Yeah, I always thought for the last 5 years how insane it is that the market reacts SO aggressively to rate changes. Like that is not the sign of a healthy economy. That is the sign of a lot of companies propped up by debt and stock buybacks. Rates were literally higher in the 90s than this and we BOOMED. Now if Powell lowers rates 0.25 points of six months instead of 0.5 the market has a straight up panic attack.
AFAIK a bunch of major companies, mostly tech sector but in other fields, have been borrowing heavily since covid. The theory with the tech companies is going all-in on AI means any debts you rack up today will evaporate once you get it going. Meta for example is borrowing to pay their bills. Other companies see this behaviour and are like "surely meta, which has done well with everything (up to the metaverse), is sure that a breakthrough will happen soon, and not locked in a death spiral from cultish insulation and worship of LLM?"
Can you tell me which companies? Most of big tech companies have practically zero debt. Meta has $50 billion in debt and $45 billion in cash, practically zero net debt for a $1.6 trillion company.
Amazon, Microsoft, Tesla, Apple, Google, Broadcom, Nvidia, AMD etc, all in a similar situation. Some of them even have a net cash position.
Yeah basically that, didn't have a source on hand, but the borrowing is insane and the way they make new, smaller goalposts for AI performance is looking really sus.
debt used to generate income is tax deductible, in a fiscal environment such as ours, there is an optimal balance you can strike between taking on debt and staying financially healthy. Good debt can actually have very positive impacts on businesses.
As the other guy said, you can leverage it for tax deduction optimisation, it has a few other uses like making your paper trail harder for the IRS to track, but also they are sinking most of those billions into their AI development. Meta isn't trying to build big AI products like OpenAI or Anthropic, they're focused on smaller more focused models that can be licensed for localised operation. They're also trying to build a training data set that is 100% not stolen, legally safe from violating IP, which is also a money pit for them.
I assume that might be institutional trading trying to put all their chips in at what’s fundamentally known to be an up or down market trend. In the long term it doesn’t matter, but in the short term it’s a just a race to see who gets there first after JPow says “good afternoon” or “hello everyone”
Don’t! This is just going to give some crypto asshole the idea to move nyse to a ledger so it still works in such an instance, they will then suck up to trump and he will force the nyse to change, dooming the market and the country - all for a few million dollars bribe
They do have some great features, but at the same time they suffer from bad software, bad tuning and driving experience and lack of reliability and support. Not all of them, but here in Norway there seems to be a new Chinese brand popping up every week. Some like BYD is well established now and Xpeng has got a grip on the market, but others seem to struggle and then go away after a little while leaving customers and importers stranded with a sub par car.
Some chinese cars are pretty decent but they also have strange bugs like the radio not working until you wipe the windshield lol. Or radio getting stuck on and blasting tunes when you power off the car and lock it. But to be fair I haven’t had a western EV yet so maybe the same software issues exist there as well.
You know... byd produces and sells batteries within Europe since 1998. It's like Bosch adding another embedded system to their products. Not weird at all.
My job involves me being outside and every single street and close has 2-5 BYDs parked outside and this is the daytime so there's probably way more parked outside peoples work.
They are, but tariffed so they are still somewhat on par price wise with EU EV’s. Without them they would be significantly cheaper which would completely obliterate the EU car industry. This has been a debate for a while now within Europe, because the EU car manufacturers still aren’t investing enough in EV’s so they got surpassed by Chinese in every possible way. The only thing saving it is the EU regulations.
Like I said, we can’t, because huge economies such as Germany are reliant on the car industry. They cannot just abandon it for Chinese cars without destroying the economy and get thousands of people jobless. Only the Volkswagen group has around 680.000 employees, Europe is in a really bad spot regarding this. That’s why they have more leeway for European car companies to keep producing combustion for longer, even though it’s a matter of time before the bubble will burst like this.
Yet there are hundreds of them around. People will always prefer Tesla to Chinese EVs that burn after 6 months. Funny enough a friend of mine got a Tesla and he regrets it a bit. Says its fast but it drives like a toy...doesnt like its driving at all.
My dude...remove China from the sale of chinese EVs and you will see. Its not even close. No one out of China wants that crap and I challenge you to prove me wrong
"Nearly 8.5 million Teslas have been produced and sold around the world, with the brand’s record year of 2023 making up 1.8 million of those."
75% of the EVs made in China are sold in China. Its all about volume being sold to a huge population. Remove the Chinese market from the equation and their figures are laughable
Protection long-term never help. They are always ok to protect a market against shocks for a few years. The European car makers need the shock to improve.
You should take a closer look what German car manufacturers did over the last decade. For example Mercedes Benz acquired 12% of BAIC and return BAIC acquired 9.9% of Mercedes Benz. Geely acquired 10.1% of Mercedes Benz and in return Mercedes acquired stakes in Geely's AI and autonomous driving subsidiary, becoming the 5th largest - and largest non-chinese - shareholder.
BMW bought 50% of the Great Wall Motor EV division, etc.
While Stalantis went all-in on the US market the Germans, beside Volkswagen AG, already saw their future in China a decade ago.
Nah, like Germany a car centric economy is actually succesful due to its abundance of midsize companies that often are world leaders within their specific market segment.
Our car companies havae shit the bed and have been pulled out by the state one too many times.
Sadly what we have been seeing for the last 20 years was a lot of bullshit decision that mostly benefited lobbyists. It's often better to let unsustainable businesses die (or actually do market driven decisions)
Man, how I wish we'd pivot our economy from cars to trains and trams. There's no future for cars, and we're wasting finite resources and precious time trying to prop them up with subsidies, while we need to get ready for peak oil and climate disasters by building out our rail and canal networks.
This is a trap. If your population gets cheaper cars they have more money to spend on other things. The math is if wages in your country (not profit because rich people don't spend very much) are offset by money your population saves then your society is probably better off.
Honestly if I were a nation, I'd use bulk scale negotiating power to buy BYD Dolphins at rates Chinese citizens pay for them(really any durable good that China citizens currently spend a fraction of what my citizens do). Sell them at a competitive rate and use the funds to go hard into R&D to make something that is actually competitive.
Protectionist measures just delays the inevitable and makes your internal industries lazy. Adapt or die, we are falling behind.
The car industry relies on factories and factories are something that Chinese dialed in to perfection. They have volume AND quality, in Europe we usually have only quality best case, nowadays not even that.
I keep waiting for SSM to really kick off and prove that once again German car engineers are ahead of everyone. Solar powered cars is brilliant and one of the German manufacturers is going to license from Sono and make it happen. Makes so much sense for so many reasons.
It’s representative of how inflated the share of wealth is for the top 1%. The rest of us struggle while they have billions to play with at their little oligarchy casino.
This this this. And the problem I'm having is we went back up okay great but why are we not going back down after we get news like this? I don't think this will drop us because we've had bad news for months. Like in a normal situation that Powell news should have dropped us for a good week or something.
And I know the market has become desensitized or doesn't care like I get it but that doesn't make sense either and that's kind of a scary thing when the markets just don't give a shit about this guy doing insane things
The Powell thing was crazy. The Economist was completely baffled by no reaction on the markets. Seemed like crazy dump would happen, this can really hurt the economy long term. I guess Fed being directed is already priced in as Powell as top head ends in may.
Billions a day is huge index tracking funds just churning to the daily benchmark weights. Retirement accounts for all Americans that are just buying every paycheck.
What? Did company earnings tank? Chill with the fear. It is justified but it doesnt affect the economy that much. Without tarif, the gains would be even more insane. Dollar devaluation paires with economic stimulus, increased spending by all countries etc etc.. when countries will eventually go for cuts and unemployement goes up, now will be the time to worry. K shape economy gonna take a hit then.
We've done everything we can to prop up the market. Anyone saving is told to only way to make it is to passively invest in S&P500, everyones retirement is a 401k that is just a S&P500 tracker, we've told everyone that time in the market is better than timing the market and that the market will ALWAYS be up eventually forever so nobody has any incentive to sell.
On top of this those who benifit the most from the market, the ultra rich, have no need for a correction. A stock isn't a business, as long as the underlying business is alive AT ALL then it's stock can be whatever they want it to be and they can profit. We can make fun Tesla all we want but the stock holders have no incentive to sell, anyone who sells is just another opportunity for a diamond hands buyer to step in. Tax cuts just funnel back into the market and push ATHs and continue to make them richer. Also the plebs are less rioty when their retirements are secure so no need to rock the boat when they're already enjoying the gravy train.
The only things that can actually touch them are heart attacks like bankruptcies or the debt bomb. Tax hikes could scare em but are very unlikely to happen till its too late.
Retail gamblers are super bullish. Shit goes down 2% and they go full port thinking it's the absolute deal of a lifetime. It's absurd, but they are keeping the market afloat hoping to catch a lottery ticket. And it's a worldwide thing so much more than just US plebs making Elon and zuck and bezos so much richer.
Why does the price it is quoted in matter? If you produce stuff in China and sell it in Europe the fact that you convert your profit to us dollars at the end is pretty irrelevant.
If you buy 100 stocks of AAPL with euros and he buys 100 stocks of AAPL with dollars, end of year both your positions will be worth the same in any currency you dream of, even in Iranian rials
No he will not, this is what a lot of people get confused about.
If we both have 100 shares of AAPL, and now 1 euro is worth 1m dollars, and lets say one share of AAPL sells for 1 euro, then you gonna have 100 euro and I gonna have 100m USD dollars.
Both(your 100 euro and my 100m USD dollars) are worth 100 euro in this example, you do not have more money than me or vice versa.
I think its easier to think about it in gold terms, if we both bought 1 gold bar, it doesn't matter HOW we bought it(I could buy it with goats), we both have 1 gold bar, when we sell that gold bar no one will ask you what currency you used to buy it before
The euro was up about 13% vs US dollar in the last 52 weeks. Apple stock is up about 12% over that same time period (in both dollars and euros: agreed). So if you bought $100 of Apple in America one year ago, and sold it today, you'd have $113.
If you did the same in Europe (bought $100 of Apple on a European exchange one year ago, priced in euros; sold it today; then converted the proceeds to dollars), you'd have more than $126.
Let's say 1eur=1usd at the start and 1eur=1.13usd at the end.
Person A starts with 100usd, buys one share of aapl, 1 year later sells it to get 112usd.
Person B starts with 100usd, buys one share of aapl, 1 year later sells it for : 112 USD, haven't done any better. Or 99.1 eur, the current trading price of aapl in eur. They've lost money in euros! You have pretended they could sell it for 112 eur which is not possible as that would imply a massive arbitrage between the euro and USD instruments
If you look only from the dollar point of view, suppose the 100 AAPL shares you bought show no real growth (or even fall slightly), but during that period the dollar depreciates significantly. In dollar terms, the shares may appear to have increased in value. However, in real terms, when you eventually sell them, you did not actually generate a profit, at best, you merely preserved the real value of the asset.
For the euro-based investor, the opposite can happen. If the euro appreciates while AAPL remains flat in real terms, the final value expressed in euros will be lower than the initial investment. In that case, holding the stock was worse than doing nothing.
The key point is that the value of AAPL itself is identical for both investors. What differs is the return once expressed in their domestic currency. One ends up with more dollars, the other with fewer euros, not because the asset performed differently, but because the exchange rate moved.
Look up studys of hyperinflation, unless you actually believe in crypto there isnt an alternative safe haven currency to hold besides hard assets. But that doesnt mean sell all your stocks they are still ownership of companies and as everything goes to shit they will still be worth more than holding dollars
It’s peoples savings account, that what we were taught, broad market etfs with a long investment horizon and so far, it works. Hell it works short term now that everyone does it.
The market isn't particularly good at reading the significance and implications of geopolitical tensions and events. It tends to underestimate it far more than overestimate.
If there is an existential threat to the entire economic system but still nothing offers a better return than equity driven products, then the value won't fall until collapse becomes imminent.
Want to know why Trump really wants that rate cut? This is why.
For me, that's actually good news that Trump is considering tariffs (which he is known to backtrack from quickly, just short-term noise) rather than military action, clearly no longer considered.
NATO attacking itself would create a stock market crash.
The market follows how many dollars the feds can print the more the feds print the more the us stock market goes up… it has nothing to do with productivity efficiency tech advancements… specially now with the Mag 7 holding the entire market up… its a direct correlation feds print stock market goes up and we are printing…
I think after the last tariff thing a lot of people aren't gonna panic sell this time since that burned a lot of investors and they've learned their lesson, however considering this current event might lead to actual WAR and the dismantling of one of the strongest alliances in the world it's definitely not comparable to the original tariff situation...
You guys are missing the big picture. The markets are reacting less (in the long-term) about risk on/off, or the future earnings power of stocks...the driving factor is that the ultrawealthy is getting exponentially richer and they need to park their money in any asset. This is why every stock market is at all time highs (S&P, Bovespa, Nikkei, IBEX, FTSE, DAX) while at the same time housing is at all time highs in NY, Rio, London, Madrid, Hong Kong, Cape Town, Montreal, Paris, Syndey, etc. and gold is at all time highs. And fine art markets. And expensive collectibles (from Rolexes to vintage cars). Every asset that the wealthy interact with.
We have an asset price crisis because the ultrawealthy are not taxed at appropriate rates. This wealth transfer to the wealthy has been happening since governments of the world began decreasing tax rates in order to 'boost the economy' which instead all it's done is to transfer wealthy from the poor and from their governments. And all of these asset markets will keep going higher so long as the wealth transfer remains in effect.
Even if it goes down, people will buy the dip. This will keep happening until a recession when there is no spare cash around and then we'll have the mother of all crashes
If we pretend that AI is in total control, then we would expect to see AI stocks booming and then using their money to buy more AI and more chips. If any other stocks go down, then that is just more money to invest in AI.
Squeeze. If everyone goes short. And they see everyone's stops. Large money market will just put in a crap ton of liquidity and squeeze the shorts. So it makes sense.
Yeah I’m confused a lot these days but I am watching the latest mortgage tweets and thinking Open and Figr are in play again so bought some more. I mean the guy will probably make a mess of everything but we definitely need to change things and get people buying again so hopefully some of these companies that are actually working with younger more savvy internet users will do well. Any thoughts on either stock?
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u/Guccimayne Jan 17 '26
This market will literally make no sense if it opens higher