State of the Market

[oliverson]

...
There is nothing good about cutting rates to zero, and it will only be done as an emergency measure. The idea that the economy will have a soft landing, and that inflation will just stick around 3-3.5% as the new normal is a bit like saying if I throw a stick in the air it will land on its end and perfectly balance. It could happen, but the dynamics around it mean this kind of equilibrium is highly unlikely to emerge in practice. The interest rate lever has an 18 month lag in its connection to the real economy. So the central bank pushes it up, then after a delay the economy crashes, it pushes it down, after a delay it surges. Imagine trying to steer your car down a winding country lane but the steering wheel has a delay of 15 seconds on it, and now you see why these things tend to always have an oscilating movement.

...

I have a pretty violent toaster that likes to eject the toast in random directions. One day it ejected a single thin slice of toast and did indeed manage to stand perfectly upright. I wonder what the chances of that might be?!

[jamesbrown]

Sorry, but a lot of this is just rubbish.

The Fed rate is a zero year (today) rate, not a 2 year rate. They are about to reduce rates imminently and could easily get to the 2 year rate in a fairly short period of time (changing up to 8 times per year). Nothing unusual about this at all.

There is not a 'massive flight to safety' - if you have evidence of that, let's see it. There is more going into defensive stocks and bonds but these have been unloved (and therefore relatively cheap) for years and bonds are much better value after the recent crash. Tech stocks look relatively pricey, but people are still buying.
The stock market is pretty buoyant, but somewhat volatile. Unsurprising given the uncertainties around the US election in particular.

The bond yield curve was inverted for the past two years - usually a good predictor of a recession. That didn't happen and it's no longer inverted.

A lot of the below feels a bit conspiracy theory and I guess there are websites that you read that push this kind of view.

Finally, Buffet's Berkshire Hathaway is sitting on 17.5% cash - about the long term average.
If you have alternative information about him having 'sold almost all his shares' then let's see it.

Exactly. Smells a lot like Zero Hedge ... and, incidentally, has almost nothing to do with the thread title.

[oliverson]

I have no idea of what this financial mumbo jumbo means I am afraid. I am relatively simple minded

So are you saying it's still going to get worse or better? And the Keely question is when will I get a contract?

Had an interview on Mon, did well however another candidate with more sector experience was offered and I was left looking for my balls again.

In other news, I have switched the heating on. Looks like winter is on its way and I hate the cold.

That's why I drove the family down to our holiday home in the sunny south of Spain for a couple of months. Trouble is, it's almost too bloody hot to work! Currently 29 degrees in the apartment and I'm too tight to put the air-con on! Even the slightest bit of effort, such as carrying the shopping in from the car, is physically draining. It's no wonder people in environments like this don't, err, really achieve very much. Gonna need some beers to cool myself down!

[willendure]

Sorry, but a lot of this is just rubbish.

The Fed rate is a zero year (today) rate, not a 2 year rate. They are about to reduce rates imminently and could easily get to the 2 year rate in a fairly short period of time (changing up to 8 times per year). Nothing unusual about this at all.

There is not a 'massive flight to safety' - if you have evidence of that, let's see it. There is more going into defensive stocks and bonds but these have been unloved (and therefore relatively cheap) for years and bonds are much better value after the recent crash. Tech stocks look relatively pricey, but people are still buying.
The stock market is pretty buoyant, but somewhat volatile. Unsurprising given the uncertainties around the US election in particular.

The bond yield curve was inverted for the past two years - usually a good predictor of a recession. That didn't happen and it's no longer inverted.

A lot of the below feels a bit conspiracy theory and I guess there are websites that you read that push this kind of view.

Finally, Buffet's Berkshire Hathaway is sitting on 17.5% cash - about the long term average.
If you have alternative information about him having 'sold almost all his shares' then let's see it.

That is correct, the Fed target rate or BofE rate is an overnight rate with zero duration. But it is also something that is under their control. Looking a little further out at the 2 year gives an estimate of the markets opinion of what inflation will be over that time horizon. Normally the 2 are not so far away from each other. It is usual for the 2 year to lead the overnight rate, that is where the market is headed and central banks are just playing catch up. It is unusual for the divergence of the 2 year to be as large as it currently is.

Fair enough on Berkshire Hathaway sitting on "only" 17.5% cash - but I don't think that is average, more at the extremes. Similar rates around the dotcom crash I believe.

The recession usually comes just as the uninversion happens or shortly after. There is a strong correlation between inversion size and recession size.

[Fraidycat]

Had an interview on Mon..

Thats a positive sign, the market has perked up in the last month. The worst looks like it is behind us.

I actually posted on this thread in mid August about a major % bounce in Job numbers on Jobserve, which was surprising because it was August. It just clicked that this bounce was very likely caused by the August 1st interest rate cut made by the BOE. Even though it was just 0.25%, it looks like it has triggered a change in sentiment.

By Jan/April next year I suspect the market is going to be a lot of better.

The price of oil is going down, and that means inflation will go with it, back to below 2%.

Regarding a Recession in the US, good chance the US is already in a recession or if it enters one soon it will be over by April next year.

Then the next boom starts..

The way recessions are reported in the US, its only well after the fact, about a year later they will actually admit there was one a year ago.

And willendure needs to stay off the Pessimism p0rn sites like Zero Hedge...

[SussexSeagull]

Coming up against a slightly more suitable candidate is the one thing you can't legislate for. Keep on going.

There does seem to be jobs appearing again so we might be starting up again post school holidays.

[Bluenose]

Just remember peeps a) it's not a real role until you get to speak with the person with the money to bring you in and b) the 30th October budget will be one for the ages.

This year has been the 2nd the worst for opportunities I've ever witnessed but it wasn't as bad as 2020.

[escapeUK]

Just remember peeps b) the 30th October budget will be one for the ages.

Yes, I think there will be huge "unintended" consequences depending which form of theft the occupational government go for. Lot of people going to be selling assets, retiring early, stop paying into pensions, withdrawing money from the stock market, going on the sick. With the commies in power there is no point, working, saving, investing or all other things that actually give us a functioning economy and society.

One rumor I did hear from the Telegraphs comments, that tax on dividends would be substantially increased. Lets hope thats not true!

[oliverson]

Yes, I think there will be huge "unintended" consequences depending which form of theft the occupational government go for. Lot of people going to be selling assets, retiring early, stop paying into pensions, withdrawing money from the stock market, going on the sick. With the commies in power there is no point, working, saving, investing or all other things that actually give us a functioning economy and society.

One rumor I did hear from the Telegraphs comments, that tax on dividends would be substantially increased. Lets hope thats not true!

News to me. I have a Telegraph subscription and monitor that site and the comments daily, though I suspect it's something this scumbag government will be looking at.

[SussexSeagull]

Any significant rise in tax on dividends begins to make the IR35 debate increasingly moot.