If "nobody could see this coming" and its an "unprecedented" move than how can you rely on data from prior cycles to make decisions?
If "nobody could see this coming" and its an "unprecedented" move than how can you rely on data from prior cycles to make decisions?
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anon_0k9zlfz6lz9oy
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Nah I saw the rise in rates, didnt think theyd hit the 7’s though this year as based on historicals theyve never risen this high this fast. Despite all this the original post and thread title remains true. This market never was a bubble (people saying it was based it on, “what goes up must come down” LOL) and the fundamental backdrop of the market is so strong that even a historic rise in rates has 2023 forecasts of prices remaining flat https://open.substack.com/pub/calcu...asts?r=cm5bo&utm_medium=ios&utm_campaign=post . I personally disagree with as i believe if rates hold above 7%, I think demand gets hit harder allowing supply to grow enough to where we get price declines.
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anon_0k9zlfz6lz9oy
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Lol rich coming from you considering all ive posted is objective data, while youve put your perma bear hat on seeking out exclusively any and all bearish data.
huh? I hope I'm missing the sarcasm here or you are just very young and inexperienced
It's not their favorite move, it's their ONLY move.
The only tools to fight run away inflation are : rate rises to shrink $ supply and kill demand, stop printing (or digitally creating) and devaluing the currency, economic growth and productivity gains.
Federal Reserve is a joke. It is not Federal, and there is no reserve.
The choice now is between a sh!t sandwich and a sh!t sub (or hoagie if ur from SJ). Hard times are coming for all. Housing market is low on the list of our problems.
This thread isn't gonna age well KYK
youth forgets the 80s and doesn't understand the role of financial mkts on mtg rates. There is more pain to come and housing is going much lower. It doesn't matter what the catalyst is whether blowing up sub prime, rising rates, unemployment etc, people inherently feel poorer when housing declines and/or 401ks decline. Housing still has a long way to go down and it will, unemployment will begin accelerating in January as right now, companies are getting in all hiring recs prior to belt tightening.
We have market dislocations caused by politics and the markets need to adjust and they haven't given the fed's policies. That is changing
no no no
they can alter the fed funds rate
they can alter swap lines
they can alter reserves banks need to maintain
they can reduce or add to the balance sheet
they can mandate lending standards
The Fed has A LOT of power and because the economists there are old, they think rates plays are the optimal way to go and they are not. Fed needs to raise reserve rates, mandate lending restrictions on revolving credit through balance sheet requirements and liquidated the balance sheet. Doing all of these things takes an enormous amount of purchasing power out of the mkts and populace. Raising rates effectiveness is diminished as the products offered by non traditional banks has increased.
Inflation is the war that needs to be fought right now.It's hammering every single American.The administration caused it and has no way out. Those may be "tools" the fed possesses, but in this battle they're Fisher-Price brand.
Too much cheap government fabricated $ chasing too few goods = crazy inflation.
On purpose? Who knows.
"It is a way to take people's wealth from them without having to openly raise taxes. Inflation is the most universal tax of all."
Thomas Sowell
Don't want to hijack Kyk's thread with inflation talk. It's relevant because people with no $ can't afford houses, especially @ high interest rates. But it's a little bit of a tangent. So I'll end it here.
Too much cheap government fabricated $ chasing too few goods = crazy inflation.
On purpose? Who knows.
"It is a way to take people's wealth from them without having to openly raise taxes. Inflation is the most universal tax of all."
Thomas Sowell
Don't want to hijack Kyk's thread with inflation talk. It's relevant because people with no $ can't afford houses, especially @ high interest rates. But it's a little bit of a tangent. So I'll end it here.
everything starts with energy,
biden will go down as the worst, eclipsing Carter
unless we open up energy production, we'll get sticky inflation which will drive a perma floor and cannot be allowed.
biden will go down as the worst, eclipsing Carter
unless we open up energy production, we'll get sticky inflation which will drive a perma floor and cannot be allowed.
If I am understanding what I am reading correctly, refining is even more of a problem because we now don’t have the capacity to handle much of an increase in production.
When the people in charge have made it impossible to build a new refinery, and constantly express their desire to eliminate the need for such refining in the next decade or so, it is unsurprising that the industry is hesitant to make big investments in upgrading or maintaining existing refineries when that spending will take years to pay itself off.
We are in deep shit if something causes any significant percentage of current refining capacity to go offline.
while it is true that no new refineries have been built in decades, it is not true that capacity hasn’t expanded. Further, while seasonally elevated, utilization at the end of the summer was no different than it was in 2019. Oil and gasoline prices capture lots of attention, but the more insidious cause of higher prices is natural gas which is ubiquitous as a raw material from chemical production to fertilizer and, ultimately, food.. It’s also easy to point the finger at Biden and say he’s the sole or primary cause. No doubt his public statements and demands are naive and unhelpful, but probably targeted at his political base. The real cause, though, is a massive turn in investor attitudes towards increasing reserves versus cash flow generation. Capital discipline was nonexistent until several high profile bankruptcies changed investor focus and willing ness to fund new, speculative drilling without commensurate cash flow. That’s the real cause. Interestingly enough, for the first time in quite a while, natural gas prices are rational on an oil equivalent basis.
Good post. Plus there were huge, unexpected external factors that have driven much of the inflation, i.e., the pandemic and the war in Ukraine, which were not the "fault" of any politician in any party, per se.
I agree that placing blame for inflation at the feet of a sitting President is often simplistic and misplaced. That’s not to say certain policies, such as the additional stimulus bill, aggravated the situation, but the causes are far more complex and global in nature. The simplest (and necessarily incomplete) summary, I think, is that we enjoyed a 40 year period of declining interest rates with relatively tame inflation due, in large part, to the deflationary benefits of globalization. Disrupted supply chains combined with a new skepticism to the benefits of international trade, replete with its issues, has led us to where we are today. Add energy costs at elevated, but not unprecedented, levels plus a near decade of zero or near zero fed Funds, and you have an adjustment that is probably in the early phases.
yes and no
try EPA has all but said there will be no new building, expansion etc and to do so has become cost prohibitive . The administration is exacerbating this issue with it's anti business/oil initiatives. Just came back from Houston at a meeting with IB on this an other things. Interesting times for sure
Stop putting all these asterisk in your call...
"I didn't see rates hitting xyz" is all bs. We've been on here telling you pain was coming, there is a ton of volatility in the economy right now and the fed was going to dig in to combat it.
Where we end up and how we get there can vary but the call is the call.
I've been predicting a bubble and continue to predict it - I don't base it on any other asterisk.
Why are things not going well? The job market seems strong, wage growth is strong and while inflation is high is it any worse than low inflation with no wage growth?
I read that wage growth is over 7% obviously that is offset by higher inflation but if inflation was 3% and wage growth 1% is there a meaningful difference for most people?
New well drilling activity was at a high point back in 2014-2015 at about 3,500-4,000 per month. It collapsed when oil prices fell and since has never reached 3,000 per month. That’s the market speaking with it wallet - no cash flow, no capital. COVID stopped new wells in its tracks, but new wells drilled has increased albeit at lower levels. You could also look at rig counts, which stand at 768, which is up from 542 a year ago. So prices are influencing activity, and domestic production is at a post-pandemic high albeit lower than that levels in 2019.
Morgan Stanley sees a 7% decline in housing prices through the end of the year, the 2nd fastest rate since the Depression, although they don't see a 27% overall drop like we saw in 2008. The Fed policy is "working" for lack of a better term, given this and the slowdown in the jobs market. Question will be how much further do they go to tamp down inflation or should they anticipate it will be corralled by the rate increases already made.
https://www.foxbusiness.com/economy/housing-market-united-states-headed-major-slowdown
https://www.foxbusiness.com/economy/housing-market-united-states-headed-major-slowdown
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Here is a chart on wage growth
United States Wage Growth 1960-2024 | FX Empire
The latest comprehensive information for - United States Wage Growth - including latest news, historical data table, charts and more.
www.fxempire.com
There is a tidal wave of bearish momentum building.
Stability is always key in economies - hence why we like stable.inflation, stable supply etc.
Covid was a meteor hitting the ocean, and the waves caused by it will continue to ripple (positive and negative). We've ridden the "positive" wave (mainly positive because of the perceived boom in demand) some of which was attributed to the misguided stimulus and the resulting supply/demand imbalances. I believe and have seen negative indicators across multiple segments that we are going to start riding the wave down.
Food , energy, unemployment & war- a vicious cycle of negative momentum that could result in a great depression (depends on what other actions are taken)
lol @ people who think global inflation can be blamed on a single administration
Yep. NY Times has a good article today on the big picture, talking about many of these things. Like anything in the realm of economics, politicians have a bit of influence, but far less than I think most people think they do. The excerpt below is the overview, which hits on many of the items you mentioned (and in my post you replied to) while the article focuses on the employment/jobs angle and its influence on inflation.
https://messaging-custom-newsletter...e990&user_id=3f7a7d00850ad922736b3173646a296d
The biggest problem facing the economy right now is that prices are rising much too quickly. That dynamic stems partly from the lingering effects of the pandemic, which continue to disrupt international supply chains, and global forces, like the war in Ukraine, which has pushed up the price of food and energy. Most economists agree that rapid inflation is also at least partly the result of excessive demand: American consumers want more cars, airline tickets and restaurant meals than companies can produce, pushing up prices. |
The Fed is trying to tamp down demand by raising interest rates, which makes borrowing money more expensive for consumers and businesses. Yesterday, the central bank announced it would raise rates by three-quarters of a point for the fourth time since June. |
That move was widely expected. But experts are less in agreement about what the Fed will do in the months ahead. Some economists argue it should hold off on further rate increases and see whether inflation begins to ease. Others say the Fed should keep going until its efforts clearly have an effect. |
Which path policymakers choose depends in part on how Jerome Powell, the Fed chair, and his colleagues view the labor market. If companies keep adding jobs and raising pay, inflation is likely to remain high, and the Fed is likely to remain aggressive in its fight to tame it. If job growth stalls and unemployment rises, the Fed could pause sooner to avoid causing a recession. |
So far, the Fed seems firmly on the side of those who see the job market as too hot. Powell said yesterday that any talk of a pause in rate increases is “premature.” |
I think a lot of that quiets down by next Wednesday.
And I am not saying there will not be a recession in the near future especially since I believe in economic cycles and we are due. We just will not hear about it all the time.
I believe amazingly crime will also not get as much exposure starting next week
Well listen the UK implemented the platform of tax cuts for the wealthy and sure enough that trickled down
How is inflation in the UK, must be way lower than here, right...
3.6% unemployment = best economy ever
3.5% unemployment, 2.6% gdp growth = essentially the great depression
It would be funny if the people saying these things didn't live through actual recessions in 2008 and 2020 entirely caused by the belief systems they espouse
Of course it is and the media carries the water for it.
Whatever gets eyeballs, and pretending 2008 and 2020 are around the corner will do that
But remember, when gas was soaring in 2008, when unemployment was close to 10% in 2008 and 15% in 2020, we know who wasn't responsible. Much like when gas plummeted in 2014 it was probably the crying speaker that did it.
You can't be serious. Nobody is this naive.
If serious, you just stand there on those railroad tracks. See how that works out for ya.
Gonna be a lot of economic natural selection going on pretty shortly.
I posted in a different thread that I and all of my friends and family are doing very well so I have not seen this terrible situation you feel is effecting everyone
The food inflation is noticeable but my income increased at a level that dwarves that increase
I'm on a JP Morgan market update call right now, and coupled with a totally separate company discussion earlier this week, there is a ton of speculation around when the recession will really hit, not if.
That's said, learned that equity valuations tend to bottom out before the GDP minimum. In fact, equity valuations have historicall returned pretty well during that delta.
That's said, learned that equity valuations tend to bottom out before the GDP minimum. In fact, equity valuations have historicall returned pretty well during that delta.
What are you talking about? I can guarantee you your characterization is way off. Plus why go with personal attacks? Stating the obvious. The OP is right. Real estate fundamentals are very strong. The rate rise is unprecedented in history In it’s speed and increase in level and no one predicted it.
You need to get outside of your bubble.
First, many people have not seen wage growth anywhere near the level of what inflation, and inflation is very regressive.
Someone making $150,000 isn’t happy food and fuel have gone up, but in the big picture it is a small percentage of income. For someone making $50,000, the current inflation is crushing them.
I posted the wage growth chart and T posted many times that the lower income have seen the higher percentage wage growth
T and I are polar opposite in our political views so it’s not like we would just agree for partisan reasons
I do not see this period or the near future any worse than a number of economic cycles during the past 40+ years
Now if you tell me that soon the dollar will not be the worlds default currency than I would agree we are headed for trouble
Oh and people making $50k or families making the average of around $70k have always faced a struggle even in boom times
Sone of the lowest tier of jobs have seen big increases because the company involved has some pricing power- warehouse jobs, fast food, etc.
People in the next tier up working for smaller companies, self employed, etc. haven’t seen near the same level of increase, and they are more likely to be punished by the additional hit of what the real estate market did to rent prices.
What, so f**k ‘‘em if inflation makes it even harder for them, as long as you are doing good?
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