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Dow Jones Stock Market 2018

Discussions about the economic and financial ramifications of PEAK OIL

Re: Dow Jones Stock Market 2018

Unread postby Tanada » Wed 21 Feb 2018, 21:40:40

9/11 theories moved to the 9/11 thread, please stick to the Dow Jones in this thread.

9/11
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: Dow Jones Stock Market 2018

Unread postby GoghGoner » Sat 03 Mar 2018, 07:26:31

Read some articles saying that volatility was returning to lower levels last week. They were wrong. March is starting off with quite a bit of volatility.

The Dow Has "Plunged" 1,100 Points in 3 Days: Here's Who's Lost Money

As with the Dow's dive at the beginning of February, it doesn't look as if a single catalyst was at play, but rather a confluence of factors. For instance, President Trump's announcement on March 1 that he'd be implementing tariffs of 25% on steel imports and 10% on aluminum imports sent shockwaves throughout Wall Street. There's clear concern that such a move could spur retaliatory tariffs from U.S. allies.

Meanwhile, economic growth figures continue to suggest that first-quarter gross domestic product (GDP) could be the strongest we've seen in many years. Though strong growth is generally a good thing, it could speed up the process by which the Federal Reserve tightens monetary policy. That's a fancy way of saying that interest rates could rise more quickly than expected, which could slow or halt housing expansion, curb lending, and hike credit delinquencies, among other things.
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Re: Dow Jones Stock Market 2018

Unread postby Outcast_Searcher » Sat 03 Mar 2018, 12:58:50

GoghGoner wrote:Read some articles saying that volatility was returning to lower levels last week. They were wrong. March is starting off with quite a bit of volatility.

Yup. As usual, I have no idea of the direction of the markets, short term.

But it seems clear that the "easy" days of a calm, smooth market, which bulls can placidly ride are gone for the forseeable future.

Markets hate uncertainty. For the US, interest rates, capacity constraints re further growth from tax cuts, inflation, and *IMO) escalating Trump policy randomness (example - recent tariff tweeting) are clear examples of increasing uncertainty that look to be with us in 2018, and potentially far beyond.

Well, over time, that's what holders of broad stock indexes get paid for -- enduring the volatility. It was a nice vacation from that while it lasted.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Dow Jones Stock Market 2018

Unread postby GoghGoner » Sun 04 Mar 2018, 07:13:32

I ran a couple of quick correlations b/w oil price and the Dow. 2018 has correlation of 0.5 and 2017 for the same period has a correlation of 0.2.

The fear that is moving the Dow is also moving commodity prices right now. With the news about the reverse VIX blowing up, I have to wonder if there isn't a small liquidity squeeze happening, too. The ETFs that went belly up were small potatoes in the larger picture (the US market alone was worth over 30 trillion in January).
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Re: Dow Jones Stock Market 2018

Unread postby Outcast_Searcher » Sun 04 Mar 2018, 12:50:08

GoghGoner wrote:I ran a couple of quick correlations b/w oil price and the Dow. 2018 has correlation of 0.5 and 2017 for the same period has a correlation of 0.2.

The fear that is moving the Dow is also moving commodity prices right now. With the news about the reverse VIX blowing up, I have to wonder if there isn't a small liquidity squeeze happening, too. The ETFs that went belly up were small potatoes in the larger picture (the US market alone was worth over 30 trillion in January).

I had eyeballed the correlation of the WTI and the S&P (I prefer the S&P as being a better index to gauge the US market short term, as it's broader, but it strongly correlates with the Dow over time) over the past month. When the US market takes a hit, WTI takes a hit. I have little doubt its traders seeking liquidity (risk off).

Looking at gold, copper, and oil for this year (the 3 commodities I follow somewhat, re eyeballing the economy) the correlation to the US market and the overall price pattern looks similar enough that you have a point.

Whether the reason is a squeeze or fear is, IMO, hard to say. Unless traders are complete morons (which, I would think, would bankrupt most of them over time), I'd be surprised to see much of a liquidity squeeze with a 10%ish correction. So I lean more toward fear/caution.

Either way, I'm certainly feeling a lot better about the money I took off the table last year in the US markets as portfolio rebalancing and "Trump Insurance" than I did at the end of Jan. It's just SO much easier to maintain a reasonable balance than to try to pick tops and bottoms.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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