09-18-2022, 09:04 PM | #7195 | |
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09-19-2022, 07:13 AM | #7196 | |
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I answered, "No kids." That shut him up pretty fast. Everyone has different circumstances. We make different salaries, we have different family situations, live in different parts of the world and have different tolerances for risk.
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09-21-2022, 05:44 PM | #7197 |
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75 Basis points is baked i…………….
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09-21-2022, 07:12 PM | #7198 |
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09-21-2022, 08:28 PM | #7199 | |
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The market is foolishly optimistic that the fed will 180 for no good reason. It's visible from a mile away |
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09-21-2022, 08:45 PM | #7200 |
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You think so now? Or are you saying they were?
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09-21-2022, 08:55 PM | #7201 | |
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I heard a fascinating interview yesterday on Bloomberg. Some woman, the CEO of an investing firm (sorry, can't recall either name), postulates that Powell isn't trying to tame inflation so much as he is trying to disabuse the markets of the notion of the so called "Fed Put". Her reasoning is that taming inflation is not a sufficient outcome, given that the Fed is viewed by many as largely responsible for a lot of it, and Powell doesn't simply want to be known as Paul Volker, Jr. She said he wants his legacy to be the reestablishment of a truly independed Fed, one that doesn't have to come in and rescue the markets every time liquidity gets tight. Why kill the Fed Put? Well, she said, the bailouts that started in 1987 with Greenspan's reaction to Black Monday (Oct 20, BTW, coming up soon....) have distorted the markets, specifically allowing people to take more risk with less-than-normal downside. The persistence of this over 35 years has done a lot of damage to capital markets and economies, as the Fed (and central banks all over the world), has essentially been forced to intervene by injecting money into markets on numerous occasions. Thus, she says, many in the Fed feel that it's become beholden to the market, and that the Fed is really not independent as a result and can't effectively do its job. Powell, she said, wants to fix that. Like I said it was a fascinating interview, and a very clever and nuanced take that considers not just the financial reality, but political/institutional/personal factors in his decision making. Powell, after all, is a very wealthy man with a big ego in a position of extraordinary power from which he cannot be removed. And he's got 4 years to run the show his way. If she's right, it's very, very bad news for the markets in the near term. We could see another 20% drop, easily, over the next 6-12 months, with incredible volatility, as Powell and the market essentially engage in a staring contest. Who will blink first? The market thinks (no, it knows, based on recent history), that it'll be Powell. But, what if it's not? A couple of links to background info - The Greenspan Put Black Monday (1987) |
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09-21-2022, 09:05 PM | #7202 | |
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Thanks for sharing that. Seems like they are adamant about doing everything they can to destroy the economy to give to magical 2% of inflation. Powell didn't even answer the question of 'lag time' by the CNBC reporter. I've lost complete confidence |
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09-21-2022, 09:32 PM | #7203 | |
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I sound like a bear but I am not, I don't support jumping all or even majority into cash or bonds. I have a small short in by way of SQQQ and VIX calls, risky but a small hedge |
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09-21-2022, 09:49 PM | #7204 |
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The projections in the news release on the Federal Reserve site, if anyone read it, shows inflation with a 2-handle in 2023.
Does this mean happy days are around the corner? |
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09-21-2022, 10:09 PM | #7205 |
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Most likely yes, bc the YOY inflation will be a comparison from then to early this year, and month-to-month inflation has been low. But even still, that could mean several months of pain in the meantime
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09-21-2022, 11:30 PM | #7206 |
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We will accept it as long as long as Tesla keeps going up
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09-22-2022, 01:19 AM | #7207 |
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What was Powell remark? If you notice the chart (any stock any chart), at around 3:10 PM eastern time the candles were all bullish with long bottom wick, then it went downhill from there….
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09-22-2022, 06:46 AM | #7208 | |
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Keep in mind that Powell may not need to raise rates like Volker did to accomplish his goals: he's also draining $90+bn/mo. through QT which is going to help beat down inflation without going to 18% interest rates. We've got a massive asset bubble that has to revert. There is going to be pain across certain asset classes, no way around it. |
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09-22-2022, 12:31 PM | #7209 | ||
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09-22-2022, 12:44 PM | #7210 | |
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As to Powell, he's clearly given up trying to provide any forward-looking prognostications, likely because like the rest of us, he has no idea what's going to happen next. Gundlach compared him to Mr. Magoo in an interview yesterday, driving his jalopy while blind and stopping only when he runs into something solid. While unflattering, that may be a reasonably accurate take. |
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09-22-2022, 04:38 PM | #7211 | |
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Going forward the m-o-m numbers are expected to come down, but very slowly. That's in part because there's a big lag in the impact of housing costs, and the increase in those remains high (+0.7% Jul-Aug). They will remain high for quite some time, and make up 30% of the Core CPI, so inflation for that reason alone will remain elevated well into next year. An additional factor is the impact of the employement rate on inflation, which also remains strong. An unemployment rate of 3.5% creates wage pressures that on their own contribute roughly 4.5% to inflation. As long as unemployment remains low that component will remain high. It's estimated that the unemployment rate has to get to 5.5-6% in order to get the wage component of inflation below 2%. It's really not complicated. People who have jobs keep spending money, even if they have to borrow to do it. People who do not have jobs do not spend money. In other words, Jobs == Demand. The unemployment rate hasn't barely budged. The Fed needs to decrease demand and is going to keep going until it does. People are going to lose their jobs. Lots of them. That's the "pain" Powell was referring to yesterday. Link to data referenced above - Consumer Price Index Summary |
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09-23-2022, 07:02 AM | #7212 | |
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Which is unfortunate. Of course, the unemployment rate is misleading, because it only considers people who want to work. We probably have a bunch of people who should be working, but are not because of the myriad of reasons, many of which came about with Covid. So those folks are living off of their savings and investments, which reduces... something. Liquidity?
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09-23-2022, 07:20 AM | #7213 |
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Consumer liquidity is a good topic, will post a chart later.
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09-23-2022, 12:03 PM | #7214 | ||
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The Bureau of Labor Statistics (BLS) tracks unemployment using the the nonaccelerating inflation rate of unemployment (NAIRU). Specifically, they define full employment this way: BLS defines full employment as an economy in which the unemployment rate equals the nonaccelerating inflation rate of unemployment (NAIRU), no cyclical unemployment exists, and GDP is at its potential. That's vague enough and dependent on so many factors that as you might expect the NAIRU varies. As do "experts" view of what the NAIRU is. The CBO assumes it's about 4.4%, I believe. Quote:
References Full employment - Full employment: an assumption within BLS projections Unemployment stats for August - THE EMPLOYMENT SITUATION — AUGUST 2022 |
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09-23-2022, 01:08 PM | #7215 |
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With interest rates hikes, housing market and stock market (leading indicator) how long before auto industry is hit? I see all the time peoples car payments are well over $1,000/ month and I just don't feel this can continue.
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09-23-2022, 01:48 PM | #7216 |
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Simple answer here: It's complicated and is going to take time.
There is no quick fix. This whole situation is related to COVID and the government reaction (I'm talking most governments in the world) to the situation. Yes, they overreacted, but you really can't blame them as they had never had to deal with a situation like COVID in present time and there was so much fear going around. They had to prop up the economy to keep the world out of an economic collapse. The issue is they helped too much and let it go on too long. Investors, private equity, etc. got greedy and got rich. Workers started having a different view of work, work ethic, and some got greedy and wanted to be compensated for seemingly basic jobs. Everyone had money and were spending it like crazy because they were bored sitting around all day because of COVID. Many were getting paid to do nothing. The stock market became WAY OVERVALUED. Then there came the chip shortage, supply chain issues, etc. that we're still dealing with that to some extent. Property and auto dealers got super greedy and buyers paid way too much for homes, cars, etc. because they had the money and were impatient. Inflation sky rocketed as a result of all of the above. The market hardly budged at first with all this inflation and in many cases, market value continued to increase (WTF?). The thought was people had jobs so everything was fine. That's so far from the truth. And so, here we are. We never learn. - The market is going to tumble for while, probably well in the 1st quarter of 2023. - A lot, and I mean a lot, of people, will lose their jobs. All sectors will be hit. - Home and car values will plummet because of interest rates, lost jobs, and the suckers that overpaid. - There will be lots of home and auto loan defaults. - Wages will go down. Gone are the days of making $17/hr making burritos or coffee orders at Chipotle and Starbucks. It's not sustainable and people aren't going to continue pay excessively high prices for fast food because they no longer can afford it.
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