OT - Dow plunges 1,175 - worst point decline in history

[Burnette]

Originally Posted by ColnagoC59

i have to admit i don't get it. market is at close to all time highs still and we have a president who engages in protectionism. normally the market should decline under such conditions and a lot more than it has.

This isn't your grandfather's protectionism though.

There's much hyperbole around the trade war but in reality it's been well reported that both sides want resolution, and a quick one.

So in reality, though some segments have indeed been impacted severely, the market as a whole has responded to the trade war in a more measured way. It's a negative and the impacts are real, but the sentiment is that it will be resolved and the markets that are hurt by it will rebound.

[oldpotatoe]

I am a stock market/investor idiot but like weather isn't 'climate', the DJIA isn't the 'economy'. There are some very real speedbumps ahead for the US and worldwide economy..real estate, job creation(maybe the 20k in Feb wasn't an accounting error), trade deficit sets a new annual record(ironic, no?), etc..this 10 year economic expansion won't last forever. Will the next recession be like 2008? Probably not but...

BUT the TV moments are really interesting..economy shines..all about the POTUS's plans, ideas and policies..economy tanks..POTUS has nothing to do with it..neither are true but as James Carville said..

It's the economy, stupid. "It's the economy, stupid" is a slight variation of the phrase "The economy, stupid", which James Carville had coined as a campaign strategist of Bill Clinton's successful 1992 presidential campaign against sitting president George H. W. Bush.

[paredown]

Originally Posted by Burnette

...
This isn't your grandfather's protectionism though.

Tariffs are (as they have always been) taxes paid by consumers. Jack the tariff, it becomes a price floor that either directly contributes to higher prices for a particular good, OR it becomes a wall behind which domestic companies can charge higher prices for domestically produced substitutes and encourages inefficiencies--along with higher prices for consumers. Case in point--the infamous 25% tariff that protects domestic truck manufacturers from foreign competition.

Krugman's recent Times column is good--and the study he cites. (I believe there was a second study in the past week or so....)

https://www.nytimes.com/2019/03/03/o...trade-war.html

Net effects are the same--people have less money in their pockets after purchasing the same bundle of goods--so the real costs are the costs of the foregone alternative--what else might they have spent their money on to stimulate demand?

[oldpotatoe]

Originally Posted by paredown

Tariffs are (as they have always been) taxes paid by consumers. Jack the tariff, it becomes a price floor that either directly contributes to higher prices for a particular good, OR it becomes a wall behind which domestic companies can charge higher prices for domestically produced substitutes and encourages inefficiencies--along with higher prices for consumers. Case in point--the infamous 25% tariff that protects domestic truck manufacturers from foreign competition.

Krugman's recent Times column is good--and the study he cites. (I believe there was a second study in the past week or so....)

https://www.nytimes.com/2019/03/03/o...trade-war.html

Net effects are the same--people have less money in their pockets after purchasing the same bundle of goods--so the real costs are the costs of the foregone alternative--what else might they have spent their money on to stimulate demand?

Certainly..tariffs make all 'widgets' more expensive, whether they are made offshore(tariffed) or made in the US..the people on mainstreet are the ones hurt.

[Burnette]

Originally Posted by paredown

Tariffs are (as they have always been) taxes paid by consumers. Jack the tariff, it becomes a price floor that either directly contributes to higher prices for a particular good, OR it becomes a wall behind which domestic companies can charge higher prices for domestically produced substitutes and encourages inefficiencies--along with higher prices for consumers. Case in point--the infamous 25% tariff that protects domestic truck manufacturers from foreign competition.

Krugman's recent Times column is good--and the study he cites. (I believe there was a second study in the past week or so....)

https://www.nytimes.com/2019/03/03/o...trade-war.html

Net effects are the same--people have less money in their pockets after purchasing the same bundle of goods--so the real costs are the costs of the foregone alternative--what else might they have spent their money on to stimulate demand?

Oh, we agree here but C59 was asking about the tariffs effect on the market and that was my focus. The tariffs are few and targeted and indeed hurt consumers and certain segments as I mentioned before. But the market has been hampered by them but as to C59's point, the market has generally chugged along. The reason for that is what I posted above, both parties have publicly stated they want this to end and markets harmed are theorized to recover.

The fact that Mainstreet coughs while Wall Street sneezes is unfortunately a long held truism.

[echappist]

Originally Posted by paredown

Tariffs are (as they have always been) taxes paid by consumers. Jack the tariff, it becomes a price floor that either directly contributes to higher prices for a particular good, OR it becomes a wall behind which domestic companies can charge higher prices for domestically produced substitutes and encourages inefficiencies--along with higher prices for consumers. Case in point--the infamous 25% tariff that protects domestic truck manufacturers from foreign competition.

Krugman's recent Times column is good--and the study he cites. (I believe there was a second study in the past week or so....)

https://www.nytimes.com/2019/03/03/o...trade-war.html

Net effects are the same--people have less money in their pockets after purchasing the same bundle of goods--so the real costs are the costs of the foregone alternative--what else might they have spent their money on to stimulate demand?

i think once upon a time, the tariffs levied on Chinese manufacturer were at least partially paid by the manufacturers. The U.S. represented the largest market segment, and the manufacturers paid the tariffs in order to maintain market presence.

Now they couldn't care less, as they have other places to sell the products. So the brunt of the tariffs are paid by consumers

[MikeD]

Hmmm... The Dow is up today, thread goes silent. All the "woodworkers" crawl back into the woodwork.

[saab2000]

Originally Posted by MikeD

Hmmm... The Dow is up today, thread goes silent. All the "woodworkers" crawl back into the woodwork.

Because trying to glean too much from short-term fluctuations is a fool's errand. Ride the waves and keep on keeping on.

[echappist]

Originally Posted by MikeD

Hmmm... The Dow is up today, thread goes silent. All the "woodworkers" crawl back into the woodwork.

who died and made you the arbiter for what's worthy of kvetching?

[Tony T]

Originally Posted by MikeD

Hmmm... The Dow is up today, thread goes silent. All the "woodworkers" crawl back into the woodwork.

The Fed will always (not) do it's job and save us.
DOW up 100, NAZ up 130, S&P up 34

[MattTuck]

Originally Posted by echappist

i think once upon a time, the tariffs levied on Chinese manufacturer were at least partially paid by the manufacturers. The U.S. represented the largest market segment, and the manufacturers paid the tariffs in order to maintain market presence.

Now they couldn't care less, as they have other places to sell the products. So the brunt of the tariffs are paid by consumers

I mean, the point of the tarrifs is to make imported goods more expensive -- so US consumers SHOULD pay them. This, in theory, should entice domestic manufacturers to see that they can make a profit producing here and thus increase jobs in the US.

They are a bit of a blunt instrument, but I think I'm generally in support of tariffs on many goods from emerging markets. We, as a democracy have agreed on certain standards on things such as working conditions (hours,minimum wage, child labor, safety, etc.), environmental impacts related to manufacturing and intellectual property protections.

It stands to reason that we should be ready to bear the cost of those regulations. If companies can avoid these standards and in so doing produce in other countries for cheaper, then I do think we should have tariffs.

[Spaghetti Legs]

Originally Posted by oldpotatoe

I am a stock market/investor idiot but like weather isn't 'climate', the DJIA isn't the 'economy'. There are some very real speedbumps ahead for the US and worldwide economy..real estate, job creation(maybe the 20k in Feb wasn't an accounting error), trade deficit sets a new annual record(ironic, no?), etc..this 10 year economic expansion won't last forever. Will the next recession be like 2008? Probably not but...

BUT the TV moments are really interesting..economy shines..all about the POTUS's plans, ideas and policies..economy tanks..POTUS has nothing to do with it..neither are true but as James Carville said..

I have only dipped into this thread occasionally and maybe the topic has already been beaten, but I am very concerned about the economy. This is based on my personal experience recently.

- Moved last summer and still trying to sell my old house which bought near the bottom of the market in 2011. Will likely have to sell below what we paid for it. Our agent constantly tells us how bad the market is, despite all the articles I've read on the "hot" market. Lots of houses in our old large town/small city market languishing.

- My wife still looking for a job in our new locale. I'm sure she could find a barista/pizza delivery job but not ideal work for a 50 year old college professor. In my own work, I come across all kinds of people and I see people working two jobs all the time. I suspect a lot of this job creation are jobs that will keep one at or around the poverty line.

I don't know enough about economics to say, but I'm worried there will be a nudge to tip the economy into a free fall and our government has dug itself into such a hole it will be poorly positioned to cushion a landing.

[C40_guy]

Buy and hold.

[MikeD]

Originally Posted by Spaghetti Legs

I have only dipped into this thread occasionally and maybe the topic has already been beaten, but I am very concerned about the economy. This is based on my personal experience recently.



- Moved last summer and still trying to sell my old house which bought near the bottom of the market in 2011. Will likely have to sell below what we paid for it. Our agent constantly tells us how bad the market is, despite all the articles I've read on the "hot" market. Lots of houses in our old large town/small city market languishing.



- My wife still looking for a job in our new locale. I'm sure she could find a barista/pizza delivery job but not ideal work for a 50 year old college professor. In my own work, I come across all kinds of people and I see people working two jobs all the time. I suspect a lot of this job creation are jobs that will keep one at or around the poverty line.



I don't know enough about economics to say, but I'm worried there will be a nudge to tip the economy into a free fall and our government has dug itself into such a hole it will be poorly positioned to cushion a landing.

You should consider moving somewhere where the economy is doing better (e.g., almost everywhere else in the US). Don't go to California though. Real estate and rent are so high, you probably won't be able to buy or rent.

[Jeff N.]

Originally Posted by miked

you should consider moving somewhere where the economy is doing better (e.g., almost everywhere else in the us). Don't go to california though. Real estate and rent is so high, you probably won't be able to buy.

+1....not to mention getting more and more crowded all the time. I love San Diego, but it's starting to lean toward Los Angeles-style crowded conditions, with heavier and heavier traffic. Decent housing is pretty much unaffordable for anyone not making well into 6 figures.