Dow tumbles 500 points after bond market flashes a recession warning (this warning has a perfect record for past 50 years at least)

[Guest]

Don’t get too worked up about roth vs traditional, most people in their 30s are sure enough about their retirement lifestyle to make a particularly solid decision either way. There are pros and cons to both and it mostly has to do with long range tax planning. But if you get a match, max it out!

[Joe]

19 minutes ago, 2user1cup said:

Do it anyway, regular 401k though, not Roth. Bring down your taxable income. 

 

Save the bill for later, amirite? USA! USA!

[marioandsonic]

Right now, I'm investing $100 (pre-tax) out of every paycheck into a 401k. 

 

I'm under a year-long employee contract that I'm hoping will result in me getting hired full-time, as that would result in a higher salary and thus open up more options for myself.

[SuperSpreader]

22 minutes ago, Jose said:

 

Save the bill for later, amirite? USA! USA!

It really depends on your financial situation

[Chris-]

50 minutes ago, Jose said:

 

Save the bill for later, amirite? USA! USA!

But like sbl said, it’s all sort of nebulous long-term planning. Going with a Roth, you’re betting on being in a higher tax bracket in retirement, and that may not be the case!

[Jason]

4 minutes ago, Chris- said:

But like sbl said, it’s all sort of nebulous long-term planning. Going with a Roth, you’re betting on being in a higher tax bracket in retirement, and that may not be the case!

 

But by going with a 401k, you're making the opposite bet.

[Chris-]

35 minutes ago, Jason said:

 

But by going with a 401k, you're making the opposite bet.

Hence why I used the term ‘nebulous’. 

[foosh]

You can always do a megaback door retirement plan where you get the perks of a traditional 401k and the perks of a Roth IRA.

[Joe]

1 hour ago, Chris- said:

But like sbl said, it’s all sort of nebulous long-term planning. Going with a Roth, you’re betting on being in a higher tax bracket in retirement, and that may not be the case!

 

May not be the case, but probably will be the case. I think the Roth makes the most sense for younger people starting out where their salaries will probably be the lowest they will ever be in their careers. 

 

Either way though, any forced savings is better than none.

[b_m_b_m_b_m]

23 hours ago, Jason said:

 

 

NO CHAOS!

 

Trump confirms he’s considering a payroll tax cut amid mounting economic concerns

Is he though?

 

 

[Jason]

25 minutes ago, b_m_b_m_b_m said:

Is he though?

 

 

 

WELL-OILED MACHINE!

 

 

[SuperSpreader]

2 hours ago, Jason said:

 

But by going with a 401k, you're making the opposite bet.

If you expect your income from 401k to be significantly less than your current income it makes sense to defer 

[Joe]

Why do you expect that? Are you definitely going to retire in your early 60's? Imagine having all this money saved and you retire when you're 65. Now you have 5.5 years until RMD's start! Woops.

 

@marioandsonic This is a purely academic discussion. What you are doing makes perfect sense in your situation so disregard until this becomes a full-time position.

[Commissar SFLUFAN]

Kansas City Fed President Esther George said the Federal Reserve may be partly responsible for the yield curve inversion.

Quote

“I think the Fed still has a large balance sheet, and that could be putting some downward pressure on those longer-term rates,” George told CNBC’s Steve Liesman from the Kansas City Fed’s economic policy symposium in Jackson Hole, Wyoming.

@Signifyin(g)Monkey

[b_m_b_m_b_m]

Is the Fed still purchasing securities? How exactly is merely holding a balance sheet forcing down yields? I could see if they're flooding the market in order to lower their balance sheet that having an effect.

[Commissar SFLUFAN]

1 hour ago, b_m_b_m_b_m said:

Is the Fed still purchasing securities? How exactly is merely holding a balance sheet forcing down yields? I could see if they're flooding the market in order to lower their balance sheet that having an effect.

The Fed ended QE3 in October 2014.

 

As for your second question, the Fed has been reducing its balance sheet since 2018, but will end that program in September.

[Signifyin(g)Monkey]

1 hour ago, SFLUFAN said:

Kansas City Fed President Esther George said the Federal Reserve may be partly responsible for the yield curve inversion.

@Signifyin(g)Monkey

If one is going to make the argument that 'this time is different', and that the yield curve is not sending the kind of surefire signal of an oncoming contraction that it usually does, then the notion that QE's attempt to depress long-term yields through its asset purchases ought to part of it. (although I think the central premise should be something else...see below...)

 

42 minutes ago, b_m_b_m_b_m said:

Is the Fed still purchasing securities? How exactly is merely holding a balance sheet forcing down yields? I could see if they're flooding the market in order to lower their balance sheet that having an effect.

The idea is that yields have already been 'artificially depressed' by QE.  The Fed has still not unwound much of the debt purchases it made then.  So (according to this view) the yield curve does not accurately reflect investor sentiment anymore.

 

I am actually pretty open to the idea that 'this time is different', but not just because of the Fed's interventions via QE; I think it could actually be more the case that, now that the yield curve is so widely talked about and observed, it has lost its predictive power.  The way a 'tell' in poker (or any card game involving bets) loses its influence on the betting behavior of the players of the game when it becomes widely known and discussed among everyone at the table.

 

In truth, the 'tell' is only useful in predicting bettors' behavior when only a select few players know about it, so it's not being widely factored into the players' expectations and decision-making.  That would be my #1 candidate for an explanation why a recession doesn't follow the yield curve inversion this time around, if that indeed turns out to be true.

 

But it's worth noting that, even before everyone knew about its predictive power, the recession that has usually followed upon the curve's inversion has oftentimes occurred at a considerable lag.  It's occasionally taken up to two years for a contraction to happen.

[b_m_b_m_b_m]

7 minutes ago, Signifyin(g)Monkey said:

If one is going to make the argument that 'this time is different', and that the yield curve is not sending the kind of surefire signal of an oncoming contraction that it usually does, then the notion that QE's attempt to depress long-term yields through its asset purchases ought to part of it. (although I think the central premise should be something else...see below...)

 

The idea is that yields have already been 'artificially depressed' by QE.  The Fed has still not unwound much of the debt purchases it made then.  So (according to this view) the yield curve does not accurately reflect investor sentiment anymore.

 

I am actually pretty open to the idea that 'this time is different', but not just because of the Fed's interventions via QE; I think it could actually be more the case that, now that the yield curve is so widely talked about and observed, it has lost its predictive power.  The way a 'tell' in poker (or any card game involving bets) loses its influence on the betting behavior of the players of the game when it becomes widely known and discussed among everyone at the table.

 

In truth, the 'tell' is only useful in predicting bettors' behavior when only a select few players know about it, so it's not being widely factored into the players' expectations and decision-making.  That would be my #1 candidate for an explanation why a recession doesn't follow the yield curve inversion this time around, if that indeed turns out to be true.

 

But it's worth noting that, even before everyone knew about its predictive power, the recession that has usually followed upon the curve's inversion has oftentimes occurred at a considerable lag.  It's occasionally taken up to two years for a contraction to happen.

This is a great explanation, thanks.

[SaysWho?]

All these attacks on the Fed are giving Ron Paul a large boner as he sits quietly alone at home.

[Jason]

18 hours ago, SaysWho? said:

All these attacks on the Fed are giving Ron Paul a large boner as he sits quietly alone at home.

 

 

[TwinIon]

I imagine Xi is overall not too concerned with Trump or his Twitter rants, but it does seem like poor foreign policy to call the leader of a superpower your enemy in such an offhand way.

[Jason]

4 minutes ago, TwinIon said:

I imagine Xi is overall not too concerned with Trump or his Twitter rants, but it does seem like poor foreign policy to call the leader of a superpower your enemy in such an offhand way.

 

The leader of a superpower you're trying to strike a bigly trade deal with. Then again, let's look at how he would have handled nuclear talks with the Soviets...

 

Quote

 

For years, a story circulated in Washington about Donald Trump’s attempt to nab a job leading nuclear negotiations with the Soviet Union in the nineteen-eighties. His book “The Art of the Deal” had been on the Times best-seller list for forty-eight weeks. Trump apparently thought that he could do a deal one-upping anybody—and wanted to prove it. He lobbied quite hard, I was told, with the George H. W. Bush Administration. The White House instead appointed Richard Burt, the U.S. Ambassador to West Germany during the run-up to the fall of the Berlin Wall and a longtime expert on nuclear-arms talks.

 

Shortly thereafter, by coincidence, Trump and Burt attended the same society wedding in New York. At the reception, Trump walked up to Burt—whom he didn’t know—and said, “So you’re the guy?”

 

Burt, who confirmed the story to me, acknowledged his new position. Trump then said, “Let me tell you what I would have done if I’d been appointed.” He explained that he would have welcomed—very warmly—the Soviet delegation. He would have made sure the country’s envoys were comfortable—very comfortable—at the table.

 

Then, Trump told Burt, he would have stood up, shouted “Fuck you!,” and left the room. (The White House did not respond to a request for comment.)

 

https://www.newyorker.com/news/news-desk/for-trump-diplomacy-is-quite-literally-a-four-letter-word

[Jason]

 

[osxmatt]

3 hours ago, Jason said:

 

 

 

Chairman Xi isn't actually a title, right?

[Kal-El814]

Just now, osxmatt said:

Chairman Xi isn't actually a title, right?

It is.

[TheGreatGamble]

5 minutes ago, osxmatt said:

 

Chairman Xi isn't actually a title, right?

Yup. Chairman of the Party is the Chinese title for Dictator.

[osxmatt]

3 minutes ago, Kal-El814 said:

It is.

 

I hate that I spent 5 minutes doing this.

 

But Trump has referred to Xi 41 times since he's become US president, and all 41 times, he's referred to him as "President Xi."

 

The only exception? Today's tweet when he compared Xi to Chairman Powell (an actual title).

[Firewithin]

1 hour ago, Jason said:

 

 

[Jason]

17 minutes ago, Firewithin said:

 

 

[GeneticBlueprint]

1 hour ago, Jason said:

 

 

If that was an attempt at humor it's honestly a pretty good joke. What's not funny is that with him you can't tell if it's a joke. What's seriously not funny are all the comments responding as though this is truth.

[Amazatron]

Now the asshat is raising tariffs again.  Gonna blow up the market again on Monday.

 

 

[osxmatt]

4 minutes ago, Amazatron said:

Now the asshat is raising tariffs again.  Gonna blow up the market again on Monday.

 

 

 

Nope. He said he's raising taxes.

 

 

[TheGreatGamble]

It sure is going to be interesting to see what the market does on Monday, but things certainly aren't looking good now... 

 

@SFLUFAN What kind of drop would there have to be to be able to call it an actual recession? Is it a 10% drop from its high? Or some other metric? 

[Commissar SFLUFAN]

1 minute ago, TheGreatGamble said:

It sure is going to be interesting to see what the market does on Monday, but things certainly aren't looking good now... 

 

@SFLUFAN What kind of drop would there have to be to be able to call it an actual recession? Is it a 10% drop from its high? Or some other metric? 

Stock markets have "corrections", not recessions 

 

You're correct though - a "correction" is a 10% decline from its high and a "bear market" is  a 20% decline.

[TheGreatGamble]

1 minute ago, SFLUFAN said:

Stock markets have "corrections", not recessions 

 

You're correct though - a "correction" is a 10% decline from its high and a "bear market" is  a 20% decline.

my bad, but yeah, i remembered hearing someone talk about 10% being the magic number, but I wasn't positive.