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  1. #2621
    Join Date
    May 2010
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    Quote Originally Posted by JasonEvans View Post
    Really, really hard to game a scenario where this happens.

    So, the Dems would then need to pick up a seat in a state that Trump wins for President. I suppose there might be scenarios where Ga, NC, Texas, or Kentucky flip while Trump still wins the state's electoral votes... but, whew, that is not something that seems at all likely.

    -Jason "we are fairly likely to see a 50-50 senate in 2020 (Dems flip AZ, ME, CO and one of GA or NC while the GOP gets Bama) meaning the VP doesn't get to take nearly as many trips abroad for state funerals" Evans
    I think you might be right about this. For example, in 2016 Trump ran about 3 points behind the incumbent senator Richard Burr. Although Tom Tillis seems to be fairly unpopular: Real Clear Politics has him currently losing to "Smith" 46 to 39. I've lived in North Carolina since 1975, and I have no idea who Smith is... They also have Biden over Trump by about 7 points or so.

    Howard

  2. #2622
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    Hot'Lanta... home of the Falcons!
    Stock market tumbling today, down 600+ points, on fears that a recession is imminent (the short-term, long-term bond yields have gone inverted, which has presaged every recession since the 1960s).

    I'm not saying it is Trump's fault, but if the economy goes sour on him it really eliminates perhaps his strongest argument for re-election. What's more, I know voters have short memories, but at some point the Democrats would be wise to point out that we had economic booms under Clinton and Obama with recession coming under HW-Bush, W-Bush, and (perhaps) Trump.
    I don't know what you are doing right now, but if you aren't listening to the DBR Podcast, you're doing it wrong.

  3. #2623
    Join Date
    Sep 2007
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    Quote Originally Posted by JasonEvans View Post
    Stock market tumbling today, down 600+ points, on fears that a recession is imminent (the short-term, long-term bond yields have gone inverted, which has presaged every recession since the 1960s).

    I'm not saying it is Trump's fault, but if the economy goes sour on him it really eliminates perhaps his strongest argument for re-election. What's more, I know voters have short memories, but at some point the Democrats would be wise to point out that we had economic booms under Clinton and Obama with recession coming under HW-Bush, W-Bush, and (perhaps) Trump.
    I think all presidents take too much credit for the economy when it is strong, and get too much blame when it is not. All of it is well beyond a single person, as important as their policies may be in influencing the global and national economy.

    Having said that, this president has repeatedly held the rising stock market out as the measure of his economic prowess. Live by the sword, die by the sword as the old saying goes. If the market tanks, I don't think people will buy his argument that it is all the Fed's fault (and also ignore that Trump appointed the Fed Chief against whom he now rails).

    The global economy is slowing, and there are some incredibly disruptive possibilities out there such as Brexit, which can tank the economy wholly independent of Trump. And while an inverted yield curve has preceded those recessions, in some instances I believe that it preceded it by more than a year so it is not a direct correlation thing. It certainly shows that there is a lot of concern out there though. This is the longest bull market in recent history and it is getting a little long in the tooth no matter who sits in the White House.
    1991 -- 1992 -- 2001 -- 2010 -- 2015

  4. #2624
    Join Date
    May 2010
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    Durham, NC
    Quote Originally Posted by JasonEvans View Post
    Stock market tumbling today, down 600+ points, on fears that a recession is imminent (the short-term, long-term bond yields have gone inverted, which has presaged every recession since the 1960s).

    I'm not saying it is Trump's fault, but if the economy goes sour on him it really eliminates perhaps his strongest argument for re-election. What's more, I know voters have short memories, but at some point the Democrats would be wise to point out that we had economic booms under Clinton and Obama with recession coming under HW-Bush, W-Bush, and (perhaps) Trump.
    Well, I never finished my Phd in econ, but I'm pretty sure of one thing: low interest rates plus massive federal deficits mean, that in the macro sense at least, the government is already applying full stimulus. The fact that the economy could still tumble into recession under those circumstances would, all things being equal, be quite surprising. Of course all things aren't equal and facts like the current trade war and the budget deficit being in large part because of tax cuts to higher income families and corporations (who tend not to spend their increased income) do mitigate the stimulus being applied. So I suppose current policy should take some blame. But it does seem like every time we think the business cycle has been eliminated, we are proven wrong.

  5. #2625
    Quote Originally Posted by JasonEvans View Post
    Stock market tumbling today, down 600+ points, on fears that a recession is imminent (the short-term, long-term bond yields have gone inverted, which has presaged every recession since the 1960s).

    I'm not saying it is Trump's fault, but if the economy goes sour on him it really eliminates perhaps his strongest argument for re-election. What's more, I know voters have short memories, but at some point the Democrats would be wise to point out that we had economic booms under Clinton and Obama with recession coming under HW-Bush, W-Bush, and (perhaps) Trump.
    Many thoughts...

    1. The fixed income market (inversion) is screaming the Fed blew it last September and December. Trump loudly and consistently said so back then.
    2. The U.S. fixed income market is definitely affected by the more than $15 trillion of currently negative rate European and Japanese debt.
    3. 2-10 year inversion usually first occurs 18-24 months before recession. IOWs, probable recession is most likely after 2020 election.
    4. One of the most prudent ways to stop or minimize the probable recession is to borrow substantial 30 year money (@ ~ 2%) and substantially repair US infrastructure.

  6. #2626
    Quote Originally Posted by OldPhiKap View Post
    I think all presidents take too much credit for the economy when it is strong, and get too much blame when it is not. All of it is well beyond a single person, as important as their policies may be in influencing the global and national economy.

    Having said that, this president has repeatedly held the rising stock market out as the measure of his economic prowess. Live by the sword, die by the sword as the old saying goes. If the market tanks, I don't think people will buy his argument that it is all the Fed's fault (and also ignore that Trump appointed the Fed Chief against whom he now rails).

    The global economy is slowing, and there are some incredibly disruptive possibilities out there such as Brexit, which can tank the economy wholly independent of Trump. And while an inverted yield curve has preceded those recessions, in some instances I believe that it preceded it by more than a year so it is not a direct correlation thing. It certainly shows that there is a lot of concern out there though. This is the longest bull market in recent history and it is getting a little long in the tooth no matter who sits in the White House.
    Very true. The US economy is bigger than any one person, even if that person is the President. And the economy is cyclical by nature, so all a President can really do via policy is extend the high's a bit (as Trump's tax cut and GWB's stimulus check seemed to have done) or shorten the low's (as the bank and auto bailouts under Bush/Obama ostensibly did). Even then, there are tradeoffs with deficit spending.

    However, when a politician takes credit for the highs, it becomes difficult to separate yourself from the lows. IMO, if the economy does trend towards a recession, Trump will undoubtedly blame someone other than himself, as that's just smart politics. A few possibilities - Democrats in the House (e.g. "everything was fine until they took over"), the fed chair ("I told them to lower interest rates but they wouldn't listen. Now we have a mess but it's not my fault."), or maybe even immigrants/illegals.

    Obama and Bill Clinton benefitted from an economic downturn during an election year that soured people on the incumbent and his party. I think a similar downturn in the next 15 months would really hurt Trump with moderates. It's established that around 35% of the country is supporting Trump no matter what. But he needs the "I support him on the economy but dislike what he says" crowd to win re-election. Without their support, the reelection math just doesn't work.
    "There can BE only one."

  7. #2627
    Quote Originally Posted by howardlander View Post
    Well, I never finished my Phd in econ, but I'm pretty sure of one thing: low interest rates plus massive federal deficits mean, that in the macro sense at least, the government is already applying full stimulus. The fact that the economy could still tumble into recession under those circumstances would, all things being equal, be quite surprising. Of course all things aren't equal and facts like the current trade war and the budget deficit being in large part because of tax cuts to higher income families and corporations (who tend not to spend their increased income) do mitigate the stimulus being applied. So I suppose current policy should take some blame. But it does seem like every time we think the business cycle has been eliminated, we are proven wrong.
    Aside from the fact that we've been running low interest rates and massive federal deficits since the start of the last recession. This isn't a new thing in the last two years. The Federal Reserve rate didn't even go up from the lows of the recession until late 2015 and not a sustained increase until late 2016. Even now they are still below anything seen outside of the early 1960's (aside from a brief dip after 9/11).

    An interesting question to ponder, if it looks like the economy is trending down, would Republicans consider a primary challenge against Trump?

  8. #2628
    Join Date
    Dec 2014
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    I'd tell ya, but then I'd have to kill ya
    Quote Originally Posted by PackMan97 View Post
    Aside from the fact that we've been running low interest rates and massive federal deficits since the start of the last recession. This isn't a new thing in the last two years. The Federal Reserve rate didn't even go up from the lows of the recession until late 2015 and not a sustained increase until late 2016. Even now they are still below anything seen outside of the early 1960's (aside from a brief dip after 9/11).

    An interesting question to ponder, if it looks like the economy is trending down, would Republicans consider a primary challenge against Trump?
    I still think this is, and will remain, a solid "NO".

    At this point in his Presidency, Obama had raised the Dow about 49%. Trump has raised it about 29%. Yes there are a lot of factors, but he is the one always talking how he's done more than anyone. See OPK on swords.

    Good thing for him that Americans are terrible at math.

  9. #2629
    Quote Originally Posted by OldPhiKap View Post
    Having said that, this president has repeatedly held the rising stock market out as the measure of his economic prowess. Live by the sword, die by the sword as the old saying goes. If the market tanks, I don't think people will buy his argument that it is all the Fed's fault (and also ignore that Trump appointed the Fed Chief against whom he now rails).
    IMO, the stock market will not tank between now and Election Day. What odds would you give me, if I wagered the S&P 500 will close higher on 2020 Election Day than it does today?

  10. #2630
    Quote Originally Posted by dudog84 View Post
    At this point in his Presidency, Obama had raised the Dow about 49%.
    I seriously doubt Obama would take credit for that stock market gain. IMO, Obama did not want to make the top 1% substantially wealthier, but he had little choice.

  11. #2631
    Join Date
    Dec 2014
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    I'd tell ya, but then I'd have to kill ya
    Quote Originally Posted by Jeffrey View Post
    I seriously doubt Obama would take credit for that stock market gain. IMO, Obama did not want to make the top 1% substantially wealthier, but he had little choice.
    Well, yesterday Trump took full credit for a plant that was given the green light in 2012. So taking credit is not a fine science. At least not peer-reviewed.

    Unfortunately, the Dow is a rather poor catch-all for the health of the economy (IMO). There must be something better. But it's what everyone uses.

  12. #2632
    Quote Originally Posted by dudog84 View Post
    Unfortunately, the Dow is a rather poor catch-all for the health of the economy (IMO). There must be something better. But it's what everyone uses.
    It's been many years (a couple decades) since I've paid any attention to the Dow. I prefer the S&P 500.

  13. #2633
    Quote Originally Posted by Jeffrey View Post
    IMO, the stock market will not tank between now and Election Day. What odds would you give me, if I wagered the S&P 500 will close higher on 2020 Election Day than it does today?
    I would take that pie bet, the only two problems are:

    1) I don't like betting against our country.
    2) If I won, you'd likely not be in a position to buy me a pie with the economy tanking and all.

    So maybe you just paypal me $30 now and if I win I'll buy myself a nice pie, if I lose I'll send you back the $30?

  14. #2634
    Join Date
    Sep 2007
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    Undisclosed
    Quote Originally Posted by Jeffrey View Post
    IMO, the stock market will not tank between now and Election Day. What odds would you give me, if I wagered the S&P 500 will close higher on 2020 Election Day than it does today?
    I think the odds are that the market is likely within 5% plus or minus of the territory we have covered so far today (i.e., roughly between 3,045 and 2,719 early next November). I also think that if we are outside of that band, the risk of falling below that mark is much higher than the chance of exceeding that mark though. And that is due to international factors which effect the global market more than policy decisions made here in the US.

    The UK economy contracted last quarter and Brexit could be a huge disruption. China's growth rate is way down and it is manipulating its currency. German and French economies have slowed. An armed conflict in Hong Kong could be a major disruption of trade. Italy's economy is struggling to put it politely. Conflict with Iran could cause a disruption of oil from the Middle East. While I would bet against a collapse of the US real estate market or our banks (which triggered the last major downturn), or a huge spike in US unemployment or core inflation, there are external factors which effect our ultimate markets and which seem riskier to me than they did say 18 months ago. And recession talk often becomes self-reinforcing: people hear about the "impending" recession so they spend a little less, which means that the businesses make a little less and maybe employ a little less, which makes people more worried and then spend even less . . . . (I'm sure there's a name for the phenomenon -- it's not original to me but I'm not sure what it is).

    So the TLDR answer: I would not be surprised to see the S&P roughly about where it is now, but if there is a surprise I think it is quite likely to be on the down-side and not up.

    Agree/disagree?
    Last edited by OldPhiKap; 08-14-2019 at 12:30 PM.
    1991 -- 1992 -- 2001 -- 2010 -- 2015

  15. #2635
    Join Date
    May 2010
    Location
    Durham, NC
    Quote Originally Posted by PackMan97 View Post
    Aside from the fact that we've been running low interest rates and massive federal deficits since the start of the last recession. This isn't a new thing in the last two years. The Federal Reserve rate didn't even go up from the lows of the recession until late 2015 and not a sustained increase until late 2016. Even now they are still below anything seen outside of the early 1960's (aside from a brief dip after 9/11).
    Right, and all that time the economy has been expanding. The interest rates aren't lower than they were a few years ago but the deficit is significantly higher now than, for example 5 years ago. The deficit in 2014 was 485 billion: the estimate for 2019 is 1.091 Trillion. (see https://www.thebalance.com/us-deficit-by-year-3306306). So from a macro-economics point of view the economy is being stimulated almost as much as it was at the worst of the Great Recession.

    Quote Originally Posted by PackMan97 View Post
    An interesting question to ponder, if it looks like the economy is trending down, would Republicans consider a primary challenge against Trump?
    I think there will be a challenge, but not a very high chance of success IMO.

  16. #2636
    Quote Originally Posted by PackMan97 View Post
    So maybe you just paypal me $30 now and if I win I'll buy myself a nice pie, if I lose I'll send you back the $30?
    Maybe not.

  17. #2637
    Quote Originally Posted by OldPhiKap View Post
    I think the odds are that the market is likely within 5% plus or minus of the territory we have covered so far today (i.e., roughly between 3,045 and 2,719 early next November). I also think that if we are outside of that band, the risk of falling below that mark is much higher than the chance of exceeding that mark though. And that is due to international factors which effect the global market more than policy decisions made here in the US.

    The UK economy contracted last quarter and Brexit could be a huge disruption. China's growth rate is way down and it is manipulating its currency. German and French economies have slowed. An armed conflict in Hong Kong could be a major disruption of trade. Italy's economy is struggling to put it politely. Conflict with Iran could cause a disruption of oil from the Middle East. While I would bet against a collapse of the US real estate market or our banks (which triggered the last major downturn), or a huge spike in US unemployment or core inflation, there are external factors which effect our ultimate markets and which seem riskier to me than they did say 18 months ago. And recession talk often becomes self-reinforcing: people hear about the "impending" recession so they spend a little less, which means that the businesses make a little less and maybe employ a little less, which makes people more worried and then spend even less . . . . (I'm sure there's a name for the phenomenon -- it's not original to me but I'm not sure what it is).

    So the TLDR answer: I would not be surprised to see the S&P roughly about where it is now, but if there is a surprise I think it is quite likely to be on the down-side and not up.

    Agree/disagree?
    Appears to be a rather long list of reasons for a decline, possibly a substantial decline. So, why are you not wagering on one?

  18. #2638
    Quote Originally Posted by howardlander View Post
    So from a macro-economics point of view the economy is being stimulated almost as much as it was at the worst of the Great Recession.
    Disagree. Short rates are currently substantially higher (than basically zero) and the US Government is not currently aggressively buying debt.

  19. #2639
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    Quote Originally Posted by Jeffrey View Post
    Appears to be a rather long list of reasons for a decline, possibly a substantial decline. So, why are you not wagering on one?
    Because I am substantially invested in the market for the long term and I am not smart enough to figure out precise short-term variations. (Which I assume is part of your point -- that long term trends have historically been higher and no one knows the day or hour of specific moves -- no?) But to the extent I took some profits recently and am holding those proceeds in safer assets for the moment I guess I have hedged ('lightly wagered") in that direction.

    To the topic of the thread, do we both agree that a sagging economy makes it more difficult for Trump to get re-elected? And if so, that there is a risk that a trade war could cause the chance of such a sag to increase? Or that there are plenty of causes outside of any president's control which could cause such a sag? That's really the point I was hoping to make.
    Last edited by OldPhiKap; 08-14-2019 at 12:49 PM.
    1991 -- 1992 -- 2001 -- 2010 -- 2015

  20. #2640
    Quote Originally Posted by howardlander View Post
    Right, and all that time the economy has been expanding. The interest rates aren't lower than they were a few years ago but the deficit is significantly higher now than, for example 5 years ago. The deficit in 2014 was 485 billion: the estimate for 2019 is 1.091 Trillion. (see https://www.thebalance.com/us-deficit-by-year-3306306). So from a macro-economics point of view the economy is being stimulated almost as much as it was at the worst of the Great Recession.

    I think there will be a challenge, but not a very high chance of success IMO.
    I would argue at least half of the deficit we have right now is structural. Go back to the 2014 budget (and all of the pre-tax cut budgets) and we were always going to have a $500+ billion deficit in 2019 due to various laws long since passed. I don't think it's fair to use just the deficit as a measure of stimulus spending. As a measure of fiscal irresponsibility, sure.

    A better thing to look at might be federal spending.federal

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