The Markets

Discussion in 'Political Discussions' started by gipper, May 9, 2022.

  1. BuckeyeT

    BuckeyeT Well-Known Member

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    Yes we will, I'm a show me guy too. Therein lies the risk that the Fed has to balance in their dual mandate - full employment and stable prices. At this level of consumer demand/output and state of the labor market, they're not going to be cutting anything anytime soon. But they are "data driven" and policy will be a function of what the data shows. Their projections do show more robust GDP growth and lower employment than previous, they also took out one of the anticipated rate cuts off the table in the out years - 25/26. In truth, they hate making these projections but it does give market participants insights into the range of expectations of Fed policy makers and some of the most informed people in the world about the state of our economy and it's component parts.
     
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  2. Terry O'Keefe

    Terry O'Keefe Well-Known Member Administrator

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    So I don't understand this deal with Trumps media company. I've read that it was struggling yet somehow this deal leaves him with at least 3 Billion dollars added to his net worth. Now I've also read that he won't be able to monetize if right away, so I guess it means he can't use it o pay that almost 5OOM judgement and save his home and golf course.
     
  3. BuckeyeT

    BuckeyeT Well-Known Member

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    As of close Friday, the disgraced ex-President's stake in the deal/company is valued at $2.9 Billion. The new company will trade on the NASDAQ under the symbol DJT - the same symbol used by his publicly traded casino company that was delisted after filing the first of 3 bankruptcies. I would have perhaps chosen another symbol, but that's just me.... He will be limited in realizing the value of his stake by a "lock-up" clause - large stakeholders are typically bound from not selling shares for some period of time post-listing to protect the value of minority interests (Trump owns 60%) from getting crushed if the major investors bail after a windfall.

    There are 2 ways that I'm aware he could realize some $$$$ more quickly. 1) he could seek a waiver from the other shareholders, 2) he could use the shares as collateral and get a loan for some portion. In any event he is likely to only be able to realize some modest fraction of his overall stake anytime soon. My guess is that he will be looking to realize as much as possible as soon as possible as the current value of the firm is wildly inflated based upon any reasonable economic basis. The company generated less than $5 million in total revenue in the first 3 qtrs of 2023 and posted a loss of $49 million (most recent data available) and I expect the shares to be highly volatile based upon the whims and fortunes of his political and legal battles and may well follow the fortunes of the first DJT firm listed on a public exchange.
     
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  4. Bobdawolverweasel

    Bobdawolverweasel Well-Known Member

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    What……company loses 49 million in the first three quarters but is worth billions. Maybe my wife can explain this to me as she usually returns from shopping and informs me that her needed expenditures saved us hundreds of dollars thus increasing our net worth. Really wish I had taken an accounting course in undergrad….
     
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  5. BuckeyeT

    BuckeyeT Well-Known Member

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    Seems our spouses took the same econ course
     
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  6. Terry O'Keefe

    Terry O'Keefe Well-Known Member Administrator

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    Are the investors/stockholders buying as a way around election rules to funnel money to Trump?
     
  7. BuckeyeT

    BuckeyeT Well-Known Member

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    His supporters have been grifted and carny barked into funding his ever growing mountain of legal bills so they're not averse to pi$$ing away their money on his shenanigans, I guess it's quite possible. The company's board includes one of his sons and several members from his former admin. It's red hot early today in the first day of trading.....

    "Trump Media, which is trading under the ticker DJT for the first time, was up 24% in premarket trading at $62 on the Nasdaq market. The business went public through a merger with a special-purpose acquisition company called Digital World Acquisition Corp."
     
  8. BuckeyeT

    BuckeyeT Well-Known Member

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    Here's what popped up on my screen at the open.....big spike then trading halted. It's gonna be fun to follow. To your point TOK, it's valuation is well beyond any reasonable economic basis so value is being driven by something other than it's worth as an economic entity. It's a natural short candidate but at this point it's impossible to find the shares to sell short

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  9. Sid

    Sid Well-Known Member

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    Could this be relevant to this conversation?
     
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  10. BuckeyeT

    BuckeyeT Well-Known Member

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    Sid, to put things in perspective the Trump Media total revenue of $3.4 million is less than 50% of that of your average Chick-Fil-A store, approx equal to a good McD's on every street corner USA yet carries a $9 Billion valuation.
     
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  11. BuckeyeT

    BuckeyeT Well-Known Member

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    Christopher Waller, Fed Governor and very influential FOMC member (I believe also former professor at ND) has gotten the attention of the market with a speech yesterday to the Economic Club of NY. Waller is one of the most respected members of the FOMC and his views typically echo the current stance of the FOMC. The Fed seems in no hurry to act to lower interest rates, nor should they be, imo

    "...the strength of the U.S. economy and resilience of the labor market mean the risk of waiting a little longer to ease policy is small and significantly lower than acting too soon and possibly squandering our progress on inflation."

    Speech by Governor Waller on the economic outlook
     
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  12. Scott88

    Scott88 Well-Known Member

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    I def agree... do not lower the rates yet. Need to see inflation dying a real death before even thinking of that.
    On another note... I see the EPA finalized their new emissions requirements that will raise all kinds of hell soon. 49% required decrease in vehicle emissions 2027-2032 with required EV sales of 35% by 3032.
    Guess what? ICE technology cannot meet those numbers, so effectively they are drawing in the EV takeover point to the 2027-2032 range.
    To meet that requirement sales of EVs will have to be 50-75%.
    Um... most folks have already shown they don't want EVs now (they are stacked up on lots from what I've read)... what's gonna happen when that's all you are trying to sell?
    Oh... and that 800lb gorilla the grid is still sitting in the corner waiting to start blowing things up when all these EV's start plugging in at once.
     
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  13. BuckeyeT

    BuckeyeT Well-Known Member

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    Yep I saw that, no surprises there after the energy policy of this admin was handed over to the progressives. Not only EV's tho....the build out of the the AI infrastructure is going to require material investment in additional grid capacity. It has been estimated that the power-hungry data centers that drive the training and roll-out of AI models will increase energy demand from AI by 70% annually. Tho each successive generation of chips is more energy efficient, energy demand is certain to increase materially.
     
  14. Scott88

    Scott88 Well-Known Member

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    Terry, I've seen this stated a few times, so it's getting my attention.
    I've been very suspicious of the strong labor market because I assumed at least as many job seekers as there are work force departures. But...
    Over a million baby boomers retired last year. This is creating a shortage in senior management positions.
    The new labor entering the work place is the smallest generation in the last 80 years.
    The historical average growth of the labor pool shrank for the first time since WW2 by 500,000 employees.
    This trend will continue through 2034, and the shortage increases by a 100,000 a year.
    There would be layoffs hitting if not for this trend...
    I wonder what the final effect of this will be?
     
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  15. BuckeyeT

    BuckeyeT Well-Known Member

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    That our economic output has continued it's expansion in the face of labor force challenges speaks volumes about the productivity gains that we have realized over the years. The roll out of AI promises to continue that effect to our benefit. On the downside, we know that economic growth is bounded by population increases and productivity improvements. That we are labor constrained in the face of declining population trends should only reinforce how critical it is to our continued economic vitality to have comprehensive immigration reform. I'm not optimistic that we have the political leadership capable or even willing to put forth a policy prescription that is anything but a cudgel with which to bash the opposition over the head. Effective and comprehensive reform must necessarily be bi-partisan in nature. We're not capable of that at present and I don't see that changing any time in the near future.
     
  16. BuckeyeT

    BuckeyeT Well-Known Member

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    The mandatory audited, SEC filings of the Trump Media and Technology Group financial statements for the year ending December 31, 2023 were released this week. I took the time to peruse them and I did find one thing of note that jumped from the pages..... "Substantial Doubt about the Company's Ability to Continue as a Going Concern". Buyer beware, but then again, the accuracy of his firms financial statements were never a strong suit of the man and his team. Perhaps there is gold in them, thar hills and it is worth of it's lofty valuation. Who knows? My guess is DJT is chomping at the bit to dispose of his holdings, at any price.

    upload_2024-4-2_15-11-37.png
     
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  17. BuckeyeT

    BuckeyeT Well-Known Member

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    https://www.cnbc.com/2024/04/05/job...cted-and-unemployment-was-3point8percent.html

    "Job creation in March easily topped expectations in a sign of continued acceleration for what has been a bustling and resilient labor market.

    Nonfarm payrolls increased 303,000 for the month, well above the Dow Jones estimate for an increase of 200,000"

    Continued strength in the labor market will have the Fed even more convinced of their "no hurry" approach to easing monetary policy and lowering interest rates. Several popular "real time" measures of economic activity point to an uptick in growth as well providing further evidence to the resilience of this economy. Current expectations continue to be 3 cuts by year-end, beginning in June but trending toward fewer cuts and beginning later.
     
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  18. BuckeyeT

    BuckeyeT Well-Known Member

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    "Dow futures drop 400 points after hot inflation report spikes yields"

    "Stock futures tanked on Wednesday after March inflation data came in hotter than expected, likely pushing off interest rate cuts by the Federal Reserve that investors have been expecting."

    Todays release evidences prices proving to be more "sticky" than anticipated. Saying goodbye to a June rate cut. Expectations for a June rate cut less than 20% today versus 60% yesterday. Several Fed officials questioning the need for any cuts at all this year. Fed in a tough spot fighting uphill to moderate demand in the face of an administration putting forth one deficit-financed stimulative measure after another. As we push policy actions later into the year, wouldn't be surprised to see Fed policy become a target of election year political criticism from both sides. Fed policy makers need really thick skin, tough job


    https://www.cnbc.com/2024/04/09/stock-market-today-live-updates.html
     
  19. Scott88

    Scott88 Well-Known Member

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    Thick skin indeed. Can't get inflation under control when the Govt continues to spend spend spend fantasy money.

    Terry... Saw some stats from earlier this year (Feb into March I think) that said Consumer debt is blasting through the stratosphere to higher than ever levels.
    Another factor that would make this soft landing a lot less soft is if those folks who are working 2 jobs (keeping job data looking good) to pay the credit cards that are keeping them afloat just say "F it!" and default.
    I see a lot of shaky cards in the foundation of this house...
     
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  20. BuckeyeT

    BuckeyeT Well-Known Member

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    Scott, something to pay attention to for sure, trending upwards, but nothing that causes me heartburn....yet. Consumer credit levels (as % of GDP) still well below historical norms - very close to historical lows - to put things in perspective, and well below the levels we saw even when Trump took office. Similarly with consumer delinquency rates, trend going in the wrong direction as it typically does at this point in the business cycles, but still well below historical norms. From the perspective of an old retired banker, consumer credit and delinquency rates are lower (healthier) than they were at any time in my entire career in the business until I retired. Def something to watch tho

    Strength of the labor market remains the critical path item. If they have jobs, they will spend and pay their bills. If there is an appreciable disruption in the job market, things will begin to deteriorate. So long as unemployment remains near historical lows, consumer credit isn't going to be a major concern.

    Now, ask me about deficit spending and fiscal discipline!!!!??? Therein lies my real concern as neither party has shown any appetite to address

    Household Debt to GDP for United States
    Delinquency Rate on Consumer Loans, All Commercial Banks