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Anyone prepping for the next financial crisis?

By Peter P following x   2017 Dec 19, 7:02pm 7,173 views   51 comments   watch   nsfw   quote     share    


#politics #collapse

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12   Peter P   ignore (0)   2017 Dec 19, 8:16pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

mell says
Only if one of the three things happen

1) A massive crypto-crash
2) Continued fast rising rates
3) Massive layoffs esp. in tech / bubble sectors

Currently no signs, though rates started rising.


All can happen at the same time, together with high inflation.
13   anonymous   ignore (null)   2017 Dec 19, 8:44pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

I am prepping for either inflation or liquidity crisis.
Yellen said she had made the system so robust that she will NOT see another crisis in her life time. That to me means either inflation (wage and CPI, asset has done inflation) is coming or liquidity crisis is coming. Since Trump wants inflation, I will bet 50% inflation and 25% liquidity crisis (within 3 years) and 25% status quo for another 3 years if everything went right.
14   anonymous   ignore (null)   2017 Dec 19, 8:45pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Well all you can do is be leveraged as much as you can in real estate bought at the last low and then minimize any other risks which means protect your savings in lowest risk instruments that return next to nothing.
15   Peter P   ignore (0)   2017 Dec 19, 8:48pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

anon_17263 says
I am prepping for either inflation or liquidity crisis.


Even hyperinflation is possible. The ask-less market will definitely have liquidity problems.
16   mell   ignore (2)   2017 Dec 19, 8:50pm   ↑ like (0)   ↓ dislike (1)   quote   flag        

SRS which had been beaten down eternally finally today made a bigger move up as rates spiked. If and only if rates continue to rise housing prices will start falling.
17   Strategist   ignore (2)   2017 Dec 19, 8:52pm   ↑ like (0)   ↓ dislike (1)   quote   flag        

anon_17263 says
I am prepping for either inflation or liquidity crisis.


So how are you prepping for inflation or a liquidity crisis?
18   Strategist   ignore (2)   2017 Dec 19, 8:55pm   ↑ like (0)   ↓ dislike (1)   quote   flag        

Peter P says
Strategist says
Yes, there is a difference. What Wall Street perceives, is where stocks go. Where stocks go, is where the economy goes. Therefore what Wall Street perceives is what matters.
Wall Street backs the R Team by default.


Don't get me wrong, I am fine with Trump.

It feels as if the market is just looking for an excuse to creep up. The rally looks peculiar.


So how are prepping for the next financial crisis as you put it?
19   Patrick   ignore (1)   2017 Dec 19, 9:01pm   ↑ like (1)   ↓ dislike (1)   quote   flag        

Peter P says
We are now in an Everything Bubble orders of magnitude larger than the previous housing bubble.


Tell me more. Stocks are frothy for sure, but even so, the p/e's are nothing like what they were in the dot-com bubble.
20   Peter P   ignore (0)   2017 Dec 19, 9:07pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Patrick says
Tell me more. Stocks are frothy for sure, but even so, the p/e's are nothing like what they were in the dot-com bubble.


It does not feel like a bubble because there is no volatility (as opposed to Bitcoin).

Also, the cross-sectional behavior is strange. Most of the gains come from a few stocks.
21   Rew   ignore (0)   2017 Dec 19, 9:44pm   ↑ like (0)   ↓ dislike (1)   quote   flag        

Peter P says
It does not feel like a bubble


The only thing I can think of is ETFs and managed stock fund packages. Also, these are all closely linked to 401Ks and other retirement stock investment vehicles. That's the only thing I randomly hazard might be 'bubbly'.

I think you are right in that this is just a huge imbalance, but not real pinpoint bubble.

We are going to burp.
22   Peter P   ignore (0)   2017 Dec 19, 10:02pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

Rew says
I think you are right in that this is just a huge imbalance, but not real pinpoint bubble.


This can be more dangerous than just an equities bubble because so many things are linked. For example, risk parity coupled with short volatility. The gearing effect cannot be underestimated.

The whole world is short gamma. If something gets tripped everything may go the other way.
23   justme   ignore (0)   2017 Dec 19, 10:04pm   ↑ like (2)   ↓ dislike (0)   quote   flag        

Patrick says
Tell me more. Stocks are frothy for sure, but even so, the p/e's are nothing like what they were in the dot-com bubble.


Whoa, Patrick. I have a FEW things to say about that statement:

1. P/E being not as as bad as the peak of the dot-com bubble is hardly reassuring.

2. Corporate debt has ballooned from 3.4T to 6.1T from 2008 to 2017, as can be seen here https://fred.stlouisfed.org/series/NCBDBIQ027S

3. That increase in corporate debt has largely been used to buy back stock so as to make P/E look smaller and thereby inflating the stock price. All that non-productive corporate debt will cause big trouble.

4. SP500 weighted earnings have barely recovered to 2007-2008 pre-crisis levels, but the stock prices have ballooned, the earnings can be seen here, http://www.multpl.com/s-p-500-earnings/

5. Nevertheless SP500 has risen from ~1500 pre-crisis to 2700 today, as can be seen here http://www.multpl.com/s-p-500-historical-prices (beware the log scale)

6. Crazy valuations of FANG and FANTA stocks. Highlights: Amazon PE of 303 and Tesla loosing $8.66/share the last 12 months. Bonus: Amazon non-GAAP free cash flow accouting blowing up in their face.

7. QE unwind is in full swing since October 2017.

8. One word: BITCOIN

9. Housing bubbles in Australia, Canada and Sweden under severe pressure

My god man, the everything-bubble (bonds, real estate/housing, stocks, cryptocurrency, what-have-you) is wildly inflated, and 2018 looks like it will be a VERY dangerous year.

It is not exactly clear what will start the whole house of cards tumbling down. Could be some SF unicorn startup failing (Uber?), could be Tesla not being able to raise more debt, could be Facebook once advertisers figure out that nobody with purchasing power really uses FB anymore (that's my subjective impression), could be Netflix succumbing to Net Non-neutrality, could be Amazon AWS being out-competed by Google Cloud (they now have their own new building on HW237 near Moffett Field) and MSFT Azure, could be collateral damage from Bitcoin and crypto-currency meltdown. Could be oil price shock from a civil war in Saudia Arabia. Could be China succumbing to debt. Could be US Healthcare industry succumbing to a repeal of Obamacare. There is a whole flock of black swans out there, paddling furiously to avoid getting dragged over the edge of the waterfall.
24   HEYYOU   ignore (31)   2017 Dec 19, 11:17pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

Black Swan
Having all the info & incapable of seeing the consequences until it's too late?
26   FNWGMOBDVZXDNW   ignore (2)   2017 Dec 20, 6:02am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I have been more conservative than normal for me this past year. The run up in stock prices before the tax bill makes sense to me. It seems to me that the P/E ratios need to be adjusted to a post-tax earnings ratio.
27   bob2356   ignore (4)   2017 Dec 20, 6:26am   ↑ like (1)   ↓ dislike (0)   quote   flag        

justme says
1. P/E being not as as bad as the peak of the dot-com bubble is hardly reassuring.

2. Corporate debt has ballooned from 3.4T to 6.1T from 2008 to 2017, as can be seen here https://fred.stlouisfed.org/series/NCBDBIQ027S

3. That increase in corporate debt has largely been used to buy back stock so as to make P/E look smaller and thereby inflating the stock price. All that non-productive corporate debt will cause big trouble.

4. SP500 weighted earnings have barely recovered to 2007-2008 pre-crisis levels, but the stock prices have ballooned, the earnings can be seen here, http://www.multpl.com/s-p-500-earnings/

5. Nevertheless SP500 has risen from ~1500 pre-crisis to 2700 today, as can be seen here http://www.multpl.com/s-p-500-historical-prices (beware the log scale)

6. Crazy ...


What do you think the tax cut was enacted for? To kick the can down the road and pump up the economy going into the 2020 elections. Watch the tax cut money drive the equities and economy into froth hyperdrive. It's already started and the bill's not even signed

What goes up always comes down. Gravity works.
28   anonymous   ignore (null)   2017 Dec 20, 7:04am   ↑ like (2)   ↓ dislike (0)   quote   flag        

Watch out for a melt-up instead of a melt-down.


This has been my angle. It’s a different mindset than a decade ago, where you had to be adverse to taking on debt. So I’m levered and diversified, but taking gains and using them to pay down debt. I’m taking risks and being greedy, while remaining cautious. It is different this time
29   Goran_K   ignore (3)   2017 Dec 20, 7:11am   ↑ like (3)   ↓ dislike (2)   quote   flag        

I didn’t even notice the 2007 meltdown. I’m not overly leveraged on real estate, I’m up 41% in the stock market since Trump took office, and my biggest clients are on 5 year contracts.

So I’m good for a while.
30   anonymous   ignore (null)   2017 Dec 20, 7:19am   ↑ like (2)   ↓ dislike (0)   quote   flag        

I'm richer than I have ever been, and bitches have never wanted my junk more than ever. Go Trump and MAGA!
31   JZ   ignore (0)   2017 Dec 20, 7:34am   ↑ like (1)   ↓ dislike (0)   quote   flag        

The FED has hit one thing right. If things happen slowly, nobody will notice. The FED has tightened, and i hear nobody mentioning/noticing it. All attention is on BTC and Trump. Inflation jawboning and rate rise is in the next 3 years. Not sure where stawks will go at this level of valuation. Bonds are going to have issues, and I am NOT sure how the US treasury will sell with even more deficit after TAX cut together with rate rise. My friend answer is war will happen so that the world will have no other stuff to buy other than treasuries. I am not sure because if war happens, why would anyone wants to lend money to enemies? I am 75% cash and 25% on commodities. I am okay to miss all the gain at this artificial level. I am in a bunker to defend the risk.
32   anonymous   ignore (null)   2017 Dec 20, 7:35am   ↑ like (2)   ↓ dislike (0)   quote   flag        

I'm prepping for disaster by paying off debt. Made some $ off cryptocurrency (I should have held onto it) and got rid of credit cards, car payments, etc. Now its just a mortgage and that will be gone in 2 years.
33   Strategist   ignore (2)   2017 Dec 20, 8:36am   ↑ like (0)   ↓ dislike (1)   quote   flag        

bob2356 says

What do you think the tax cut was enacted for? To kick the can down the road and pump up the economy going into the 2020 elections.

And what can would that be?

bob2356 says
Watch the tax cut money drive the equities and economy into froth hyperdrive. It's already started and the bill's not even signed

What's wrong with a strong economy and stocks? It's the goal of every government. Stop complaining.
34   justme   ignore (0)   2017 Dec 20, 8:37am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I was debating with myself yesterday whether I should mention the Germany Steinhoff situation as another black swan. I think I will. This particular swan already went over the waterfall.

https://wolfstreet.com/2017/12/19/margin-debt-backed-by-steinhoff-shares-hits-bofa-citi-hsbc-goldman-bnp/
35   Quigley   ignore (0)   2017 Dec 20, 8:54am   ↑ like (2)   ↓ dislike (1)   quote   flag        

Peter P says
Even hyperinflation is possible


Have you considered that in the current economic climate, hyperinflation might be exactly the thing we need to escape the coming debt crisis? Bankers hate it, and interest rates will necessarily rise, but it seems to me that the last hyperinflation was the biggest giveaway to the middle classes of any in the 20th century.
When money loses 3/4 it’s value in ten years, a lot of debt vehicles lose their grip on the people.
36   HonkpilledMaster   ignore (5)   2017 Dec 20, 9:03am   ↑ like (2)   ↓ dislike (1)   quote   flag        

I don't think we even need hyperinflation. Just half a decade of 7-10% inflation would be an amazing debt destroyer. It would also smack home prices down, since people buy the payment not to sale price.

Although they've had an unprecedented ride, I have a feeling banks feel entitled to permanently low inflation. Be nice to shake it up.

Inflation returning to normal would also confirm widespread growth for the many, as well.
37   Strategist   ignore (2)   2017 Dec 20, 9:32am   ↑ like (1)   ↓ dislike (1)   quote   flag        

just any guy says
I'm richer than I have ever been, and bitches have never wanted my junk more than ever. Go Trump and MAGA!


Wine Women and Wealth. What more could a man want?
38   lostand confused   ignore (0)   2017 Dec 20, 9:35am   ↑ like (1)   ↓ dislike (1)   quote   flag        

Unless something catastrophic happens, I don't see hyperinfaltion. In the free trade model,w e export inflation. If you can buy a Lenovo laptop for 100 bucks, who is going to buy an American made one for 800 bucks?
if you can hire a chinese worker , no rules, work 7 days a week, stays in dorm attached to the fatcory and only goes home twice a year-why would you hire an American worker with all rules, regulations, unemployment, lawsuits etc etc. Now if we slap an import tax, yes, but otherwise how is an unskilled worker's salary increase in the current environment.
39   Strategist   ignore (2)   2017 Dec 20, 9:51am   ↑ like (0)   ↓ dislike (1)   quote   flag        

lostand confused says
but otherwise how is an unskilled worker's salary increase in the current environment.


Slave labor and technology are the two main reasons why the wages for unskilled labor lags. Only government laws like minimum wages can reverse that.
40   mell   ignore (2)   2017 Dec 20, 10:59am   ↑ like (2)   ↓ dislike (0)   quote   flag        

The hotter the girl, the more expensive. Basic economic function.
41   HEYYOU   ignore (31)   2017 Dec 20, 11:00am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Strategist says
Slave labor and technology are the two main reasons why the wages for unskilled labor lags. Only government laws like minimum wages can reverse that.


Damn it! You're making me think!

Any of the "unskilled" can run & be elected to CONgress.
They are making more than minimum wage.
How many D & R voters are making Congressional salaries?
What's the total hours congressmen actually spend on the job for taxpayers &
what does that work out to be per hour?
What's the total benefit of non-salary items (insider trading-they know shit the voters don't)?
.....
'As the founding fathers intended'-Thanks Mr. Adorable!

"During the Constitutional Convention, Benjamin Franklin considered proposing that elected government officials not be paid for their service. Other Founding Fathers, however, decided otherwise."

Senate Leadership

Majority Party Leader - $193,400
Minority Party Leader - $193,400
House Leadership

Speaker of the House - $223,500
Majority Leader - $193,400
Minority Leader - $193,400

https://www.thoughtco.com/salaries-and-benefits-of-congress-members-3322282
American voters be so smyrt.
42   NuttBoxer   ignore (2)   2017 Dec 20, 11:26am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Haven't really prepped. Just more discerning about taking on debt, living within our means, investing in something with value not tied to fiat currency, and long terms plans to move to the South Pacific. The last I'd probably due regardless of financial collapse though.
43   bob2356   ignore (4)   2017 Dec 20, 1:21pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

Strategist says
bob2356 says
Watch the tax cut money drive the equities and economy into froth hyperdrive. It's already started and the bill's not even signed

What's wrong with a strong economy and stocks? It's the goal of every government. Stop complaining.


Worked great 2002-2006.
44   Quigley   ignore (0)   2017 Dec 20, 3:00pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

mell says
The hotter the girl, the more expensive. Basic economic function.


My wife’s hot and she contributes a nice income. Not sure if she’s expensive, but I’d definitely say she’s a bit of a unicorn. Most hot girls don’t get and education or if they do, they don’t study anything useful.
45   anonymous   ignore (null)   2017 Dec 20, 3:48pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Quigley says
mell says
The hotter the girl, the more expensive. Basic economic function.


My wife’s hot and she contributes a nice income.


Then what's wrong with her? Why did she merry you?
46   Patrick   ignore (1)   2017 Dec 20, 9:03pm   ↑ like (0)   ↓ dislike (1)   quote   flag        

Quigley says
it seems to me that the last hyperinflation was the biggest giveaway to the middle classes of any in the 20th century.
When money loses 3/4 it’s value in ten years, a lot of debt vehicles lose their grip on the people.


Yes, as long as salaries surge to keep pace, then fixed mortgage debt really falls in value with inflation.

I feel fairly well set up for inflation since stocks generally ride out inflation pretty well. Prices for goods rise, so corporate earnings rise, so stocks rise.
47   Patrick   ignore (1)   2017 Dec 20, 9:04pm   ↑ like (2)   ↓ dislike (1)   quote   flag        

lostand confused says
if you can hire a chinese worker , no rules, work 7 days a week, stays in dorm attached to the fatcory and only goes home twice a year-why would you hire an American worker with all rules, regulations, unemployment, lawsuits etc etc.


This is why globalization is a disaster for ordinary working people.
48   Peter P   ignore (0)   2017 Dec 21, 12:54pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Patrick says
This is why globalization is a disaster for ordinary working people.


But they are all globalists, just different flavors.
49   Peter P   ignore (0)   2017 Dec 21, 12:56pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Quigley says
Have you considered that in the current economic climate, hyperinflation might be exactly the thing we need to escape the coming debt crisis?


Hyperinflation is usually caused by a complete loss of faith in the currency. It will be tough for everyone without productive real assets.
50   Patrick   ignore (1)   2017 Dec 21, 7:42pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Peter P says
Patrick says
This is why globalization is a disaster for ordinary working people.


But they are all globalists, just different flavors.


What do you mean? That working people are also globalists because they benefit from cheap foreign consumer goods which destroy their own jobs?
51   Peter P   ignore (0)   2017 Dec 21, 10:09pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

Patrick says
What do you mean? That working people are also globalists because they benefit from cheap foreign consumer goods which destroy their own jobs?


Both candidates were globalists, just different kind.

That said, I am quite happy that Trump won.

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