Recession canceled? U.S. stock market 'frothy' after S&P 500's strong first half

Oh yeah, but the market's been predicting the fed will be "forced" to drop interest rates for about a year now, base solely on the taper tantrum from several years ago. Hasn't happened yet.

What the market seems to be conveniently ignoring is that a world where the Fed allows itself to be "forced" into lowering rates to near-zero again is a world where the Fed largely ceases to be relevant. So the Fed is, IMO, going to keep rates at least where they are if not higher if for no other reason than self-preservation. They'll have to see complete market capitulation before they'll consider lowering again.

Besides, one of their mandates is price stability. If they lower rates again, guess what happens? More inflation, and then they have to raise rates again because Congress certainly isn't capable of doing anything about it.

Employment numbers are skewed because of people who wouldn't normally work working more to make ends meet and debt keeping on rising and inflation slowing but still unsustainable.

Under the hood these numbers are not good.

Unemployment is a lagging indicator for a recession, and credit card debt is also at an all time high.

Sure things could stay positive for a while longer, but there's a lot of headwinds on the horizon, more than I've seen in a while, and these headwinds are tangible, concrete, structural things we can put some numbers to, not just vague philosophical notions of "it can't go up forever" and "everything's overvalued". How big an impact it all makes and on what timescale we'll have to just wait and see, but I'm not leveraging up in this environment.

Europe: Germany - is already in the recession, but DAX is climbing on par with SP500 (or anything what climbs). Obviously, not a good indicator of a rationality in the market, esp. when greed indicators are at the top. Even Lagarde warned about swift market corrections, but market participants apparently think it all is a bluffing =)

> You conviniently left out all the good parts of the economy: unemployment is at all-time lows, inflation is down (but still not at 2%), consumer spending is at an all-time high.

On the ground here we were at 3 typical incomes to make basic bills in Jan 2022. As of this month we're solidly at 4 incomes to meet those same bills. Most of that jump occurred this year.

higher interest rates are preferable to uncertainty.

Higher interest rates can be planned for already has a location in the tax code.

I’m staring to see that the recent recovery funding was a cash infusion to mask the rate increase from the 2008 recovery.

It is a great opportunity to reset expectations.

Additionally, you can say what you want about chattel slavery but it rendered a very strong employment rate.

is consumer spending at all-time high adjusted for inflation?

atmosphere and oceans pretty much shot to shit, we are so doomed

> You conviniently left out all the good parts of the economy: unemployment is at all-time lows, inflation is down (but still not at 2%), consumer spending is at an all-time high.

Ah yes, the fruits of Bidenomics!

Real wages are stagnant so everyone has to pick up additional work to deal with inflation. In a backdrop of inflation, these are essentialy a drop in wages: https://www.bls.gov/news.release/pdf/realer.pdf

Inflation is down: sure, from a face-ripping to a merely painful number. More importantly, it took several revisions to the CPI calculation and the lowest SPR levels in decades to make it happen. Also conveniently ignored, food CPI is still at a crushing 6.7% annual rate. If you remove food and energy, CPI inflation is at 5.3%. See: https://www.bls.gov/cpi/

Consumer spending is all-time high: indeed. Sky-high! It becomes quite nefarious when you think about the above: inflation of very important things is still high, but wages are not keeping up. How is the American consumer trying to stay afloat? Household debt. That is credit cards and other forms of personal debt has hit an all time high: https://www.newyorkfed.org/microeconomics/hhdc

I understand that Biden is trying to paint this as a success, but it's just cherry-picking statistics that hide the disaster the Democrats have created. It's like the Weimar Republic celebrating that the stock market is at all time high and unemployment is 0%.

It doesn’t need to refinance its debt. It pays what is necessary in interest payments.

Perhaps a change in employment statistics? If a large cohort retires in a narrow window of time then numbers may spike until they all age out of the usual range.

Good call out. Edit - FWIW, energy sector stocks are also down YTD (certainly correlated with lower prices of an inelastic product).

I also realized the linked sourced from Coatue hasn’t been on HN and is a good source for independent discussion like this. Submitted: https://news.ycombinator.com/item?id=36565261

it’s usually not a good thing cuz it’s indicative of demand being down which usually means the economy is weak

> crude oil is a commodity, and it going down is a good thing

Unless you happen to believe that climate change is real, and market-based pressure is useful in its mitigation.

I didn't say it will reverse quickly, I said it can reverse quickly. There is a difference.

The yield curve inversion has predicted the last 9 out of the 5 recessions.

Could it also be that the two-year yield is higher (than the 10-year yield) because people expect the fed to lower the FFR after a couple of years after inflation has reached their target?

That’s actually a good point. I think the covid era is unique though because the “labor shortage” still hasn’t been worked through. A lot of people straight up died, retired early, became shutins, etc. and I’m very certain some sectors have not recovered. I think the recent market elation around AI is basically a last ditch hope/pray effort by Wall Street/C suite execs that something will magically show up and fill in the gaps. I see it at work and it’s cringe, they’re extremely reluctant to hire for desperately needed roles and are apparently hoping that AI will somehow show up and fix all of our problems.

If you invest in Vanguard funds, you are a Vanguard shareholder.

Don't discount bonds, foreign stock, and commodities. Diversified portfolio including bonds is closest thing known to a free lunch.

FWIW it’s only money I’m willing to part with anyway.

Some people buy video games, some people fancy car hobbies, I like buying stocks.

Short term bonds are your friend.