A possible explanation for the sudden change in mindset:
Until recently, data was considered "the new oil." Those who sit on vast amounts of it were considered rich.
Now, after the Equifax hack, the FaceBook/Cambridge Analytica scandal, and other revelations (such as Grindr freely sharing highly personal data), it seems that data is increasingly being viewed as "the new uranium."
Data, it seems, is becoming radioactive and must be carefully controlled and safeguarded to prevent leaks. Those who sit on vast amounts of it must now handle it with care to avoid societal, political, regulatory, and legal backlash.
The stock market seems to be reflecting data's transition from asset to liability.
Facebook is in trouble because it sold political influence at a price that previously non-mainstream actors could afford. Data is incidental to that scandal. Equifax suffered no meaningful consequences for its breach.
I understand that the HN consensus desperately wants your statement to be true, but that doesn’t make it so.
> Facebook is in trouble because it sold political influence at a price that previously non-mainstream actors could afford.
Since there appears to be some confusion (it took me a few passes as well), I interpreted your statement as the following:
> Facebook is in trouble because it sold political influence at a discount from what previously only large nation-state actors could afford.
The implication, if I'm reading correctly, is that any mom-and-pop millionaire could practically launch the same sort of campaign on the platform. Or perhaps more succinctly and dramatically,
The traditional DNC/RNC campaign-finance and media-buy systems are not very efficient. They're also based on relationships. Candidates must appeal to broad coalitions of donors so that they can afford the TV airtime necessary to succeed. Ads must not be too damaging to the reputations of the career staffers and media companies putting them on the air. This tends to constrain the ideological space a successful candidate can occupy.
We saw a successful candidate from outside that space because the efficiency of Facebook's ad platform, plus a unique and possibly Russian-intelligence-supplied savvy in wielding it, obviated the need for (as much) donor consensus to achieve a winning level of influence. I don't know about "any mom and pop millionaire," but you need less of them in your court than you used to.
That scandal that has everyone up in arms is Facebook's complicity in Trump's election, which is a consequence of its enablement of extremists in general, which is a consequence of its ad platform's cost-efficiency, which is a consequence of its troves of user data. But it's not data that started a drumbeat of public intellectuals calling for heavy-handed intervention in the New York Times editorial section (a fingerprint we've seen before). It's influence. The establishment is (correctly) not trying to engage populism in a meme war. It's fighting back the way it knows how.
Politics are like medieval royalty. A complex inter-generational web of influence, alliances, and quid pro quo. Support of these influencers was required to earn votes, and policy had to repay these influencers - rather than voters.
Through the application of advanced techniques and data, Facebook enabled the circumvention of that at a shockingly lower cost than in the past.
That’s right. The numbers I’ve seen have been 10 million for the Mercer’s initial investment. This is a pathetic amount of money to bankroll an operation with such large scale effects. Assuming the Mercer’s eventual expenditure reached 10 times that, $100 million is like building a library in a middling size city. It’s an incredible return on a pittance of an investment.
I think the full amount of money and dark money involved in this will turn out to be staggering. Parscale bragged of spending $90m alone on FB ads. And that is just one highly visible piece of the puzzle.
Facebook is in trouble because it sold political influence at a price that previously non-mainstream actors could afford
I’m curious exactly what you mean by this. If you’re saying that their paid ads system works well, that isn’t specific to political influence. Further, the recent scandal was over data abuse by third parties, and the reported effects of that have been proven to be dramatically overblown [1], so I assume that isn’t what you’re referring to. Finally, the notion that enough votes to change the election results were suppressed/changed by some Russian fake news articles mostly written in broken English is laughable.
>Further, the recent scandal was over data abuse by third parties
The most recent wave of Facebook's ongoing scandal revealed that data abuse by third parties was one implementation detail of Facebook's complicity in Trump's election. Facebook's troubles (calls for breakup, regulation, etc) started over its crime of making political influence too readily available to extremist ideologies.
Again, you aren’t explaining your basis for the idea that Facebook actually has political influence to make available to anyone. The idea that CA’s strategies worked to any degree has been disproven.
Also, not to get political, but would you be this upset over it if the other side had won and it turned out that they had employed a similar strategy (even if it had been proven ineffective, as CA’s strategy has)?
Did I indicate I was on board? Absolutely not. I think it's a disgrace that polite society is gearing up to wreck free speech on the internet just because we didn't like the result this time. But of the people calling to punitively regulate the tech industry now, only the tiny minority who've drunk the HN kool-aid are approaching it from a data-privacy perspective. The actual movement here is about Facebook's assistance to Trump and other extremist politicians, effective or not.
You're right, but that's exactly why you're seeing this.
Fact: the "wrong" candidate was elected (according to >50% of voters and >80% of American billionnaires). (wrong between quotes because obviously in a democracy there is no wrong election outcome, and that's a very good thing indeed, even if it is not what I would have liked)
Fact: he did so while being dramatically outspent by the other candidate (and with pretty much all tv stations supporting one candidate with the one exception being Fox, which cannot reasonably be accused of uniform support for Trump)
Fact: The entire bay area is up in arms about this, and has shown itself prepared to destroy people's careers over this.
(and yes, it was the economic situation created by Bush, and (much more so) by Obama, I get it. However, most voters do not get this)
Now you're right. Even if the Russians supported Trump, it cannot have been a great factor. Fake news is another issue that I find hard to believe swayed the election. And, truth be told, there is both democrats and republicans rigging votes, it's not going to make a huge difference.
You're right, BUT, seeing this, as a democrat in California or Florida, requires realizing
1) that they've lost. They were in power and fucked up the economy bad enough that they lost the election. The thing about elections is simple: there is always a change of the guard if the economy does badly. Always.
2) (on the part of large tv stations, newspapers, etc) that they've lost their influence. That Jeff Bezos' money spent on the Washington Post was just wasted money. That the owners of NBC, CBS, ABC ... cannot influence people more than facebook can.
3) Have you seen any interviews with Hillary's election team ? I mean I voted for her (DESPITE the war comments, wtf Hillary ?), but damn, these people are NOT taking a "live and let live" attitude here. At one point I thought she was going to attack the interviewer (for asking "why she failed" after she explained that they didn't fail, they were robbed).
So if you haven't noticed yet, people, especially in the Bay Area, are attacking anything and everything that is even remotely perceived as being on the side of Trump. And of course, Facebook has/had Peter Thiel, and nobody is happy with him.
You are right, the fault is with the democrats and how they handled governing, and how they handled the election, not with Facebook, Russians, Peter Thiel or whoever else will get blamed next month. The fault is with them. They can either admit fault or attack these evil outsiders, and, well, clearly they don't agree the fault is with them.
Any conversation that even veers slightly in the direction of politics immediately gets prefaced with a warning that Trump got elected. And we all know, this is a warning that if you support him, for the love of God, keep your mouth shut (I'm convinced that this merely hides his support, and he therefore has a LOT more support than is generally thought. I mean between 1/3 and 1/4 voted for him in the heart of the Bay Area. Where are these people ?).
Personally I find blaming myself a very healthy attitude to failure. Step 1. It's my fault. Why ? Because what I do myself is the only thing I can change, and that's the only tool I have to create a different outcome next time. So that's where I need to focus my effort. And yes, I can attack who "made me fail", real or perceived, or with conspiracies, but it's not going to get me a different outcome, it'll simply cement in the failure.
> Facebook is in trouble because it sold political influence at a price that previously non-mainstream actors could afford. Data is incidental to that scandal.
Would you care to elaborate? I'm curious and not entirely sure what you mean by this, sorry.
> Equifax suffered no meaningful consequences for its breach.
I don't think OP is claiming they did, but rather that it was part of the evolution towards thinking of data as a liability rather than an asset.
my assumption is that anything new is weaponised _first_ and then slowly over time diffuses out into the world and is nett positive (it's like society figures out how to take the spikey edges off) but you definitely don't want to be in the leading edge of the transition...
This was obvious. The only people who didnt see this in tech were the tech optimists.
Anyone else who has had to deal with humanity at large has warned that whatever was created would be used to help the powerful retain power.
The time for revolution was back in the 1990s. But that got lost in the baggage and dreams of being a unicorn.
This is just reversion to the mean, if anyone missed this, they havent developed the right balance of cynicism and optimism which helps identify the koolaid from the water
That is to say, I agree, it was obvious for a long time and information asymmetry has always been a tool of survival, advantage, control, etc. and not just in humans.
However, having lived through and been a tiny part of the "data revolution", and having seen some of the bad parts personally, as well as what we could do with data if everything was done in the open with good, clear intent and permission... that part of it still makes me sad.
I mean, the way the human race is going in general makes me sad, so yeah, perhaps I should not be surprised to see reality affect this area.
But, I'm still optimistic that some of us really are doing good and honest work with data and that there is still much more to be done.
Right, but much in the same way that muskets and nuclear warheads are weapons... technology has changed the calculus on how powerful the weapons we have are.
The Springfield musket has probably been responsible for roughly about as many deaths as the bombings of Hiroshima and Nagasaki; but I suppose the nuclear weapons have more shock and awe to them.
Still, suffice to say, we've been slaughtering each other quite capably despite the level of technology we've been at.
There was a good quote in the Cloudflare post yesterday about 1.1.1.1, that said something to the effect of "we don't want to store any personal data, because it's a liability, not an asset".
The sooner companies understand that data is a liability (hopefully with some "help" from governments - GDPR is a decent step in that direction) the sooner they will start implementing a "least data collection" principle and adopt end-to-end encryption for as many of their services as possible.
I've never heard it expressed this way, but GDPR is essentially a tax on collecting data. Not in a revenue generating way, but definitely in a "discouraging behavior" way. It increases costs for companies to collect and store user data.
It’s ridiculous that a one person startup with no revenue has to spend time dealing with GDPR regulations. This should have been structured to deal with the kinds of entities that lead to the law being written in the first place. This is only going to tax small startups and stifle innovation, giving an even bigger moat to the large incumbents. The road to hell is paved with good intentions...
No, the way GDPR is written, the cost is null for most small startups in europe. And for the startups in need of personnal data, either the ammount of data that need protection is small (like a birth day field) and will need at most ~4 day (counting deployment) to be corrected, or they are working with state-related business (at least in France).
Source: i'm currently paid to create ML and data analytic clusters for startups and to give some advices on regulation.
I look forward to using GDPR to solve nasty technical questions about data retention and sovereignty. Like many saas companies, we probably tend towards keeping data around in case our customer can make use of it at some time in the future. Now we'll be able to just be more hard core about not retaining data "just in case".
Much as I'd like to believe otherwise, I don't think this genie is going back in the bottle. Ever. There's too much money involved and our systems of governance are too fundamentally corrupt and unreliable to permit that.
I'm not a fan of "big government" in principle, but one of the things I've been feeling lately is that it's pretty clear we need something big enough to push against increasingly giant mega-corporations, something whose primary goal is the welfare of the populace, and not some profit motive.
In a completely free competitive system, cheating becomes necessary to survive. This applies to almost any industry. In a weird way, you can't blame companies for cheating so much as the government for being too poorly structured/equipped to regulate effectively.
Cheating can take the form of: pollution, privacy violations, abuses of human behavior, exploitation of natural resources, corruption, etc. You'd be hard-pressed to think of a single F500 company that isn't benefiting from some form of cheating that is inadequately regulated at present.
Hell theft is the best form of business. Theres no reason to be so enamored by business as the best form of organization - it has its uses and weakenesses.
Counter to that would be to make things smaller again. Eliminate the corporation as a long term legal entity. Revert it back to what it was, a risk mitigation/investment technique for specific, short lived ventures.
That (failure to keep the public welfare in mind) is not the goal of the system though, but rather a failure case due to antagonist agents both within and outside the system.
It comes down to money in politics, where said money is a necessity to maintain an agent position within the system. This motive alone is enough to turn protagonist agents within the system into antagonist agents against the system.
Sure. But even if we removed the money, there would still be power, tribalism, fame, hatred, and all sorts of -isms to fill in the gaps and corrupt officials and regulations. I am pretty skeptical that empowering officials to regulate money doesn't just result in a new form of corruption.
I'd rather we make the government more focused and responsibilities more specific. We need to remove the incentives for throwing money into politics rather than try to play corruption whack-a-mole.
Government, for the most part, seems to actively promote giant mega-corps, particularly with all the mergers they've allowed happen over the last 30 years.
Company: "Merging this and that will benefit the customer."
USGov: "Ok, good enough for me!"
You're right in that the genie will not go back to the bottle, but we have other models for aggregating social data / building networks on the horizon that don't involve a central entity (state or otherwise) so the future is likely to look very different and I'll bet very "weird" to us now.
FB's leak was tied to Trump, whose election has many, many people outraged.
That's the only reason why the media at large cares about FB's data leak right now. That's especially not something to trade over today since the leaky API was fixed in 2014 or something.
Considering all of the leaks/breaches that happen, FB is an outlier and not indicative unless something changes with regulations and the law.
I'd agree that the outrage is fueled by the election, but I don't think that diminishes the significance of the shift. I think it was the force that was required. Previously, the trade of "all your personal information" in exchange for finding out which harry potter character you were most like seemed reasonable to people. They didn't see the value in their data, and they trusted random 3rd parties with it. Now people are seeing it.
It's like one of those 3d pictures. The "hidden" image was always there in plain sight. People just overlooked it until they stared at it hard enough.
Until FB faces real penalties or suddenly every company starts doing security correctly, there isn't a shift. Just congressional testimonies and FB trying to save itself, which is basically how every other breach usually goes. It's how Equifax went and before FB, that was the breach to do something about because of their position within the banking sector.
Equifax is worse because it is a true monopoly. Cannot rent a condo buy a house do anything without dealing with those government backed extortionists. Whatever nyt or the left want to say you can absolutely live without fb, using it is a choice
You're being downvoted because this is not the narrative the typical HNer wants to believe - but you are absolutely correct. And the public somehow realizing the inherent perils of collecting personal data is not why the stock market has been on a downward trend. It's trade war fears, professionals taking profits, and panicky concerns that we've reached the top of the market or peak of the economic cycle and the inevitable downturn is now upon us.
It's an interesting point but it's worth remembering that Uranium is far more valuable than oil by weight. Many people wouldn't mind sitting on vast amounts of Uranium.
Also, keep in the various oil disasters. Dealing in oil also comes with it's own risks. No need to switch from that analogy. In this light, likening data to radioactive materials seems to me like spreading fud...
> The stock market seems to be reflecting data's transition from asset to liability.
I always thought this to be the key difference between the treatment of data in the USA and Europe. In Europe the culture of personal data protection is much more developed. In the USA it looks like citizens don't care and corporations abuse it to an absurd extent.
You can witness this by using any service for the first time: an American start-up will immediately subscribe you to their mailing list without asking any questions - the relevant info is (probably) in their Terms and Conditions. In Europe, you are most likely presented with a separate box that even cant't be selected by default. In some countries you need to have separate boxes for different scenarios of personal data use. These regulations clearly favor the user and upset the marketing folks. People often criticize the EU for bureaucracy, but I'm not even sure the USA has an office responsible for cases like this one, someone who cares and can intervene on behalf of the citizens.
The analogy can be taken further: like uranium, data can be and has been weaponized in a narrow sense, and despite the toxicity and trouble still remains incredibly valuable.
I don't and have never opened a Facebook account... but I've very little doubt that Facebook knows me as a 'shadow profile' reported by the friends and family that have tagged me without my permission in many photos.
THAT should be something that an individual can sue Facebook over.
That's besides the point of the original comment though. I'd assume even if they know stuff about you they can't make money off of you since you're not watching ads.
Yes you can, up to end of 2017 when I deleted my account. You just fill in a name in the tag field and it displays the tag as text, instead of a link to a profile.
Like so much other information, it sits on both sides of the balance sheet: Both an asset (if used correctly) and a liability (if collected and kept carelessly).
A client of mine was pulling his hair out the other day over GDPR compliance and its demands on his small business. The business doesn't actually depend on customer data at all; they just... have some of it, I guess. Sure sounds like a liability to me.
I've sat in several meetings where leadership folks are looking for a data warehouse strategy and plan. The topic of importance for data almost never came up. It was "store now no questions asked, mine value later". This was in line to other buzzword sentiments like "data is the new oil" (people believe it, seriously).
One important takeaway here is that if you think the "worries over tech firms" and their data are bad now, just wait until there's a Three Mile Island or Chernobyl level incident with all their data, like millions of identifable browsing records or grindr logs being dumped on an onion site somewhere.
Like if Grindr sells your HIV+ status and then instead of hiring you an employer picks the other candidate because they know you'd raise the group health insurance rates?
Let's not pretend that there's no way to misapply this data and that a lot of people won't be incentivized to do so.
- Fed is raising rates to slow down the economy/inflation
- Tech, which did alot of the leading of the market, is finally having to account for alot of its negative externalities.
- The US is picking a fight with China and Europe over trade access, though I think the US has a point on this fight.
- Market is just over bought by several common factors
- Too much institutional money is chasing too few ideas so that these trades are all levered up, the risk here is that the first person to be forced to unwind could cause alot of additional unwinding as the selling off feedback loop plays out.
And sadly this could have been bitcoin's time to shine and show that its a gold replacement by performing well when the market goes to shit, but bitcoin is going through an ever larger correction at the moment.
Hand's up, who thought back in December that we'd see a 6 handle on bitcoin by April:(
Good time for HFT firms though, volatility is back.
It's a lot easier to HODL your bitcoin when you don't have looming mortgage payments. When the economy gets rough, people are going to liquidate holdings in assets all across the board.
With Bitcoin having no real-world value aside from being an great token for a fully-anonymous game of greater fool, the prognosis is not great.
With other asset classes, there's some real-world value backing the minimum price (real estate has rent, stocks bring dividends, bonds guarantee interest payments, etc). With bitcoin, there's no real bottom for the value.
In this, it's actually similar to a lot of unicorn stocks. What's the real-world value of a business that's bleeding money like no tomorrow? The P/E ratio is negative!
Bitcoin is only 'potentially anonymous' and then only if both you and anyone you ever trade value with has PERFECT OpSec. The public ledger aspect means that as soon as the identity of anyone in the chain is pinned it is merely a question of how much effort is desired to track down who that value was sent to / from.
I'm not against those as features of a platform, I'm just realistic about Bitcoin /NOT/ being anonymous.
What I am against is the perversion of proof of work from something that is optimal on a /generic/ computing platform to something that is dominated by ASICs and 'entry level' on GPUs. Speculation related to bitcoin has caused so much wasted power and driven up the cost of hardware that could otherwise be far more economical for it's intended uses. At least if the work had been based around CPUs we'd be seeing /that/ market scale up which I believe both has more capacity to scale up and would also be more beneficial to the long term results. (It would be much nicer if the 'work' were mixture of proofing the ledger AND something actually scientifically useful, examples including the old protein folding, SETI, and prime number searching projects.)
3.0 blochains are around the corner with dpos. Bitcoin will be a legacy coin unless they do something drastic to compete. As for no real value I won’t even bother arguing with someone who has already made up their mind.
I think we are saying the same thing. Apple/Adidas might have inflated prices today, but they're also creating actual products, selling for actual money, in actual stores.
That's the key difference. Bitcoin is as valuable as Beanie Babies. Those too had a perceived brand value, which was supposed to keep on rising forever.
The fact that you or I don't value an asset doesn't mean that that's asset value must therefore be zero.
I wouldn't pay 5 million dollars for Michal Jackson's glove, but some people did. That in itself makes it more valuable that let's say it's cost of manufacture. And it's valuation is rational, but in a more complicated kind of rationality than the simple ones presented in economics 101 books.
I believe in the god of P/E. If you’re unable to find a greater fool to buy the Michael Jackson glove, how long do you have to hold it before the income covers purchasing costs?
For Apple stock, the number might be high, but it is not infite. For Bitcoin, there’s _no_ annual income from holding it.
Intangibles can still have substantial real value. For example, the Jackson record copyrights - while completely immaterial - still bring a very nice chunk of revenue every year.
Bitcoin creates the same value as VISA, Paypal and Banbks as a means of transferring money. If transferring money without these middle men is as valuable as a beanie baby, then please explain the similar utility created?
It is also a fantastic means for storing wealth and moving it without qeustion, but I'll admit that the volatility makes this use case substantially less useful than the payment network which is the true value, regardless of price (so long as it is non-zero).
>90% of gold's price is investment/speculation, only 10% has real-world usage backing.
I'm not sure I would even give it 10%, but yes, Bitcoin is a lot like gold in that regard. It's not an overly useful metal and it's primary usefulness is to look pretty.
Apple/Adidas's stock price is based on their income statement plus speculation. I would guess the speculation could -/+ the dollar value by 20% or so, but the rest is solidly based on the business.
I don't personally discount intangibles, but they are tricky because they are harder to predict and can be fleeting. Since Bitcoin is mostly speculative (100%?), there's a lot of things that push it down and it's bottom would be effectively $0.
Bitcoins can be sent across the internet without middle men. As long as it maps to market value, Bitcoin is digital value transfer without middle men. Do you really believe this is valueless?
So can text files. The distributed ledger algorithm has intrinsic value as an algorithm, but not so much the coins. If retailers and banks and other institutions continue to accept them, they do have some value, but that can also be fleeting.
Until a major government backs it or something, it's value can go away in a poof.
Sure, sometimes a text file is the best way to send money over the internet, although I have to stretch to think of those scenarios.
Bitcoin is the best way to send money in a lot of scenarios. Visa is the best in a lot of scenarios, Venmo is the best in a lot of scenarios, sometimes a check is best, but there are a lot of scenarios where that won’t work.
Bitcoins use value comes from the number of those scenarios.
One kind of "tinfoil hat" argument in favor of gold is that it can easily become an exchange medium in case of infrastructure collapse, I.e. banks and the internet don't work anymore. In that case its value can be immensely larger than what you're paying for it now.
My father was a geologist who spent much of his life doing exploration for gold mining companies. He was always extremely skeptical of gold as a "safe" place to put your money given how much it's pretty extreme price volatility had created massive swings in his industry.
Not really, to be honest. The SPX is still above the February high. We are merely back to were we were in October 2017 before the acceleration into the end of the year and the January rally. We're still up around 9% for the last 12 months. Q4 earnings have been extremely strong, and early indications suggest the same for Q1.
The looming risk of a trade war seems to have spooked the market somewhat, which has resulted in a re-pricing. But, as it stands, pullbacks are still buying opportunities here as long as we don't see a large scale escalation.
I am far from an expert in these matters so I can only quote others who seem to know more.
Peter Schiff sounds like a gold salesman at times (he is afaik), but he makes the argument that rather than fixing the issues that caused the bubble that led to the Great Recession, the Fed and stimulus managed to only make it bigger. Now the market is burning itself up with expectations of economic growth under Republicans, but all they are doing is growing the deficit and putting the US deeper into a hole that it can never dig itself out of. Soon the US will be unable to acquire more debt and we'll do another round of quantitative easing, which could spiral into hyperinflation as we're forced to repay our debt by printing money. This will be terrible for the US because we've become a nation of debtors and consumers. He believes the coming recession will be worse than 2008 and that we are in the largest bubble the US has ever experienced, possibly never having even escaped the 2008 recession in the first place.
He believes all this will come due before the end of Trump's term, probably within a year or two. I've heard other famous investors say a recession is likely to begin next year.
The OP is saying 'there are icebergs ahead', and you are saying 'lol, nothing to worry about, we are moving at record speed!'.
The recent market volatility has more to do with the debt markets than near term quarterly earnings. No one really knows how the messy combination of tax cut fueled growth, trade wars, inflation (or lack of), fed rate schedule, record US deficits, and unwinding QE will impact markets, but the general consensus is that interest rates are going to rise. The question of the day is 'how fast?'. Too fast, and it will hit the brakes on the economy. Too slow, and we may overheat (if we haven't already).
> Bitcoin ... show that its a gold replacement by performing well when the market goes to shit
I think it should be pretty clear that Bitcoin is not a gold replacement.
Neither have any intrinsic value (unlike property), except that gold has been in use for thousands of years. If the market goes to shit, then so does Bitcoin, because it's a bubble.
"intrinsic" is a bad word. really we should be saying like "non-speculative" or "utility" value or something. The price as if no one had ever thought to price it to sell to other speculators.
gold's price is some part speculative some part non-speculative. Non-speculative value gives it some kind of price floor, but the price can be way above the floor. For instance, if the price of gold jumps 2x it's not necessarily because gold jewelry became twice as popular in the same time period.
There's betting that the price will go up. That's speculative. There's industrial use. That's non-speculative. And there's kind of a third category that I don't know how to name.
I can invest in gold because I want something that will retain value, even if it doesn't grow. I'm gambling, if you like, but I'm gambling that people will still want gold for more than industrial and cosmetic uses. In a big world, where in a variety of places people fear that their government will try to take their assets (either through confiscation or inflation), that seems like a reasonable gamble. I have a hard time classifying it with "speculation". It's still a gamble, but it's a pretty conservative one.
You are also gambling that mining doesn’t increase, that new technology doesn’t make finding new reserves easier, etc... you are also giving power to the countries that mine the most gold (China, South Africa, Russia, Australia, Peru, Canada, the USA).
New gold is a very small fraction of the gold supply, so I'm not giving much power to those who mine the most (currently). A major new discovery could change things, but it would have to be huge. Mining (or, more probably, refining) becoming easier could change things more than a big discovery, by making many uneconomic deposits suddenly economically viable to work.
Most fundamentally, I'm gambling that the chemical composition of the earth's crust isn't going to change much. That part of the gamble I feel pretty confident about.
Mining yields 2% of existing supply every year, and gold isn’t used up (it is reused and recycled), that isn’t insignificant. We also have no idea how much China and Russia are actually mining, there is suspicion that they have a lot more than they say they do. Gold is not all that rare, it is abundant in the earth’s crust, those reserves are just largely inaccessible with today’s tech. See http://www.westcoastplacer.com/how-much-gold-is-left-on-eart....
But its use in those areas is dwarfed by its use as a store of value. Or to put it a different way, its industrial, scientific, and cosmetic usage has a far smaller effect on its price than people buying it as a stable store of value.
But the utility of those applications does not translate into gold’s current price. Most of gold’s value is from speculators and people using it as a wealth store.
The same reason a lot of very expensive land is sitting undeveloped. Whoever owns it, is betting they can get a higher payment for the usage tomorrow than today.
Bitcoin has intrinsic value: trustless transfer of digital quantity.
Speculative bubbles can happen around anything, whether it has value or not. Beanie babies and AI are examples of things that were/are the subject of speculative bubbles.
It's really hard to imagine the Bitcoin tech will just poof go away when the market tanks. No way.
But while Bitcoin almost certainly won’t go poof, it could dry up. ETH and Monero each take a slice of the market away (smart contracts and anonymous, respectively). More will come that take away more niches.
Lots of things can transfer quantity trustlessly now. The question is: in a world with thousands of established way to send quantity, how much is the “plain old ledger” worth?
Come on, this isn't the thread for it. People don't vote for Trump because they're ignorant or stupid, it's because they're desperate. And if you don't believe that's the case, I'll go spend a day in rural West Virginia with you and show you first hand.
As an American, I despise the man, but fully support his efforts at tempering globalism and clamping down on H1Bs. I don't have to like him to judge his policies on a case by case basis.
This "globalism" you're quick to demonize is one of the greatest forces for progress the world has seen. The world's poverty rates, starvation rates, sicknesses, childhood death rates, illiteracy rates, etc. have dropped like a sack of potatoes as a result of global trade. Nationalism and xenophobia, while definitely common in the 1950's, aren't the tools to bring back the middle class of that era.
Tell that to the midwestern industrial towns, who for decades have massive job and population declines, and who see year after year of opiate deaths that exceed (in each year!!) the deaths from the Vietnam war in total, as a result of economic hopelessness. [0]
You talk about death rates. The suicide rate of working class white Americans has been sky rocketing [1]
You can ignore these and many many other data points to assume a narrative of unceasing improvement, but millions of people would rightly see that as nonsense. [2]
The towns who are relying on cheaper steel and aluminum imports to build air conditioning units for the rest of America?
Or the ones relying upon cheaper steel and aluminum to build cars? Or Airplanes?
Sure, it sucks to be Pittsburgh when steel imports compete against the steel industry. But its great for literally every other industrial town in the USA. There are far more USERS of steel than there are makers of steel.
Tell me: do you think the 25% price increase on imported steel (helping Pittsburgh, and almost no one else) is worth the Chinese tariff on Pork, Nuts, Wine, and other agricultural products (aka: the majority of rural American's exports)?
Pittsburgh is a blueprint for the rest of the country in this regard. It sucked to be Pittsburgh in 1970-1990. Today, Pittsburgh is almost unrecognizable from the Steel City, at least in economic terms, and the county's unemployment rate is right around the national average.
> helping Pittsburgh, and almost no one else
The help to Pittsburgh would be pretty marginal; US Steel isn't even a top 5 employer in the region, and a lot of those jobs are suits that scale logarithmically with output. US Steel employs about the same number of people as Carnegie Mellon, which isn't even a particularly large university among R1 institutions.
But China already has far higher tariffs on many goods, so the deal isn't equal already. To extend your point, I think we need to go further.
Higher oil prices in 2008 did what? Increased domestic oil production, massively.
We'll see this in steel, and we should take measures to do the same for other industries by equalizing tariffs vs China.
But back to my point about globalization leading to massive outsourcing of jobs to China, then leading to massive economic dissolution to large swaths of the country. We can't all be "coders".. So what's the solution?
We "buy local" by spending a little bit higher prices on food and hipster coffee & craft beer and restaurants etc. Why can't we do the same, at the margins for all sorts of industries. Is that "more expensive" than dealing with epidemic levels of Opioid addictions and corresponding healthcare and other costs? The current situation is not working.. or more specifically, it is not working for a particular group of people in any way whatsoever.
As you can see, the US is increasing manufacturing steadily (with exception of the 2008 recession).
The problem is that we've got fewer jobs that produce MORE than we did before. The issue is that the USA is getting incredibly more efficient at manufacturing.
Consider the relatively labor-intensive job of farming. With innovations like "Plant Tape", what used to be a 10-person job is now the job of ~3 people and one tractor: https://www.youtube.com/watch?v=hzHo80bO-sU
And said ~3 people+tractor will work more efficiently and get more work done than 10-people in the "old way". Fewer and fewer people are needed to work anymore. That's the problem.
> We can't all be "coders".. So what's the solution?
You seem to have confused the current opioid epidemic as being caused by globalism, or economic hopelessness as you put it.
None of your sources link those two, and U.S. unemployment is at a record low so I'm not sure what the point is you're trying to make here is. Yes, the opioid epidemic exists, but nobody was saying here that it doesn't, so why are you introducing it?
All that says is that joblessness can be one of many factors in the opioid epidemic - it doesn't make a very strong case for it and still comes off as a fishing trip.
It also doesn't explain why GP is introducing the opioid epidemic as a consequence of globalism.
Are you surprised that people are upset when resources that used to be local are spread thinly across the globe? Forgive them, when they don't jump for joy.
You ignore the very real feeling they must be having when they can't afford a home. You ignore how they must feel when they put off marriage, and having children, because they're living paycheck to paycheck. You ignore how it must feel to wonder if you'll ever retire, feeling like you just barely missed the "good times". Its happening in our country, in our neighborhoods, to good people. It's no wonder Trump's slogan was "Make America Great Again". People eat that shit up right now. The standard of living is dropping and the middle and lower classes are feeling it the worst.
But hurray, global poverty is down.
There's a real dilution to the western experience happening right now and it's naïve to brush off the woes of your countryman with the idealistic perspective of a global poverty lift.
The wealthiest 20% of Americans have experienced the opposite of dilution over the past 40 years. Meanwhile the other 80% kept voting for policies that were actively working against spreading the income surplus more evenly.
When they finally woke up to what’s happening, the blame goes on Chinese and Africans — because anything else would be suspiciously close to an argument for socialism.
> Meanwhile the other 80% kept voting for policies that were actively working against spreading the income surplus more evenly.
That would be a fair criticism, but I don't see any major party candidates advocating for wealth redistribution. Maybe if someone was allowed to offer an argument for limited socialism then we could actually vote on it and try it out.
The only semi-socialist candidate in recent memory who came close to winning the primary was railroaded through a combination of systems that favor the status quo (superdelegates), a media that alternately ignored and attacked his candidacy, and a party that actively schemed against him while nominally allowing him to run.
All this after we elected a president who ran as the "change" candidate and promised to hold big banks accountable, only to stick the taxpayers with the bailout bill, increase the scope of domestic spying programs, and implement a flawed health care scheme dreamed up by the Republicans.
I can understand why people are pissed. I can also understand why some might choose to vote for their narrow self-interest, given the state of our democracy.
George Carlin said it well: "Good honest hard-workin people CONTINUE -- these are people of modest means -- continue to elect these RICH COCKSUCKERS who don't GIVE a fuck about them."[1].
I can't say that I didn't feel bad for them but this has been long time coming. How come countries like Germany are at the same time booming, is it because there is something intrinsically different about the two populations? We are not just leaves in a stream floating around aimlessly, the people themselves have to try and change the current status quo. If the system in place does not provide a way to do it or does it inefficiently (how I view Trump election win) it does a disservice to its people.
It disgusts me how any comment like yours that goes against the status quo here is downvoted,and if you are lucky enough to get a reply, it will inevitably avoid your points and just pivot to the same preferred talking points. Ironically, the people here expect uneducated laborers from middle America to completely understand a complex world when they themselves can't participate in good faith in an intellectually honest discussion.
Who will be the first to jump for the report button boys?
The HN voting system only works when most participants can keep an open mind. Unfortunately when it comes to politics it's hard for people to keep an open mind.
If I am wrong then tell me where I am wrong - but don't downvote comments just because they make you feel uncomfortable.
Every time I make a pro bitcoin or pro blockchain comment on HN I get downvoted to hell. So much for open minds here. Seems people are very touchy feely on politics, blockchain or anything else against the grain of the majority.
Global trade is neither going away nor will there be billions more starving babies if we change our trade policies to protect ourselves against totalitarian regimes who have considerably more selfish interests than us.
Most of his votes came from the same place that most of any other Republican candidate's votes come from, including the ones that lost. Most of the swing towards the Republican candidate that caused him to win, unlike John McCain and Mitt Romney who also had the support of those wealthy Republicans, came from working class and less well off voters.
Nobody is claiming that most of his voters are industrial midwestern working class. It is the net change from recent Republican candidates that point to those class of voters.
And it is most certainly this group that explains why he won. He won Wisconsin, Pennsylvania, and Michigan. You realize that hasn't happened in quite a while for a Republican right?
Yes, because the H1Bs are the reason people in rural West Virginia are suffering. People are suffering because the labor movement in this country was effectively killed. Trump and his policies are anti-labor and will not do anything to improve their position in life.
> Yes, because the H1Bs are the reason people in rural West Virginia are suffering.
There is a huge amount of semi-skilled IT work that has been shifted to India. Enough to employ millions in the US.
And this kind of work is a good stepping stone to higher skilled IT work.
A large proportion of this work would never have shifted without H1B/L1. If you work at one of the big body shops you will see how they constantly rotate Indian developers between India and the US.
The outsourcing of the late 90s and early 00s never would have happened without this.
> isn’t h1b a visa to allow you to work in the US?
Yes, and the professional services companies (the body shops I was referring to above) need people on-site in the US. They act as the bridge between the client and offshore workers.
During the outsourcing craze it was incredibly common to bring over a team from India, spend 6-12 months training them up, and then lay off the American workers.
I am not sure you have done your research. Trump's incompetence is ironically helping Indian outsourcers as they can easily abide by Specialty Occupation and Employer Employee control guidance specified by H1. Trump's policy actually is ending up hurting folks who work in Googles and Amazons of the world in related positions like Data Scientist, Growth Makeeteer etc. Because some of these roles can be challenged as "Specialty Occupation".
Further, claiming down on Indian outsourcing companies will not increase American jobs, but will lead to lower blended ratio and more offshoring. No one is ready to pay huge wages to maintain an aging ERP implementations
> Further, claiming down on Indian outsourcing companies will not increase American jobs
Of course it will - Indian outsourcing companies only have onshore staff because they have to.
> No one is ready to pay huge wages to maintain an aging ERP implementations
Costs were only 10-15% higher when the work was done locally. Companies will pay what they have to - I have no doubt American devs can be competitive in this space.
In the long term it will hasten the shift to cloud erp solutions and towards providers with a lower maintenance burden - IMO not a bad thing.
There are as many reasons people vote for someone as there are people voting.
But you can definitely find a contingent of Trump voters who are voting out of ignorance. It’s a whole theme of people saying they support the man for X while you can prove he’s anti-x.
That bothers me a lot less than his voting bloc that votes for him because he emboldens racist actions.
That said, I agree this is off topic & on the point of tariffs Trump has been quite transparent & consistent.
Desperate is why you'll pay a high price to get even a small increase in the chance of a good result.
Ignorant is why you'll choose an option with a worse chance of a better result on the axis of concern.
I think in many cases people ignored the things they couldn't deny that they didn't like about Trump out of desperation, but I think that in many cases they also voted for him out of ignorant belief that he offered a better chance for change they wanted in other dimensions (either ignorance of his likely policies or ignorance of the likely impacts of those policies on things they really wanted out of them.)
not that i think this is a good idea by any stretch, but i know some of my friends and i (outside the US) thought that one good that might come out of is that maybe now politicians and people alike see how totally broken everything about their elections and political system is and shake things up? so far, that’s not the result; there’s been a light shon on many of the failings (electoral college) and 0 change
it’s possible that people just wanted ANYTHING other than the political crap fest that was the whole cycle that world politics is stuck in, and trump was a way to shake things up and help change things in ~10years
For at LEAST the last 20 years, I've heard of people complain about "Trade Deficits" and the perils of "Globalization". Sure, Trump is an anti-globalist. But so are a TON of other people. My statements are aimed at anti-globalists in general.
> And if you don't believe that's the case, I'll go spend a day in rural West Virginia with you and show you first hand.
Indeed. And I've spent a week in rural Washington (Spokane). The town was decimated after a lumber mill closing, and tons of people were on welfare. Trust me dude, I've seen it myself. HUGE stretches of areas where the ONLY revenue source are Native American casinos and/or military bases, with closed down factories overlooking hills. There were some successful farmland, but that's not enough to sustain the economy of the population.
Now explain to me how raising Aluminum / Steel prices is going to improve the position of towns like this? Explain to me why a trade war with China / Europe / Other countries helps at all?
Good luck rust-belt / heartland. The trade war is coming. A good chunk of the rural folks have been wanting this for years. If Trump wasn't going to be elected last year, it'd only be a matter of time before some other "anti-globalist" came into power.
Unfortunately for the rural folks: they're the ones who depend most heavily on exports AND imports. Increase costs of steel and aluminum makes manufacturing more difficult. Sure, it helps the US Steel industry, but there are FAR more rural towns out there who rely upon cheap steel prices for the meager manufacturing that they already have. And obviously, if China stops buying Pork / Fruits / Wine / etc. etc. from American farmers, then those farmers are going to get hurt.
Its obviously lose/lose if you give it some thought. Alas, too many people are focused on the "Trade Deficit" to even care.
Trade deficit is also a red herring. It's accompanied by an equal and opposite capital account surplus. In this case China invests in US Treasuries. Now this is money you could be spending wisely -- funding obligations and social services, investing in education, investing in infrastructure, investing in new technology. The rhetorical question is what has the US been spending it on?
It's crystal clear what the problem is. It's not the trade deficit, which is simply a result of the market's way of allocating where capital and labor should be. The market is giving US laborers an extraordinary break -- let others be slaves, you take the capital. The problem is what the US has been doing with this capital.
> This specific issue has nothing to do with Trump.
I can certainly agree with that. In these sorts of discussions I work hard to ignore the 'people are complaining about ...' sorts of inputs because people complain about everything, it is hard to develop understanding from that.
However it is useful to understand economic value is changing. For example, gasoline was a 'waste product' of refining oil for kerosene[1]. When the economic value of gasoline changed, it changed how the companies were viewed. Nuclear power was once the power of the future with high economic value, until it was perceived (or maligned depending on your point of view) into being a threat to civilization.
So where does economic value arise? It is the ratio of the cost of production over the price of a good. So raising tariffs allows the cost of production of a foreign good to rise, and assuming the buyers are all trying to get the same price, the economic value of aluminum production goes up in the local (tariff free) economy.
So the price of aluminum goes up, and now it can be made profitably in Spokane, so an aluminum plant (mill?) opens up and jobs are created and the town becomes more prosperous.
With tariffs it is possible to raise the effective cost of any good to the point where it can be made profitably locally. However it requires that the local economy be able to pick up production. That is generally not a problem for the US economy, not as easily done on places like Brazil for example which can have high tariffs and still not have a local iPhone factory.
The rust belt folks believe that the country will switch to manufacturing things locally and consumers will eat the cost increase (or not eat, pun intended). They may be correct, they may not. Seems like we get the experiment regardless of our point of view.
> The rust belt folks believe that the country will switch to manufacturing things locally and consumers will eat the cost increase (or not eat, pun intended). They may be correct, they may not. Seems like we get the experiment regardless of our point of view.
They are simply not correct, unfortunately. There's no need to experiment.
The issue is not with manufacturing per se. Its with manufacturing JOBS. The USA is far more efficient today with computers / automation managing huge swaths of our manufacturing process. Even if we increase output dramatically, we won't make many jobs.
The sad fact is that automation is destroying that way of life. US Manufacturing is severely up over the past few decades. Aside from recessionary periods (2008, 2001, etc. etc.), the US has constantly manufactured more and more things.
We've just managed to do it with fewer and fewer people.
Be careful of confirmation bias, it is easy to just say they are wrong but it is important to them that the experiment is run.
Your thesis seems to based on the assertion that 'jobs' are the desired outcome and you will get 'automation' instead.
I don't disagree, that is certainly a possible outcome but having recently read an interesting position paper on Tesla where much of their model 3 woes were being pinned on being too automated it suggests that it isn't as simple as ordering up a few robots and you're done.
Further many of the steel and aluminum plants in the US have been automated as a means of cutting cost, and yet are still made idle by lower cost foreign steel and aluminum. So perhaps it may be a small number of positions that are brought back just by turning the factory back on. Not to mention material transport, etc.
All I'm trying to say is that these things are often more nuanced than they appear on the surface.
> Be careful of confirmation bias, it is easy to just say they are wrong but it is important to them that the experiment is run.
Sure. And its important to me that the USA remains strong and the best in the world. Unfortunately, their perspectives are weakening the USA and therefore, I'll work against them politically.
Various US citizens are entitled to their opinion. And I'm entitled to my opinion of those people.
10K mile view, automation is part of it but offshoring jobs is also part of it. My vehicle was manufactured in Mexico. The one I owned before that was manufactured in the US. The manufacture is still highly automated, but it's cheaper to do in Mexico for various reasons, one being cheaper labor, another being no tariffs.
> one being cheaper labor, another being no tariffs.
The most important of which is that specialization is the key to efficiency.
The USA plants manufacture Ford F-150. But the Ford Fusion is manufactured in Mexico.
Having all of your plants in one city making the F150 and ONLY the F150 means parts for that vehicle are more readily available, more specialists who understand the process are grouped together, and the community grows as a whole.
Cars definitely need to be made per-country basis in general. The USA has slightly different regulations than UK (Driver seat for instance).
Often times: when a plant moves to Mexico, its more so that Ford can increase production of a particular model in a particular area. Scaling up the F150 to even greater production numbers? Well, its cheaper to move the assembly lines to another country, and then grow the F150 plant.
Spokane is not rural. Newport is rural, Yakima is kind of rural, but Spokane has 500,000 people and a grimy downtown. Spokane’s current decline, vs. when I was a kid in the 80s, is due to a decline in...manufacturing. Also, Kaiser as a major aluminum processing center there , fed by cheap hydro power from columbia river dams, so the steel/aluminum should be of some benefit (though that feeds a Boeing operation that could be hurt by retaliation tariffs). (note: I don’t support the tariffs, just pointing out the facts).
Looking back at the map, I landed in Spokane airport and then traveled westward for 2 hours. We passed the Grand Coulee Dam and I stayed in and around that area for roughly a week and got to interact with the locals.
Omak was the actual town I stayed in. Apologies for getting the geography wrong. I had to look up the map and actually remember the names to get this stuff right... I'll check a map next time I start listing off Geography I'm not familiar with...
Specifically for the area I was in: the locals were mostly concerned with a Lumber Mill that shut down relatively recently. Certainly not a town that is affected by the Aluminum or Steel tariffs, and certainly one that will be affected by China's counter-tariffs in Nuts and Dried Fruit. Lots of farms in that area.
You're right though: they have lots of cheap power due to the huge Grand Coulee Dam, so the area should be theoretically a good area for manufacturing.
Ah...that makes much more sense. There is nothing from Spokane to Wenatchee along that route. Spokane is Washington State's second largest airport, but like many airports is located outside of the city.
Washington has been in the metal refining business because of cheap hydro since WW2, Boeing's primary operations are in Washington (Seattle, some in Spokane) because of it.
Also, most of the farms in that part of Washington focus on apples, berries and, oddly enough, grass feed for Kobei beef, nuts are more of a California thing.
Those are largely mega-farms run similar to mega-corporations, and they utilize a lot of immigrant labor. There are a few independent farmers around eeking out a living, but not many.
Capitalism generally favors mega-farms though, due to the efficiencies of scale.
Larger corporations can more reliably offer wages, better plan for trends, better analyze market conditions, afford the latest technologies, etc. etc.
Traditionally, when companies got too big in the USA, the regulators would split them up to allow competitors to flourish. This sort of splitting doesn't happen these days however.
>This sort of splitting doesn't happen these days however.
They sure haven't. Last real breakup was AT&T in the early 1980s? I think that's my biggest gripe with politics today. Neither party is willing to break up these big companies and often gives the green-light for mega mergers without much fuss.
Bringing this back on track. If the market tanks before November, there is a higher chance of dissent against Trumpism, since he tied himself so much to the market, and in a very literal sense, is causing it to tank by policy and by embodying political risk.
Latest figures show a $13B trade deficit with the EU for January of 2018. One month.
Of course, this doesn't account for the several billion we shove into their economy with the tens of thousands of troops and contractors stationed throughout the continent, paying dearly for the privilege of being there.
Nor the trillions of dollars we spend to keep the Russians out, and the Germans from misbehaving. Funny how much thanks we now get from younger Europeans for keeping Europe (mostly) at peace for the longest period in its history, along with rebuilding it.
But I don't even need to show more facts and figures. As an American who has lived in the EU several times, let me tell you just one example of what you'll see in, say, Germany:
About 90% of the cars there are made by them (VW, BMW, Opel, Mercedes, etc), with a few Fords and Peugeot, some Fords and maybe some Toyotas rounding out the other 10%.
I'm looking into my US parking lot right now - I see about 90% foreign cars, and a few US SUVs.
At the time, Mercedes-Benz and Nissan were already building a $1.4 billion plant near Puebla, while BMW was planning a $1-billion assembly plant in San Luis Potosí. Additionally, Audi began building a $1.3 billion factory near Puebla in 2013.[6]...
Funny how only one politician, in my near history, has dared to speak of this in public...
I'm a "buy a US car" guy and have been since I've been buying cars. Sadly, if you want to support US workers, buying a US car probably isn't the best option anymore.
In the modern supply chain the distinction makes no sense whatsoever.
I have former colleagues who are working on a project for Ford with a team spread out across the entire globe: From Michigan to Mexico; with developers in the UK; Germany; India and Japan.
Where is this stuff made? Everywhere at once, and all at the same time.
I think they were bought and then sold by GM, similar to how Chrysler and Mercedes were once paired up. But Opels are still designed and made in Germany (or possibly Poland now).
But this is all just financial games that the parent companies use - Opel never employed any actual Americans other than some financial folks, I'm guessing.
Gold is poised as, with stock market declines, US funding of deficits gets severely pressured. As a result, Fed will have to reverse course, sacrificing the dollar to maintain asset prices and ability to finance government.
We'll see if dollar has a short term rise, though as a flight to safety, though I think unlike in past downturns, the dollar and US economy is in a much worse position.
How does the stock market declining affect US funding for deficits? Deficits are funded by bonds, which (almost always) move in the opposite direction from stocks. This also means that your second sentence doesn't follow.
> ... though I think unlike in past downturns, the dollar and US economy is in a much worse position.
I'm a bit undecided, but I fear that you are right on this one.
I've been following the thesis of @LukeGromen, (here's a sampling)[0].
Here I think he covers it mostly in full [1].
Definitely worth a listen..
Also, here is a great 5 part podcast from December where he (and other Dollar bears) talk about the dollar decline[2].
Because of US dollar reserve status, government spending has been financed by foreign buying of treasuries, especially China. In recent years, they have rightly seen the fiscal situation of US, with massive liabilities, as being fixed only by devaluation of the dollar and therefore in real terms holding treasuries, or especially continuing to stockpile them not prudent. And he points out many examples of how they have recently been declining their purchases of treasuries and stockpiling gold (them and Russia).
He argues their recent opening of a Oil futures market as their avenue to moving away from dollar, eventually (long long term) pushing Renminbi to gain reserve status but in medium term using gold / oil as their leverage away from dollar.
On the stock market/taxes connection, he points out usually a yr over yr decline in tax receipts occurs in recessions. But last month, in the midst of an "everything bubble" (stocks, real estate, bonds, etc.) we saw a year over year decline of tax receipts. [3]
Also that stock market is increasing % of GDP & most taxes paid by wealthy whose income increasingly based on stocks market returns implies a dependence at the margin of government spending on high equities valuations. [4]
If the market continues to decline, and future months tax receipts decline, the "fed put" will get called into action, as China has stopped funding deficit (enough to match it's increase) so it has to be funded by rising rates in the private market. Libor shows this, as does the decline of the dollar.
Here's a link his slide deck covering all of this [5].
See slide 26 for a chart showing that when tax receipts fall "enough", US quickly takes action to weaken the dollar.
Slide 25 shows that declines in tax receipts usually correspond to recessions, but except recently..
"Price stability": sounds like no inflation or deflation to me, but in fact they pursue some non-zero amount of inflation, usually 2-3%.
"Full employment": sounds like 0% unemployment to me, but in fact they target some non-zero value, around 5% I think.
Targeting equity prices or other asset prices is not officially within their mandates, but given their behavior at times (e.g. suddenly dropping dovish comments when the market drops), one might start to think this is a de facto or shadow mandate. :)
I think worrying about the price of the dollar is closely related to the level of inflation or uh "price stability" they are aiming for.
"Let me start with the Fed’s mission. It’s often said that Congress assigned the Federal Reserve a dual mandate: maximum employment and stable prices. But, that’s not quite accurate. In fact, the Fed has a triple mandate..."
> "Full employment": sounds like 0% unemployment to me, but in fact they target some non-zero value, around 5% I think.
3-5% sounds plausible. Even with full employment, people will be unemployed for short periods of time while they're between jobs. And these phases are going to get more significant in a gig economy, where you don't stay at the same company for 40 years anymore.
Similarly, as a large-scale landlord, you can always expect some 3% of your apartments to be vacant even in markets with high demand because some time passes between the old tenant moving out of an apartment and the new tenant moving in. (Source: My father is working in that business.)
If i remember macroeconomics, a little bit of deflation can spiral out of control quickly. It's hard to guarantee it'll never go less than zero if they target exactly zero. So they shoot for a little bit over. Also a little bit of inflation encourages people to find things to do with their money other than stuff it in the mattress.
Fed only controls overnight rate. QE happened because overnight rate hit the floor and is now being unwound. If investors are not willing to fund the Treasuries there is not much the Fed can do. But that is not the case, certainly not now.
> What stocks will Warren Buffet be looking to buy once the fear sets in?
Whatever's a good deal when the prices drop low enough.
> How does one evaluate value the way he does?
It's not difficult, he and Munger consistently refer to a handful of books and themes and repeat them over and over.
They do have advantages that you and I don't, however.
First: they have a captive source of cheap cash in their insurance businesses. They are run strictly for underwriting profit, meaning there is always cheap float on hand to invest.
Second: they don't participate in the open market a lot of the time. A lot of the B-H stable is composed of successful private businesses who sold directly, rather than being purchased via the share market. Buffet & Menger can more or less let the deals-of-a-century come to them.
Third: if there's nothing good to buy, they don't. They accumulate cash and near-cash assets. This means that when the market tanks, they are one of the few groups with cash on hand to snap up bargains. This happened in a big way during 2007 and 2008.
The ones that have a business model your grandad would understand. His heuristic is somewhat naive, but he's made a lot of money by betting against the paradigm shifts and capitalistic innovations.
He's basically applying systems theories to companies, and knows that the more complex a system is, the more possible failure states it has.
There is an open possibility that cash will flood into BTC/ETH as a store of value in a highly volatile S&P market, replacing traditional reservoirs (eg: Japanese/other international equities, precious metals, etc).
No, this won't happen, fear makes people go back to old stores of value / dig in to their current ways, as opposed to seeking out new ways (usually). The circumstances that lead people to seek out new ways tend to be an absence of fear and a desire for better functionality as opposed to fear. Cryptos are much more likely than conventional securities to go to near-zero, and fearful people know that.
Implied volatility and historical volatility are different, but they're at least "the same units". So please tolerate this apples-to-oranges comparison. Still, its clear that BTC is way more volatile than the S&P500, even today.
In times of crisis, people move their money from high-volatility to low-volatility sources. IE: Stocks to Bonds.
In times of growth, people move from low-volatility to riskier (but higher potential of gains), ie: Bonds to Stocks.
Crypto is far from being a good store of value. I'd argue it's even more volatile than the legacy markets right now. If anything, there'd be a spillover where traders and investors derisk entirely and go into fiat or the traditional store of value which is gold.
That makes no sense at all. High volatility for the SPX means +-2% a day. High volatility for crypto currencies means > 20%. Why would you try to secure your capital by moving it to something that is orders of magnitude more volatile? A store of value is by definition something that moves as little as possible.
Sure, fearing overvaluation (i.e. too high price-to-earnings ratio) of stock markets, people will switch to an asset where the "earnings" part is zero by design. Sorry, but I would rather place my bets on real estate or dividend stocks (reasonably P/E'd stocks to be more precise).
Your comment contains a financial fallacy. Cash cannot flood "into" assets. For every buyer of an asset there is always a seller of that asset. The same number of dollars will be held regardless of the price of cryptocurrencies.
No, if I buy BTC for $1 then sell it for $2, there is now $1 more in BTC than I put in to it. If cash cannot flood 'into' an asset, then the assets value would never grow.
No worries, this is actually a pretty subtle concept because it's an instance where the properties of the aggregate are different than the properties of the individual.
An individual can put cash into an asset. You can start with $1, then exchange it for BTC, and now you have $0. The amount of dollars in your accounts has gone down and the amount of BTC in your accounts has gone up.
But in aggregate, this is impossible. There is a (mostly[1]) fixed supply of dollars in the world. And there is a (mostly) fixed supply of BTC in the world. When you buy BTC for $1, the $1 just moves from your account to someone else's account. Their BTC moves from their account to your account. In aggregate the amount of dollars is the same before the transaction and after. The amount of BTC is the same before the transaction and after.
The reason for this is that for every buyer, there is always a seller. Every single time someone puts dollars "into" an asset, someone else is taking dollars "out of" the asset on the other side of the trade. No one has ever put dollars "into" BTC on net.
Generally, prices do not go up because dollars go "into" the asset. It is fallacious to say that the stock market has gone up because dollars have gone "into" the stock market. Dollars flow through markets, they don't flow into markets. Prices reflect opinions of people making transactions, they don't reflect a history of dollars that have gone "into" an asset.
To be fair, this issue is kind of pedantic and besides the main point of this thread, but I do think it's a fallacy worth being aware of. Ever since I learned of it, my financial thinking has felt clearer.
[1] let's say fixed with respect to you any buy/sell transactions you may or may not execute (this would have be an asterisk, but it turned all of my text into italics)
> No, if I buy BTC for $1 then sell it for $2, there is now $1 more in BTC than I put in to it.
There are no dollars in BTC, period. Dollars and BTC may both move, and in certain exchanges one may be traded for the other, but the dollars are never in BTC. (Your net worth, which you may choose to measure in dollars, may be tied up in BTC, but no actual dollars are.)
Why BTC / ETH and not, say, bonds? I would think BTC / ETH would be anathema to someone fleeing volatility, no matter how bad the S&P got, but I am only a casual watcher of any market.
And I still disagree. Deciding you want a way to short paper currencies can, at times, be very rational. Does gold fulfill that function reasonably well? Yes, I think history shows that it does. So it can be very rational to buy gold.
(Perhaps "short" was the wrong word. But it is where people go - with reason - when they're losing confidence in fiat currencies.)
I suppose a silver lining on a tanked economy caused by President Trump is that it probably ends his parties control of Congress in November. If he keeps wiping out market value at record pace with his policy statements and decisions he is going to have a hard time convincing people the Republican party is the party of smart business.
Instead of fixing core problems exposed recently, ie, not letting a single person via the executive branch have direct control over important things like tariffs (this used to be something only congress had control over) people want to just blame the other party as a solution for everything.
Despite the fact the executive branch grew the fastest and exercised some of the greatest amount of power under the previous party, much like the previous guy before him who also set a record of executive power expansion, etc, helping set the stage for current volatility.
I seem to be one of the few people concerned by the fact such market volatility is even possible based on one man's decision making.
Although I should note there is a uniquely large disconnect from the things said by the current administration as opposed to the actual actions - and the subsequent media (and lesser extent market) reactions. I'm happy people are concerned about abuse of power but it's disheartening that it's been so weakly correlated to real world power use/expansion.
That's what I thought about Bush, but he checked out right when the crisis hit and let employment bottom out on Obama's watch. Then Trump was able to run on a pro-business campaign saying that Obama didn't create enough jobs. What we're seeing is possibly the bleeding edge of a downturn that may not hit for real for a year or two. It could easily hit the next administration and it will a hell of cleanup job since we haven't paid off our last recovery yet.
If it hits the next administration, it can't really get going until late 2020. Most of us would take that (given that we fear the next three years being much worse than that).
Bear in mind a lot of the unemployment numbers are hilariously fake. Way too much is exempted, and for the last several administrations of both parties, this talking point is not reflected in people's lived experience.
Bear in mind that what's considered 'employment' is far from what people called employment in the fifties. This does not translate into people attaining self-sufficiency.
I would like to know why this is being downvoted. I cannot speak for the US, but the same has been happening in Germany in the last 20 or so years, at least anecdotally.
The reported unemployment rate peaked at 13% in 2005 (which, whether coincidentally or not, is also the year when Merkel was first elected), then fell steadily [1] and is currently at 5-6%. Critics attribute a fair amount of that positive trend to tampering with the statistics. For example, unemployed people are excluded from the statistic while they are going through government-mandated job training. I've heard stories of people who had to sit through the same Excel course over and over again because the stat was lower while they did so.
The specific metric you and the parent are looking for is "Labor Participation Rate".[0]
This is a personal favorite metric of mine, because it makes readily apparent some of the distortions the parent brought up. I imagine they're likely being downvoted for some combination of more vociferous language, less citations, different perspectives on the merit of the math/historical comparison the poster is referring to, as well as good old "you're wrong" downvotes, but I certainly found myself agreeing with the thrust of the point. (that unemployment and in related fashion CPI are regularly distorted for one agenda or another; for a recent example of this look at the application of C-CPI in the latest tax code to help address budget shortfalls in a way one might fairly call "slight of hand."[1])
But it is also skewed by the “papy boom”, wealthy post war generation going into retirement, leaving the workforce. So it’s not trivial to read the participation rate either.
The unemployment numbers are very thorough and accurate and also irrelevant to this thread. The BLS tracks everything very carefully. The so-called headline unemployment is not intended as a comprehensive statistic, but rather an indicator that has been very historically consistent. There's a zillion other measure of employment that all tend to move in formation with headline unemployment.
In terms of "self-sufficiency" the laggard of the past few decades has been wages which is largely attributable to fiscal policy placing a premium on investment instead of production, not economic output.
Unlike Reagan, Trump didn't inherit an economy already in recession. Unemployment started to spike in 1980 and the economy was a significant factor in the election.
However according to Fox and the right on general he did. So it doesn’t matter what you and I think as his base believes they’re living in the Obama Recession
It doesn’t seem likely that this would happen before the midterms. Also, Trump is having a direct effect on the economy through his words (tweets) and actions (tariffs), Reagan was more of a bystander.
Or perhaps it’s designed to create a situation from which he intends to proclaim victory over prior to November in order to sway malleable voters who, while they are likely impacted by trade policies, likely aren’t directly affected by the daily fluctuations in the way that those with personal investment accounts and retirement accounts are.
"Falling equity markets may produce a negative wealth effect, with economic implications, but barely half of Americans own equity (and most do not own very much equity)." - UBS' Paul Donovan
I’d also bet more equity is concentrated in states that likely don’t vote republican.
It's common for people to look at the S&P 500 chart and immediately decide it's due for a crash. (In fact people have been doing that since 2013!)
But the economy itself is quite healthy. Earnings have been rising and driving up valuations. Unemployment is low. Wages are (modestly) growing. Things are in general very good.
Why has the market risen for so long? Because the correction in 08 was so fast and deep, and took so long to recover from. That doesn't mean we're due for a correction anymore than sunny weather makes you due for rain.
Barring a shock to the system (a war, an unforeseen debt crisis perhaps coming from China, terrorism, etc.) I think we've got some more gains to realize.
> But the economy itself is quite healthy. Earnings have been rising and driving up valuations. Unemployment is low. Wages are (modestly) growing. Things are in general very good.
But the multiple is rising, meaning prices have grown _faster_ than the price.
To clarify what I think you mean, the P/E ratio is rising and is now above historical averages for the S&P 500 dataset. The only times in the past where this was true was in the bubble days of the late 90s and mid 2000s. The takeaway is that stock prices are not actually supported by the underlying earnings gains, even if earnings are going up - this is evidence of an overheated market.
I’d argue that a very large part of the high valuation and low volatility (until February) of stocks was because of low rates and money printing. Once that goes away, the economy may or may not tank but you would expect stocks to be at least volatile, if not to drop mechanically.
My sides. Dude is worth 4 billion dollars, ran hundreds of businesses over the course of his extensive business career, negotiated his way out of severe personal debt, is married to a hot former model 24 years his junior, and is a president of the US of A after taking up politics as a hobby 1.5 years before the election. And there’s still “dearth of evidence”. What does he need to do? Cure cancer?
I'd settle for above average returns on what he started off with, plus at least some evidence that thar was connected to skill in the domain it is being attributed to.
> and is a president of the US of A after taking up politics as a hobby 1.5 years before the election
Trump's first Presidential effort, which was quickly abandoned (notionally because he didn't want to be associated with certain other candidates in that race), was in 2000, when he sought the Reform Party nomination. He was involved in politics before that, and had fairly open Presidential aspirations since. So you're off by at least an order of magnitude with that 1.5 years. (Then again, while governing is something else, electoral politics is about 100% brand marketing.)
He didn’t run hundreds of businesses, he licensed his brand to oodles of failed business lines in a desperate attempt to make up for huge loses in real estate. He made a lot of bad decisions, ran a failed casino, got bailed out by his dad, the banks, and Russian oligarchs in that order. He cashed out an IPO and stuffed investors and creditors and contractors.
His negotiation skills are more like con-artist skills selling snake oil. Why should anyone on HN regard him as a great entrepreneur who built a great disruptive enterprise that caused many boats to rise on a ride? Shall we compare him with Bezos, Gate, Jobs, or Musk? There’s kind of a bizarre Trump worship that happens among SeekingApha financial types who seem to value pseudo-Alpha male bullying behavior and win at all costs salesmanship even if it screws other people over.
He is not an exemplar of a great businessman or negotiator and if anything his personal skills seem subpar and based purely on a dishonest sales tactics and bullying.
Ross Perot who also ran for the Reform Party Like Trump is a business man deserving of far greater respect based purely on what he had to do.
Moreover do you really think it is hard for a billionaire or pseudo billionaire to marry a former young model?
Honestly, if you can’t tell that Trump lacks serious character traits to be an effective executive I don’t know what to tell you because it seems patently obvious, from the temper tantrums and childish outbursts on Twitter, the excessive personel churn and desire for loyalty over competence, to the inability to focus, stay on message, and apparent severe attention deficit disorder.
Maybe people were hoodwinked in 2016 and really disliked Hillary, but at this point, all the cards and warts are on the table, and if you’re still carrying water from Trump there’s not really any other conclusion to make.
> Ross Perot who also ran for the Reform Party Like Trump
The Reform Party was created in an attempt (unsuccessful, but that's another story) to institutionalize the relative success of H. Ross Perot’s 1992 independent run, and qualified for federal matching funds in 2000 based on the (lesser) showing of Perot in the 1996 election under the party banner.
Trump, David Duke, and others sought to take advantage of those matching funds by running for the Reform Party nomination in 2000, but Trump’s run wasn't much like Perot’s.
Quote: “The president's personal financial-disclosure report was extensive before he handed the torch to his sons, and listed Trump as a trustee, president, chairman, or member for more than 530 entities. Almost half of these companies listed have Trump's name as part of the company name.”
“President-elect Donald Trump owns a helicopter in Scotland.
To be more precise, he has a revocable trust that owns 99% of a Delaware limited liability company that owns 99% of another Delaware LLC that owns a Scottish limited company that owns another Scottish company that owns the 26-year-old Sikorsky S-76B...”
We don’t know how much Trump is actually worth. Even if he is worth a billion, that’s because he inherited an estate worth $100 million. It’s not exactly difficult to turn that into $1 billion (compared to, say, turning $10,000 into $100,000.)
His business acumen is questionable, as he has gone through four bankruptcies. One of those was a friggin casino. Do you know how hard is it to bankrupt a casino?
His negotiating himself out of personal debt amounted to threatening banks that he would declare bankruptcy unless they reduced or forgave his debt. As the saying goes, if you owe the bank $100,000 you have a problem, but if you owe them $100,000,000 they have a problem.
You must have forgotten about his first presidential bid 10 years ago. His MAGA slogan was trademarked in 2012. So his interest in politics isn’t new.
Lastly, I’m not sure how his marrying a “hot former model” has anything to do with... well, anything.
> he inherited an estate worth $100 million. It’s not exactly difficult to turn that into $1 billion (compared to, say, turning $10,000 into $100,000.)
And turning $1 billion into $10 billion is even easier!
> I think he is a more than a little random and vengeful but that scares people into line.
Random scares people away (or into violent opposition), not into line; for punishment to be effective in getting people in line, you want people to be maximally clear on what action will and will not provoke it.
Even without Trump's negative tweets, companies like AMZN are extremely overvalued and the premium is there on the expectation of future hyper growth. With the overall markets falling, investors are now taking a step back and re-evaluating their portfolio.
Also, with a possible trade war scenario happening, AMZN will no doubt be impacted. Ecommerce will also suffer as a whole, especially with a lot of products sold that are being manufactured in China.
The market responds to Trump's tantrums because it affects the potential of Amazon in the future.
Basically, if Trump threatens to take some action against Amazon that may hurt its value as a company by 10%, and investors believe there is a 50% chance of Trump following through with this threat, the investors will (theoretically) collectively lower the price of the stock by 5%.
A price on a stock market is determined wholly by future outlook, which a president's negative tweets can affect, hence why some companies with high earnings expectations in the distant future cough Tesla cough have ridiculously high price/earnings ratios on their shares.
Only companies making profits have P/E ratios, Tesla is still losing money so its P/E doesn't dictate its share price, only its projected future growth/sales.
P/E ratios don't tell the whole story, e.g. AMZN has a high P/E ratio because they aim for low profitability by reinvesting in growth, similar to Netflix who's still taking on debt to build out its inventory.
When a companies growth and revenue has stagnated their P/E ratio then becomes a strong indicator for market value / share price.
The part you omitted is how the long-term outlook currently priced into a lot of tech stocks (including AMZN) is far too optimistic and not accurately discounted relative to likelihood. Current prices aren't a function of rigorous analysis so much as pie-in-the-sky projections and too much capital floating around.
The efficient-market hypothesis basically asserts that if a price weren't a function of rigorous analysis, then there would be a sizable incentive to find and correctly analyze this stock, and trade appropriately to take advantage of the inefficiency until it no longer exists.
There could possibly be a more optimistic pricing in the markets if we factored in, just as a random example, that people are more timid to short rather than buy, as a short can easily result in a loss higher than the entire value of the position. An interesting read if you'd like to go down the rabbit-hole of that ideology would be anything on the concept of 'Adaptive Markets' by Andrew Lo. Rather than the common physics/maths-based approach to market behavior, it focuses on a more biological one, and thus includes these 'emotional inefficiencies' that may be present in market pricing.
Because an unhinged Twitter addict with access to nuclear weapons is bad for business?
More seriously, there's a lot of uncertainty affecting the US political and economic prime movers that's not priced into the market, for reasons I don't understand. You could have knocked me over with a feather when a con man with his own private parking spot at bankruptcy court won the Presidential election and markets went up.
To make a comical point out of a depressing topic: You and I might be so wise as to ignore if, for instance, a goat started telling us it was going to come after us and steamroll our houses.
Put the goat behind the wheel of a tank with a brick on the gas pedal, and I think you may start to see why there's a degree of real fear behind what otherwise would be off-kilter ranting from a surprisingly loquacious ungulate.
The President is the leader of the USA. You cannot ignore him.
When Trump / Jeff Sessions announced that they were going after marijuana, marijuana stocks fell. Trump announces tariffs on Aluminum, users of aluminum fell (ie: Ford). Making Aluminum and Steel 25% more expensive in the US has long-term effects you cannot ignore.
You CANNOT avoid Mr. Trump or his tariffs. You can't dig your head into the ground and "ignore him". When Mr. Trump decides to do something, it has cascading effects on the rest of America.
Mr. Trump controls the FBI, the DEA, the FTC, the FCC, the USPS. Directly. Mr. Trump can add and remove policies from these great agencies without even asking for anything from Congress. Pure, unilateral power of the executive order.
You CANNOT ignore this power. Its how America works.
It happened under the Obama administration. In fact, Mr. Obama demonstrated how it could be a weapon for good.
Mr. Obama encouraged taxes to benefit solar-manufacturers and electric car companies. This caused those stocks to go up, and investments into green-energy to flourish. Sure, there were some failures (see Solyndra), but I think it was overall a net-benefit to the USA.
We're now manufacturing advanced Solar Panels that are better than a lot of other countries (although China is still manufacturing them cheaper...). And Tesla greatly benefited from the tax-break on electric cars.
That's the sort of thing a President is SUPPOSED to do: use his powers to lead the nation. Trump is using his powers to turn us against each other.
21, as much as you might like, YOU do not determine the course of this discussion. Mr. Trump's tweet has more relevance. The focus of the discussion is therefore on the relationship between the USPS and Amazon, and how it would affect the USA.
If Mr. Trump decides to start tweeting about fixing the double irish with a dutch sandwich loophole (see: https://www.investopedia.com/terms/d/double-irish-with-a-dut...), then I'll support it. Alas, that is not what Mr. Trump is talking about today. Neither you nor I determine the course of the national discourse. Only Mr. Trump has the power of the bully pulpit.
> Neither you nor I determine the course of the national discourse. Only Mr. Trump has the power of the bully pulpit
I'm not sure what's you point here. This is what the US president does (unlike other countries) - has a lot of power to directly intervene in many places. This is what voters expect from him, and this is the issue on his mind.
Amazon is not the only one abusing the USPS. Chinese companies like AliExpress do the same thing all over the world, taking advantage of national post services to ship a 50 penny screw free from China to UK for example.
My point is that Mr. Trump is not talking about the double irish with a dutch sandwich loophole. He never has, and probably never will. Mr. Trump had an opportunity to fix it in last year's tax overhaul. But he turned a blind eye to the well known tax issue.
Therefore, your earlier statement:
> We all know how the big tech companies pay basically zero tax by elaborate international tax reduction schemes.
is... well... I agree with it. Companies shouldn't be abusing the double irish with a dutch sandwich loophole. But our President is ignoring the issue. And therefore, neither you nor I can do anything about it.
> But our President is ignoring the issue. And therefore, neither you nor I can do anything about it.
Actually we could do something about it. People don't want to buy from companies which use child labour or which destroy the environment.
Thus you have all tech companies painting themselves as green as possible.
We are already seeing a trend in people demanding that companies support the "local economy". I think it's just a matter of time until they will demand for them to also pay "local taxes".
If Mr. Trump were complaining about Alibaba or even doing something about it, maybe then I'll chime in on that discussion. Otherwise, it seems kind of irrelevant to the greater discussion that our President is putting forth.
The only reason Mr. Trump is talking about Amazon is because Jeff Bezos owns Washington Post, and Mr. Trump doesn't like the articles that WashPo are running. When Mr. Trump stops using Chinese labor, and his own company stops abusing these same rules... then maybe I'll trust that he's taking the issue seriously.
If your point is that you support tariffs on China for unfair practices, then I agree with you. The part where I stop agreeing with Mr. Trump is where these tariffs start to affect US Allies (ie: Canada, Australia, UK), or close US Trading Partners (Europe, Mexico, etc. etc.).
Because I'm interested in human psychology, kind of as a hobby. I find it fun to observe how people become incredibly righteously indignant on what they think is a principled basis "But he turned a blind eye to the well known tax issue" and then do the very same thing. Donald Trump cherry picking = bad, you = ok.
I also find it interesting to interact with people who think they can read minds: "The only reason Mr. Trump is talking about Amazon is because Jeff Bezos owns Washington Post, and Mr. Trump doesn't like the articles that WashPo are running."
> If your point is that you support tariffs on China for unfair practices, then I agree with you. The part where I stop agreeing with Mr. Trump is where these tariffs start to affect US Allies (ie: Canada, Australia, UK), or close US Trading Partners (Europe, Mexico, etc. etc.).
I support fairness + pragmatism. China was given extremely favorable tariff treatment as they were developing, but they are now far, far beyond the development phase and it is well past the time that tariffs are normalized, as well as other unfair advantages fixed (free worldwide shipping subsidized by mostly Western postal services, like USPS).
But to listen to the typical fresh out of school HN expert armchair economists, current tariffs are "just right", as if they never change, and never need to change to accommodate changing conditions. In other words, they are incredibly ignorant of history (such as Obama's similar actions....where were the dire Smoot-Hawley warnings then?), but even worse, their emotions related to the topic seems to have disabled their plain old common common sense.
> I find it fun to observe how people become incredibly righteously indignant
> I also find it interesting to interact with people who think they can read minds
Normally, I'd continue discussing this with you. But I've been literally banned when I "return the favor" here on YCombinator. The mods really don't like aggressive discussions in this area. Therefore, this is where the discussion ends.
I've made a personal promise to the mods to not escalate towards personal attacks anymore on this site to keep my account active, and therefore I'm unable to reciprocate your subtle personal attacks against me.
I've also received warnings....birds of a feather flock together they say! :)
Personally, I strongly disagree with this policy, or at the very least believe they are going to need to revisit it soon due to the bizarre nature of discourse on recent topics - so many people refuse to engage in intellectually honest, non-deceptive discussion.
Unsurprisingly (based on the somewhat snarky tone of my comment, but absolutely and objectively justified imho), I am of the opinion that you were yet another of these people. Disagreeing on politics is one thing, refusing to engage on points of contention but instead moving the topic back to a preferred talking point, as politicians are famous for, to me is a depressing change in the level of discourse on HN.
Perhaps I've done this myself to a degree? Maybe, but it wouldn't be out of malicious intent, it is out of frustration.
Thanks for "a" reply at all, my spirits are lifted. But, I would be curious to know the perspective from your side of the political aisle, not about the topic we're disagreeing on, but whether HN has changed in the ways I'm describing. It may be less easy to notice if you don't hold opinions contrary to the norm, but no harm in asking.
EDIT: Ah yes, nice to see I got my obligatory downvote.
This is the (Republican) justification for the corporate tax breaks though.
The theory is that:
Companies with international operations didn't repatriate funds because the U.S. because the U.S. was not competitive. Now it is.
It's worth noting this is not limited to Tech companies, XOM paid nearly 0% for decades, and, based on the returns that we have seen, we believe that Trump's family business may have paid 0% taxes for > a decade as well (because it had a deductible loss).
Because they are worried he's actually going to do something? What he might do I don't think anyone could really tell you, but the possibility that he does something that hurts their business is real.
Trump has the ability to direct various federal agencies to do things that could impact Amazon in more concrete ways. He's not just a blowhard throwing tantrums...
Well, for example, he could start appointing lackeys to the USPS governing board, who would presumably appoint a new Postmaster General more in line with his views. Those views could include making life very hard for Amazon (who, judging by the delivery method of my packages, still do quite a lot of business via USPS).
Just an anecdote- my postal carrier is a contractor for the USPS. She is terminating her contract early because the USPS has tripled the number of packages she has to deliver with no increase in pay.
My neighbors are all up in arms over this. They blame Amazon entirely for this woman’s troubles. On our FB group they’re talking about boycotting Amazon entirely.
Personally, I think both the USPS and the carrier negotiated their contracts poorly.
Mr. Trump has the power to do this. And he did, just a few weeks ago. Mr. Trump is realizing the extent of his powers and is beginning to use the office of the Presidency with efficacy.
The tariffs did not increase the price of steel by 25%, they added a 25% tariff to imported steel. The US imports under 1/3rd of the steel we use (36M mt vs 81M mt), so the majority of our steel will have no tariffs on it.
Like, say, directing the Justice Department to launch antitrust proceedings against Amazon.
I'm not saying that the Justice Department would take the case to court (still less that they would win). But the stock market may care about such possibilities, because if they happened, Amazon's share price would take a hit - a bigger hit than it takes just from Trump whining about them.
Because Trump controls the US Postal Service, by nature of being the president.
If Mr. Trump wants the USPS to screw Amazon over, he has the power to do so. Its clear that Mr. Trump doesn't care about the long-term survivability of the USPS anyway, so he certainly has the power to "weaponize" the USPS and change its terms to become anti-Amazon.
On the contrary to your post: it is the JOB of investors to pay attention to the US President, as well as the powers he has... to keep your investments safe. Its your 401k retirement at risk here. Therefore, it behooves you to move your money to safer pastures if the President is making threats.
> If Mr. Trump wants the USPS to screw Amazon over, he has the power to do so. Its clear that Mr. Trump doesn't care about the long-term survivability of the USPS anyway, so he certainly has the power to "weaponize" the USPS and change its terms to become anti-Amazon.
No, he can't. There are laws in place to prevent the USPS from changing the price based on who is shipping. The USPS is Net Neutrality at its best.
What is preventing Mr. Trump from tearing up this contract for Amazon Sunday Deliveries?
Hint: absolutely nothing. Mr. Trump can destroy the USPS's revenue AND hurt Amazon at the same time if he so wished. I guess destroying the contract will take 30 days, but in any case, Mr. Trump can make "Sunday USPS deliveries" of Amazon goods incredibly more expensive in just one month.
Mr. Trump may need to fire a few Post Office directors, but Mr. Trump doesn't really seem to care too much about the turnover of this organization he's running.
[I am going to respond to thrillgore and dragontamer in this post because the HackerNews software won't let me respond to both posts]
> "There are laws in place" is literally dismissing anything he can do; because its clear he's gone over the law before (the travel ban), he'll do it again, and again, and again, until the law has no foundation left to stand on.
And he lost on the travel ban, twice. In fact, when you look at what he has done that are against the law, he gets smacked down. He does not win on such things.
> Hint: absolutely nothing. Mr. Trump can destroy the USPS's revenue AND hurt Amazon at the same time if he so wished. I guess destroying the contract will take 30 days, but in any case, Mr. Trump can make "Sunday USPS deliveries" of Amazon goods incredibly more expensive in just one month.
There would be complete shitstorm if he did that since USPS makes money on the Amazon contract. Trump does not rule in a vacuum and even his shills in Congress would come down on him if Amazon packages stopped being delivered. Plus, Jeff Bezos can put messages at the start of every Amazon Prime Moive/Show asking for Amazon customers to call their Congress person to complain. Little message on Amazon.com on why there is no Sunday delivery would be a shitstorm to Congress. Trump might be the President but Jeff Bezos has millions of US voters using his website every day. I also guarantee that more people like Amazon.com than Trump.
Erm, Trump doesn't seem to care about the number of shitstorms he causes.
If anything, Trump (and his base) are HAPPY when they get shitstorms. "Drain the Swamp", "Snub the coastal elites", etc. etc. If Trump wanted to prevent shitstorms, maybe his Cabinet-level officials wouldn't leave every 3 or 4 months.
Trump doesn't care about Congress or laws. He just does whatever he can do. Sure, the courts smack him down sometimes, but the power of the Executive Order means he truly can hurt Amazon (to the detriment of greater America) if he really wanted to.
----------
There are PLENTY of powers Mr. Trump can do. The Justice Department can investigate Amazon for antitrust. So can the FCC. Heck, the FCC just got rid of net neutrality (due to Mr. Trump's most recent appointee). Demonstrating the power over the Internet that Mr. Trump wields.
USPS is just the most obvious way (IMO) that Mr. Trump can hurt amazon. And it seems to be the one that Mr. Trump's tweets are focusing on.
> He just does whatever he can do. Sure, the courts smack him down sometimes, but the power of the Executive Order means he truly can hurt Amazon (to the detriment of greater America) if he really wanted to.
It's also worth pointing out that judicial remedies to Trump's wrongdoing are retroactive; they occur only after Trump has acted. In the meantime, before the courts get to act, real damage is done to actual people. It's a case of act now, ask questions later.
> And he lost on the travel ban, twice. In fact, when you look at what he has done that are against the law, he gets smacked down. He does not win on such things.
You mean, eventually, after God knows how many people got kicked out.
But the President can divert funding and fire the Postmaster General.
"There are laws in place" is literally dismissing anything he can do; because its clear he's gone over the law before (the travel ban), he'll do it again, and again, and again, until the law has no foundation left to stand on.
The disposition of the president toward your company/industry is, unfortunately, an important market input. A symptom of executive overreach though it may be.
Long-term investors do that, ignoring not only various Important Pronouncements, but also the market's many short-term diaper-crappings in reaction to same.
Mr. Trump is directly attacking Amazon, and is saying that he wishes to change USPS rules to extract more money from the Amazon deal.
Its not "emotional" to sell Amazon stock after this tweet. Its common sense. Mr. Trump clearly has the power to hurt Amazon, and he's threatening them.
So as an investor, why SHOULDN'T I sell Amazon in light of this news?
This doesn't add anything to the conversation. The market is responding to things that have the potential to impact what they're investing in. It's not a political or even emotional response.
Trump just won't shut the fuck up. Any time he goes after Amazon, its a dog whistle for the market to sink. All this trade confusion is the root cause of the matter.
My money is in IRAs weighted against a diverse mixture of stable and medium-risk companies. It's one thing if Amazon is getting criticized, but if the P&Gs of the world are sinking too...
The stock market is not "the economy". Ultimately AMZN's price will be reconciled with it's earnings. It's possible that future earnings will be affected by higher shipping costs, but if the USPS is being too generous (I have no idea) then everyone except AMZN is a winner if a better deal is negotiated.
> Ultimately AMZN's price will be reconciled with it's earnings.
I'm surprised no-one has called you out on this yet. Amazon's price to earnings multiple is currently 223.09 (after the 5% drop). Normal for companies is ~20, maybe 25. Bad companies usually run at 10 or so (usually meaning lots of debt, but no doubts about survival), Great companies run at double that, up to ~50. Amazon's price to earnings is ridiculous.
Nope, Amazon's stock price is purely running on the reputation of the firm itself and of it's manager, Jeff Bezos. It is a huge exception in that regard.
The self-proclaimed genius president seems like is following through his threats. What worries me is not the fact he is challenging China for its more than questionable trade practises but the incompetency how this problem would be solved. Tit-for-tat politics won't go far. And just when I started investing in stocks, oh well. I had a policy that I'd buy only after market crash and keep my assets liquid till then but since predicting market crash is just as improbable as investing at the right time I wagered that I should just buy now and worry about it later.
This market is a bit painful right now, amazing how everything seems to be going to shit all at once. Right now, I'm back to where I was a few months ago.
But, the economy is still pretty good IMO, I still have 40k in cash to allocate, planning to buy in if things go a bit lower. Trade war stuff should subside once people get used to the new reality, and the issues with tech stocks are mostly negative press, but fundamentals are still strong and that's what matters. Wait till earnings. I do not hold any positions in TSLA.
To expand a bit: When you add frictions, you reduce the number of transactions that are profitable, and therefore reduce the number that happen. So total economic activity goes down.
let's remember that 2018 dropped the max corporate tax rate 14% to 21%. So, Tariffs add 25% friction on your steel usage or 10% on your aluminum, or x% on your chinese imports - but your value add is taxed at 14% less.
It's really a shame the tariffs and the corporate tax rate weren't packaged together to be closer to revenue neutral.
> let's remember that 2018 dropped the max corporate tax rate 14% to 21%. So, Tariffs add 25% friction on your steel usage or 10% on your aluminum, or x% on your chinese imports - but your value add is taxed at 14% less.
I couldn't really tell what point you're trying to make.
Also don't really why you're connecting those two. I'm sure in your mind it makes a lot of sense, but you gotta share it with the rest of us...
Thanks for letting me know that that wasn't clear.
The point is that Tariffs are not happening in an economic vacuum; but are happening in the same space as a 14% corporate tax break.
The extension of this is that tariffs collect revenue (much like taxes did) while enforcing a political agenda (encouraging changing of sources).
If a "trade war" tariff exchange is isolated to raw materials (steel, aluminium, pork, etc) then tariffs are preferable to a higher finished good tax rate because there is margin on the finished good.
It's interesting how the market never just drops though. I was talking about this with my family over the weekend.
There always has to be some precipitating event, e.g. if you think Tesla is wildly overvalued, it gets adjusted as the result of some event like a (car) crash, and all of a sudden, it's a giant panic.
This is often a result of selection bias. There's always some event out there that could conceivably affect the stock price in some direction. When the price moves, your brain (and the news headlines) ties the price move to the event because humans don't like "Yeah, it was just random chance" as an explanation, but the actual reason the price moved was there were fewer or more buyers than sellers that day.
I've seen this happen in action when the S&P 500 might start the day with a big drop and the headlines are all "Markets drop on inflation fears" at 11 AM, and then they turn positive in the afternoon, and suddenly the headline changes to "Markets rebound on positive economic data". In actuality, neither the inflation fears nor the economic data was the cause of the market moves, but "Markets move randomly throughout the day", though true, is a terrible headline that won't get any clicks, and so no news outlet will ever run with it.
In my view, there's a price that correctly prices in all information that's knowable. Note that each individual may have his own version of this price, which is why buying and selling takes place. "Market efficiency" just means if I think it's worth 5 and you think it's worth 10, and we're participating equally in the market, the price will be 7.5. It does not mean one of us is necessarily not right and the other not wrong. If the market price is 7, but I have better information that makes be believe it's worth 10, I'm right, the market is wrong. Efficiency just means everything is aggregated properly and all opinions are priced in.
In the long term, we all know stocks are driven by both macro and company fundamentals, stuff like GDP growth, earnings, margins, revenue, free cash, etc. But there's also a short-term view that drives prices day-to-day. I think Peter Lynch was right, that short-term movements are more like a "voting machine" driven by news, hype, perception, and a lot of other things. While short-term pricing is unpredictable, I don't think it can properly be called "random" in the sense of a coin toss, or dice roll. It may be hard to predict, but it does feel that there's a definite cause and effect to things. In the case of Tesla, you may not know that they were going to release news of a crash, but it's a pretty safe bet that once that news is released, it's going to depress prices. It's not hard to see why, market participants are human, they do things for reasons, though those reasons may not be well-informed, predictable, or otherwise rational.
What's interesting is how these two views--the short and long-term ones--equilibriate/converge over time. Empirically, I've observed it's usually some sort of "event", whether an earnings release, or a news item, or a job report, that causes this equilibriation process to kick off. All of a sudden, some good or bad news item breaks, and the market "overreacts" (positively or negatively). I find this really interesting.
That’s largely not true of most stocks. They tend to have fairly stable prices that are impacted predictably by things like macro factors & earnings reports.
Something like Tesla that can be impacted dramatically (over longish timeframes) by a single event is amplified because it’s a speculative investment.
Let's see how many people sell low. Just hit support on various indexes today. Short-term bottom is in, already today, or tomorrow on marginal new lows.
It's refreshing reading a comment from one of the 5% on HN that doesn't believe themselves to be smarter than the market. However, listening to a technical analyst is going to be about as useful to you in figuring out where the market is going as listening to an astrologer. There are a lot of parallels between the two disciplines, actually.
This message and previous one seem to be contradicting. You are making a prediction, admitting that you can be very wrong. Did i get this right? Or was your prediction a sarcasm?
Any prediction about the future direction of the market can be wrong, unless you are an insider on a rigged market, which I am not.
I predict that the market will go up from here. The idea looks okay. But it could be proven wrong. So we use stop losses, without exception. This is the mantra of someone who runs a successful trading strategy.
No sarcasm; I forgot to put in the disclaimer in the original comment, and didn't want to edit it after the fact. These follow-ups hopefully offer sufficient clarification.
Just wanted to point out (just trying to help): Referring to someone, while in their presence, in the 3rd person is rude.
The "let's see how many" part follows from my throw-away handle name, which is indicative of my general strategy (a contrarian strategy seeks reversal opportunities at sentiment extremes) relative to the sentiment of the comments in this thread along with the title of the post, coupled with what was a long signal for my system.
I did fail to put in the disclaimers and did not intend to imply that my idea of going long came with any guarantee. This long does not come with any guarantee of working, nor do any of my trade ideas. But I do have significant experience with trading futures and with studying trends.
Just a humble suggestion, hope this doesn't come across in the wrong way: It's rude to use 3rd person in someone's presence.
Any "prediction" is worth zero unless you're an insider on a rigged market. Hence, any "prediction" can be wrong. So anyone saying that "The market will definitely do X" is wrong.
Accordingly, I did phrase the original comment incorrectly by not putting the usual disclaimers in. But these follow-up comments should clarify. No sarcasm was intended. Yes, I've traded futures for about that long and studied trends extensively.
I may be wrong in the context of polite message board conversation, but in a group setting one wouldn't use a pronoun; instead the better approach is to stick to their first name. Or "op" for original poster, or "contrarianguy", or "thread parent".. sorry i'm at a loss for proper etiquette. Maybe I'm wrong, sorry, maybe 3rd person okay here.
It is a bit more complicated than just data becoming a liability.
There are a bunch of moves that the current president has taken that undo the actions the previous president took to help the United States and the global economy recover from the worst financial recession in history. The undoing of all of those efforts and the efforts of previous generations is seriously a risk the global marks and capitalism.
Potential NAFTA withdraw, TPP withdraw, Paris Climate Accord withdraw, starting trade wars, creating America isolationism, is a serious headwind for the global economy for for American prosperity.
The markets are beginning to price that in and will continue to do so until we get back on the course we were on before this administration took office.
It surprises me that people are so exercised about Trump's tweets and Amazon. Amazon is the archetypal survivor of the original dot com bust, has grown enormously since then. AWS alone is a $10bn a year business.
> A broad market sell-off hit Wall Street on Monday, ...as a recent blitz of bad news about technology companies and festering worries about a trade war between the United States and China
Indeed the media blitz against US tech companies has been well coordinated. Somebody is running a very effective campaign.
Market at all time high relative to 5-10 year average it is way above average. This is a psychological run market, models will often roll with punches. So people are in a hand on the trigger mode after suffering suffering close 10 percent losses. Any news and downs will trigger more downs, and ups will cause people to buy back due to losses and the models also play into these predicted effects.
GDPR is the Sarbanes-Oxley of data privacy. It was intended to stop the large abusers but it just stifled small companies, giving large companies even more of a protective advantage. Omar size fits all rules make no sense.
"He reminded me to re-watch the onstage interview from just months before that he did with me and Walt Mossberg. Walt asked him about privacy and referenced Facebook CEO Mark Zuckerberg, who was also in the room listening.
"Privacy means people know what they're signing up for - in plain English, and repeatedly," said Jobs in that interview, which you can see below, aiming at the young techie and advertising-based businesses like Facebook."
Trump is bring the end of a system. Interesting to see how it will actually unfold.
Trade war with China will hurt both sides, with China on the loser side. But China will be resilient, after all the anti-west narrative never goes away and Trump only proves its correctness , when the propaganda machine rolls it will make China even more united, a divided US on the other hand, is not. Any negative impact will be written down by opposition as bullets for next election. Violent delights will have violent ends. Grab my popcorns, the show has just begins.
Until recently, data was considered "the new oil." Those who sit on vast amounts of it were considered rich.
Now, after the Equifax hack, the FaceBook/Cambridge Analytica scandal, and other revelations (such as Grindr freely sharing highly personal data), it seems that data is increasingly being viewed as "the new uranium."
Data, it seems, is becoming radioactive and must be carefully controlled and safeguarded to prevent leaks. Those who sit on vast amounts of it must now handle it with care to avoid societal, political, regulatory, and legal backlash.
The stock market seems to be reflecting data's transition from asset to liability.