Inflation

[divs4ever]

And as I type this, my news stream is talking about "perhaps the ai bubble is popping".

Nah, you think?

Unless markets find another big thing (it was ai at the start of this year) then the correction is now in.

well if some of the calculations on power ( electricity ) are correct ... there won't many manufacturing plants with enough power to light the office ( let alone charge the forklifts )

but AI is only as good as the data it can draw from ( in some cases AWESOME and some cases awful )

 

[divs4ever]

Mmmm I'm halfway with you on this divs.

I watch FMG like a hawk for a reason

it will get messy if we get dragged into a full on trade war with China .. all that pandemic carnage was educational enough

i did notice a video highlighting the strategy to shift ( part of ) the manufacturing to Vietnam wasn't playing out so well ( for Samsung in particular )

maybe China still has modern society by the short hairs

i was trying to bias towards India ( and Indonesia ) hoping India will stay neutral

 

[over9k]

well if some of the calculations on power ( electricity ) are correct ... there won't many manufacturing plants with enough power to light the office ( let alone charge the forklifts )

but AI is only as good as the data it can draw from ( in some cases AWESOME and some cases awful )

And herein lies a fact of the matter: Governments always go on infrastructure binges when recessions hit. ALWAYS.

So if the next big thing that'll need to be done is the electricity grid for the electric car transition, well, we all know what they'll do when things start to really pinch.

The problem is that outside of mining this country really doesn't have a private sector/export industry. Maybe if you count a bit (a bit) of a finance industry in sydney. Other than that, mining's it.It's a one trick pony. If mining goes (because demand from china goes) then aus is in quite the bind. I simply do not see what steps in to replace it.

 

[divs4ever]

And herein lies a fact of the matter: Governments always go on infrastructure binges when recessions hit. ALWAYS.

i had been planning on that since mid 2012 with mixed results so far

the problem is now we have a definite skill shortage , throwing cash won't make the tradesmen/engineers , etc magically appear to do solid workmanship

most likely we will end up with more bridges ( roads and rail ) to nowhere , but maybe i will be wrong this time

 

[moXJO]

Unless markets find another big thing (it was ai at the start of this year) then the correction is now in.

Robotics will probably be next after the AI build out. AI isn't having the returns they thought because a lot of investors didn't understand how it will likely roll out in real time.

AI will have another pump at some stage. But similar to early days of when bitcoin was worth $1. There's a lot of build out before it becomes usable, useful and profitable.

 

[over9k]

Robotics? In this country?

 

[waterbottle]

Nah, just start another war

 

[over9k]

Nah, just start another war

Don't threaten me with a good time

 

[over9k]

Ok hear me out:

War...

With robots.

 

[waterbottle]

Only if they are lithium powered and have AI-powered self-driving tanks

 

[waterbottle]

In other news, the Nikkei has pretty much erased all 2024 gains and has had 20% drop since its peak i.e. we are in bear country now.

It's also had a >5% drop today which is a relatively rare event, which has only occurred 83 times out of the previous 14 164 trading days (as per data from yahoo finance)

 

[over9k]

Futures and yields have both PLUMMETED in response.

 

[waterbottle]

Yup, its happening!

CUT CUT CUT CUT

US 10 year now at 3.82 . 2-10yr spread at 15bps...

 

[divs4ever]

Recession Triggered: Payrolls Miss Huge, Up Just 114K As Soaring Unemployment Rate Activates "Sahm Rule" Recession​

Recession Triggered: Payrolls Miss Huge, Up Just 114K As Soaring Unemployment Rate Activates "Sahm Rule" Recession | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

ho-hum , there will be a new definition ( of recession ) in ...10 ...9 ... 8...

don't you know it is an election year ....

 

[over9k]

So despite the nasdaq having the largest drop, the s&p isn't that far behind it. That tells you that this crash is much broader based.

That tells you something

 

[Smurf1976]

AI will have another pump at some stage. But similar to early days of when bitcoin was worth $1. There's a lot of build out before it becomes usable, useful and profitable.

Or the internet.

There was massive hype about how it was going to revolutionise everything.

Just one thing - that hype completely missed social media in any form, YouTube, eBay, Amazon, Google Earth, movie and audio streaming and indeed most consumer uses of the internet. It also missed the entire concept of smartphones.

Point being even if someone grasps that a revolution is at hand, rarely do they get the details right.

 

[Smurf1976]

So despite the nasdaq having the largest drop, the s&p isn't that far behind it. That tells you that this crash is much broader based.

I'm not fully convinced.

The S&P500 is down just on 7% from the peak and the Nasdaq is down 10.35% but the S&P500 equal weight is only down 3.2%.

Now looking at the S&P500 components, well the top 7 are all tech or heavily related to tech and between them they're 29.6% of the index.

In 8th place is Berkshire Hathaway, 9th is a pharmaceutical company, 10 and 11 are both tech which brings the tech total up to 32.3% on just 9 stocks, 12th and 13th are financials and insurance, 14th is Exxon Mobil. Every other stock is less than 1% of the index.

I'm not saying the market isn't declining, just that the S&P500 is itself substantially a tech index these days given 9 tech stocks are almost a third of it. On an equal weight basis it's nowhere near as big a decline.

According to this: https://www.barrons.com/articles/sp-500-tech-magnificent-seven-00c0ab36

The tech sector now accounts for a record 30% of the benchmark index, more than the next two largest components combined—healthcare and financials. The truer tech weighting probably is over 40% and it has been growing as tech companies have bested the overall index this year.

I remember the late-1990's tech stocks bubble rather well and this all does seem very familiar. A market that's dominated by tech that then falls over, meanwhile plenty of sound non-tech businesses are far less affected.

 

[waterbottle]

I'm not fully convinced.

The S&P500 is down just on 7% from the peak and the Nasdaq is down 10.35% but the S&P500 equal weight is only down 3.2%.

Now looking at the S&P500 components, well the top 7 are all tech or heavily related to tech and between them they're 29.6% of the index.

In 8th place is Berkshire Hathaway, 9th is a pharmaceutical company, 10 and 11 are both tech which brings the tech total up to 32.3% on just 9 stocks, 12th and 13th are financials and insurance, 14th is Exxon Mobil. Every other stock is less than 1% of the index.

I'm not saying the market isn't declining, just that the S&P500 is itself substantially a tech index these days given 9 tech stocks are almost a third of it. On an equal weight basis it's nowhere near as big a decline.

According to this: https://www.barrons.com/articles/sp-500-tech-magnificent-seven-00c0ab36



I remember the late-1990's tech stocks bubble rather well and this all does seem very familiar. A market that's dominated by tech that then falls over, meanwhile plenty of sound non-tech businesses are far less affected.

McDonalds and Wendy's are having trouble selling their fast food.
Louis Vouton is no longer selling like it used to.
Big tech is now missing on earnings.
PMIs have been pointing to a manufacturing contraction for several months, and now the services PMI is showing the same.
Europe and Japan have been in technical recessions.

How many non tech businesses are actually doing well? I don't personally know any. In fact, they've been struggling to stay afloat since the hikes started.
Look at Australian commodities - all have taken a dump as China has been struggling since 2022.

This was the expected and inevitable plan to curb inflation. Destroy global demand by increasing unemployment and eliminating buying power through globally synchronised interest rate hikes. Savings rates are no longer where they were during covid.
Businesses have had to deal with the highest interest rates in a generation for a year now.

The US is the last canary in the coal mine, thanks to its reserve currency status and global political power. US businesses are now capitulating and unemployment is on its way up.
The Fed's unemployment rate projections
(as of June 2024) for this year Was 3.8 - 4.4 %, with a median of 4.2 in 2025 and 4.1 in 2026. Yesterday showed that we are already at the upper end of that estimate.

Historically, rising unemployment (along with rapid interest rate cuts) marks the beginning of a recession. It's not a guarantee but it's pretty damn close.

 

[over9k]

I'm not fully convinced.

The S&P500 is down just on 7% from the peak and the Nasdaq is down 10.35% but the S&P500 equal weight is only down 3.2%.

Now looking at the S&P500 components, well the top 7 are all tech or heavily related to tech and between them they're 29.6% of the index.

In 8th place is Berkshire Hathaway, 9th is a pharmaceutical company, 10 and 11 are both tech which brings the tech total up to 32.3% on just 9 stocks, 12th and 13th are financials and insurance, 14th is Exxon Mobil. Every other stock is less than 1% of the index.

I'm not saying the market isn't declining, just that the S&P500 is itself substantially a tech index these days given 9 tech stocks are almost a third of it. On an equal weight basis it's nowhere near as big a decline.

According to this: https://www.barrons.com/articles/sp-500-tech-magnificent-seven-00c0ab36



I remember the late-1990's tech stocks bubble rather well and this all does seem very familiar. A market that's dominated by tech that then falls over, meanwhile plenty of sound non-tech businesses are far less affected.

I'd have to go and plot the graphs over each other to give the *exact* numbers but what I was getting at was that if big tech (let's be honest here, it's almost entirely the magnificent 7) accounted for almost the entirety of the gains we've seen this year (and it has, let's call it 80% of it) but only accounts for, say, 60% of the drop from the peak we're now seeing then that's obviously a broadening.

Admittedly this was only yesterday:



But previously you'd see tech head and shoulders above the rest (in percentage terms) whereas the others haven't been *that* far behind. I can even remember seeing headlines stating "most concentrated rally in history" but we haven't seen a corresponding "most concentrated crash in history" on the other side of it.

No I haven't gone and plotted anything over anything else to check the exact sums.

 

[moXJO]

Robotics? In this country?

Sorry US focused.

I'm having a hard time seeing how Australia survives a washout of white-collars in favor of international AI.