Heavier trading

[Luckyone77]

The volume on the US shares has been unusually heavy. Someone is bailing out. No idea why but I'll proffer a guess that it's because they're not so pessimistic about the market anymore now that Obama is gone and won't be keeping his thumb on economic growth. Fairfaxs' main attraction to many has been the deflation hedge and the stock hedges. I know it was for me. I'm much more optimistic now that a conservative has his hands on the wheel. I think the US economy is poised to grow solidly. At the very least, I'm hoping we'll quit digging such an enormous hole.

 

[petec]

Certainly I think the odds of reflation have risen.  I'll continue holding my FFH - I always saw it as a stock for all seasons, with an insurance business that will benefit from rising economic activity, inflation, and interest rates.  But I agree, I also saw it as a great hedge and I am sure there are sellers out there as a result.

[naboo]

Certainly I think the odds of reflation have risen.  I'll continue holding my FFH - I always saw it as a stock for all seasons, with an insurance business that will benefit from rising economic activity, inflation, and interest rates.  But I agree, I also saw it as a great hedge and I am sure there are sellers out there as a result.

 

 

Agreed.  I consider the FFH is balanced company and can live in any market condition.  The insurance part is much better than years ago, the investment gets a little bumpy but is still too early to call.  Overall FFH is a safe play and I am buying more. 

[petec]

The one question mark I have on the reflation theme is that US government debt has been rising $1.4tn a year which is a 7.5% deficit.  That's far bigger than the reported deficit, and I don't fully understand the reasons why.  But, I question how much scope Trump will have to expand the deficit.  That said, if lower taxes stimulates the economy and ends up with a classic Laffer-style increase in the tax take, it won't be an issue.  If.

[Luckyone77]

History suggests that if they lower taxes, cut spending and do away with all these stifling regulations, business will boom and could do so very quickly. Harding did it about 90 years ago. Repealing Dodd-Frank alone will do wonders for unleashing business in the US and I understand that will be gone and replaced.

[naboo]

The one question mark I have on the reflation theme is that US government debt has been rising $1.4tn a year which is a 7.5% deficit.  That's far bigger than the reported deficit, and I don't fully understand the reasons why.  But, I question how much scope Trump will have to expand the deficit.  That said, if lower taxes stimulates the economy and ends up with a classic Laffer-style increase in the tax take, it won't be an issue.  If.

 

We might see a temporary strong dollar but QE4 seems inevitable.

[petec]

History suggests that if they lower taxes, cut spending and do away with all these stifling regulations, business will boom and could do so very quickly. Harding did it about 90 years ago. Repealing Dodd-Frank alone will do wonders for unleashing business in the US and I understand that will be gone and replaced.

 

But they are not planning to cut spending as I understand it.  So you've got a hell of a deficit denting confidence, and potentially offsetting the benefits.  I agree with you on balance, but that's the fly in the soup.  To put it another way this policy mix is inflationary and that has unintended consequences.

[Jurgis]

Repealing Dodd-Frank alone will do wonders

 

Ah yes, 10 years haven't passed from Great Recession, European banks are still on the brink of collapse, US banks are fortresses due to Dodd-Frank, so let's repeal it and see if we can get another speculative bubble and burst. Great idea.

[petec]

Repealing Dodd-Frank alone will do wonders

 

Ah yes, 10 years haven't passed from Great Recession, European banks are still on the brink of collapse, US banks are fortresses due to Dodd-Frank, so let's repeal it and see if we can get another speculative bubble and burst. Great idea.

 

I agree entirely with your sentiment, but maybe not method.  Why is Dodd-Frank, with all its expense, a better way of regulating the banks than having a sensible real rate of interest and decent reserve requirements?  And why are deposit-taking banks allowed to have investment banking operations?

 

I'd be a fan of simpler, tougher regulations.

 

 

[Jurgis]

I'd be a fan of simpler, tougher regulations.

 

Perhaps. But is this really gonna be the outcome of "repeal DF"?

 

We'll see.

[Luckyone77]

Repealing Dodd-Frank alone will do wonders

 

Ah yes, 10 years haven't passed from Great Recession, European banks are still on the brink of collapse, US banks are fortresses due to Dodd-Frank, so let's repeal it and see if we can get another speculative bubble and burst. Great idea.

 

Even Barney Frank said it went way beyond it's intent. Talk to the bankers and you'll quickly see how stifling it is. Repeal it and make it more practical and less deleterious. There's a much better solution than that overreaction.

[Luckyone77]

History suggests that if they lower taxes, cut spending and do away with all these stifling regulations, business will boom and could do so very quickly. Harding did it about 90 years ago. Repealing Dodd-Frank alone will do wonders for unleashing business in the US and I understand that will be gone and replaced.

 

But they are not planning to cut spending as I understand it.  So you've got a hell of a deficit denting confidence, and potentially offsetting the benefits.  I agree with you on balance, but that's the fly in the soup.  To put it another way this policy mix is inflationary and that has unintended consequences.

 

No doubt and I share that concern.

[petec]

I'd be a fan of simpler, tougher regulations.

 

Perhaps. But is this really gonna be the outcome of "repeal DF"?

 

We'll see.

 

On that I share your scepticism.

 

Will be very interested to see what Prem has to say on his next call!

 

[chrispy]

I agree that fiscal stimulus in things like infrastructure is required and will be beneficial to many sectors/people.  It is way overdue.

 

But, it was only a few days ago when people were saying the market was overpriced and now everyone is willing to purchase stocks for a greater price?  We still hardly know what the guy will do or what other republicans will push him to do.

 

Today, deflation seems less likely.  If he says that we are no longer trading with ½ of the world and closing our borders, deflation looks very possible.  Who knows.

[petec]

I agree that fiscal stimulus in things like infrastructure is required and will be beneficial to many sectors/people.  It is way overdue.

 

But, it was only a few days ago when people were saying the market was overpriced and now everyone is willing to purchase stocks for a greater price?  We still hardly know what the guy will do or what other republicans will push him to do.

 

Today, deflation seems less likely.  If he says that we are no longer trading with ½ of the world and closing our borders, deflation looks very possible.  Who knows.

 

Agreed.  Clearly the market is worth more if taxes get cut.  And likely for a while the deflation trade doesn't work and a relation trade does.  But the mid/long term consequences are unpredictable.

[dutchman]

Theyve already said that dod frank will not be revoked.

[Luckyone77]

Any chance they may use some of their 10b and buy back some of their own stock at this price?

 

[Luckyone77]

Theyve already said that dod frank will not be revoked.

 

From Zero Hedge:

..."dismantling and replacing of the Dodd-Frank Act financial-sector law with pro-growth policies. This means that banks will be allowed to not only engage in prop trading again, but to invest directly in hedge funds. “The Dodd-Frank economy does not work for working people. Bureaucratic red tape and Washington mandates are not the answer,” says statement on Trump’s official transition website."