2022 looks like 2008

Even if there is a total 1% increase in interest rate, there is little impact on economy overall.

In general, businesses are not borrowing since there is no hot expansion. Economy is not over-heating.

Consumers are not heavily in debt, other than the hot housing market. As long as housing market does not crash like in 2008, consumer finance looks to be fine.

Most of the impact is on the financial market. Re-pricing and re-positioning. Crypto will be hurt the most. Then some of those hot financial instruments. Large techs, Meme and SPACs. Some good stocks can be baby in bath water. But that should not last very long. If some companies like energy companies still make good cash flow, their stock prices should still be strong.

I think this re-pricing will last for the entire 2022. Fed will make sure this does not cause recession.
 
RedSun said:
Even if there is a total 1% increase in interest rate, there is little impact on economy overall.

In general, businesses are not borrowing since there is no hot expansion. Economy is not over-heating.

Consumers are not heavily in debt, other than the hot housing market. As long as housing market does not crash like in 2008, consumer finance looks to be fine.

Most of the impact is on the financial market. Re-pricing and re-positioning. Crypto will be hurt the most. Then some of those hot financial instruments. Large techs, Meme and SPACs. Some good stocks can be baby in bath water. But that should not last very long. If some companies like energy companies still make good cash flow, their stock prices should still be strong.

I think this re-pricing will last for the entire 2022. Fed will make sure this does not cause recession.
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a 1% increase in interest rates has a huge impact on future earnings multiples.
 
brightside said:
a 1% increase in interest rates has a huge impact on future earnings multiples.
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Wrong. A 1% increase now won't change the real interest rate for the next 10 years or next 30 years.

This is exactly what market gets it wrong. A 4x 0.25% Fed rate increase this year only change the short-term Fed rates. It is the market expectation what happens with the long term rate. The 10-year rate is still only at 1.8%. It is still low historically.
 
ET180 said:
Huge difference. In 2008 Fed funds was not set at 0 with pre-pandemic record amounts of QE running in the background. P/Es were also far lower back then. Government wasn't sending trillions of $ to mailboxes back then to prop up earnings. We also didn't have the backdrop of China, Russia, and Iran doing joint military drills (https://www.zerohedge.com/geopoliti...int-naval-drills-after-key-putin-raisi-summit). We didn't have a nursing home mental care patient as president who has already declared that the next election could be illegitimate and pre-announced that we might not do anything if Russia invades Ukraine (events just from the last week).

Debt to GDP looked much better. The average American looked much better (https://www.usnews.com/news/data-mi...sity-rates-over-last-decade-federal-data-show). A third of America didn't at least viscously hate the other half. I guess we're f***ed. Maybe the Fed can blow a bigger bubble and keep the show running for a bit longer.
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You're totally lost in complete bs.
 
RedSun said:
No, 2022 is nothing like 2008. In 2008, we had systemic risk since US financial system was on the verge of total collapse. Now what?

If TSLA corrects 30%, no hard to US economy. Is all Google, MSFT, FB, NVDA, AAPL etc correct themselves 30% more, no hard to US economy. Also Bitcoin can drop 50%. No impact. Those are just the financial assets held by the rich people (some small traders will be wiped out too).

The only risk is the housing market. Is house prices drop 20%, that will harm US financial system again. But US banks are better capitalized now.

So 2022 is totally different than 2008. I'm not worried. Those NASDAQ 100 should continue to correct itself.

Higher interest rate won't impact regular US businesses much since most of them do not borrow much now.
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ET180 said:
Huge difference. In 2008 Fed funds was not set at 0 with pre-pandemic record amounts of QE running in the background. P/Es were also far lower back then. Government wasn't sending trillions of $ to mailboxes back then to prop up earnings. We also didn't have the backdrop of China, Russia, and Iran doing joint military drills (https://www.zerohedge.com/geopoliti...int-naval-drills-after-key-putin-raisi-summit). We didn't have a nursing home mental care patient as president who has already declared that the next election could be illegitimate and pre-announced that we might not do anything if Russia invades Ukraine (events just from the last week).

Debt to GDP looked much better. The average American looked much better (https://www.usnews.com/news/data-mi...sity-rates-over-last-decade-federal-data-show). A third of America didn't at least viscously hate the other half. I guess we're f***ed. Maybe the Fed can blow a bigger bubble and keep the show running for a bit longer.
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Chart looks the same.
 
2008? There was fear at that point. Right now, zero panic. So we could have much lower to go. Markets tend to test the complacent. Cryptos have already dumped a ton. Now imagine if the stock markets has fear. BTC will go back to under $10k.
 
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