10 replies to this topic

[skott]

https://www.dailymai...-IMF-warns.html

[pdx5]

Corporates are not alone in the debt area.

Students are drowning in college debts.

Consumers are loaded to their necks in credit card debt.

With the housing price bubble, mortgage loans are sky high.

I hope the margin loans are manageable, haven't seen any news on that lately.

Annual federal budget deficits are now running north of $1 Trillion.

I can't think of ONE country in the G10 which is not drowning in debt.

 

That is what happens with artificial low interest rates.

So the FED better not jack up rates to real inflation levels.

Because they have the tiger by the tail and can't let go!

If they did, the tiger will devour them.

[skott]

And car loan debts are crazy too. So much debt everywhere and ppl think you can just keep it going. I'm worried. Madness everywhere.

https://thesoundingl...idity-its-debt/

[Waver]

Debt isnt a problem until its a problem.

From the last look, credit spreads show zero issues.
Until it starts spiking higher, debt isnt a problem.

That being said, I can see a massive amount of deflation due to all of this debt. But only what that time comes.

Edited by Waver, 20 October 2019 - 11:33 AM.

[skott]

This may be why the Russell 2000 has performed so poorly. Companies are having trouble meeting interest payments according to the IMF. I guess every October I get antsy. I still remember and actually predicted that 1987 crash days before it happened. I was young and new little about trading and tried to buy puts but could not for some reason. Maybe I was not deemed to have enough experience? Getting that deja vu again. Someone wrote an article about similarities between then and now, more like an ad, I should say

[pdx5]

Debt isnt a problem until its a problem.

From the last look, credit spreads show zero issues.
Until it starts spiking higher, debt isnt a problem.

That being said, I can see a massive amount of deflation due to all of this debt. But only what that time comes.

 

 

Haha.....debt is never a problem If economies are doing great, debt is actually a useful leverage to accentuate profits or gains.

The problems explode when the economies start to slow down. That is when the high debt accelerates the downslide.

[skott]

PDx5, you are a little inaccurate. We are having to continually add more and more debt just to keep the ship afloat. The amount of
debt injected now has little effect any more. Add to the fact that the "Fed" is having to pour nearly a trilling into the Repo mar
ket over just a months time when the economy is at full employment is a problem. Why are we cutting rates with full employment?
The system is already broken. I should say the lug nuts are very loose on the wheels and one day they will come off completely.

This hyper-loading of debt is causing the same problem at three levels. The problem is inablity to meet payment
on debt. The levels are individual, businesses and the govt. For govt, the interest paymet is I believe now either
the largest item in the budget. It keeps growing because we keep piling on ever more debt. This is occurring despit
record low interest rates that the govt is borrowing at. The interest is starting to choke out of items in the
budget. You can also add pension liabilites which applies more at the state level. Chicago looks like sh!T because
the govt is fleecing the people giving out lavish pensions to govt workers retiring at 50 or 55. More and more retire
and colliect for 30+ years while the little guy gets nothing. These pensions by state law must be paid before all
other items.

Edited by skott, 20 October 2019 - 05:00 PM.

[OEXCHAOS]

This may be why the Russell 2000 has performed so poorly. Companies are having trouble meeting interest payments according to the IMF. I guess every October I get antsy. I still remember and actually predicted that 1987 crash days before it happened. I was young and new little about trading and tried to buy puts but could not for some reason. Maybe I was not deemed to have enough experience? Getting that deja vu again. Someone wrote an article about similarities between then and now, more like an ad, I should say

 

Well, I was there, as a broker in 1987. I actually had an order in to buy a bunch of out of the money puts on the Wednesday before the crash (I missed them by 1/32, IIRC). You could smell a problem in the market, and it was being telegraphed by sentiment and by breadth. Neither of those conditions exist today. Not even close.

 

Moreover, the Crash of '87 is really Wall St.'s "Self-Inflicted Wound". We were due a good wash-out in what was a run of the mill correction (and what should have been a solidly deep one), but Crash, however, was really about the "portfolio insurance" and index arbitrage, which were poorly understood by a lot of players, even big ones at the time. It wasn't predicting a major economic problem- it WAS the problem. But it was quickly corrected.

And folks like you and me spent decades looking for the next Crash.

 

Mark

[12SPX]

 

This may be why the Russell 2000 has performed so poorly. Companies are having trouble meeting interest payments according to the IMF. I guess every October I get antsy. I still remember and actually predicted that 1987 crash days before it happened. I was young and new little about trading and tried to buy puts but could not for some reason. Maybe I was not deemed to have enough experience? Getting that deja vu again. Someone wrote an article about similarities between then and now, more like an ad, I should say

 

Well, I was there, as a broker in 1987. I actually had an order in to buy a bunch of out of the money puts on the Wednesday before the crash (I missed them by 1/32, IIRC). You could smell a problem in the market, and it was being telegraphed by sentiment and by breadth. Neither of those conditions exist today. Not even close.

 

Moreover, the Crash of '87 is really Wall St.'s "Self-Inflicted Wound". We were due a good wash-out in what was a run of the mill correction (and what should have been a solidly deep one), but Crash, however, was really about the "portfolio insurance" and index arbitrage, which were poorly understood by a lot of players, even big ones at the time. It wasn't predicting a major economic problem- it WAS the problem. But it was quickly corrected.

And folks like you and me spent decades looking for the next Crash.

 

Mark

 

Great minds think alike!  I was the only guy in the office saying somethings up and cashed completely out on Wednesday but I wasn't much of an option trader then so missed it!!  Was so much fun on Monday buying cheap stocks with the tape hours behind though...  

[OEXCHAOS]

 

 

This may be why the Russell 2000 has performed so poorly. Companies are having trouble meeting interest payments according to the IMF. I guess every October I get antsy. I still remember and actually predicted that 1987 crash days before it happened. I was young and new little about trading and tried to buy puts but could not for some reason. Maybe I was not deemed to have enough experience? Getting that deja vu again. Someone wrote an article about similarities between then and now, more like an ad, I should say

 

Well, I was there, as a broker in 1987. I actually had an order in to buy a bunch of out of the money puts on the Wednesday before the crash (I missed them by 1/32, IIRC). You could smell a problem in the market, and it was being telegraphed by sentiment and by breadth. Neither of those conditions exist today. Not even close.

 

Moreover, the Crash of '87 is really Wall St.'s "Self-Inflicted Wound". We were due a good wash-out in what was a run of the mill correction (and what should have been a solidly deep one), but Crash, however, was really about the "portfolio insurance" and index arbitrage, which were poorly understood by a lot of players, even big ones at the time. It wasn't predicting a major economic problem- it WAS the problem. But it was quickly corrected.

And folks like you and me spent decades looking for the next Crash.

 

Mark

 

Great minds think alike!  I was the only guy in the office saying somethings up and cashed completely out on Wednesday but I wasn't much of an option trader then so missed it!!  Was so much fun on Monday buying cheap stocks with the tape hours behind though...  

 

I had orders to cross millions of dollars worth of OTC stocks, which would have netted me over 100k in commissions. Couldn't get anyone to pick up the phone to cross them for me. Almost all the orders went away before I could do the cross. Such are crashes!