this trend is apparent with AAPL's business model: there is no escape even if AAPL moves production to other SEA countries as Trump gov will tax these countries during his tenure, so AAPL already announced to increase prices while US retailers ALREADY came out with profit warnings for Q4/Q1 and we are not officially in recession yet, so what is going to happen to margins if unemployment rises and prices to up while AAPL still trading at 30x P/E ratio...
Sounds more like stagflation. Falling oil prices because of either too much supply or too little demand is hardly going to lead to rampant inflation. Budget deficits are now the norm in all governments so hard to see massive unemployment even in a profits recession.
I think you can have deflation for the next 2 quarters and we will still have long end yields rise at the same time.
Can see CAPEX reducing which will have a knock on effect into Wage Growth as rationalisation plans are drawn up.
The only caveat I can see is if there is a Tax Cut which will help to drive consumer spending and potentially drive inflation while there are constraints on global supply.
Hey Russell, the one thing that isn't clear at least for me is while the incentives and push from the tariffs to spend and stimulate are clear, the tariffs are still a unilateral tax, which creates an extra drag - which should reduce the overall pie for everyone. Wouldn't the outcome depend also on the counterbalancing forces of the overall reduction vs the individual stimulus that's coming?
Well US workers see wages rise... and increased investment in US manufacturing. And European and Asian savers spend to build. Losers are consumer and corporates... but just a reallocation. Not net destruction... ultimately we need to rebalanced asset values to wages
Kicking myself for not adding more TLT puts yesterday... EOY expiration contracts fell below $2, now back >$3.30...
Flight to safety with bonds presents a good opportunity to cost avg down TLT puts.
this trend is apparent with AAPL's business model: there is no escape even if AAPL moves production to other SEA countries as Trump gov will tax these countries during his tenure, so AAPL already announced to increase prices while US retailers ALREADY came out with profit warnings for Q4/Q1 and we are not officially in recession yet, so what is going to happen to margins if unemployment rises and prices to up while AAPL still trading at 30x P/E ratio...
Sounds more like stagflation. Falling oil prices because of either too much supply or too little demand is hardly going to lead to rampant inflation. Budget deficits are now the norm in all governments so hard to see massive unemployment even in a profits recession.
Strangely natural gas prices holding up. Maybe more important these days
Oil is being pulled down by low natgas prices.
In USA, natgas is trading like oil is $15/bbl.
More relevant prices is Asian LNG - which has fallen from 16 to 11 USD. Which matches more closely with oil price action
I think you can have deflation for the next 2 quarters and we will still have long end yields rise at the same time.
Can see CAPEX reducing which will have a knock on effect into Wage Growth as rationalisation plans are drawn up.
The only caveat I can see is if there is a Tax Cut which will help to drive consumer spending and potentially drive inflation while there are constraints on global supply.
Hey Russell, the one thing that isn't clear at least for me is while the incentives and push from the tariffs to spend and stimulate are clear, the tariffs are still a unilateral tax, which creates an extra drag - which should reduce the overall pie for everyone. Wouldn't the outcome depend also on the counterbalancing forces of the overall reduction vs the individual stimulus that's coming?
Well US workers see wages rise... and increased investment in US manufacturing. And European and Asian savers spend to build. Losers are consumer and corporates... but just a reallocation. Not net destruction... ultimately we need to rebalanced asset values to wages