Inflation is looming; has been for over a decade. The Fed doesn't want to admit it, claiming that inflation is under control at 2% a year. It HAS NOT BEEN UNDER CONTROL AND IS OVER 20%, but that fact is hidden because DC changed the way they calculate inflation starting in the early 90s. It's a travesty that food and energy costs are not included, and that home foreclosures were included adding a 'negative' to the real inflation rate. Also, the Fed printed billions of dollars daily under the plan to get banks to make loans and pull the US out of a depression (2009). Those dollars were based on China buying our debt. Obama talked about the trade imbalance with China, but did nothing. Likely out of fear that he was borrowing from them. Trump seems unaware of the complexities. But, no matter who is president or what is done with trade agreements, the US is very much facing inflation as payback for the last decade.
1
Could this spell the end of the "Trump Bull Market," which he has so often held up as confirmation of the "greatest presidency in the history of the nation and the world?" If so, and if the market's decline continues through the November elections, Trump's primary raison d'être will quickly evaporate, and the Blue Tide, which was nearly snuffed out by the Dem's resort to lies and near violence to stop Kavanaugh, will be recharged and as unstoppable as a tsumami.
Cause for progressives to celebrate? Hardly. Even if they were to take over both houses of Congress with this year's election, and the presidency in 2020, they will have captured an authority no longer with sufficient moral authority to govern. Anyone who thinks those Americans who elected Donald Trump will submit themselves obediently to a progressive government of taxes and regulations better think again--rationally. Enact all the taxes they lust for, but Trumpsters won't pay them. Having learned from the Democrats that don't have to obey the law, they won't, and the entire house of cards that is the structure of every government will fall as flat as road kill on I-95..
And then what? Viva voluntary self-government at last!
1
Between the .01%'s likely (and inside) short selling and the computer-driven nature of much of stock-market trades, I predict that there will be lots of "winning" for the average American ahead-- whether or not they actually own stock, which many do not.
1
Trumps' plot to punish Jeff Bezos? Okay, that's probably too far fetched even for The Dumpster, but it's hard to imagine he's unhappy with the news.
It's the debt overhang, which is worse now than it is when Lehman's went under. Subprime housing, subprime student loans, subprime credit card, subprime auto loans. And, of course, subprime Federal Reserve and US government.
It is at best one-sided to talk about a booming economy public and private debt are at levels much higher than enaything ever seen in history.
All the trump supporters crowing about their personal economic benefit, typically in the low hundreds of dollars, with no concern for the national economy are about to be smacked by the reality of how the stock market and economics actually function.
It will be entertaining, sad but entertaining, when the so-called conservatives flip-flop and suddenly begin to worry about deficits and government spending again.....of course they will never admit their tax-giveaways to rich people are the problem and will feel justified in trying to pay the bills on the back of poor people.
Poor Trump. This means he'll have to go on TV and take responsibility for the stock market plunge. "Just as I claimed credit for market increases, I must now take the blame for this large drop and the financial losses suffered by so many. I was wrong about trade wars being easy to win."
Look for coverage of his statement right after the story about a flock of flying pigs landing on the White House lawn.
4
It's a shame that we have a President who can not appreciate that opinions and policies that go against his are just that, alternate opinions of very educated and experienced people. However, Trump declares every alternate belief as "Crazy or a conspiracy against him". If he actually sat down, talked with people and understood why they disagree then it might change his opinion. If he did that ( by the way this will never happen as he has the attention span of a squirrel at a buffet) and still felt they were wrong based on an educated refutation then all would be ok. Instead, he watches Fox, listens to right wing commentators, and determine his responses. Then he plans on some simple catchy derogatory phrase that he can say to get a laugh from his base and have them leave saying it over and over like a cultist chant. In Trumps world, the only sane people are the ones who agree with him. So Sad
3
So it's all the Fed's fault? Nothing to do with trade wars with China, tax cuts and deficit spending? Sure let's just put the blame on the Fed raising interest rates.
Rate rises over the last 18 months have pushed up mortgage rates about 1.25% so that's another $250+ a month on a 300k mortgage.
1
“It looks like China is going to be a long-term issue.” China has always been a long-term issue, yet most don't want to admit and deal with it, instead just "kicking the can down the road". The trade issues, the stealing of technology, not honoring patents, withholding rare earth metals, etc. is not going to stop unless we take definitive action against the Chinese. Wake up and smell the coffee.
1
@Mark Hi Mark,
I agree with much of what you say but the Chinese can sell or not sell rare earth metals as they choose just as we can or won't sell weapons as we choose. They are using that as leverage in negotiations the same as we do. Nothing illegal or immoral. It's a shame though that they have been smarter about purchasing companies or making trade agreements globally to gain the rights anticipating the need that now is very real.
3
"Mark's" (appearing as a NYT pick) comments don't go far enough.
A decade ago we had a financial meltdown with bank after bank meeting the criteria "small enough to fail" while the biggest received billions of tax dollars so their doors could remain open.When interest rates were lowered by the Fed to stimulate the economy, millions of Americans took advantage of this to refinance their mortgages at these 30 years lows. And coming as a bonus, a credit-worthy borrower able to maintain the same monthly payment as before found that they could increase the amount of their loan because lower rates open the door and in doing so had more money in their pockets to buy goods and services...
Now that home and apartment prices are falling due to the $10,000 cap, concerned economist should be waking up to the fact that, "give it to me one more time", there is no equity left in these loans and perhaps the race to the bottom is on again.
Trump on March 2nd: "Trade wars are good and easy to win"
Looks like he is just about be back in a spot he knows ohh so well, on the receiving end of a bankruptcy.
Only this time it is not a company of his but an entire country.
Well, Dear Americans, you elected him and not even all of you did so.
Now live with him.
But why do we have to do so too?
This decline is Trump's fault. He cannot take credit for upside without taking the blame for downside.
When I read the comments here, I feel that many readers have a poor understanding of how the macro economy works. Readers dislike Donald Trump and believe the Chinese can do serious damage to the United States by not buying US debt. This is not true. What you need to understand is that the productive capacity of the United States won't change simply because the Chinese stop buying little pieces of paper from us. We still have huge slack in our economy. We are no where near our productive capacity. And we only owe the Chinese US dollars, which we can print at will. We will devalue our currency. I didn't vote for Donald Trump, because I disagree with him on a lot of social policies, but this has nothing to do with that. We are far better off than the Chinese are. They need us to buy their stuff. But, we can make stuff ourselves. And we can turn their US debt into confetti. They know that and they don't want that. So, they will deal with Trump.
1
@Mark
Exactly how do we devalue the dollar only for the Chinese? What happens to your savings and retirement plans if all of a sudden $1000 will be required to buy a large coffee. As far as US being able to make things vs China, have you tried to buy an American made item off the shelf lately? I am not in disagreement with your statements concerning China as far as their business practices, but there is no such thing as a peeing section in the global economic pool.
3
@Rob Wagner - Not much happens to your savings when a cup of coffee costs $1000 if you have Starbucks stock in your portfolio either directly or indirectly by way of a mutual fund. The dollar will be devalued because we owe so many dollars to foreign governments. It is guaranteed to happen, which is why it's foolish to participate in this sell off.
See everyone, Trump economic policies are finally starting to work just like in all of his failed businesses! Except this time he will take down the U.S. and the rest of the world instead of a handful of investors.
1
as long as trump's golf games are paid for, dignitaries continue to do business at his hotel, he is happy. he couldn't dare less about the country. he speaks words he doesn't mean.
2
We can say all this stuff but there’s a coincidence every time. The scientist indisputable dire report on the global climate crisis accelerating and the information readers will skip on how it works- that a half degree overall means death by starvation and drought. Conflicts will occur and even huge war possibly world war. That’s the elephant in the room. Then Kavanaugh another market drop. Denial of those factors is insane. We don’t have even 30 years. Then worse hurricane ever slams so watch tomorrow. How are you enjoying your Trump tax cut Democrats and GOP? More ethanol from Trump to add to the climate crisis. Coal anyone? Yes reviving up on those hee haw slap happy good ol boy states oh yeah. Wow the disparity between market analysis and facts and between nationalism d greed undeveloped nations is unfathomable. Kids know nothing but we know we and they are in trouble. All fish is filled with plastic. More plastic particles in the ocean - microscopic guys not plastic bags on the beach- more of that than plankton. Not off topic. When banks collapse will they say no to the FDIC protection? We are sinking ...Society is coming apart. California has drowned in illegal immigration.
3
Now watch China dump 250 Billion of our debt just to let US know they can yank the chain of our economy anytime they want...
2
We are living in an economic Renaissance.
Taking Obama’s boot off America’s entrepreneurs throat has led to 4.5% growth.
All the benefits including economic growth, job gains, productivity rising, increasing tax revenue, renewed capital investment, lower poverty and wage growth have occurred.
So we had a little drop in the Dow.
The sky must be falling! (NYT)
Steve, last quarter we had 4.2% growth not 4.5% growth. Such growth would have been the 4th best quarter during Obama's tenure but was the best of Trump's. Trump came in with a great economy waiting for him. Obama faced the worst economy since 1929 when he was elected.
10
@Steve MD
It would help to understand if you could explain what "boot " you are talking about. What terrible limitation did President Obama place on the economy? The one in which the stock market recovered the losses from the Recession?
2
Trump’s tariff policies are tanking stocks left, right and center, and are forcing me and other working class families to paying lots more to buy groceries and other products.
Trump recognizes no moral, political or strategic commitments. He feels free to pursue objectives without regard to the effect on allies and the world. He has no sense of responsibility to anything beyond himself. His nutshell foreign policy:
-Allied nations are weak and should be mistreated;
-Dictators are strong and should be admired.
-Multilateral treaties are trash; only treaties that Trump sets up bilaterally have worth.
-Finger to the wind, always. If prevailing winds of at least 2/3 of the U.S. feel strongly about any topic, change position to the prevailing wind.
-Anything Obama did should be undone.
Congress should immediately pass a resolution censuring Trump for his Helsinki display; and Congress should immediately pass legislation preventing Trump from unilaterally pulling out of NATO.
Trump and Congress are taking away as much health care from the lowest wage earners in the country as possible, resulting in premiums that have raised 20 percent over what they would have been without these cuts.
Trump’s hotels renting to foreign embassies...his DC hotel rented to Azerbaijan. Kuwait, Bahrain, and who knows how many other other countries.
Federal debt? Through the roof under Trump. Will top $22 trillion this year, with a $1 trillion budget deficit.
And on, and on, and on.....
2
Wall Street and the business community cheered tax cuts and deregulation. These are policies that any Republican president would have pursued to some degree.
The business community also supports infrastructure, education, free trade, and legal immigration. Most of all, the business community likes stability and predictable policy.
There is nothing else the Trump administration has to offer the business community. In fact, all of his remaining policies are decidedly anti-business. Wall Street is wising up to this fact. And the chickens are coming home to roost.
3
If a stock market crash is the catalyst needed to trigger-start Trump's downfall, so be it.
12
I'm still 99% in stocks. Been doing this a long time. Here are links to 2 posts of mine back in February after the big sell off.
https://www.nytimes.com/2018/02/05/business/stocks-equities-dow-markets....
https://www.nytimes.com/2018/02/08/business/stock-market-activity.html?c...
Stocks are just a few bucks cheaper, but nothing has else has changed. If you're under 50 years old, don't even bother with bonds. Just buy as much S&P 500 as you can afford. Inflation is not bad for stocks!
3
The $1 Trillion annual Federal deficit gives China, which holds huge amounts of US debt, a powerful weapon in the trade war against the US. If China stops buying Treasuries it will have a powerful effect on the bond market.
12
Not a weapon, but mutually assured destruction.
Unpredictable, erratic international economic decisions notwithstanding, The impending sea change in the economic climate and radical political backlash implied by the results of the November election should certainly be a major consideration in any investor's judgment at this time. The sidelines seem like a safe haven for the next month or so.
21
Globalization is not an empty word. Supply chain issues do affect our companies doing business with others and our daily livelihood. I think the trade disputes with China, EU, and many other countries eventually will catch up with Trump's offensive words in foreign relationships. Today's stock market may reflect the sudden waking up reality and our not too distant future.
55
@Usok
Whatever happened to that company that said it was the last company in the USA to make nails? He said that without an exemption from tariffs, he would have to close his doors. Rebuilding after all the floods and hurricanes will surely need nails.
And where are the hammers made?
3
No one uses hammers anymore. It’s nail guns now. And most are imported from China
So lets see how far we’ve fallen in just two years.
We have farm subsidies (aka a TAX on everyone else) to bail out farmers, as a result of a self inflicted, unnecessary trade war with China.
We have rising inflation as a result of an overheated economy, that was doing just fine before the tax windfall to big business.
We have flat / stagnant wage growth.
We have a planet that is teetering on the edge of climate disaster with deniers at the helm who wont pay for job training in renewable energy.
We have No real substantive plans for healthcare reform.
We have a record defecit and few fiscal tools to stimulate growth when the tax windfall cool aide starts wearing off in 2019.
But hey, at least we still can deduct our state and local taxes and have mortgage interest as a deduction.
What’s that? Those were cut to help line the pockets of big business and shareholders?
I just hope the millennials, independents and suburban women, show up in a month at the voting polls to push these jokers out of office.
175
@Mark
And we've got Trump and the damage he has done. Our political norms have been shredded. Norms take generations to re-establish. We've dropped out of global competition. America now thinks she can win by hiding behind a wall. We've become a nation of cowards.
Our time is done, but all is not lost for the global community. China may well be better for the world than most of us think. At least that offers some hope for the future.
1
@Mark Are you kidding? Were you unaware of the tax code and subsidies to farmers before Trump, Obama, Bush, Clinton?
It’s not just technology companies that are “dragging” as a result of Trump’s trade policies. Many manufacturing and the food sectors are getting the old yin-yang as well. Exports down, supply chain prices up. For all those who kept warning about inflation under Obama, the chickens are coming home and BHO is long gone.
4
This sell off had nothing to do with China or Trump! It had everything to do with the Federal Reserve chairman Powell. Try trading for a living. If over time you are successful at it then maybe you might have a process that can lead you to the correct answer. Coming out with an article like this is nothing but click-bait for advertising and is best served by the Macro-Tourists of CNBC. Thanks for coming out.
1
What we have been waiting for - and more to come thanks to trump.
5
I'm saw this coming and sold all my stock holdings last week. Remember people, pigs get slaughtered. Greed and Fear.
6
Where is Trump? Doesn’t he usually toot his own horn? Take credit where credit is due? Trump has the touch of Midas.
3
@SG
He's been out yelling about the "Loco FED."
1
Chomp, chomp. That is the sound of our economy getting bitten by the foolishness of Trump’s poor understanding of what is good and bad about trade deficits.
9
Emperor Trump fiddles while Wall Street burns. Sure feels great to be winning. How is Trump going to spin this mess to be the Democrats doing?
3
Trump's predictable response to the big sell off? It's the fault of the fed. Has nothing to do with his tariff war with China and half the rest of the world. Has nothing to do with the fact that half our technology is manufactured in China. Nooooo. That's not it, it's the 1/4 point interest rate hike those bad people at the Fed are are foisting on us.
10
I believe the last Fed chief was appointed by President Obama.
1
Yes, Obama appointed Janet Yellen. But Trump let her go a year ago and replaced her with Powell.
Trump owns this.
3
@HL So what are you saying?
I am pushing 70 years old. If there is any benefit of being this old it is that we've heard it all before. I can think back maybe 60 years on silly reasons why the stock market is doing this or that. It's always silly, it's always false, it's always anecdotal.
So, when I see an article like this one it is hard to treat it seriously. Plus, I know from experience (I was in a photo like this one once upon a time) the consternation the trader shows has nothing to do with the stock price, what his facial expression is really saying is: "you're kidding, you just want a hotdog from 7-11? I want to go to Chelsea Market and get a Japanese Taco a la Guatamala and a frozen icee."
6
Since Trump took credit for the upside, he owns the downside as well. Enjoy.
14
Welcome to Trumplandia.
Were the markets were going up because of the Trump tariff and trade pact chaos? Will an erratic, unhinged and untethered president produce steady, low volatility economic growth? Did the economic growth have anything at all to do with Trump?
10
Everyone calm down. The stock market dropped one day and people are losing their minds blaming the President. So I assume every time the market dropped from 2008-2016 it was Obama’s fault?
None of you should invest in the stock market - your stomach for risk is too weak.
1
@Abe
Who is “losing their minds”?
...and the Democrats, once again, will be left cleaning up an economic disaster created by Republicans.
15
Trump keeps bragging about the stock market at record high and how great your 401k is.
Today the Dow Jones is down over 800 points, or 3.1% in one day. That is the THIRD LARGEST SINGLE DAY POINT DROP EVER. The Dow is down 4.5% in one week.
The S & P 500 is down 94 points, or 3.2% in one day. That's the THIRD LARGEST SINGLE DAY POINT DROP EVER. It's down 4.7% in a week.
"Big deal, the market fluctuates" say you Trumpsheep.
Ok, let's look at longer term performance.
Obama to this point first term: Dow up 39% S&P500 up 43%
vs.
Trump to this point first term: Dow up 28% S&P500 up 22%
Obama set 122 record high Dow Jones and 16 record high S&P500.
Trump has not acknowledged any of this. And Trumpsheep still say that he "tells it like it is."
Baa! Baa! So much winning!
24
Is everyone is tired of winning yet?
2
Well one thing's for sure: Trump will declare it to be somebody else's fault.
4
2017: the Trump Bump
2018: the Trump Pump-and-Dump
2019: the Trump Slump
13
19,827.25 Dow on Inauguration Day.
25,598.74 at the end of trading.
The NYT wasnt pushing alerts to my phone on the way up. Sure seems eager on the way down.
Long term investors have made a killing eithe and most invest on 20 to 40 year horizons. If anything, a pullback is always healthy and profits should be taken and positions should trimmed. Nothing unusual here and I trade 6 personal portfolios. If anything, a possible buying opp
Richard Werner predicted this in the long-banned final chapter to "Princes of the Yen." He couldn't get it published in English - each publisher would come back to him clearly under pressure, even though Alan Greenspan personally praised Werner's book.
Basically, Werner discusses how the central banks have engineered an asset valuation crash as a form of monetary policy shock treatment. Every one of his predictions has panned out. The Central Bankers have been manipulating the economy while the Talking Heads spout off on fiscal policy. It's time, in this Democracy, for the People to take back control of their money and put the Federal Reserve under the control and direction of the Treasury.
4
China may be exporting inflation to US by weakening the Yuan. Then the Volcker/Carter era of very high interest rate and bond yield will sink Trump. This may be China's backdoor strategy to force Trump to call off the trade war.
In the interconnected world, inflation in a major country will show up in other economies and US is not immune to it.
Stocks will also continue to decline. In effect, it will be a mutual assured economic destruction. Inflation may be one tool China have to damage US economy substantially.
1
"policies put into place under Mr. Trump, like tax cuts and increased government spending that have widened the federal deficit, are also a factor in the rise in borrowing cost"
"Widened" ? Trump has INCREASED our debt by hundreds of billions of dollars - Much of this is to pay for tax breaks for his Billionaire donors and his Corporate Sponsors.
Trump ran up the nations credit card, and then claims economic victory. When the reality that this is a false economic gain sinks in with people, the stock market is going to crash again. Maybe this is the start of it .
3
The GOP and Dishonest Donald have gone mad. Restriction investors from the second largest economy is sheer lunacy.
This country's steel mills, railroads, electric networks, harbors, were all built with foreign investments. When companies need money to grow they sell stocks and bonds, much of the money comes from Chinese investors. The keep the interest rates down. China can retaliate by not entering the auction for Treasury Bonds, causing the price to decline, increasing the interest rate, increasing the Federal debt. In the meantime it holds $1trillion of U.S. debt which we pay China interest on.
Your company needs more money to expand, no Chinese allowed to make the loan, the company will pay more, profit will be less. Investors see this, it may be time to take some profits and be cautions with a bumbling simpleton in the White House.
10
Trump's really not a businessman. He clearly doesn't understand the interdependence of economies or even that his policies will cause inflation. When people realize that they can no longer afford necessary purchases, they might come to understand who caused their misery.
9
Stock markets generally looks 6 months ahead. They see uncertainties such as midterm election results, Disruptions in supply chain and potential consumer pullback. This is not a correction, just hang around kind of thing. Final quarter is also start of lock-in profits for the year end. So, expect market keep fluctuating or slide little until they see increase in profits beyond six months.
2
A few more thousand points drop will bring the stock market down to earth, close to when Obama leave office.
Most likely Trump's tax cut boost liquidity for the top earners, corporations to play the market.
Now with the China trade war, everybody looking for the exit door. They know the tech stocks are way overvalued using fake wealth Trump pump into the system to participate in this 'legalized gambling'.
10
“I think the Fed has gone crazy.” No, Mr. President. It's your supporters who are crazy. Unfortunately, our duplicitous congress refuses to do its duty and remove you from office.
China has been playing chess while you've been playing checkers. Premier Xi & his advisors expertly used every misstep u made with tariffs into an advance for China but China's boldest move is about to unfold. China has begun to "step back" from treasury auctions which will force the interest rate higher exacerbating the debt you added $1 trillion to. Eventually the US will lose its unique, reserve currency status and our debt will be repriced commensurate with the risk.
Every day our nation is lead by someone so inept the risk increases & confidence ebbs.
Yes, the UN was laughing at you and the country I served in the USMC.
But just when we think it can't possibly get any worse, the planet is facing the greatest challenge in human history.
What are you doing? Promoting coal.
Heaven help us.
92
@Henry J -- spot on
1
@Henry J great comments. right on target. no nukes! harvey wasserman
1
@Henry J
Where is Sante Fe? And Mr. Trump calls everyone crazy. Keeps us all in a vortex.
Vote for sanity in Sante Fe or Santa Fe.
1
The tiger economies of Japan, Taiwan, Korea, and China were greatly helped by American generosity which permitted them to trade with us at terms much more favorable to them than to us. Both parties contributed to this tactic.
In the meantime, our own business leaders discovered the virtues of foreign low cost labor; they shut down their own factories en masse and opened them in low wage countries. That is from where we get our clothing, consumer goods, electronic devices, cars and ships. We don’t have much to sell abroad other than farm products, aeroplanes, and military armaments.
A theoretical but impractical method would be to equalize the wages but that will not work, nor would it make America great again.
So where is the beef? Trump is raising tariffs on imports. It has not worked yet but may in the long run. That remains to be seen.
2
@ALM
"Trump is raising tariffs on imports. It has not worked yet but may in the long run."
Sure, just like Herbert Hoover, and we accumulated 10 years of massive global economic suffering from 1929-1939 to just know how that worked, don't we?
22
You’re leaving out the effect tariffs will have on shrinking the global marketplace. We were winning before the dumpsters trade skirmishes.
18
It's the stock market. There always going to be ups and downs. Nothing new. And we/it are still riding pretty high compared to past history.
@old sarge - actually we are about average at best - which is roughly 7% gain per year. S&P is at 5 1/2 percent on the year which for October it needs another 1.5 % before the eve of the year just to be average.
16
The Dow Jones Industrial Average seems to be hurling insults at Donald Trump more abundantly than Trump can conjure up at his rallies.
24
Gee, looks like the Fortune 500 spent all their Trump's tax giveaway on stock buybacks and management bonuses and all the super rich are taking their money out of the equity markets because his 1% beneficiaries unlike his deplorable dupes know he's a category 5 economic disaster and they ain't sticking around when a hollowed out, debt laden economy implodes.
The only folks who'll be left holding the smelly mess and losing their shirts will be the 401k retirees and public employees enrolled in state pension funds too big to get out of the market without huge losses.
Some pundit said if it happens to a few it's their problem, if it happens to a lot of people it's a political problem, and if it happens to everyone it's not a problem but a policy.
I'd just add that if it only happens to people struggling to get by, it's Trump aided and abetted by Republicans.
In other words, it's an intentional policy of giveaways for the rich and takeaways for the not rich.
Trump is Wall Street's co-pilot like Palin was for McCain.
We know Trump can see Russia from the South Portico.
48
@Yuri Asian-Indeed. If anyone could deliver effectively for Putin, it's Trump.
@Ann
Actually I think Putin has buyer's regret and what a fool for a spymaster for him to think anything with Trump would be clandestine.
This is not the big one. That is still in the future.
The economy is not humming, it's on a crash trajectory.
Comment I post periodically elsewhere:
I mark January 1, 2018 as the official end of Obama's economy and the beginning of the next economic crash trajectory.
Few supporting reasons:
1) corporate taxes were reduced by one third
1.1) creates artificial step increase in corporate performance without an actual increase in performance.
1.2) money was used for stock buybacks, not for investment or wage increases
1.3) huge government borrowing (from China?) to make up for lost tax revenues, injecting billions of borrowed money into the economy.
2) revoke Volcker rule, allows for propriety trading (gambling) with FDIC insured depositors savings by a few rich guys with access. This (combined with buybacks) is inflating another market bubble.
3) raised taxes (aka tariffs) on the middle class, which caused frontloading, another temporary bump in the economy.
4) two thirds of GDP is consumer spending, raised taxes (tariffs) places a huge drag on this.
The market is not the economy of course. The run up in the market (approx 8% ?) is not correlated with the economy (4.2%). The recent 4.2% number in the economy is dismal given factors enumerated above. Since it is not possible to time the market or the economy, it is impossible to know when the next crash will occur, but we are certainly on the trajectory.
33
One can hope that the number of people who believe only Trump/FoxNews is shrinking. It wouldn’t take many escapees to completely turn this around, remember. Reality tends to debrief cultists.
24
@Dagwood i wish you are right, but not seeing it in Pennsylvania and Indiana or Michigan.
6
Whenever a bank equity analyst tells you to stick with stocks, that means her bank is unloading it's position.
25
Republicans knew a Trump win plus control of congress would give a placebo shot in the arm to all the profit sluicers, and we saw the equities bubble grow in 2017 and 2018, and now the denouement is coming. They got their SCOTUS control and tax cut too, now it's time to cut and run: Democrats can come by to clean up the mess and take the blame after winning in the midterms. And with that blame, lose the 2020 election.
26
Let it all bankrupt and bail out student loans. Give no money to any businesses. Go direct to the individual. Giving money to businesses resulted in bonuses to execs. Now companies that we bailed out are laying off workers.
13
Well now. The stock market is starting to display the same kind of unpredictable behavior exhibited by Trump since before he was elected, not quite knowing how to respond to the conflicting stimuli heaped upon the economy in the many months afterward. Gee...didn't see that coming.
29
The stock market as defined by the S&P 500, the 500 largest capitalized companies, is trading at very high values, with price to earnings (P/E) ratio of about 25, when the historical average is about 15. The 10-year cyclically average P/E ratio is about 32, again with the historical average of about 15.
All 140-years of historical market data tells us we're in a stock bubble, and these prices WILL revert to the averages. In layman's terms, the prices being paid for S&P 500 is somewhere between 65-100% above the averages, and it can only fall back to reality. Whether that reversion happens in 2018 or 2020, no one can tell you. But it will happen.
And for my long-term retirement monies, placing your bets in an very over-priced market is unwise.
42
@GTM
Exactly, and thank you.
1
I'm still in disbelief that anyone in this country would think Trump and cohorts would implement policies that are good for the economy, good for the poor and middle class (i.e., people voted for him because of "populism" are you kidding?), and good for the country at all. All evidence points to an eventual collapse if nothing is done to stop this runaway train.
64
@Jeff People voted for Trump because he was giving the finger to a political class which had done nothing to stop the decline in purchasing power of the average worker. They paid no attention at all to the warning signs, flashing like neon in a dark night, that an ignoramus like Trump would even know anything (or care anything) about their plight. I hope that the Democrats and moderate Republicans (if there is such a thing now) will have a platform which addresses the economic plight of the working class, the middle class. Hint: This program should not be against capitalism but about making corporations and the wealthy and the upper middle classes pay their fair share, that is they should pay at least as much percentage wise as Warren Buffett's secretary.
2
I dislike it when the media doesn't point out that we have over a trillion annually.
Let's see: Republicans were in a rage, when Obama had 1/3 this amount.
With the major stimulus of these deficits, what would the economy be at?
We are going to be on ZERO in reserves when we do have a stimulus.
here we come: SOUTH AMERICA.
27
Say hello to The Trump Slump. This one's on you, Emperor Donald.
35
I'm glad I sold everything last month. Now if only I didn't have to worry about that dang IRA.
7
I wanted to sell all the end of January and then i wanted to sell all the end of September -- i wish that i had.
4
@Allison You can sell inside an IRA.
Regardless of what else the world has to suffer from and endure, leave it to Wall Street to not allow itself to be ignored. Another tumble from the petulant child, what a clumsy oaf.
7
The Nasdaq rise in particular has been a joke and it shows the Greater Fool Theory in full flight. Now it drops 3 percent today and everyone freaks? Wait for the 15 percent fall in a day and then you’ll see the rush for the exits. Lots more pain to come for this wildly overheated index. When companies like Apple and Amazon are valued more than $1 TRILLION each, it means the tech bulls are headed for a great deal of pain.
15
Cool your Liberal crowing Jets. This market is still rising. Over the long haul. Jeez
8
Keep putting your money in Jean. The market is way over valued and Wall Street is cashing out, but keep believing
3
Tired of winning yet?
16
Trumponomics at work. This is what happens when our economic policies are based on alt right conspiracy theory mythology.
18
Anybody expecting different from a Republican government and voting for a continuation of Republicans deserves to spend their retirement eating canned dog food.
56
How long did anyone really believe that having un unstable, and ignorant man at the helm, who gave a tax cut to mostly rich people, with less money coming into the Treasury to pay the bills, could last? Actually, not long. Tariffs, poor relations to the leaders of other stable countries, worshipping at the feet of dictators, the inability to have most stay in any position in his cabinet, the White House, or other parts of the government, because of a jealous bully, who wants to go to a rally every week, or go it alone. What exactly would one expect. Even the stock market is invested in the future of not only this country, but the world as well.
27
Ford is gearing up for layoffs due to tariffs. Did those Carrier jobs get saved? (Not). But who cares. All we want is for NFL players to stand at attention and Trump's mimicry talents have Obama beat. yuk, yuk.
25
@Greenfield And please don’t forget that trumpf keeps talking about bringing the dying dying
Don’t forget that two days ago Verizon said it was laying off 44,000 employees. MAGA!
2
Not to worry, World! Our "Stable Genius" has everything under control. We're good! Just keep in mind that everything good that's going on is DJT's doing, and everything (including mini-oopsies in world markets) is the fault (in order) of Barak Obama, Hillary lock-'er-up Clinton, every Democrat in Congress, China, the U.N., NATO, border "infestations" and MS13. Climate change is NOT on the list, and until there are more sump pumps in the lobby of Mar-a-Lardo than weekend guesties, it won't be on any lists or government documents, either. Are we clear?
25
Stock market sell off seems to be over-reaction.
Increase in the interest was signalled by
the fed sometime back, so it shoudln't have
come as surprise. Bloomberg story on China
inserting a chip to spy seems to be outlandish.
Both apple and Amazon have denied it
vigorously. Surely, Blooberg has n't done
any testing. It is adding fuel to the fire. Strong
economy suggests rising company profits
at least in US market. If so called trade war
cum cold war with China gets nasty it will affect
the sales and profit of American companies.
It is an imprudent policy to hurt American
business in China with a huge market almost
as big as USA's( after adjustment for inflated
healthcare and defence expenditure). Fear and
greed drive stock market. It is hard to find
logic in the market behavior except to attribute
irrationality some time and over exuberance
at other.
5
When P/E ratios in tech sector are double the historic average, its not irrational to sell out.
4
Why did Haley resign? No such thing as a coincidence?
Sooner or later the con is up and everything is related?
Whether we like it or not we are all in trump’s orbit.
12
It wouldn't hurt you to include the actual point drop in your article. The Dow Jones experienced losses of -1175.21 on 2/5/18 and -1032.89 on 2/8/18. Some of us market watchers like to see actual numbers with percentages.
14
Good job managing the economy, Donald.
19
My algorithm says we are going to be hearing a lot about how the FED is... blah blah blah blah
13
So Trump blames the "crazy Fed." Has there ever been anything that went wrong during his presidency that he didn't blame on someone else?
What a wuss.
35
It's Obama's fault.
Or Hillary.
8
1. When you are running really fast, it is more likely when you trip over something you didn't see, you will down HARD.
2. When you drive around a city with no sign posts (ro worse yet, sign posts that change each day), it is likely that people will be confused and collide with each other.
Welcome to the economic and market reality of today.
11
How can such a stable genius preside over such an unstable stock market?
9
Just as Trump did with his father's money (bring to the brink of bankruptcy multiple times) Trump is playing fast and loose with an economy that Obama worked hard to bring back from depths of depression (compliments of Bush). Trump was saved by the whims of a personal banker at DB. He is coming for the piggy banks of ordinary Americans this time so that he can line the coffers of his rich buds.
38
The only silver lining is the Trump mob’s pratfall contortions as they frantically try to deflect any blame from Dumb Donald (who tries to take credit for any rise in the market). Watching these goofballs try to spin this is good for a laugh or two.
13
I never made a single dollar off the stock market so I dont really care that some rich people only have a 23% gain since Trump instead of a 25% gain.
What I do care about is fighting China and forcing them to open their markets and stop using us as a dumping ground for steel and other commodities.
I for one am willing to take a little pain to fight China and try to preserve an American global economic order. I support these tariffs, and I dont think China had many tools left to fight back while we have another $260 billion of tariffs that we can add on. They cant realistically sell their debt because it would cause a huge shift in the currency markets that would in fact undermine their efforts, and in the end China only owns 8% of US debt. Unless other countries join in on the side of China, they cannot destroy us.
China is the weaker country in this case, and if we dont give in to our greed we can force them to change their ways and be more fair to not only Americans, but also the rest of the world. I just hope that our greed doesnt prevent us from doing the right thing.
7
@Jacqueline I refuse to buy any item marked "Made in America," the country that on November 8th, 2016, elected the most vile, corrupt and unfit president ever to disgrace the Oval Office. I intentionally look for the "Made in China" label...or Vietnam, Thailand, wherever. I even bought a vacuum made in Belgium. Vote for a uniter, intelligent and inspirational leader next time, and I'll go back to supporting America. And please do not tell me "if you don't like it here, move to another country," or "get over it." I am a native daughter and will continue to express my disenchantment with America right now any darn way I please.
1
@Jacqueline-Preserve an American global economic order? China plays the long game inking deals and investing all over the world while we racked up war debt.
Good commentary on trade with China
https://www.yahoo.com/finance/news/xi-key-advantage-trump-trade-war-1557...
China's european seaport control
https://www.npr.org/2018/10/09/642587456/chinese-firms-now-hold-stakes-i...
China - Transport, Minerals - Africa control
https://www.npr.org/2018/10/08/641625157/a-new-chinese-funded-railway-in...
Budget deficits are back above a trillion annually.
The US government is the single largest borrower of funds in the world.
We are now borrowing an additional $3+ billion more per day just to meet the Republican/Trump's budget shortfalls -- never mind that these liabilities are piled atop of the existing national debt.
Rates rise when the world's largest borrower is in need of funds. The private sector competes with the US Treasury for credit. When the competition heats up -- bond buyers demand higher yields.
Sadly, Obama had reduced budget deficits by more than two-thirds; I believe he oversaw 5 straight years of deficit reduction, thus why the FED was able to suspend QE.
19
I worry about a lot of things re the markets. There is too much debt floating around without honest quality economic activity to back it up. Printing quantities of money does not sustain a healthy economy. Giving out massive amounts of debt at low interest does not sustain a health economy.
Long story short.... there is too much supply and not enough demand. What good does it do to sell stuff that people can't afford to buy?
8
Exactly! It’s only going to get worse. Sears going bankrupt, Ford getting hit hard with tariffs so they are laying off and Verizon announce 44,000 workers are getting cut.
2
Sears has ben on the precipice for years, unable to compete with other brick and mortars, and really unable to fight Amazon.
The market doesn't care about its bankruptcy, just as the market doesn't care about layoffs, except in how they affect the bottom line. People care about the real stuff.
@cheryl I believe Sears as a victim of a ill advised CEO in part.
What goes up must come down (eventually). It was only a matter of time before the stock market would crash. This is the way it usually works. The market is always in a state of flux. This is only temporary and will rise again.
7
You were heaping praise on Trump about the market a few days ago. Funny how your tune changes
1
@WPLMMT Only once the dems are in power and once again establish sound policies that bring our economic house in order. Then the Republican cycle of destruction and short term memory enters again to destroy it all. Once again bringing us to the brink of economic doom and we're suppose to once again bail out these market geniuses and Trumps - no thanks this time. Join the rest of sinking middle classers.
1
It's really just one day or one week.
Not time to panic yet.
And not a buying opportunity either.
I don't think the earnings season numbers will be terrible relative to predictions, but I would expect a lot of squishiness in the prognostications for the future of the companies reporting.
With all no-longer-taxed money spent on buybacks and not on investment/infrastructure/R&D, it seems to me that it will be hard for CEOs to claim they see a bright future.
We were on a sugar high after the tax cuts, and now we will suffer the headache. The really interesting thing is where the money comes from to pay the debt Trump and the Republicans incurred committing ex-tax receipts to goose the economic activity at the end of a boom cycle. The public is tapped out, so....
Unfortunate for Trump and the R's if their inflate-the-stock-price-numbers game doesn't hold for another month. Mr. Market is showing real signs he doesn't like this game. We'll find out just how badly Mr. Market feels, probably this week. It might just turn completely around tomorrow.
11
I never understood how gradually rising interest rates, which have been anticipated for quite a long time, could cause sudden plunges in the stock market. If the market is so "smart" why hasn't it adapted to these expectations already? What did anyone learn on Wednesday morning that caused a change in outlook?
12
The drop has less to do with Fed rate hikes as you pointed out, its been well known and expected. Donny just needs something to blame. The problem is inflated PE ratios in tech sector.
4
Econ 101
It is not China
It is not Trump
It is the Fed
"The stock market lives and dies by the actions of the Fed"
Economist, since 2010, have worried on what would happen when the Central Banks, that printed truly unprecedented amounts of money (mostly captured by the rich) would wind down their positions
There is no historic precedent - and hence no guidance what might happen.
8
It’s interesting that if you’re really going all in — quite a risky proposition — that the US is probably the best place for your money. Where else to invest? EU? China? Japan? South America??
Is the strategy to shake up everyone, let the money flow to the safest place (currently the US). Problem is that this will result in political and economic disaster for a lot of people in a lot of places — wars, refugees, starving people.
5
What's not to like about this falsely dramatized "correction" vis a vis the stock market that will please the "deep states" of both China & the USA, before exclusions are granted, promoting the economic winners & losers we've come to expect from any administration. Saber rattling, tariffs & the results thereof are just another euphemism for modern corporate restructuring with all the "ships that sailed" mumbo jumbo we've heard previously.
Too late to right the ship of state toward peace & plenty. Take your choice, do you want enemies within or without? The electoral college looms large.
3
The Fraudster in chief stated - "Trade wars are easy". Well it is easy for him to create a mess and friction. Not easy to "win". We are not winning.
42
Comrade Trump will soon tweet that all is well—the market has never been higher—trade war is easy to win and good—and his supporters will lap it up. We'll all get what they so justly deserve.
38
The decline is statistically significant and nobody knowledgeable doubts we are in for #big# correction. Follow the finance news, where some non-cable news folks still try to apply nonpartisan reason and experience rather than rely on propaganda.
Now, “correction” does not mean “crash” — we hope—but common sense applied to domestic and international news gives sound reasons to hedge and worry. So say all of those with real knowledge on economic cycles.
20
Fake news or Obama's fault (or Soros's). Things like this don't happen on the Trump watch.
22
Where is Fred Trump when you need him? We could use a trillion dollar loan right about now.
50
Trump crowed when the market started its irrational exuberance run post Nov 2016.
Now he can EAT CROW as his tax cut, deficit-raising, regulation cutting, immigration/labor damaging, tariff and trade destabilizing, and world threatening policies take hold.
To quote Stanley Kowalski, "HA HA!" This 5 day plunge cannot be a surprise to anyone who tracks the truth behind Trump's policies and ignores his and his supporters' bloviating rhetoric.
47
The market has been remarkably immune to Trump's antics.
Election Day is 27 days away. Hard to believe Trump can keep crowing about the economy if the market tanks. How is he going to spin this to his base at the political pep rallies?
More smoke and mirrors please.
21
@Howard Levine
It's Obama's fault. It seems to work all the time.
6
@Howard Levine His base is not in the market. His rich cronies are.
8
Thank you, Trump voters, for installing a megalomaniac who is provoking the globe and now leading to our decline. Yes, please continue attending his ego rallies and blathering trite phrases about making America great again -- will you continue doing so when the economy collapses and you end up jobless and homeless? Or will you foolishly try to pin it on the previous president despite his having left office nearly two years ago?
97
I would add that the market has the goal of making those that have money to spare, richer. If you read the data about climate change and how our world will have to rethink how we feed ourselves and use our resources more wisely, the market is absolute. Since the rich and corporations are not paying taxes to help the multitude of people in our country in need, who will pay for these effects ? What will be important in 20 years a plus high rise without electricity/water during a Hurricane, Earthquake, Drought ? The market should blow up just like Banksy's art did.
12
@Ellen Fishman, #Metoo survivor, volunteer and retired teacher, this is going to hurt millions of people on our/side, too. Be careful what you wish for.
6
Metoo survivors never wanted to be hurt either. Yet our society ignored the culture that ignored it. Consumerism is bad for the planet. I owe my grandchildren . They did not do anything but be born.
9
Thanks to the tax cut near full employment which has added several hundred billions to the federal deficit, combined with the Federal Reserve liquidating their bond portfolio, interest rates are rising on longer term bonds.
Borrowers will pay more for financing, and those tech companies that live on debt will now have a monkey wrench thrown into their business models. Profits will now start to make a comeback as an important consideration when owning stocks.
The current correction is rebalancing the risk equation toward companies that make money from those that pursue growth through endless debt. It probably won’t be as bad as 2000 in magnitude, but many profitless companies will see their share prices come back to earth with a thud.
5
President Obama could only take us so far. Now republican policies are finally setting in and we see the results. Thank you President Obama for saving us from the wreckage of the Bush administration. And don’t worry republicans, we will save America again after you are done implementing Fear and Wreckage 2.0. And we will also let you continue to pretend you are the financially responsible party. We know how important that is to your self esteem and your political future.
62
Let’s not forget that the GOP tax scam was designed to hit the average citizen in 2019, after the 2018 midterms. When gas prices go up, rents and adjustable rate mortgages go up, the price of food continues to skyrocket and wages stay stagnant some will be shocked that the man to blame lied, that they, unlike Fred Trump who saw what his offspring tried to do to him in his old age, were conned. Oh, and the cost of healthcare will rise too.
As some have already said here the GOP has to run on scare tactics. Their official propaganda out is already saying that what happened today is a plot against Dear Leader before the midterms by his enemies. I wonder who they mean?
42
@Madeleine215 Not to mention the cheap imported goods at Walmart no longer being so cheap. Maybe the base will finally have to "buy American" instead of just pretending to. Remember who made all those MAGA hats sold by third parties and who bought them instead of the ones made here.
9
Reviewing the comments here, I count at least 20 reasonable-sounding explanations for the huge drop in the stock market over the past few trading sessions. The bottom line, however, is that no one knows precisely what causes a market correction to occur, or to occur at a particular moment in time. Certainly, "program trading" can be a major culprit.
Be that as it may, only 52% of Americans own stock, and of that 52%, the vast majority of stock is owned by the wealthiest 10%. Most Trump supporters don't own stock, so the fall in the market won't affect their support for him or for Republican candidates generally.
What bears close watching are the following: (1) how the WH and the Treasury handle the situation if things really go south in the markets; and (2) how the oligarchs react.
Unless the stock market sinks the way it did in in 2001 and 2008, I expect radio silence from Trump -- or at most a comment to the effect that "markets go up, and they go down."
17
Growth through debt doesn’t end well. $6.6 TN in corporate debt. $1.5 TN in student debt. $1 TN in credit card debt and >1 TN in federal deficit. This is all very inflationary except for the steady supply of Chinese merchandise and purchase of our debt. That’s coming to an end now. So inflation will start kicking in.
45
This is just hiccup, nothing more, and has literally nothing to do with China. In a few weeks the market will recover from this. Corporate earnings are expected to continue climbing 20% year over year for the next two quarters, the economy is still expanding, and unemployment is a record low. There are zero conditions for a bear market.
7
And yet, wages stagnate, student debt is poised to rob my entire generation of any meaningful wealth accumulation, and the real estate market looks like it did circa 2006. The cocaine high is great in the moment, but the come down is brutal.
36
@RSSF No conditions other than a hyper-inflated market that has only gone up, on any good/bad news, for a decade straight. Everybody dumped their money into equities, as the other low-earning options *sounded* terrible. (Irrational exhuberance)^18. I'm not sure when it'll hit, but when it does, it'll be worse than you've ever seen in your lifetime.
8
There are many reasons to be concerned about the long-term health of the US economy. Chief among these is our failure to address climate change. (Are so-called business analysts not aware that an uninhabitable planet earth will severely deplete the number of people able to drive a consumer diriven economy?)
But a short-term fluctuation in stock prices is not one of these concerns. And attempts to analyze the cause of a single day's fluctuation on the same day as it occurs is an exercise in speculation, not analysis.
8
But it keeps eyes glued to screens, increases website visits and keeps lots of “experts” employed.
4
Tomorrow the algorithms will go to work and find some buying to do after this drop or maybe the algorithms will say sell. If algorithms could talk what would they say?
Algor 1 says to Algor 2, "This would be a lot easier if we could count on a predictable President with an actual plan."
Algor 2 responds, "Just go crunch some numbers and enter in a hyperbolic variable to account for his ruminations. Cross your fingers and hope we stay on the positive side of the number line."
Algor 1 quips, "Is this any way to run a business?"
Algor 2 answers, "Yeah, that is his business model. Start with a lot of money and then behave unpredictably."
Algor 1 jaw dropping, "And that is supposed to work?"
Algor 2 defiantly, "Says so right in his book."
24
@Richard Wiesner - So I wondered when the Trump disinformation team would chime in and try to blame this on machine trading? They tried in January as well, but that lie didn’t really own out. The thing is that most algos are chosen by human traders and have limits of how low/high to go. There are some High Frequency Traders that can do what you describe, but they are a very small part of the market and are regulated now so they are not allowed to move entire indices the way you describe without the SEC sending someone to jail. No, today was what happens when a rational and orderly retreat by institutional investment firms gets piled into by retail panic after market news gets out.
4
The NYT's recently had an article that said Wallstreet said they see Trumps major recession coming soon. I hope this is the beginning and is a big one for Trumps supporters to get affected. The Republicans had done tariffs against our allies in 1932 called the Smoot and Hawley and it failed miserably. They were voted out of office the next year. Now Trump is going to close our Post offices and let thousands of people be unemployed. The post office needs to close having a 10 billion health bill to pay. With all this bad news coming from the White House I am not surprised to see the stocks plunge.
20
@D.j.j.k., but remember, lots of good people, our people, will be hurt, too.
1
@CP
I am sorry about that but when half the country supports culture of corruption I guess every body hurts. That is sad.
Will Trump take "credit" for this remarkable performance? He had no trouble taking credit for a rising market! Wise leaders know to keep their distance from financial markets, but no one ever accused Trump of being wise.
38
trump takes no responsibility for anything except the “good stuff” anything negative is someone else’s fault, he’s like a child.
5
"Everything is fundamentally sound"
Wall Street Quote 1929
54
So will Trump be braying tonight in Erie PA about how great the market is???
I think not. I live in W. PA and ALL my neighbors are complaining about 3.29 a gallon gasoline, and now whatever they made in the market for 2018 is evaporated in ONE DAY.
Trump will be blatting about Kavanaugh, that Ford is a liar, the Dems are causing the hurricanes to spite him, only 12 people died in the tsunami/earthquake ( and they were all elderly in nursing homes),....that we are "teaching" Iran a lesson, we are thumping the Chinese, and the tax cuts are NOT going to break the nations back.
Trump said to "wait a few weeks for a HYUUUUGGGEE announcement on cutting the ballooning deficit (AFTER the elections)....when he will probably announce his well thought out plan to cut Social Security, Medicare and ESPEICALLY Medicaid.
And funding for a wall.
And that he's considering Steve Bannon for UN Secretary.
Are we winning yet?
60
It' called........"WINNING". Get used to it. More to come. The stock market is now competing with bonds, & everything isn't perfect.
5
Stocks dropping, climate change hitting, Trump flying off to a rally. Just another day in the USA.
46
I wonder if Trump will mention this drop in his rallies.
20
when market goes up , because TRUMP's economy when market goes down because Obama did not do a good job
11
About time to revive the term 'irrational exuberance' perhaps?
8
Is there a stronger word than irrational?
2
@From Where I Sit...3 words: collateralized debt obligations (CDO's)...when you bundle thousands and thousands of mortgages into investment vehicles and sell them around the world. Then interest rates increase and home owners are unable to pay their mortgages. However, nobody knows which mortgages since they've been bundled together into huge investments. Then credit freezes up, banks refuse to lend to each other, companies go out of business, home owners lose their jobs and their homes when they can't pay on their mortages. Consider this a mini description of the 2008-09 Great Recession.
Kidnapping a Chinese spy from Belgium didn't help.
Bolton and what's left of the neo-cons are going to get us all killed.
24
The stock market fluctuates all the time.
This, on the other hand, is a big drop.
I wonder who trump will blame for this decline?
Obama, Hillary, Schumer, the prime minister of every country who has one, the FBI? Just waiting for that tweet.
BTW. Since tweeting is the main form of communication for trump, would it be logical to call him a bird brain? Methinks so.
MAGA- - DUMP TRUMP!
70
@angfil Definitely wrong. Birds have better brains than he does. Crows play in the snow, use tools(sticks) to extract food etc. Do you really think that occupant 45 is capable of such skills? Perhaps amoeba brain might be best, they do live in a swamp also.
9
Just a hiccup. Move along, folks.
2
@M - This time is different I suppose? Either that or you need a bump so you can out at a better spot this time?
5
Hurricane Michael is slamming into Florida panhandle and I feel bad for the people living in that area.
However Hurricane DJT is slamming into the entire USA and I feel that there might not be an end to it ever.
You know that he's going to blame the Democrats for this loss.
27 more days to midterms.
55
So, if you jack up interest rates, housing will crash. From 2017, to 2018, according to usual measures at department of labor, WAGES ARE DOWN. Wins fo Trump:polluters are able to pollute more, contributors to 5014C can be foreign governments, other people who want cheap mineral rights in a state-- no disclosure. They can claim a candidate is a child molester, or a Russian spy, and no time before elections to prove them wrong, and no penalty paid. We have stepped out of hard won negotiations with farmer selling to China, verifiable nuclear treaties with Iran, and the p-grabber in chief has done tax things that would land anybody but the president in jail. I think he will run for dictator, don't you?
16
“Stock markets like rising interest rates because they tend to signal a strong economic backdrop,” said Jonathan Golub, chief U.S. equity strategist for Credit Suisse.
What?
No market “likes” rising interest rates. Interest rates might rise in response to a strong market, but the causation doesn’t go the other way.
5
This is happening because he is not being a president. He is out doing rallys to boost his ego. I thought a president was suppose to stay in Washington D.C. & work for the citizens. This one is out there craving attention & promoting violence against anyone who is not a republican. I hope the stock market continues to fall over the next few months. He needs something to worry about other than his face on TV.
37
Trump knows what he's doing, though. Nothing to worry about at all.
7
It has been nice to know you Donny, but the reality show is finally over. Your in big trouble now!
18
The hedge fund chieftains, who control the market, are biding their time. They will reward Trump for the big tax cut by bidding up equities right before the mid-terms. And Trump's working class base, who hold almost no stock, will again reward the Republicans with their vote. Once again voting against their own interests.
20
@Dave. They try every day - in fact, they have been buying the dip and hiding the intraday volatility from the average investor for the last 7 months. I am not sure they can do it this time without the corporate overseas repatriated money that is locked up until at least next week. If earnings don’t come in strong they will absolutely not be able to do it even if the FED backs off and holds on rate increases.
5
The market as of today is at the same level it was around mid-January when it was in the middle of a steep climb in an overzealous reaction to the tax bill. Then tariffs were announced.
Well, it sure looks like the tax break steroids can’t overcome the Trump tariffs anymore now that companies are prohibited from stock buybacks due to the blackout period before reporting earnings.
...Or maybe it’s the tepid earnings relative to analyst estimates that companies are starting to hint ahead of official earnings reports.
...Or maybe it’s all that debt that is having to be sold at a premium to pay for that tax break that is hurting equities.
...Or maybe it’s the ridiculous price to earnings ratios that require investors to pay top dollar for a mediocre ratio of return from companies that are more leveraged by the week with record corporate debt.
Trump is probably even right that rising interest rates - as championed by his FED appointee more so than other board members - is having an effect.
One thing for sure though is that, with all three branches of government controlled by the Trump Party (the GOP is dead except for maybe two senators and a handful of representatives) and two years into the Trump Presidency, that whatever happens in the market is 100% based on Trump policy and cannot be blamed on Democrats.
This time will not be different no matter how much Trump believers throw money at the market and the straw that breaks the market’s back will be Tariffs.
19
@Jason "...and two years into the Trump Presidency, that whatever happens in the market is 100% based on Trump policy and cannot be blamed on Democrats."
Oh, goody. Now Dems can stop crediingt Obama for the stock market gains since the 2016 election.
2
@MCH - I think in a couple of years we will clearly see that the Obama gains were sustained and the Trump gains only short term as a result of economic steroid measures that benefited only the most wealthy. Now, maybe you should figure out the average market gain per month or year under Trump and compare it to Obama’s average. I know you will be very surprised to see that Trump is not winning. Incidentally - the best average gains of a modern President were under Clinton.
10
Of course stocks react when interest on bonds climbs suddenly and dramatically. How could they not.
And the cause of the rise in interest rates? Republican policy:
Massive deficits caused by ill-considered tax cuts.
Increased prices for almost all goods because of ill-considered tariffs on foreign goods.
The Trump-Ryan recession cometh, and when it arrives, Congress won't be able to stimulate the economy with more tax cuts from our bankrupt treasury.
Republicans have delivered the perfect economic storm to the American people.
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Who would ever think that someone who went through multiple bankruptcies even after inheriting $140 M from his family would not mess up an entire economy of a nation that was already in good shape?
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Correction:
That would be inherited $400 M
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It was more like $410 M!
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@Dave..It was actually $410M, but who's counting?
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Increasing mortgage rates , had prices the highest in 4 years, food prices through the roof and increased healthcare premiums. Layoffs due to tariffs and world economy tumbling- who will get the blame Democrats and there are no adults in room who have intellect or capacity to correct . And Trump rants at resistance at his rallies while his adoring base adore their demigod.
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And here we are...just in time for the mid-terms...
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I don't draw any conclusions from one day; stocks may be up 500 to 1000 tomorrow.
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I can just see the latest tweet from the president:
'Obama is to blame' despite all my hard work, he is the one responsible for everything wrong with the economy'.
Lock him up!
Oh, yeah, Lock up Hillary!
And, Diane Feinstein!
And, ...
You know, if he declared the US under war, he could suspend Habeas corpus, and lock em all up.
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@Gdnrbob
I'd not mind locking up all the politicians on both sides who've taken corporate bribes, aka corporate donations.
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Finally...an article on the economy...funny how we haven't heard anything on the other 99% good news. Will you write another retraction when the Market goes back up? Didn't think so...
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@dave
Are you saying a 800 point drop in the Dow is not newsworthy?
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@Dave
This time is not different. The Bull Market that lasted for 6 of Obama’s 8 years has to end sometime.
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An economy that has been on the rise since the recession due to Bush and mostly, Obama efforts. Trump benefited from the growth and stimulus that happened before he even got elected. But let me guess, you are one of those that when the country was digging out of its hole you were blaming Obama for everything!
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As the saying and song lyric go, "What goes up, must come down..." and the super inflated stock values brought on by sustained and freakishly low interest rates is now beginning to come to an end as the Federal Reserve tries to gradually normalize and balance the system with higher prime lending rates. Of course, Trump's tariff plays have the potential of inflaming a circumstance in the markets that can not be walked back.
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From the perspective of a former Wall Street technology stock analyst and research director, this market has had all the characteristics of a souffle for a couple of years now. Even given the seemingly inexhaustible amount of hot air coming from Washington and Wall Street, it's dubious that it doesn't collapse. Virtually everything being done in political and corporate America is focused on the near-term, with little or no need being paid to the long term.
A severe market correction to reflect reality places two areas at relatively high immediate risk: defined-benefit pension plan sponsors and educational institutions dependent upon annual drawdown from engorged endowments (many of which are inherently illiquid). The former places a lot of taxpayers at risk, given the enormity of underfunding by substantial numbers of government units; the latter involves dozens of high-profile colleges and universities that are increasingly being viewed as revenue sources by various government entities.
This could become really unpleasant.
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Thanks Clown! So tired of "winning."
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Trump has been saying there is no economic reason to raise interest rates. This clearly has the smell of an attempt by democrats to win the mid-term elections.
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The GOP owns all three branches of government. It’s ridiculous to claim democrats are behind the rate hike.
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The GOP has nothing to do with raising / lowering interest rates. Actually, this has nothing to do with the federal government. The "private" Federal Reserve is responsible for the interest rates.
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@Don
Interesting since the biggest advocate for rate increases on the Federal Reserve Board was nominated by Trump.
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And potus is in PA for a campaign rally. I guess he'll blame market drop on the dems.
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@Barbara for a man who wanted to be president he really hates being in Washington D.C. A president should be working in Washington for the people & not out seeking applause to boost his ego. He is not campaigning for anyone he is out for his glory. No hurricanes or plane crashes in his future. He needs to stay at his desk!
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@Nostradamus Said So Who said he wanted to be president? He wanted attention to jump start his failing brand. Campaigning feeds his ego, WH is drudgery, full of people trying to tell him things he's not interested in.
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@Kathy Agreed Kathy. Read Michael Lewis' new book-- his lack of concern for our government and failure to fill important positions is having scary consequences that are only going to get worse....
It will be interesting to see how Trump will get himself( and us) out of this one. Implementing critical trade policy based on bravado is a sure fire recipe for failure.
Furthermore, those who are struggling to fund a dignified retirement should not be subject to the whims of traders who decide to unload their holdings and tank the market for all of us because of supposed good economic news and it's effect on interest rates.
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@BMAR distraction from the arrest of a Chinese national for espionage. Will he come here & disappear like the Saudi journalist?
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The only thing that will finally rid us of Trump is a prolonged, catastrophic fall in the stock market.
So let’s all sit back and enjoy it.
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@A. Stanton I have no stocks or other such so I will sit back & pray for a big crash with a resounding depression for the next two years. Then the democrats can come in & straighten it out for 4 years (or more) so the republicans can do it all over.
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@A. Stanton
Well, it's hard to enjoy a tooth extraction, even when the end is worth it.
This decline is the result of Trump's disastrous economic and trade policies. Let's see him dare to shout those hollow claims of his "great economy" at his MAGA-head rallies. And it will get worse. This is why the Republicans have stopped talking about tax cuts for billionaires and started to run on cheap scare tactics. Voters should take note! Republicans have nothing to offer except hate, anger, and fear. Vote them out!
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@William O, Beeman
Hate, anger, and fear is what drives turnout and may be all that's needed to win. Especially against ... what are the Democrats offering? I can't recall.
Worst market day in 8 months. Considering who's the so-called captain of our ship of state, it's the least surprising news in 8 months.
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The stock market is not the economy but we all know Trump’s bluster and mistakes will haunt as all. China beats us in almost every category of future economic prosperity: research and development, infrastructure investments, and transition to a renewable energy supply. The wasteful tax cut, the crumbling grid, highways, ports and public transport, our neglect of Africa, the deteriorating relations with allies, missed opportunities on new trade deals to contain China and finally the sabotage of free trade and the delicate global supply chain through tariffs all add up to an assault on the US and global economy. The downturn or a crash can happen anytime. It can be Brexit, or the collapse of an emergent economy, or something totally unexpected. We will call it the Trump Slump or the Great Trump Depression.
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Trump bully tactics on Economy is having first results; more to come soon. Tax cuts; tariffs; attacking China and on and on. Trump is solidly to blame for the coming collapse. Trump/GOP will deny blame; They are squarely to blame. Ray Sipe
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But it's not Trump's fault, as I'm sure he'll tell us.
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Enter the dragon. Trump left the rate door open with tax cut and trade war.
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Any comment from Trump? We're not winning so much anymore.
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@Richard last week everyone was claiming it’s Obama’s economy. What a joke.
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@Shamrock-
Obama’s economic polices are seeing fruition. But he’s not the one that started a trade war with China . That was the clown in the orange castle .
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It was the self proclaimed stable genius who said trade wars are easy to win. Too bad he didn't define what winning means to him which, from all available evidence finally boils down to everyone, and that means everyone, but Donald J Trump losing. Just the guy you want in control of weapons of mass destruction such as the world has never known.
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Don't panic-sell: the GOP isn't going to let its base get to November 6th with the stock market in correction territory. They will now pressure Trump to make conciliatory noises about trade policy, at least until the midterms. After that, he'll either resume his usual trade war rhetoric if the House goes Democratic, or ratchet it up further if it doesn't.
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...his base that is wealthy or well-off enough to afford to invest in the stock market. The same base that benefitted from his "biggest ever" tax cut. Not the majority of his base who can't afford to ever own stock, and has only seen a negligible increase in their take-home pay. But they'll probably continue to support him regardless
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Economics is my favorite science of all, with Psychology in close second. Mostly because neither are a science, and so many people seem to think that they are.
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@ubique
Economics actually is a science, but the economists are not scientists. They all have their favorite "school" and that's the problem.
It will be interesting to see the GOP and their tantrum throwing, responsibility dodging leader contort themselves into human pretzels to shift the blame for this on the Democrats.
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@wcdessertgirl
Right. Hillary's emails will be blamed . . .Or Mueller. . . Or Dr. Blassey Ford OR Soros for not paying those protestors.
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Easy- the market is reacting to the expected blue wave. Case closed.
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@wcdessertgirl
Wait, they will blame Hillary and her emails - or Benghazi.
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Time to reap what was sown.
Not a problem until the average Joe notices.
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@Awake Go ahead and sell. I’ll reap the profits next week.
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For month the federal government has been releasing statistics that claim a robust and string economy. The Federal Reserve, using these "statistics" continue to raise interest rates to tame inflation. Never mind that most of the people, in this country, have not benefit from this so called heated, robust economy. The latest rise, plus indicating more to come, has caused all other interest rates to rise, including bonds. The result, it is bringing down the stock market.
Couple this with Trump's tariffs and trade war. This is adding to inflation, by causing imports to increase in price. Now, it is starting to cause an upward spiral. Those getting hit are consumers, who are paying more.
Salaries are not keeping pace with inflation. Raises, for those who get them, are seeing prices and fees increase outpacing their salary.
The tax cuts continue to put money in the pockets of corporations, and very wealthy people. Most people are not seeing anything; or very little.
Finally, those who are re tired, or building their nest egg, are now seeing a major market correction. Rising bonds, and dropping stock prices, a two edge sword.
Trump, the Fed, GOP, and Congress have created the perfect storm for a recession. And, this recession will be very painful, because thanks to them, there is nothing to bail anyone out.
Oh yeah, thank you Fesinstein, Pelosit, the DNC and super delegates for thrusting Clinton on the masses 2 years ago. The seed sowed then, continues to be reaped.
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@Nick Metrowsky
Great essay Nick.
Then you throw in the DNC et al.
Unfortunate!!
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It was inevitable that Trump’s trade wars with other countries would lead to disaster. I am just surprised that it has not happened sooner. Trump’s nationalism has no place in the twenty-first century. As Yeats said, “Things fall apart. The centre cannot hold. Mere anarchy is loosed upon the world.”
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@Robert Dole Not a day goes by that I don't think of that Yeats poem. Especially, watching Trumpism come to power:
"The best lack all conviction, while the worst
Are full of passionate intensity."
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to continue the poem: “The best lack all conviction, while the worst/Are full of passionate intensity.”
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The president praised the record setting increase of the stock market. Now the down side is owning it when it declines. Will never own it just like has been in his life
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@Dave - I predict seriously that Trump will tweet an excuse along the lines of, "It's because those 'Dims' want to make me look so bad they crashed the stock market on purpose!"
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Many folks are finally digging themselves out of the great recession debacle only to be faced with every increasing mortgage rates preventing them from home ownership. Is the Trump every increasing national debt/tax cuts for the rich and corporations to blame. Or maybe foreign countries don't want to buy into our National debt by buying treasuries. Can't blame them with Trump antics being what they are.
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Long story short, Trump robbing Peter to subsidize farmers and pay off Paul (and Stormy) is not remotely sound economic policy.
Tired of winning yet?
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@common sense advocate Where do the republicans in the House who are pushing full funding for the wall going to find the money to pay for it? There is no surplus or extra lying around with trump flying all over the country to his "ego boosting" rallys & to play golf. If they pass the full funding for the wall, I will stop paying taxes. I have nothing they can confiscate so no blood from a rock.
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@Nostradamus - haven't you heard that the GOP uses the trillion dollar deficit like it's a surplus? They make fun of Democrats' for tax and spend- but the GOP is just spend and spend. That's why every single Democratic administration has economically outperformed every Republican administration since World War II.
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@common sense advocate Farmers have been subsidized for decades - each member of the farming family receives $50,000 a year, just 'cause. This didn't change under Bush, Obama, or Trump. And many in Congress own farms for that purpose (Dems as guilty as Reps).
Just another strong performance won't do. The profit will have to almost double in order to justify the stratospheric PE and the corporate tax cut is already accounted for in the bottom line. Then there is that matter of head winds in the form of the trade war. I wouldn't stick with stocks. Mine has been moving to savings and CDs that are marching toward 3%.
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For now, it's uncertainty with bad trade strategy. Soon it'll be the consequences of going way too far in treating the Chinese badly and ignoring how interwoven sectors of our economy are.
Putting g on the squeeze is bad foreign policy and trade strategy. Trump is making enemies. This will cost us dearly. It already is.
---
Things Trump did while you weren't looking
https://wp.me/p2KJ3H-2ZW
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This is what one would expect when you slash corporate taxes, give massive tax cuts to the wealthiest Americans for no reason and provide no money for infrastructure, healthcare or to start to pay down the national debt. Don't forget a trade war with our allies and a unnecessary military hardware buildup.This may be a blip or the beginning of Trumps Republican economic policy's taking effect. Well done Donald, that was easy.
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This market is the Bubble of Everything ~ where opportunity has risen in many, many places, it's difficult to point to one area that could signal future calamity. Makes me wonder if people are drinking too much Trumponomics KoolAid, and if the prevailing Republican rhetoric is shielding what's almost certain to come for the average investor. The ballooning Federal deficit -- looming to be the largest in history -- combined with higher payments on the debt due t rising interest rates -- are the tip of the iceberg. And purely a Trump-Ryan-McConnell play. Time to keep a close eye out.
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But it seems that right underneath the tech veneer is a massive marketing/advertising-driven bubble. Way too many businesses and business people are in marketing who are either not creative types or other would be in any other hot market just because of the trend. When things slow, what’s one of the first budgets to be cut? Marketing.
@Susan The "largest in history" by percentage was run up by FDR, but there was a war on. And it was paid off by Truman almost immediately.
Fixing Jr. Bush's "Great Recession" was responsible for the largest since, and although Obama then cut it rather dramatically, Trump has it on the increase again.
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