Personal Finance Topics / Macroeconomic Trends and Risks
No. of Recommendations: 26
Well, I see some sand has been thrown into the gears of international trade. Living in Europe as I do, it's the transatlantic trade routes that are of particular interest.
My main wonderment is whether anyone at the US government knows that the US has no trade deficit with Europe? The trade has been very closed to balanced for many years.
A much more subtle question is whether anyone there knows that bilateral capital account surpluses (trade deficits) are meaningless, as it's only the aggregate balance of a country that matters? i.e., the sum of all positive and negative accounts across all trading partners.
Imagine the US sells machine tools and licenses for a chip design to Taiwan (in return for money), they make chips and send them to China (in return for money), China assembles an electronic widget and sends it to the US (in return for money). It's entirely possible for the net trade sum for all three countries to be balanced (no country has any current account surplus or deficit, no trade surplus or deficit), but all three bilateral relationships to be "unbalanced". There is nothing wrong or unsustainable about this, and in fact all three countries are probably much better off for the trade having taken place. If one of those three insists on balancing its bilateral trade with one or both of the other two, all three are poorer.
Some people think a trade deficit of $1 is a loss of $1 and simply can't be persuaded otherwise, forgetting that you do get stuff in return (duh). And usually more than the amount of the same stuff you'd get for $1 bought from somewhere else or made locally, so it's usually a net value gain for the importing country. That isn't to say that there aren't other smaller effects both benign and unfortunate, but it certainly isn't a loss of $1 for the importing country.
Jim
No. of Recommendations: 0
The game is afoot.
I suppose it will take more than one wicked down day to start triggering your major bottom detector?
No. of Recommendations: 3
I suppose it will take more than one wicked down day to start triggering your major bottom detector?
I assume so.
It is looking for absolute capitulation, which takes a while, and I don't think we're anywhere near that yet. Valuations are mostly still very lofty and there seems to be an army of buy-on-every-dip types still in force. (that's my anecdotal appreciation, I haven't actually checked the signal today)
Admittedly I am one such person, I did buy something today. But oddly enough it was up today.
Jim
No. of Recommendations: 27
I suppose it will take more than one wicked down day to start triggering your major bottom detector?
FYI, it looks like the "minor bottom" detector will trigger today. It's pretty common by comparison. One month forward results are good on average.
As with the major bottom signal, it can trigger several days in a row, so it's best not to act until the first day that it does NOT trigger.
The "major bottom" signal won't trigger today, but it's quite a bit closer to the line than I expected.
There hasn't been a "major bottom" signal since 2022-09-29. That cluster formed a very good signal, within a couple of points of the lowest close a few days later.
SPY total return CAGR 18.1% in the 2.5 years since then, even after the recent dip. Would have been 24%/yr if you'd presciently sold at the recent top : )
Jim
No. of Recommendations: 1
agreed!
the mkt is not responding anything like lasting high global tariffs.
more in line with an emotional tantrum with historical precedent of cancellations\delays\exemptions\etc...
No. of Recommendations: 1
It is looking for absolute capitulation
Ah, so it's looking for a day when the market AND BERKSHIRE is 5% down. :)
No. of Recommendations: 3
It is looking for absolute capitulation
...
Ah, so it's looking for a day when the market AND BERKSHIRE is 5% down. :)
Probably!
It's looking to describe, numerically, that moment when the last hodler calls his/her broker to say "I don't care what it's worth, I don't care what the price is, I just can't take it any more--sell everything!"
Yesterday (April 3) there were just too many things that went up to be consistent with that feeling. Too many people were switching to defensive stocks rather than out of stock entirely.
Hmmmm...It should be mentioned that at the moment Berkshire is down 3.5% in pre-market as I type. The day is yet young. So is the year.
Jim
No. of Recommendations: 10
Ah, so it's looking for a day when the market AND BERKSHIRE is 5% down. :)
Berkshire down 6.12% so far today...
My "minor bottom" signal is definitely present today, but no "major bottom" in sight. It would take at least another two days this bad, at a guess.
I still can't quite figure out why Kroger hit a fresh all time high today.
Jim
No. of Recommendations: 0
Just after 1pm Chicago time: DOW -1400 to -1500.
No. of Recommendations: 4
My main wonderment is
Never forget: The current administration is a bunch of business AND economic morons. They self-define "winning" and "losing". So they can change the definitions as their plans fail over and over again. Fact, not opinion. They are ALL losers. Everyone knows it but them. They are too self-absorbed in their own reflections from their mirrors, not the real world. Ignore them as much as possible. Treat stupid AS stupid.
No. of Recommendations: 3
Interesting recent writeups in the WSJ aligned with Jim's exiting the US market due to escalating risk of... well, crazy.
Bill Ackman, the billionaire hedge-fund manager behind Pershing Square, called for a 90-day pause in the tariffs to negotiate with other countries, warning that the alternative was “a self-induced, economic nuclear winter.”
“We are in the process of destroying confidence in our country as a trading partner, as a place to do business, and as a market to invest capital,” Ackman wrote in a social-media post on X.
Across Wall Street and in Washington a growing number, including those who support tariffs in theory, were saying that the current plan is misguided and will cause irreparable damage. Some big bank executives were feeling shut out and lectured at, some of them said.
