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Market in danger of big decline below SPX 2500


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#11 dTraderB

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Posted 24 January 2019 - 07:34 AM

For starters, the Council of Economic Advisers estimates that every week that the government remains partially closed, quarterly economic growth decreases by 0.13 percentage points. That means that by Friday, when federal workers will have missed their second paycheck, the shutdown will have already cost the U.S. economy nearly two-thirds of a percentage point of growth.

But, according to Brian Rose, Senior Economist Americas at UBS, the longer the shutdown lasts, the deeper the pain, as government agencies with spare funds to continue operations for a short period of time see their money run out and federal workers decide to quit rather than working indefinitely without pay. Replacements can be difficult and expensive to find and train, extending the negative effects of the shutdown even once the government reopens.

Put together the trade war, the government shutdown, and other seemingly self-inflicted economic woes and the Rose best summed up his view with a metaphor:

I once saw a short film about an F-1 racing team testing new engine designs. They would set the engine running at full throttle and wait until, glowing red from the heat, the most fragile part would break and the engine would stop. We are now running a similar experiment on the economy. It is difficult to predict what part will break first, but you can already smell the smoke. For example, the University of Michigan survey of consumer sentiment fell sharply in early January. The sub-index on recent changes in business conditions, which was at a record high last February, plunged to its lowest level since late 2011. The Fed's Beige Book also noted deteriorating business sentiment.



#12 12SPX

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Posted 24 January 2019 - 08:11 AM

 

For starters, the Council of Economic Advisers estimates that every week that the government remains partially closed, quarterly economic growth decreases by 0.13 percentage points. That means that by Friday, when federal workers will have missed their second paycheck, the shutdown will have already cost the U.S. economy nearly two-thirds of a percentage point of growth.

But, according to Brian Rose, Senior Economist Americas at UBS, the longer the shutdown lasts, the deeper the pain, as government agencies with spare funds to continue operations for a short period of time see their money run out and federal workers decide to quit rather than working indefinitely without pay. Replacements can be difficult and expensive to find and train, extending the negative effects of the shutdown even once the government reopens.

Put together the trade war, the government shutdown, and other seemingly self-inflicted economic woes and the Rose best summed up his view with a metaphor:

I once saw a short film about an F-1 racing team testing new engine designs. They would set the engine running at full throttle and wait until, glowing red from the heat, the most fragile part would break and the engine would stop. We are now running a similar experiment on the economy. It is difficult to predict what part will break first, but you can already smell the smoke. For example, the University of Michigan survey of consumer sentiment fell sharply in early January. The sub-index on recent changes in business conditions, which was at a record high last February, plunged to its lowest level since late 2011. The Fed's Beige Book also noted deteriorating business sentiment.

 

i so disagree!!  so our entire economy runs on 800,000 people don't think so.  yes it affects other areas to a degree but not by that much in my view.  always love reading all your information though so much in there btw!



#13 redfoliage2

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Posted 24 January 2019 - 10:07 AM

Bears still got a chance to bust the SPX 50 dma today..................



#14 dTraderB

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Posted 24 January 2019 - 12:25 PM

Choppy directionless markets.... so far, but this usually indicates a rapid range expansion - up or down

 

If the WH warns of zero GDP growth is the shutdown continues into Feb & March, then one has to take this seriously

 

Going from a healthy 3% plus GDP to near zero in a quarter  is a shock to the economy.

One can't simply turn off and turn on the economy as you would do to  vehicle etc

 

And, with emerging global data showing a slowing down, all you need as a catalyst to send it into a recession is the largest economy in the world

gong from #% to zero GDP! 

 

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The JetBlue CEO says the U.S. air system is nearing its "tipping point" over workers unpaid during the government shutdown https://bloom.bg/2DwVxjk 



#15 dTraderB

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Posted 24 January 2019 - 12:31 PM

Bad Optics

 

Wilbur Ross asks why furloughed workers aren’t taking out loans

Ross also downplayed the effect the shutdown would have on the nation’s economy.

“Put it in perspective, you’re talking about 800,000 workers. And while I feel sorry for the individuals that have hardship cases, 800,000 workers if they never got their pay, which is not the case, they will eventually get it, but if they never got it, you’re talking about a third of a percent on our GDP,” he said. “So, it’s not like it’s a gigantic number overall.”

 

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"The 30 days of pay that some people will be out, there's no real reason why they shouldn't be able to get a loan against it."

 

  • ‘I don’t really quite understand why’ they’re seeking charity
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    Bank credit is effectively government-guaranteed, he says

https://www.bloomber...-them-get-loans

 



#16 redfoliage2

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Posted 24 January 2019 - 12:51 PM

The market is waiting for a trigger for a resolution either way.  Internals holding well though...............


Edited by redfoliage2, 24 January 2019 - 12:59 PM.


#17 dTraderB

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Posted 24 January 2019 - 12:59 PM

Yeah, we are stuck in this range .... got to break out of this.

 

Need a catalyst....news... something



#18 redfoliage2

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Posted 24 January 2019 - 01:18 PM

Likely the SPX 50 dma will be tested again today.  It may be finally overcome and the range moves to a lower level ..............


Edited by redfoliage2, 24 January 2019 - 01:21 PM.


#19 dTraderB

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Posted 24 January 2019 - 02:37 PM

Not going to happen.

China and N Korea are stalling & playing for time.

 

As the markets decline, there will be more incentive for the US to make a deal

 

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U.S. Commerce Secretary says a U.S.-China trade deal will hinge on whether Beijing will deepen economic reforms and further open up its markets



#20 dTraderB

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Posted 24 January 2019 - 02:49 PM

Added to QQQ put position - really going out on the limb here with 3 QQQ APRIL 170 puts, also have an order to buy QQQ APRIL 168 puts

 

Grand total of 11 QQQ puts. 

 

Looks like Wilbur may be the next one out, he or Mnuchin

 

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Douglas Kass Retweeted Justin Sink

I say B.S.

Douglas Kass added,

Justin SinkVerified account @justinsink
Ross on Bloomberg TV says he was trying earlier to highlight that federal workers credit unions offering loans. "Part of my purpose in what I said this morning is to try to make sure the workers who are experiencing liquidity crises know that may be a source they could go to."
9:38 AM - 24 Jan 2019