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Been thinking a little about the implications of the impending fall of Trump, market-wise. All in all, I thought the markets would react negatively when he was elected and I was dead wrong on that, obviously. So given that Wall Street liked President Trump, it stands to reason that they will not like it when he is removed. More to the point, I wonder if there are specific stocks or sectors that will move a lot if Trump is out of office. Two come to my mind and I'm wondering what the rest of this august group thinks. First, Chinese stocks should bounce because the tariffs are a Trump thing and I doubt Pence would run with that ball. I'd look to BABA specifically as a big beneficiary and maybe also the other common names (IQ, JD, etc). On the flip side (and I am out of this loop), I believe some American companies got a boost with Trump, so it stands to reason that they might fall. I first thought of X which did pop after his election but has already reverted back to its pre-election PPS. There must be some specific companies (coal?) that will be really bumming with Trump out of office. I'd love your thoughts on those plus on the Chinese companies, too. TIA.

 
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pecorino said:
Been thinking a little about the implications of the impending fall of Trump, market-wise. All in all, I thought the markets would react negatively when he was elected and I was dead wrong on that, obviously. So given that Wall Street liked President Trump, it stands to reason that they will not like it when he is removed. More to the point, I wonder if there are specific stocks or sectors that will move a lot if Trump is out of office. Two come to my mind and I'm wondering what the rest of this august group thinks. First, Chinese stocks should bounce because the tariffs are a Trump thing and I doubt Pence would run with that ball. I'd look to BABA specifically as a big beneficiary and maybe also the other common names (IQ, JD, etc). On the flip side (and I am out of this loop), I believe some American companies got a boost with Trump, so it stands to reason that they might fall. I first thought of X which did pop after his election but has already reverted back to its pre-election PPS. There must be some specific companies (coal?) that will be really bumming with Trump out of office. I'd love your thoughts on those plus on the Chinese companies, too. TIA.
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Impending fall of Trump?  What are you talking about?  He may very well lose in 2020 but he is not getting impeached.

 
Don't Noonan said:
Put me in the camp that we finish 2018 much higher than we are at today.  I also see a positive 2019 as well.  We are nowhere near a recession.
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I've heard this quite a bit lately, but it doesn't make any sense- the market doesn't go up every year that we aren't in a recession....

 
humpback said:
I've heard this quite a bit lately, but it doesn't make any sense- the market doesn't go up every year that we aren't in a recession....
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Many of the sellers lately are worried about inverted yield curve.  The 2 and 5 year inverted this last week but this happens quite a bit.  On fact, average 12 month return after it happens is 13%.  

Trade war is a worry if you think it is a long term problem.  It will be an afterthought by next year.  Economy is doing just fine and earnings are solid.  

Lastly, the 3rd year return of each President going back to the early 50's has been positive every year.  

 
Don't Noonan said:
Many of the sellers lately are worried about inverted yield curve.  The 2 and 5 year inverted this last week but this happens quite a bit.  On fact, average 12 month return after it happens is 13%.  

Trade war is a worry if you think it is a long term problem.  It will be an afterthought by next year.  Economy is doing just fine and earnings are solid.  

Lastly, the 3rd year return of each President going back to the early 50's has been positive every year.  
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There are countless things that investors are worried about lately, but this wasn't really about whether the market is going to go up or down, it was more about the reasons for it. I think your views here are overly optimistic, but I appreciate you giving more reasons at least other than the narrative that "we aren't going into a recession therefore the market will go higher" that I've seen/heard a lot lately. We can certainly go lower even if we don't hit a recession in the near future, that was my only point.

 
humpback said:
There are countless things that investors are worried about lately, but this wasn't really about whether the market is going to go up or down, it was more about the reasons for it. I think your views here are overly optimistic, but I appreciate you giving more reasons at least other than the narrative that "we aren't going into a recession therefore the market will go higher" that I've seen/heard a lot lately. We can certainly go lower even if we don't hit a recession in the near future, that was my only point.
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I believe the 2 key market concerns last week were worries about Fed interest raze hikes and US-China trade tensions.

Powell stated last week that the pace of future hikes is not set in stone (good news)

After G20 summit, China agreed to purchase more US goods and cut tariffs on US auto imports, US agreed to hold off on planned tariff increases for 90 days ( good news as moving in right direction)

There is clearly more fear than optimism in the market right now and once it gets back to focusing on fundamentals it should move forward again.

 
Don't Noonan said:
I like BABA.  I bought some FB whennit dropped down to $162 2 weeks ago.  

I don't see any impeachment, indictment or death to Trump in the near future.
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https://www.oddsshark.com/entertainment/donald-trump-betting-props

From Nov. 18, 2018:

Donald Trump’s odds to be impeached by the House of Representatives are closer to EVEN than they’ve ever been. Betting odds released Thursday have Trump’s odds of being impeached by the House at +120. Of course, the main reason for this odds shift is the fact that the House is now controlled by the Democratic party and the president has been acting quite erratically since the midterms. 

It’s about to get really interesting in Washington and we’ll expect these odds to be very fluid going forward. For the first two years of the Trump presidency, Democrats had essentially no power in Washington. After the midterms, the Democrats are planning their revenge on Trump, while Trump is going to Chapter 1 in his playbook: Attack, attack, attack. 

Additionally, for the first time during the Trump presidency, the odds say that he will not win the 2020 election, according to BetOnline. 
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WILL DONALD TRUMP BE IMPEACHED BY THE HOUSE DURING HIS FIRST TERM?

 Odds

Yes+120

No-160

WILL DONALD TRUMP BE ELECTED TO A 2ND TERM AS POTUS?

 Odds

Yes+150

No-170

Odds as of November 15 at BetOnline
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Back to stocks....

 
Don't Noonan said:
I like BABA.  I bought some FB whennit dropped down to $162 2 weeks ago.  

I don't see any impeachment, indictment or death to Trump in the near future.
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Seems to be some conflating of actually being impeached and removed and the house bringing impeachment proceedings in 2019. 

i would bet a lot on the latter but the former has no chance of happening next year. 

 
Capella said:
Seems to be some conflating of actually being impeached and removed and the house bringing impeachment proceedings in 2019. 

i would bet a lot on the latter but the former has no chance of happening next year. 
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Agreed.  I can definately see a scenario where House Democrats vote to impeach Trump but they won't get 60 votes in the Senate to remove him unless something big is revealed by Mueller.

 
Don't Noonan said:
Agreed.  I can definately see a scenario where House Democrats vote to impeach Trump but they won't get 60 votes in the Senate to remove him unless something big is revealed by Mueller.
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You actually need 67 to remove which makes it even less likely. And even if it gets to that point they’ll let the voters decide in 2020. I have to imagine if it got that bad the Republicans would just find another candidate. 

 
NotSmart said:
Good interesting thought... wouldn't this already be mostly priced in though?
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I would think at least initially but it seems everyone is bullish on Tesla of late and there's promising reports of this gigafactory in Nevada.  Thought maybe all of that would flow over to Panasonic.

(side note....I've had a lot of luck/success with Panasonic TVs....I recommend them)

 
Don't Noonan said:
I believe the 2 key market concerns last week were worries about Fed interest raze hikes and US-China trade tensions.

Powell stated last week that the pace of future hikes is not set in stone (good news)

After G20 summit, China agreed to purchase more US goods and cut tariffs on US auto imports, US agreed to hold off on planned tariff increases for 90 days ( good news as moving in right direction)

There is clearly more fear than optimism in the market right now and once it gets back to focusing on fundamentals it should move forward again.
Click to expand...
There is so much debt out there, I think China is masking the real issues here and if a deal is reached, it will provide the perfect selling opportunity. 

To me, this is the most important thing that everyone keeps overlooking, these charts are pretty solid in telling a story:

https://www.google.com/search?q=corporate+debt+to+gdp&source=lnms&tbm=isch&sa=X&sqi=2&ved=0ahUKEwjYpoCowZ3fAhXaF4gKHVq2AHMQ_AUIDygC&biw=1561&bih=876#imgrc=qRdZdlC-8ABR3M:

The last 10 years have been built on easy money & QE - Money is more expensive now and liquidity is being pulled from the system. 

ETA:

Following the headlines and listening to the talking heads will get a lot of people slaughtered in the coming 12-24 months, unfortunately, IMO. 

 
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As a fun exercise, I went back and read a bunch of forecasts at the start of 2008, I'd recommend everyone doing this. 

Not to predict a huge crash like that, but to understand that all of these idiots are usually wrong about a lot of things and to take almost no stock in their advice. 

The huge crash to come was so blatantly obvious, unfortunately, I was in my early-mid 20's and had no clue about any of this stuff. The point is, these guys all missed, I mean almost all of them got it wrong, and it was right there in their faces to see. If they missed that, do you think they'll catch other things less obvious?

 
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Don't Noonan said:
I believe the 2 key market concerns last week were worries about Fed interest raze hikes and US-China trade tensions.

Powell stated last week that the pace of future hikes is not set in stone (good news)

After G20 summit, China agreed to purchase more US goods and cut tariffs on US auto imports, US agreed to hold off on planned tariff increases for 90 days ( good news as moving in right direction)

There is clearly more fear than optimism in the market right now and once it gets back to focusing on fundamentals it should move forward again.
Click to expand...
Again, didn't intend on diving into the direction of the market, but you're leaving out a lot of bad news that has happened as well. In any event, I'm a pretty firm believer that the market is a lot smarter than you and I and is usually fairly priced based on current information. Sure, if the information is more positive than expected going forward we'll go higher, but the opposite is also true.

 
fantasycurse42 said:
There is so much debt out there, I think China is masking the real issues here and if a deal is reached, it will provide the perfect selling opportunity. 

To me, this is the most important thing that everyone keeps overlooking, these charts are pretty solid in telling a story:

https://www.google.com/search?q=corporate+debt+to+gdp&source=lnms&tbm=isch&sa=X&sqi=2&ved=0ahUKEwjYpoCowZ3fAhXaF4gKHVq2AHMQ_AUIDygC&biw=1561&bih=876#imgrc=qRdZdlC-8ABR3M:

The last 10 years have been built on easy money & QE - Money is more expensive now and liquidity is being pulled from the system. 

ETA:

Following the headlines and listening to the talking heads will get a lot of people slaughtered in the coming 12-24 months, unfortunately, IMO. 
Click to expand...
That chart is interesting but I’d rather see the interest rate cost at the same time. I’m not sure what it was before the 80s but the rates back then were 10-20%, meaning 1/10th of the debt nowadays was as expensive to pay as it 10x now. I can see where it’ll put pressure on stocks because the cash/earnings are going less into investments as it will tonpay things down.

Stocks have been on such a ride that things will settle regardless. If you’ve got a long time, it may be a good time to invest for 5-10 years and then hopefully catch another run up. 

 
stbugs said:
That chart is interesting but I’d rather see the interest rate cost at the same time. I’m not sure what it was before the 80s but the rates back then were 10-20%, meaning 1/10th of the debt nowadays was as expensive to pay as it 10x now. I can see where it’ll put pressure on stocks because the cash/earnings are going less into investments as it will tonpay things down.

Stocks have been on such a ride that things will settle regardless. If you’ve got a long time, it may be a good time to invest for 5-10 years and then hopefully catch another run up. 
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If you click on the chart it brings you to an article that discusses this:

In 2016, interest on the national debt was $241 billion, or nearly 2 percent of GDP. Despite a record level of debt and ongoing deficits, federal spending to cover interest on the national debt has been lower compared with recent decades. During the 1980s and 1990s, interest payments as a share of the national debt averaged 2.7 percent of GDP. Lower interest expense has been the result of lower interest rates. During the early 1980s, the 10-year Treasury yield reached over 15 percent. Interest rates were high during the early 1980s because Federal Reserve chairman Paul Volcker was pursuing a high interest rate policy in response to high inflation. After the early 1980s, interest rates began a consistent and gradual decline. Today the yield on the 10-year Treasury is closer to 2 percent. But historically high debt-to-GDP levels risk higher interest expense for the federal government.
Click to expand...
 
fantasycurse42 said:
As a fun exercise, I went back and read a bunch of forecasts at the start of 2008, I'd recommend everyone doing this. 

Not to predict a huge crash like that, but to understand that all of these idiots are usually wrong about a lot of things and to take almost no stock in their advice. 

The huge crash to come was so blatantly obvious, unfortunately, I was in my early-mid 20's and had no clue about any of this stuff. The point is, these guys all missed, I mean almost all of them got it wrong, and it was right there in their faces to see. If they missed that, do you think they'll catch other things less obvious?
Click to expand...
It was obvious in hindsight for sure.  But not many people I can recall were out selling their houses and stock portfolios in 2007 because of -what we now know in hindsight- that obvious risk.  Perhaps there is a truth to this market (call it a radical truth) that many are failing to see in the present, but will look back in hindsight and say..."of course _____ was totally obvious to see." Because the truth might not be less obvious - rather we're just not open to seeing it right in our present day face.

 
siffoin said:
It was obvious in hindsight for sure.  But not many people I can recall were out selling their houses and stock portfolios in 2007 because of -what we now know in hindsight- that obvious risk.  Perhaps there is a truth to this market (call it a radical truth) that many are failing to see in the present, but will look back in hindsight and say..."of course _____ was totally obvious to see." Because the truth might not be less obvious - rather we're just not open to seeing it right in our present day face.
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Leon Cooperman was on CNBC a week ago, I was traveling for work and in a hotel room getting ready, had it on in the background. He was on for almost 30 minutes, I mean I was in the shower, ironing clothes, etc etc and he was going on and on about all of the reasons to be bullish.

One thing I did hear that made me lol when he was going on for a half hour about all of these bullish reasons:

Sure, there is a debt crisis, but who knows when that will hit. 

That was entire commentary on debt. It’s funny how meaningless debt is to everyone. These guys throw darts like the rest of us, they just manage a lot more money.

 
I also need to find the article, and when I do I’ll post it, but issuing debt is no longer working out.

The numbers stuck with me, but I need to find the source.

The quote was:

In the 1940s, $1 of debt financed $4 of growth. Today, $1 of debt finances 40 cents of growth. 

 
Nibbled on a bit of BX today.  Seemed like a good valuation and it's bounced down near this low a couple times.  8.5% yield and a ~10 P/E for one of the best run companies out there is hopefully a good value.

 
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guru_007 said:
The stock market is forward looking. Further it is a bit cyclical, so it's not always as easy as looking at historic PE ratios and extrapolating those over the next year to try to figure out where the stock market is going.  Lastly, PE is just one metric of evaluating a stocks (or indices) performance (and by no means the best, just probably the easiest to research, although Shiller PE ratio may be even more telling).  There are many others.
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Just a note here since you mentioned Shiller PE10.  Looks like for the last number of years it has been quite distorted and should be taken with a grain of salt.  Folks have been quoting it over and over about future returns being very low thanks to this number being quite high currently.   It turns out, for this metric, if you just take AMZN out the Shiller PE (currently at 29.6) drops to 16.9 - a 43% drop.   Here is the article - it's fascinating.  Never thought that once stock could skew that number, but there it is.

16.9 is a healthy number, perhaps even a market on the underpriced side considering the levels of interest rates current. 

Note:  There is some wrangling on the math in the comments section, so perhaps not correct.  

 
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pecorino said:
I think it is a traders market. With the wild swings, I am looking to buy and sell, not invest. Maybe a year end pop happens but if it does, I’m taking profits quickly.
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Algo trading is swinging this market all over the bloody place.

 
pecorino said:
I think it is a traders market. With the wild swings, I am looking to buy and sell, not invest. Maybe a year end pop happens but if it does, I’m taking profits quickly.
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Unfortunately I believe that is what everyone (myself included) is hoping for so it probably won't happen.

 
Capella said:
[sometime on December 31st]

no biggie we’ll end the year up 
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Sucks for the stock that’s still vesting but at least that’s over the next two years (80% of it) and that was free money so to speak. So glad I sold the big block of shares I had. It’s down over $30k since I sold it at $1760-1770ish. Heck I actually made $7k on it. Dumb that I didn’t dump SQ too but a much smaller position.

 
I'm holding my self funded 401K contribution still for 2018.  Wanting to see some kind of bottom or at least hold out as long as possible.  Been too heavy in cash in recent years anyway so looking at any longer term bear trend as an opportunity to correct some of those mistakes.

 
Think the Fed will give us a rate hike and then walk back any hawkish talk tomorrow. 

While the behavior of this market is confusing, I feel it should give us a sellable rally.

 
GoBirds said:
I just don't get the rate hike here.
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Let's put this into perspective. To start, we're currently in the slowest tightening cycle the Fed has ever embarked on. Here is a historical FFR chart:

https://fred.stlouisfed.org/series/FEDFUNDS

We sat on 0 for about 6-7 years. The current FFR after this hike will be 2.5%, that's still very small and the 25 bips they're raising mean really little. 10 year is now all the way back down to 2.85%, also very low. 

Does everyone want to sit on zero or close to it forever? The economy needs to move on its own, it has spent the last decade moving on the Fed. I wouldn't mind them pushing us into a recession and letting the pain be felt for a few years. Not to be a bad guy, but to correct this mess they're sending us in. We have the data from a major economy when the central bank intervenes too much and leaves easy money policies in place for too long, the results are very bad. If anyone is unfamiliar, take a look at the Nikkei 225 and read up on Japan. 

Furthermore, if they don't hike, after everyone is expecting it, it will create a panic. The central banks across the world will be the cause for the greatest crisis we ever see in our lifetimes, and it won't be because they've been too hawkish.

 
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fantasycurse42 said:
Let's put this into perspective. To start, we're currently in the slowest tightening cycle the Fed has ever embarked on. Here is a historical FFR chart:

https://fred.stlouisfed.org/series/FEDFUNDS

We sat on 0 for about 6-7 years. The current FFR after this hike will be 2.5%, that's still very small and the 25 bips they're raising mean really little. 10 year is now all the way back down to 2.85%, also very low. 

Does everyone want to sit on zero or close to it forever? The economy needs to move on its own, it has spent the last decade moving on the Fed. I wouldn't mind them pushing us into a recession and letting the pain be felt for a few years. Not to be a bad guy, but to correct this mess they're sending us in. We have the data from a major economy when the central bank intervenes too much and leaves easy money policies in place for too long, the results are very bad. If anyone is unfamiliar, take a look at the Nikkei 225 and read up on the Japan. 

Furthermore, if they don't hike, after everyone is expecting it, it will create a panic. The central banks across the world will be the cause for the greatest crisis we ever see in our lifetimes, and it won't be because they've been too hawkish.
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I see what you are saying, just think they are so far behind no matter how hard they push it they aren't reloading enough bullets in their gun to offset the next recession so maybe ease up on pushing us into it. I've also sat on some cash though and if they do push us into recession like you say we could see some of the first buying opportunities in stocks and real estate we've seen in awhile. 

 
GoBirds said:
I see what you are saying, just think they are so far behind no matter how hard they push it they aren't reloading enough bullets in their gun to offset the next recession so maybe ease up on pushing us into it. I've also sat on some cash though and if they do push us into recession like you say we could see some of the first buying opportunities in stocks and real estate we've seen in awhile. 
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Yellen left us on zero for too long. Could've moved at 2 hikes a year for the last 4-5 years. 

Sure, the market gains wouldn't have been as much, but the future would be brighter. 

I say the same thing over and over, but we constantly mortgage our future for the present, it really pisses me off. 

 
fantasycurse42 said:
Yellen left us on zero for too long. Could've moved at 2 hikes a year for the last 4-5 years. 

Sure, the market gains wouldn't have been as much, but the future would be brighter. 

I say the same thing over and over, but we constantly mortgage our future for the present, it really pisses me off. 
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Remember the greek bailout a few years back?  Imagine that with the US FFR at 2.5%.  

 
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