Investing

[gehringer_2]

The bottom is falling out for young workers, even those with degrees, while the profits keep rolling in for the deal makers.

Quote

Wall Street banks have rallied for most of this year, thanks in large part to their fee businesses, which include trading, dealmaking, and other brokerage services. Lender revenue has been boosted by a combination of record-high asset prices and corporations seeking to issue debt, execute mergers, and even go public. - yahoo finance news

 It reflects a lot of what is wrong with the American economy and goes to the point about how we use numbers to judge our condition. GDP growth becomes especially meaningless as a socio/political useful objective when it's coming at the expense of half the population actually getting poorer.

Edited September 11 by gehringer_2

[gehringer_2]

1 hour ago, Deleterious said:

Let the mortgage rates drop.

 

I won't be surprised if mortgages respond sluggishly - the spread between the 10yr and longer rates is unusually large right now. It will help if that also closes some.

Edited September 11 by gehringer_2

[Deleterious]

Sounds about right 

 

[Screwball]

The ORCL thing kinda reminds me of the Enron (ticker ENE) and Worldcom, mark-to-market accounting, circa 2000 thing. Part of the dot-com bubble even though ENE was an energy company for the most part (IIRR, they got into internet too). Part of the theme; what's not to like about printing future (years) unrealized profits to the current bottom line.

ORCL just played those cards.  The stock goes ape **** nuts (in this case ~35% in a day). WTF?

If I held any of it, I would have pulled the rip cord that day.

There is an old saying; they don't ring a bell at the top. This AI thing will prove to be a spectacular ****-up. While investors love the thought of all these new data centers and all the money to be made... Reality will take over. The insiders and the early will get rich, once it blows up, the losses will be passed down to our 401ks - as it always is.

AI data centers need a bunch of energy, water too. It will take years to build what they need. It will never happen. The push is sold as a great thing for us as a people, making our lives better and easier, but behind the scenes it's all about replacing our jobs. NO! Tell me it ain't so. 

It is so. I just spent the last 40 years watching it develop and happen. Technology is a great and wonderful thing, it can also be a real bitch. Two screws are three jobs.

Robots, machines, and AI don't take breaks, vacations, call in sick, get pregnant, lip off, smoke, or need an HR department. If you can be replaced, you will be. And to make it even better, as the company announces thousands got laid off because of this, the stock price rockets another 5 percent higher.

They get the gold mine, we get the shaft. Hat tip Jerry Reed.

Edited September 13 by Screwball

[chasfh]

I’m thinking about pulling the ripcord on ORCL right now, or perhaps set some kind of trailing stop on it. It’s already down some -15% from Wednesday's high. Probably should consider that for PLTR and my other tech as well. My only hesitation is the tax hit. Gotta figure something out.

[gehringer_2]

39 minutes ago, chasfh said:

I’m thinking about pulling the ripcord on ORCL right now, or perhaps set some kind of trailing stop on it. It’s already down some -15% from Wednesday's high. Probably should consider that for PLTR and my other tech as well. My only hesitation is the tax hit. Gotta figure something out.

There is diverging sentiment between Wall Street and consumers about the future. The market thinks the future is peachy, consumer sentiment about the future is in the tank both regarding employment and inflation. Given the continuing income disparity in the US, that could be true for both, but only to a degree. In a 60%+ consumer spending driven economy, if the consumer bugs out, it will still pull down most things else eventually. 

I've always just rode out the drops in the past, but my horizon is a lot shorter now so IDK.

 

Edited Saturday at 01:44 PM by gehringer_2

[CMRivdogs]

I've been seeing stories around here about localities falling all over themselves to lure these data centers. The same folks that keep finding excuses to deny solar farms and such.

Interestingly enough the same folks pushing for these things are the ones screaming the loudest about a regional sports/entertainment facility being built in the area. They are also championing the building of another Buc-ees nearby

[gehringer_2]

26 minutes ago, CMRivdogs said:

I've been seeing stories around here about localities falling all over themselves to lure these data centers. The same folks that keep finding excuses to deny solar farms and such.

Interestingly enough the same folks pushing for these things are the ones screaming the loudest about a regional sports/entertainment facility being built in the area. They are also championing the building of another Buc-ees nearby

apropos of this:

https://finance.yahoo.com/news/big-techs-energy-hungry-data-040203455.html

Quote

With the explosive growth of Big Tech's data centers threatening to overload U.S. electricity grids, policymakers are taking a hard look at a tough-love solution: bumping the energy-hungry data centers off grids during power emergencies.

Texas moved first, as state lawmakers try to protect residents in the data-center hotspot from another deadly blackout, like the winter storm in 2021 when dozens died.

Now the concept is emerging in the 13-state mid-Atlantic grid and elsewhere as massive data centers are coming online faster than power plants can be built and connected to grids. That has elicited pushback from data centers and Big Tech, for whom a steady power supply is vital.

Like many other states, Texas wants to attract data centers as an economic boon, but it faces the challenge of meeting the huge volumes of electricity the centers demand. Lawmakers there passed a bill in June that, among other things, orders up standards for power emergencies when utilities must disconnect big electric users.

 

[Deleterious]

 

[Deleterious]

Saw this about Chicago pensions.

Chicago pensions carry more debt than 44 states

They have $53 billion in unfunded liabilities.

Quote

Chicago’s pension systems remain among the most poorly funded government retirement systems in the country. In 2023, the unfunded debt from just the city’s municipal, laborers, police, fire and teachers’ pension funds surpassed the pension debt of 43 states. In 2024, it surpasses the pension debt of 44 states.

https://www.illinoispolicy.org/illinois-ranks-48th-for-people-moving-out-loses-over-56k-residents/

Quote

“Chicago levies some of the highest property taxes in the nation among large cities, largely to pay for the pension crisis. More than 80% of Chicago’s property tax levy – including all of the automatic annual increase – goes to pensions, and the Chicago Teachers’ Pension Fund, which has an additional $14 billion in unfunded pension liabilities that are not included in the city’s financials, has its own property tax levy specifically dedicated to pensions. In the past decade, the city’s property tax levy has doubled, with all the increase going towards pensions.

“Actuaries often consider systems with funded ratios below 60% to be “deeply troubled” and those with less than 40% may be past the point of no return. Chicago’s four city-run pension systems are less than 40% funded. A significant market downturn could wipe out money people are counting on.

 

[Deleterious]

Mortgage demand jumps to the highest level in three years, as interest rates drop sharply

[Deleterious]

Moving about a mile west.

 

[Deleterious]

 

[Deleterious]

 

[ewsieg]

Would love to know what Trumps thoughts are for going to bi-annually from quarterly for earnings reports.  The cynical side of me says he doesn't want Q3 reports right before the mid-term or the next POTUS election.  The other part of me thinks maybe it could incentivize companies to make longer term decisions, which tend to be more prudent, rather than switch course due to 1 bad quarterly result.

[Screwball]

Long thread discussing this. Pros vs. Cons. 

[chasfh]

2 hours ago, Deleterious said:

 

What company wouldn’t want an extra three months to cover their quarterly criming?

[Deleterious]

1 hour ago, Screwball said:

Long thread discussing this. Pros vs. Cons. 

Good info in there.

I also don't think it allows for more long term planning.  Management will still make decisions based off of stock performance.  Stock prices are even more short term than quarterly reports.  

[Screwball]

1 hour ago, Deleterious said:

Good info in there.

I also don't think it allows for more long term planning.  Management will still make decisions based off of stock performance.  Stock prices are even more short term than quarterly reports.  

I agree. I think it would save them money. Like it said in the tweet, they spend a bunch of money for the quarterly report. It cost money on all sides. How many Wall Street analysis cover the stock (for big companies quite a few).

The most important thing IMO, as far as investors go, was this part, which I believe to be true; 

Quote

In our view, the switch to semi-annual reporting would need to be required to be effective. When it is optional, equity risk premiums rise on companies that report less often. Simply put, you are taking on more financial risk when you have less information about a company.

The bedrock of how a market and investing should work. 

[Deleterious]

1 hour ago, Screwball said:

I agree. I think it would save them money. Like it said in the tweet, they spend a bunch of money for the quarterly report. It cost money on all sides. How many Wall Street analysis cover the stock (for big companies quite a few).

The most important thing IMO, as far as investors go, was this part, which I believe to be true; 

The bedrock of how a market and investing should work. 

I agree, less info is bad.  At the end of the day I would probably pick keeping the costs in exchange for more info.  But I have completely given up on the stock market so either way it won't impact me.

[Tigeraholic1]

6 hours ago, Deleterious said:

Moving about a mile west.

 

I got to tour this facility last month. The tech is amazing! All the cubes/offices I saw have glass or plastic what I thought were dividers. They are actually smart screens rather than monitors. Think of the new vehicles that show things on the windshield when you are driving. You can have 8-10 windows open and move them around like you are Tom Cruise in Minority Report.

[Deleterious]

 

[Deleterious]

He will also be a voting member.  

 

[Deleterious]

And this just happened.  So unless something crazy happens, Cook will be voting this week as well.

 

[gehringer_2]

the 25 pt cut is already baked in almost everywhere.  If for any reason they bail it'll be 'Panic in Detroit' 🙄