Australian (ASX) Stock Market Forum

Inflation

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Pfft the ISM figures have been crap for a while.

Market now pricing in emergency fed cuts LMAO. Meanwhile Fedwatch has a 50bps cut at 81% chance at the September meeting.

And in the middle of all of this, NVDA announced that they're delaying the release of their next AI chip due to design faults lmaaooooooo
 
waterbottle said:
Pfft the ISM figures have been crap for a while.

Market now pricing in emergency fed cuts LMAO. Meanwhile Fedwatch has a 50bps cut at 81% chance at the September meeting.

And in the middle of all of this, NVDA announced that they're delaying the release of their next AI chip due to design faults lmaaooooooo
Click to expand...
more likely China and Russia restricting the sale of vital commodities needed in the chip manufacture , but NVDA has made some less than impressive chips ( but their record is still way better then Intel's )
 
I predicted this, but the thread is so big can't be bothered looking for it.
The effect of higher interest rates lags by at least 6 months, probably more. In the USA more so.
This means that by the Fed usually cuts too late. And the effect of the cut is also 6 months. So USA recession here we come.

It didn't help that certain political elements were threatening the Fed members to not cut or they will lose their jobs.
 
Knobby22 said:
I predicted this, but the thread is so big can't be bothered looking for it.
The effect of higher interest rates lags by at least 6 months, probably more. In the USA more so.
This means that by the Fed usually cuts too late. And the effect of the cut is also 6 months. So USA recession here we come.

It didn't help that certain political elements were threatening the Fed members to not cut or they will lose their jobs.
Click to expand...
Imho, we are well past: the market is falling as the economy is tanking because rates have been kept too high
But yes, let's blame it on Trump....
 
qldfrog said:
Imho, we are well past: the market is falling as the economy is tanking because rates have been kept too high
But yes, let's blame it on Trump....
Click to expand...

I'm not seeing much mention of inflation in the news today. Fear of recession caused yesterday's blip in the market and is today's news.

The question is, what is causing the fear?

the answer has many factors.
  • Trump vs Harris and the economy they will deliver.
  • Harris possibly winning the next election.
  • Cheap money and Japan.
  • China's dominance of materials and cheap manufacturing that no country can match.
  • Poor productivity and job markets in every major economy.
Inflation is still a concern, but the money markets are now looking at the big R word, recession.

The dramatic fall on Wall Street which smashed shares around the globe was triggered by the same force that historically precipitates most crashes: the source of the money that was fuelling the boom dries up.​
​
Before President Biden left the 2024 presidential race, Donald Trump look certain to become president. Now there is no certainty and indeed Kamala Harris is the front runner. Trump planned a massive US boom based on low cost energy; tariffs mainly on Chinese goods and much lower taxes. The tariffs, plus Chinese car import restrictions, were aimed at creating massive investment in US manufacturing. Global trade would be severely impacted so the US sucked in investors. Harris is a left winger who will not be kind to equity markets and is likely to raise taxes and pursue much higher priced “green” energy policies. That’s not what the markets had priced in.​
​
The high US interest rates began to do their job and benchmark consumer groups like McDonald’s, Coca-Cola and Pepsi reported a sales weakening.​
​
The US job market eased faster than expected. Markets had been expecting good times with high profit forecasts so became nervous. In my view on their own those signals were not strong enough to create a recession but they would create a “weakness stage” that multiplied the fears of left-wing Harris policies.​
President Xi Jinping is directing investment in manufacturing to satisfying the global market for renewable power generation, including windmill blades and solar panels. There is now a global excess of supply. It’s not goods news for China.​
​
Worse still, the green revolution in areas like Europe is slowing. Many European countries discovered that renewables like wind and solar are unreliable and the facilities have a limited life. Many are not being replaced. The expected biofuels industry boom was fallen over. The carbon reduction targets are being quietly put back.​

Loading...

www.theaustralian.com.au
 
JohnDe said:
I'm not seeing much mention of inflation in the news today. Fear of recession caused yesterday's blip in the market and is today's news.

The question is, what is causing the fear?

the answer has many factors.
  • Trump vs Harris and the economy they will deliver.
  • Harris possibly winning the next election.
  • Cheap money and Japan.
  • China's dominance of materials and cheap manufacturing that no country can match.
  • Poor productivity and job markets in every major economy.
Inflation is still a concern, but the money markets are now looking at the big R word, recession.

The dramatic fall on Wall Street which smashed shares around the globe was triggered by the same force that historically precipitates most crashes: the source of the money that was fuelling the boom dries up.​
​
Before President Biden left the 2024 presidential race, Donald Trump look certain to become president. Now there is no certainty and indeed Kamala Harris is the front runner. Trump planned a massive US boom based on low cost energy; tariffs mainly on Chinese goods and much lower taxes. The tariffs, plus Chinese car import restrictions, were aimed at creating massive investment in US manufacturing. Global trade would be severely impacted so the US sucked in investors. Harris is a left winger who will not be kind to equity markets and is likely to raise taxes and pursue much higher priced “green” energy policies. That’s not what the markets had priced in.​
​
The high US interest rates began to do their job and benchmark consumer groups like McDonald’s, Coca-Cola and Pepsi reported a sales weakening.​
​
The US job market eased faster than expected. Markets had been expecting good times with high profit forecasts so became nervous. In my view on their own those signals were not strong enough to create a recession but they would create a “weakness stage” that multiplied the fears of left-wing Harris policies.​
President Xi Jinping is directing investment in manufacturing to satisfying the global market for renewable power generation, including windmill blades and solar panels. There is now a global excess of supply. It’s not goods news for China.​
​
Worse still, the green revolution in areas like Europe is slowing. Many European countries discovered that renewables like wind and solar are unreliable and the facilities have a limited life. Many are not being replaced. The expected biofuels industry boom was fallen over. The carbon reduction targets are being quietly put back.​

Loading...

www.theaustralian.com.au
Click to expand...

None of this is new information though.

Markets are always held up on some pedestal as being able to price in events, until we have days like yesterday.
 
waterbottle said:
None of this is new information though.

Markets are always held up on some pedestal as being able to price in events, until we have days like yesterday.
Click to expand...
It's just the froth coming off the "ai" exuberance IMO.

If the climb was absurd (and it was) then it's only reasonable to expect the drop from the peak to be just as (or far more) ridiculous.
 
waterbottle said:
None of this is new information though.

Markets are always held up on some pedestal as being able to price in events, until we have days like yesterday.
Click to expand...

Nothing is new, but nothing is ever the same.

Most recessions get called when the economy is recovering from it, because everyone is looking at the wrong thing. Take this thread for example, inflation is the flavour. We are looking at all the causes and affects of inflation, while business close, people go broke, taxes are reducing consumer spending.

Inflation is a problem, but the cause has changed over the past two years and recession is the risk.

History is only a guide, not a map.

The majority of the controllers of markets and economies have not experienced the big corrections of the past, nor have they any certainty on who will win the next presidential election, or if and when a recession will start.

What you say is true for most, "none of this is new information". But like a lottery, no one knows the numbers, they are only guessing.
 
The real question is whether the slow melt now begins. It's not just tech stocks that were sold off something shocking, though they were sold off more.

It's when everything else starts to get sold off in some way that is not just getting caught up in the tech selloff panic that we need to be worried.

So, that's what we now keep an eye on.
 
JohnDe said:
Most recessions get called when the economy is recovering from it, because everyone is looking at the wrong thing.
Click to expand...
Also comes down to perspective and what matters to the individual.

Eg an unemployed person who wants a job has a very different perspective to that of a share trader as to when the recovery is underway.

What matters to them is a different thing so they'll perceive the timing to be very different. :2twocents
 

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