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Participant ○○

Re: Does anybody think that there could be a crash before the Elections?

I expect the equity and investment grade bond markets to crash EVERY DAY.

I really don't like these super low / negative REAL yields on US Treasuries and TIPs. 

What scares me most is a future increase in interest rates with economic recession. STAGFLATION.

Our port's FI allocation has an average duration = 6.3 yr. And a real yield = 0%. It's a sitting duck. 

So are equities.

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Participant ○

Re: Does anybody think that there could be a crash before the Elections?

Maybe, but my hunch is we'll have a series of corrections before bottoming out some time next year. If that doesn't happen you still can't discount another shock—possibly unrelated—waiting to happen. One way or the other, I don't see valuations continuing an upward trajectory and since they usually go either up or down, my money is on the latter.

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Frequent Contributor

Re: Does anybody think that there could be a crash before the Elections?

Possibility of a crash before election is remote because $3T in recovery money is now Flowing through the economy and Fed has contributed another $2T with loans/QE which will raise stock prices. Fed is preparing to lend to middle market businesses. Markets have priced in 40% decline In 2nd qtr GDP and 25% decline in 3rd qtr GDP.  Congress will pass another stimulus program of $3T+ by Sept and by Election Day there will be increasing progress toward reopening the economy and developing a Covid vaccine which will also raise stock prices. Fed can always ratchet up its balance sheet to accommodate Treasury borrowing at lowest interest rates in history, 0.75% for 10 yr , 1.35% for 30 yr.

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Frequent Contributor

wRe: Does anybody think that there could be a crash before the Elections?w


@galeno wrote:

I expect the equity and investment grade bond markets to crash EVERY DAY.

I really don't like these super low / negative REAL yields on US Treasuries and TIPs. 

What scares me most is a future increase in interest rates with economic recession. STAGFLATION.

port's FI allocation has an average duration = 6.3 yr. And a real yield = 0%. It's a sitting duck. 

So are equities..


How is there going to be an increase in interest rates when fed has flooded the economy with $2T in liquidity This year? Fed has increased its balance sheet from $4T to 7T this year and it’s lending operations have gone from 0 to $500B in 3 months. Fed is preparing to make direct loans to middle market businesses Which it has never done before.

Interest rates will remain lower for the foreseeable future simply because the US government will flood the economy with Cash which is why fixed income investments will under perform equities. I bond yields will be lower than  CDs.

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Frequent Contributor

Re: Does anybody think that there could be a crash before the Elections?


@Gary1952 wrote:

A down leg, yes. A crash again like in March, no. All due to not many understanding how bad the economy will be.


I don't think so either. If we have many surprising new cases of virus with opening up the economy, it could be a reason for a major drop, or is the campaign gets too volatile. I think the coronavirus is the main factor.

I do not see interest rates rising; loner duration bonds might be the best way to have some yield.  Stocks should be on an uptrend, unless there is a new crisis.

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Participant ○○

Re: Does anybody think that there could be a crash before the Elections?

Talked to a worker in china town(Walmart) today. He told me the only large screen t.v.'s they had left was on the walls. Does that tells you what the fed money checks is going for? Sorry to get off topic.

As long as the economy and wall street are going in different directions I look for a downturn before end of year. Last year they both seem to be headed in same direction. Not now.

Copie 

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Contributor ○○

Re: Does anybody think that there could be a crash before the Elections?

I think CV19 will not be a big player in a re-testing drop. It's not new news. The economic after-effects might be once they sink in. It's usually the unexpected events that drive things to a new low. This could be a terrorist attact, natural disaster, violent social unrest, etc. It's hard for me to believe that we will not have some more downturns, however. The real question is how are you preparing yourself for such an event? I'm holding a good deal of cash, EDV and hope. Good luck!

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Explorer ○○○

Re: Does anybody think that there could be a crash before the Elections?

Talked to a worker in china town(Walmart) today. He told me the only large screen t.v.'s they had left was on the walls. Does that tells you what the fed money checks is going for? Sorry to get off topic.

--------------

So What?

Walmart made money!
The workers at Walmart made money!
The whole supply chain for that TV made money!

Netflix, ISP will make money because these people might get those services.

All the banks, bond holders and investors will now get some of their money back.

Why? Because money was spent on that TV.

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Frequent Contributor

Re: Does anybody think that there could be a crash before the Elections?

Does anybody think that there could be a crash before the Elections?

Sure, a crash can happen any time, the question is do you have a specific plan (written is better) what to do and are you going to follow it?

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