I have to agree that the student loan thing is a tempest in a teapot. Even if it went cents on the dollar. There's a reason the charts show % growth in various loan classes rather than $ growth. Probably single digit percent growth in real estate loans equals the entire amount of student loans. Food for thought, what is the elasticity of the demand curve for imported consumer goods? I know someone in the import business, he's currently eating 90%+ of the tariffs. Basically Amazon, Walmart...are telling their suppliers that they have to eat the extra cost if they want to continue to do business with them. He can only do this for a very short time more before he starts passing it on or goes out of business, and most suppliers are like him, currently operating at zero or negative profit in hopes of riding this out. So, what happens when they all basically run out of money at once and go away? We run into basic goods shortages while the supplier network re-sorts itself and simultaneously run into a 25% increase in most basic consumer goods. If the demand curve is fairly elastic, that won't have a huge impact. If it's fairly inelastic, which it may very well be given the part of the income spectrum that is the major buyer of these goods, that could be a significant shock to the economy?
I think he corrected himself, and dalayed events, for another two years (?) ( going to sleep, il chech yield curve invert tomorrow , one of his indicators ) Yes, 1,5 vs 12,7 yet, catalyst (?) size was :
Errrr, I like your idea, but I think you stated it backwards -- elastic demand will respond relatively more %-wise to a $1 shock, while inelastic demand will respond materially less. Helpful?
I too like @Sig's idea but don't believe you'll see that drastic an impact. If Walmart and friends are getting their suppliers to take the brunt of it, the suppliers will likely tap financing while they restructure their sourcing. It's not going to take years to restructure, maybe a few months. So I don't see that happening unless all importers make the same stupid mistakes while rejigging their supplies. Walmart is not dumb. They know what their suppliers can handle to juuuuuust before the breaking point. Remember, these tariffs aren't out of the blue. Trump has been signalling them for months. That was enough time for many companies to figure out alternatives in the meantime and I'm sure many already have.
Interesting thread going on over here. What I do notice is that most comments are about US domestic driving factors which could cause a next crisis (e.g. student loans). The thread title is about "passive index investing" (SPY is mentioned by @nooby_mcnoob). There no are comments yet about whether the US equity indexes are highly correlated to foreign indexes. There are multiple demographic trends happening in countries such as Japan, Europe and China which could result in a worsening of their economies on the longer run. And thus have a negative effect on those international indexes. If the US index will remain highly correlated to those international indexes, is there a chance that it will be pulled down as well.
The Mexican ones sure but even those are being phased in starting at 5%. The Chinese ones were obvious to anyone paying attention