Macro thread - Why is the market up/down?

[Dinar]

58 minutes ago, thepupil said:

fair enough, was assuming a single earner and the numbers are a little off. But I see no reason why 44% can't go to 50% via increased payroll taxes for high income folks. or even for...dividends/interest/capital gains etc. all income. if we want a welfare state that guarantees old folks not be destitute, we have to pay for it. flip side is cut benefits at the top.  

 

social security is just a transfer from those that earn to those that don't / old people. it's not like the income isn't there to redistribute as the electorate s desire. we'll increase taxes and decrease bennies when the math tells us too.

 

the whole medicaid fraud thing seems to be particularly important to you. i don't have a strong view there and don't think there's some huge underemployed population choosing not to work. just never really seen that....i just don't really ever understand what you're talking about on this to be frank. 

You assume that taking tax rates from 44% to 50% will not impact the economy, it absolutely will.  25% of the country is on Medicaid, you really think that 25% of the country is disabled?  When people take advantage of the system, it corrodes the moral fabric, and bad behavior is contagious.  When welfare is generous, you have to pay a tremendous amount to people to make it more profitable to work than to be on the dole, and you get inflation.   You also need insane taxes to finance this, and we all know how well high taxes work out - USSR is a good example.  

I know three people in Manhattan who chose not to work and live on Upper West Side and receive Medicaid.  One is a Russian immigrant, came here fifteen years ago, married a Latino guy who works as a math tutor for cash.  They show essentially no income, all five (including 3 children) are on Medicaid, live in his grandfather's rent-stabilized 4 bedroom apartment, and take vacations twice a year.   She said to me, I was thinking of getting a job since the kids are getting older, but even if I get paid $30 an hour, mind you, she has no skills, I am still better off on Medicaid and benefits.  Another is also a Russian immigrant, has been in a relationship with a college professor for 15 years, they live in his $1MM apartment, their daughter is on his insurance, but they are not officially married, so she is on Medicaid, and presumably other social programs.   Third is an Armenian immigrant.  She officially works as her mother's home attendant (also a recent immigrant from Armenia) although as she says her mother is as healthy as a horse.  The mother gets Medicaid + welfare+food stamps etc, the daughter gets a salary + healthcare for being her mother's caretaker, but actually works as a nanny on UWS for cash.  So yes, I am incensed that I have to pay tax to support these leeches.

Edited April 24, 2025 by Dinar

[dwy000]

1 hour ago, 73 Reds said:

What about a means test for receiving social security?  Many people I know laugh at the idea that they receive a monthly check.  Or apply it as a credit toward your tax bill if you don't need it and won't miss it anyway.

The problem with that is social security is seen not as a tax but as an "i paid in, I want my benefit" program.  People think of it like a pension (i know it's not but that's how people view the concept).  If you disconnect the pay in/pay out it just becomes taxes.  

 

I like the aussie superannuation concept that combines IRA/401k idea with a soc security component.  But the current system is unsustainable.

[cubsfan]

5 minutes ago, Dinar said:

You assume that taking tax rates from 44% to 50% will not impact the economy, it absolutely will.  25% of the country is on Medicaid, you really think that 25% of the country is disabled?  When people take advantage of the system, it corrodes the moral fabric, and bad behavior is contagious.  When welfare is generous, you have to pay a tremendous amount to people to make it more profitable to work than to be on the dole, and you get inflation.   You also need insane taxes to finance this, and we all know how well high taxes work out - USSR is a good example.  

I know three people in Manhattan who chose not to work and live on Upper West Side and receive Medicaid.  One is a Russian immigrant, came here fifteen years ago, married a Latino guy who works as a math tutor for cash.  They show essentially no income, all five (including 3 children) are on Medicaid, live in his grandfather's rent-stabilized 4 bedroom apartment, and take vacations twice a year.   She said to me, I was thinking of getting a job since the kids are getting older, but even if I get paid $30 an hour, mind you, she has no skills, I am still better off on Medicaid and benefits.  Another is also a Russian immigrant, has been in a relationship with a college professor for 15 years, they live in his $1MM apartment, their daughter is on his insurance, but they are not officially married, so she is on Medicaid, and presumably other social programs.   Third is an Armenian immigrant.  She officially works as her mother's home attendant (also a recent immigrant from Armenia) although as she says her mother is as healthy as a horse.  The mother gets Medicaid + welfare+food stamps etc, the daughter gets a salary + healthcare for being her mother's caretaker, but actually works as a nanny on UWS for cash.  So yes, I am incensed that I have to pay tax to support these leeches.

 

Awful. Sounds like California, where the numbers are higher. Big black market economy. 40% of residents on MediCal, 25% on welfare. So much fraud, too many incentives not to work.

[73 Reds]

3 minutes ago, dwy000 said:

The problem with that is social security is seen not as a tax but as an "i paid in, I want my benefit" program.  People think of it like a pension (i know it's not but that's how people view the concept).  If you disconnect the pay in/pay out it just becomes taxes.  

 

I like the aussie superannuation concept that combines IRA/401k idea with a soc security component.  But the current system is unsustainable.

Yeah, if it was viewed as more like insurance than a vested benefit, maybe it would be more palatable.  Pay in and hope you don't need it but if you do, its there for you.

[dwy000]

11 minutes ago, Dinar said:

You assume that taking tax rates from 44% to 50% will not impact the economy, it absolutely will.  25% of the country is on Medicaid, you really think that 25% of the country is disabled?  When people take advantage of the system, it corrodes the moral fabric, and bad behavior is contagious.  When welfare is generous, you have to pay a tremendous amount to people to make it more profitable to work than to be on the dole, and you get inflation.   You also need insane taxes to finance this, and we all know how well high taxes work out - USSR is a good example.  

I know three people in Manhattan who chose not to work and live on Upper West Side and receive Medicaid.  One is a Russian immigrant, came here fifteen years ago, married a Latino guy who works as a math tutor for cash.  They show essentially no income, all five (including 3 children) are on Medicaid, live in his grandfather's rent-stabilized 4 bedroom apartment, and take vacations twice a year.   She said to me, I was thinking of getting a job since the kids are getting older, but even if I get paid $30 an hour, mind you, she has no skills, I am still better off on Medicaid and benefits.  Another is also a Russian immigrant, has been in a relationship with a college professor for 15 years, they live in his $1MM apartment, their daughter is on his insurance, but they are not officially married, so she is on Medicaid, and presumably other social programs.   Third is an Armenian immigrant.  She officially works as her mother's home attendant (also a recent immigrant from Armenia) although as she says her mother is as healthy as a horse.  The mother gets Medicaid + welfare+food stamps etc, the daughter gets a salary + healthcare for being her mother's caretaker, but actually works as a nanny on UWS for cash.  So yes, I am incensed that I have to pay tax to support these leeches.

Medicaid doesn't get cut off if you have a job, it's income tested.  And once you have sufficient income to move off Medicaid you should qualify for ACA with subsidies to keep it affordable (that's the concept).

 

It's a question of whether as a society with some of the highest healthcare costs in the world we want to turn people away at the hospital who cant afford care.  Medicaid is supposed to be last resort care.  If there's fraud in the system it's primarily from providers who actually receive the payments not from people seeking care 

[thepupil]

30 minutes ago, Dinar said:

You assume that taking tax rates from 44% to 50% will not impact the economy, it absolutely will.  25% of the country is on Medicaid, you really think that 25% of the country is disabled?  When people take advantage of the system, it corrodes the moral fabric, and bad behavior is contagious.  When welfare is generous, you have to pay a tremendous amount to people to make it more profitable to work than to be on the dole, and you get inflation.   You also need insane taxes to finance this, and we all know how well high taxes work out - USSR is a good example.  

I know three people in Manhattan who chose not to work and live on Upper West Side and receive Medicaid.  One is a Russian immigrant, came here fifteen years ago, married a Latino guy who works as a math tutor for cash.  They show essentially no income, all five (including 3 children) are on Medicaid, live in his grandfather's rent-stabilized 4 bedroom apartment, and take vacations twice a year.   She said to me, I was thinking of getting a job since the kids are getting older, but even if I get paid $30 an hour, mind you, she has no skills, I am still better off on Medicaid and benefits.  Another is also a Russian immigrant, has been in a relationship with a college professor for 15 years, they live in his $1MM apartment, their daughter is on his insurance, but they are not officially married, so she is on Medicaid, and presumably other social programs.   Third is an Armenian immigrant.  She officially works as her mother's home attendant (also a recent immigrant from Armenia) although as she says her mother is as healthy as a horse.  The mother gets Medicaid + welfare+food stamps etc, the daughter gets a salary + healthcare for being her mother's caretaker, but actually works as a nanny on UWS for cash.  So yes, I am incensed that I have to pay tax to support these leeches.

 

interesting..this says a large % of "medicaid adults" are working. I don't believe that 25% of the country is disabled. I do believe 25% of the country might be poor enough to get health insurance via medicaid. the below says about 13% of enrollees are because of disability. so do I beleive that 13% of 20-25% of the country is disabled? 2-3% seems about right???

 

https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-medicaid/

 

https://www.kff.org/medicaid/issue-brief/understanding-the-intersection-of-medicaid-and-work-an-update/#:~:text=Among adults under age 65,working full or part-time

 

your first example sound like they're underreporting their income and probably don't quality in reality / are committing fraud (in the same way that like 70% of nannies who take cash are...which is just pretty common/i've never really seen as some great societal ill) your 2nd two seems to be following law / simply choosing to not work, right? 

 

 

 

 

 

Edited April 24, 2025 by thepupil

[Masterofnone]

55 minutes ago, Dinar said:

You assume that taking tax rates from 44% to 50% will not impact the economy, it absolutely will.  25% of the country is on Medicaid, you really think that 25% of the country is disabled?  When people take advantage of the system, it corrodes the moral fabric, and bad behavior is contagious.  When welfare is generous, you have to pay a tremendous amount to people to make it more profitable to work than to be on the dole, and you get inflation.   You also need insane taxes to finance this, and we all know how well high taxes work out - USSR is a good example.  

I know three people in Manhattan who chose not to work and live on Upper West Side and receive Medicaid.  One is a Russian immigrant, came here fifteen years ago, married a Latino guy who works as a math tutor for cash.  They show essentially no income, all five (including 3 children) are on Medicaid, live in his grandfather's rent-stabilized 4 bedroom apartment, and take vacations twice a year.   She said to me, I was thinking of getting a job since the kids are getting older, but even if I get paid $30 an hour, mind you, she has no skills, I am still better off on Medicaid and benefits.  Another is also a Russian immigrant, has been in a relationship with a college professor for 15 years, they live in his $1MM apartment, their daughter is on his insurance, but they are not officially married, so she is on Medicaid, and presumably other social programs.   Third is an Armenian immigrant.  She officially works as her mother's home attendant (also a recent immigrant from Armenia) although as she says her mother is as healthy as a horse.  The mother gets Medicaid + welfare+food stamps etc, the daughter gets a salary + healthcare for being her mother's caretaker, but actually works as a nanny on UWS for cash.  So yes, I am incensed that I have to pay tax to support these leeches.

Just a quick point of fact without comment: the Medicaid number is about 72 million- very close to 21%

[Dinar]

1 hour ago, Masterofnone said:

Just a quick point of fact without comment: the Medicaid number is about 72 million- very close to 21%

Medicaid and chip 79.3 million 

[Masterofnone]

3 hours ago, Dinar said:

Medicaid and chip 79.3 million 

Correct, so 23.3%

[Blake Hampton]

The WSJ business section today was depressingly bad. Nothing but missed expectations and pulled guidance. I think the only single article about something good was on gold.

 

But the market is up!

 

Edited April 25, 2025 by Blake Hampton

[Blake Hampton]

In Dimon's annual letter, he mentioned that even before the tariffs, the economy had been slowly weakening over the previous three years. I feel the same. It's interesting to me how companies have generally been posting lower year-over-year earnings, along with nothing but layoffs in the news, yet the market just continued to hit all-time highs.

 

Just my thoughts.

 

Edited April 25, 2025 by Blake Hampton

[mattee2264]

I think to some extent the market is front-running trade deals and interest rates cuts. And also figuring that if things get really bad then Trump will pivot or will be forced to pivot. 

 

Also Big Tech are a big driver of the markets and they sold off significantly over the last few months. 

They stand to benefit from lower interest rates (long duration) and their earnings are likely to hold up pretty well during a slowdown/recession as their products/services are essential to consumers and businesses and there is also the AI story which encourages investors to look through any near term weakness. They also have strong lobbying power so will benefit from various exceptions/exemptions. 

[Ronchong]

16 hours ago, mattee2264 said:

I think to some extent the market is front-running trade deals and interest rates cuts. And also figuring that if things get really bad then Trump will pivot or will be forced to pivot. 

 

Also Big Tech are a big driver of the markets and they sold off significantly over the last few months. 

They stand to benefit from lower interest rates (long duration) and their earnings are likely to hold up pretty well during a slowdown/recession as their products/services are essential to consumers and businesses and there is also the AI story which encourages investors to look through any near term weakness. They also have strong lobbying power so will benefit from various exceptions/exemptions. 

 

This scenario would be true in most cases but in the event of a Draconian economic downturn, even the big techs are not able to escape scot-free when their end customer starts tightening their belt (e.g. wells Fargo has just came out stating that they would pause on some of data centre deals). Do I think the big techs are able to fare down? Yes but I don't think they are as immune as the market made it out to be. Depending on the direction of how the tariff ends up, this would have a very wide outcome.

[brobro777]

all this discussion about policy and issues is nice and all but when is nasdaq futures hitting 20k? I'm still holding my position

 

like, it's taking forever to get to 20k bro, come on

 

[rogermunibond]

This feels like a macro hedge fund degrossing event.

[gfp]

Lots of eyes watching the S&P 500 and how it behaves every time it tries to go down

 

 

 

 

And helpful to keep one eye on JPM as a canary

 

 

 

We'll see!  There was a time the other day when the SPY chart looked like this:

 

 

"I keep trying to go down but they keep pulling me back in!"

Edited March 5 by gfp

[rogermunibond]

I think the market is realizing the conflict is going regional and will take longer to resolve.  Maybe 6 months or more.

[gfp]

Once again the SPY refused to break down!  JPM didn't fare so well.  Tomorrow should be interesting with 'hold over the weekend' risk and all that.  Covered my short from yesterday when she looked tentative.  As one of my early mentors used to say, ' when you don't like the action, GTFO '  (get the funds out!)

 

 

[gfp]

We may have 3% GDP growth but we're going to have an issue if this persists.  DOGE is over but AI's impact has barely started.  Last night at dinner I heard several stories of recent layoffs.  Two were non-lawyers at law firms and two in communications / marketing.  Those were all AI-related, whether their employers framed it that way or not.

 

[73 Reds]

2 minutes ago, gfp said:

We may have 3% GDP growth but we're going to have an issue if this persists.  DOGE is over but AI's impact has barely started.  Last night at dinner I heard several stories of recent layoffs.  Two were non-lawyers at law firms and two in communications / marketing.  Those were all AI-related, whether their employers framed it that way or not.

 

I dunno, hard to argue that in the long run AI won't be a net positive.  Short term growing/transitional pains won't change that.

[gfp]

"Short term" transitional pains could be the rest of your lifetime Reds.

[73 Reds]

Just now, gfp said:

"Short term" transitional pains could be the rest of your lifetime Reds.

Could be.  But in the grand scheme of things it is a mere spek on the time horizon.  

[rogermunibond]

There's a ton of fiscal stimulus and now tariff rebates that have yet to flood the US economy. I don't worry too much about US GDP growth but sentiment might be bad.

 

Developed Europe and Asia is another story as the energy headwind is going to hurt.

[Marco Van Basten]

A friend works for a large hedge fund.  His group, I think ten people, got rid of two PhD level coders and one data scientist thanks to AI.  Now, keep in mind, several years ago, Nadella at MSFT said that he could double the amount of business and not add more headcount, similarly a few years ago, a prominent venture capitalist stated that he could not understand what 50% of the people at Google did all day.  So you could have mass white collar lay-offs, or just a declining employment thanks to attrition. Also, if I remember correctly, Biden expanded the federal work force by 300,000 people, and now Trump shrank it by 300,000 people.  Meanwhile, I was walking in Manhattan yesterday, a fast food chain advertised: $21.50-$24.50 hourly wage, free breakfast and lunch for employees, plus annual bonus, plus healthcare plan, dental plan and a 401(k) plan.  So you could have an economy where nurses, doctors, plumbers/handymen/electricians/carpenters/waiters thrive, and where college professors/administrators/many other white collar jobs shrink.  

[sleepydragon]

55 minutes ago, Marco Van Basten said:

A friend works for a large hedge fund.  His group, I think ten people, got rid of two PhD level coders and one data scientist thanks to AI.  Now, keep in mind, several years ago, Nadella at MSFT said that he could double the amount of business and not add more headcount, similarly a few years ago, a prominent venture capitalist stated that he could not understand what 50% of the people at Google did all day.  So you could have mass white collar lay-offs, or just a declining employment thanks to attrition. Also, if I remember correctly, Biden expanded the federal work force by 300,000 people, and now Trump shrank it by 300,000 people.  Meanwhile, I was walking in Manhattan yesterday, a fast food chain advertised: $21.50-$24.50 hourly wage, free breakfast and lunch for employees, plus annual bonus, plus healthcare plan, dental plan and a 401(k) plan.  So you could have an economy where nurses, doctors, plumbers/handymen/electricians/carpenters/waiters thrive, and where college professors/administrators/many other white collar jobs shrink.  

 

I feel like I need to put on some hedges in this market... Marco, do you have any suggestions for shorting? preferable ETFs?