuel oil and vehicle fuel prices, but there is also a large portion of the U.S. economy dependent on the oil production and refining industries. So when prices get "too low" there are serious labor market and investment implications for the U.S. economy. The macroeconomic effects of very low oil prices probably hurt consumers more than a dime or two higher gas prices. Obviously a return to $100 a barrel would not be good, but something between $50-$60 is probably the sweet spot for balance the interests of consumers of petroleum products and U.S. oil producers.

 

TL/DR: OPEC reducing production to increase oil prices slightly is good, on balance, for the U.S. economy

 

Chevron CEO says he’s hearing ‘optimistic talk’ around OPEC oil production cut

Share this post


Link to post
Share on other sites
On ‎3‎/‎4‎/‎2020 at 6:41 PM, hegemony said:

considering the >10 year boom, this is not surprising even without the contagion of COVID-19.

 

Economists might not say it out loud, but recession risks are above 50%

 

but on the other hand (economist pun intended), economists have predicted 12 of the last 5 recessions.

There's a reason Economics has been called the "Dismal Science" though the specific reasons have evolved over the centuries. OTOH, to give the field credit, economists have been very good at predicting the past.

Share this post


Link to post
Share on other sites
1 hour ago, cashnocredit said:

There's a reason Economics has been called the "Dismal Science" though the specific reasons have evolved over the centuries. OTOH, to give the field credit, economists have been very good at predicting the past.

It is difficult to make predictions, especially about the future.

Share this post


Link to post
Share on other sites
On 3/4/2020 at 9:45 AM, hegemony said:

FWIW, I think ADP's data is the best metric for tracking extant labor market changes.

Considering ADP processes more payrolls than any other third party provider, they would have a good base of metadata to work from.

Share this post


Link to post
Share on other sites

Interesting - I would expect precious metals to take off like a rocket. Au is up about $3.75 (.25%) but Ag, Pd, and Pt are all down.

Share this post


Link to post
Share on other sites
Posted (edited)
2 hours ago, TheVig said:

They could predict everything, but their own eventual BK. You think they would have saw it coming. 

 

 

Good LAWD! 3.99/minute??? That's rich even in 1994 dollars. Adjusted for inflation would snatch that mop off Ms. Warwigs head!

🤯🤯🤯

 

Edited by w00t

Share this post


Link to post
Share on other sites
11 hours ago, IndyPoolPlayer said:

Interesting - I would expect precious metals to take off like a rocket. Au is up about $3.75 (.25%) but Ag, Pd, and Pt are all down.

well the industrial demand for these metals (Ag, Pd, and Pt) may decrease and work against the gold-bug-like buying.

 

In fact the more I think about the whole situation this is not a credit, liquidity, or valuation crisis. It is a demand crisis which means we may all soon understand what Japanese workers/consumers have experienced for a generation.

Share this post


Link to post
Share on other sites

I like oil going down a lot, which is like a tax free money for everyone in this country. I do not like why the stock market is going down, just pure manipulation for sure

Share this post


Link to post
Share on other sites
1 hour ago, hegemony said:

In fact the more I think about the whole situation this is not a credit, liquidity, or valuation crisis. It is a demand crisis which means we may all soon understand what Japanese workers/consumers have experienced for a generation.

 

Well, I'll grant that should the US savings rate spike to 40% sometime in the near future then, yes, we may appreciate the economic challenges confronting Japan beginning in the early 90's.  But that's not a scenario that's much on my mind just now.

 

Heg, you've suggested 3x in the last week that the US economy isn't facing considerable challenges on the liquidity front.  I don't if that stems from a perception that there's more than enough cash to go around (I agree, there is) ... or on what else you base your perception.

 

A liquidity squeeze isn't a shortage of cash; it's the unwillingness of market participants to part with the cash ... at least where it comes to certain asset classes.  There's a crap load of cash finding its way into Treasury securities this year, bringing market interest rates to all time lows.  In the face of a handful of underlying market risk escalations (tension with the Iranians, trade tensions, coronavirus impact, Korea uncertainties, Brexit fallout, Israeli/Palestinian tensions, etc.), investors see market returns as insufficient to warrant current investment strategies and are partially paring back in a "flight to quality" (safer investments).

 

The fed's recent surprise rate cut wasn't driven by a desire to spur investment.  I'll suggest it was actually a spur to "de-invest" in Treasuries and other low risk securities and setting rates so low that investors are forced to seek out greater risk in order to achieve palatable returns.  In other words, boost liquidity.

 

There's a ton of debt that needs to be "rolled over" in the markets each day, and tons of new funding is looking for a home (in particular, securitized securities backing new consumer loans).  Even a modest liquidity disruption can blow up the markets.

------

Look, I don't have a Phd in Econ, so I'm hardly one to pontificate on how best to interpret what's going on in the markets.  But, generally my finance perceptions are well served by a BS Econ from Wharton.  I'm certainly open to counterarguments.
 

Share this post


Link to post
Share on other sites
48 minutes ago, Krish said:

I like oil going down a lot, which is like a tax free money for everyone in this country. I do not like why the stock market is going down, just pure manipulation for sure

 

A market in which there are a limited number of sellers (such as oil) is far more open to manipulation than one with an immense number of independent participants (the stock market).

 

And, in fact, the latest decline in oil prices has come specifically because Saudi Arabia is showing it's clout against the refusal of Russia to accede to a request to cut production.

 

If oil prices were reliably cheaper for the foreseeable future, that would obviously be a great thing for consumers.  However, it's unlikely that the forces that brought about this decline will be sustained; and what lies beyond, once OPEC realigns upon a mutual policy, is very uncertain. 

 

When the dust settles, one thing is sure:  No one on the consumption side benefits in the face of greater risk/uncertainty.

Share this post


Link to post
Share on other sites
On ‎3‎/‎9‎/‎2020 at 7:00 AM, hegemony said:

In fact the more I think about the whole situation this is not a credit, liquidity, or valuation crisis. It is a demand crisis which means we may all soon understand what Japanese workers/consumers have experienced for a generation.

This^  Japan's markets have been lackluster since 1989.  The Nikkei is less than half what it was when it peaked then. Talk about buy and hold. Imagine putting 100k in the market 30 years ago and having it only worth 50k today.

Share this post


Link to post
Share on other sites
On 3/9/2020 at 9:49 AM, Krish said:

I like oil going down a lot, which is like a tax free money for everyone in this country. I do not like why the stock market is going down, just pure manipulation for sure

I'm guessing you missed what happened to economies in places like Houston during the mid-80's.  It was ugly.  And it was even worse in the communities that were driven almost entirely by oilfield work (ie. Midland/Odessa).  Places near oil-driven ports were also substantially impacted. 

 

Cheap gas certainly helps those of us who drive 40K miles or more in a year and don't like paying two and a half bucks a gallon, but it does not help those who have oil stocks in their pensions for the historical dividend production. 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.





About Us

Since 2003, creditboards.com has helped thousands of people repair their credit, force abusive collection agents to follow the law, ensure proper reporting by credit reporting agencies, and provided financial education to help avoid the pitfalls that can lead to negative tradelines.
×
×
  • Create New...

Important Information

Guidelines