Have We Hit The Top?

[Santayana]

16 minutes ago, Gregmal said:

There was no meaningful inflation in housing over the decade covering 2010-2020

https://fred.stlouisfed.org/series/CUUR0000SEHA

https://fred.stlouisfed.org/series/CSUSHPINSA

 

It may have accelerated post-Covid, and of course there is a lot of regional variation.   But both rents and home prices were increasing faster than 3% over that time.   I'll withdraw my comment about *extreme* inflation, although where I live the numbers are much higher than the average, but it's still 50% higher that their target inflation rate.  Inflation has been real for much longer than the CPI tells us.

[Santayana]

10 years ago I could buy a beer after work for $5, tax and tip included.  Now I can't do it for $10. 

 

[Gregmal]

3 minutes ago, Santayana said:

https://fred.stlouisfed.org/series/CUUR0000SEHA

https://fred.stlouisfed.org/series/CSUSHPINSA

 

It may have accelerated post-Covid, and of course there is a lot of regional variation.   But both rents and home prices were increasing faster than 3% over that time.   I'll withdraw my comment about *extreme* inflation, although where I live the numbers are much higher than the average, but it's still 50% higher that their target inflation rate.  Inflation has been real for much longer than the CPI tells us.

I mean the answer is as old as time and no one has ever really presented any sort of valid point saying anything BUT THIS should be done. Build more!

 

Riddle me this, with prices so high, why arent builders blasting out homes like theyre Big Mac meals? Because rates are too high for it to make any sense. Why are rents "stubbornly high"? Well cuz no one can afford to buy a home. Remember all the concern in 2021 that we were headed for a housing crash because experts like Ivy Zelman were projecting a 2M per year build rate? Jerry took care of that. Why? Especially if he's trying to solve the largest contributor to inflation...housing. 

[Gregmal]

11 minutes ago, Santayana said:

10 years ago I could buy a beer after work for $5, tax and tip included.  Now I can't do it for $10. 

 

Devaluation of cash is just part of life and living in a developed society; its been occurring forever. My father still talks about how you used to be able to buy hanger steaks for $5 a pound too. Its like yea I know, and Im sure you also used to walk 7 miles a day to get to school, in the snow.

 

What was happening pre covid, was never an issue. The issue and where everyone got up in arms, was what happened during and following covid. Except thats entirely over and all thats left hanging around is directly caused by these people. And yet they are still feeding us this stuff that just doesnt add up and defies logic. 

[Guest]

Anyone concerned with deflation? I wasn't but am becoming more open minded about it.

[Santayana]

23 minutes ago, Gregmal said:

I mean the answer is as old as time and no one has ever really presented any sort of valid point saying anything BUT THIS should be done. Build more!

100%

[Gregmal]

4 minutes ago, stahleyp said:

Anyone concerned with deflation? I wasn't but am becoming more open minded about it.

Generally speaking? Yes. Thats what happens when you have a government and their cahoots openly boasting of their desire to destroy jobs, crush wages for 90% of the population, and promote energy policies that will ultimately just cripple the affordability of whats left for anything else. 

[Santayana]

17 minutes ago, Gregmal said:

Devaluation of cash is just part of life and living in a developed society; its been occurring forever. My father still talks about how you used to be able to buy hanger steaks for $5 a pound too.

Right, but doubling in 10 years is far in excess of both the target, and what the CPI tells us the "actual" inflation is.   Then we have the so called hedonic adjustments which try to wave away price increases as being a result of improved quality.  Do you know anyone who actually thinks the quality of most of the goods we buy has actually been increasing for the past few decades?

[Gregmal]

2 minutes ago, Santayana said:

Right, but doubling in 10 years is far in excess of both the target, and what the CPI tells us the "actual" inflation is.   Then we have the so called hedonic adjustments which try to wave away price increases as being a result of improved quality.  Do you know anyone who actually thinks the quality of most of the goods we buy has actually been increasing for the past few decades?

I agree to an extent but I think the real problem is whats "sinister" and whats being used as an excuse for the "inflation" handwaving. The issue is there has been no wage growth. For decades now. In 2007 a 30 pack of Natty was $15 and today its $19. so I guess where you get your beer depends. But in terms of life and living? Most people have been raped by big government/corporations and institutional wealth accumulation. Wage growth has really gone nowhere because the dynamic of power never lies with the laborers. GFC happens, largely caused by big corporations and government officials, and whats the end result? Many people lost their jobs and those that didnt took huge paycuts and were told to be grateful. At best, unless they are ladder jumping aggressively, the best they can hope for annually is 3% raises but unless you worked for a government agency, you didnt even get that. Most spent the past decade being told to take 2% and like it. We FINALLY just had a situation where the laborer was in control, finally about to turn the tables a little bit, and these guys used fake inflation driven predominantly by supply chain and covid restriction related issues, as the excuse to deliberately put an end to it. Its a real tragedy. 

[Santayana]

I agree with much of what you're saying, but regardless of whether or not it's been caused by government, inflation has been real for most people for quite some time, much more so than what the CPI says.

 

What does Natty Light have to do with the price of beer?

Edited September 29, 2023 by Santayana

[changegonnacome]

On 9/28/2023 at 11:07 AM, Gregmal said:

You have growth and trillion dollar size being bid like a Barry Honig stock promotion

Yep exactly what I mean - the growth stuff is in for another shalacking IMO.

 

Inflation isn’t just going away….soft landing are fairly tales….and the idea that we may somehow be going back to ZIRP with the inflationary pressures sitting in the background, the decoupling from China & the outrageous government deficits & bond issuances has just

completely killed the idea that rates will settle back into a 2010s ballpark….the bond curve has permanently shifted up.

 

 

[changegonnacome]

3 hours ago, james22 said:

expect a catch-up trade in Tech as or more likely as anything else.

I expect the exact opposite….the ARKK stuff is in trouble again IMO….most likely catalyst is another hike & even more higher for longer talk but more importantly repricing of that reality

[changegonnacome]

4 hours ago, stahleyp said:

Anyone concerned with deflation? I wasn't but am becoming more open minded about it.

No…..simply because the government as indebted as it’s become post-covid & running outrageous peace time deficits….can only continue to function in a world of inflation….deflation would blow the doors off the fiscal situation…and it won’t be allowed to happen….Dalio and his big debt cycle thesis is correct….we are two crisis deep (GFC & COVID)….each one saw significant levels of debt moved from corporate & household balance sheets to the sovereign….look at the annual deficit & then the debt pile in its totality….then realize that a deflationary bout if it occurred would spell tier 1 trouble for the fiscal authorities in the US and Europe….to the extent that a deflationary cycle happens by ‘accident’….well we figured out how to get inflation back from covid….and it turns out it’s very popular politically….you send people money in the mail and you don’t raise their taxes even though you should.

 

Short version of where we are IMO….is that all risks are skewed to the unexpectedly high inflation side of things….geopolitically….and for the simple reason that it’s in the best interests of the politicians…..and simply you can argue that in some ways it’s in the best interest of us all….the ‘system’ had to get bailed out in 2008 & in 2020…there are no free lunches in life…...and inflating away the debt that we used to stabilize society then by inflating away a chunk of it now is the cowards way out. The alternative….tightening our belt…increasing taxes, reducing conspicuous consumption ….working harder and expanding productivity…is not what happens in wealthy developed societies.
 

Betting on politicians to be cowardly & short term minded….is ordinarily a slam dunk….i think a short term deflationary surprise is possible….but for the reasons above I just don’t expect it to stick around for a hot second.

[Jaygo]

4 hours ago, Santayana said:

100%

It’s definitely in the back of my mind. Lots of puts and takes and everybody is pulling in the other direction so it’s unlikely. 
 

deflation to the point where people wait to buy items expecting a better price which then devolves into depressed prices and economic activity generally involves a complete lack of confidence in their future earning power and a really significant mindset shift. 
 

small bouts of deflation are very possible with dept deflation economics but are generally short lived. 
 

 

 

[james22]

1 hour ago, changegonnacome said:

I expect the exact opposite….the ARKK stuff is in trouble again IMO….most likely catalyst is another hike & even more higher for longer talk but more importantly repricing of that reality

 

Maybe, but every money manager who is behind because they hid out in cash the beginning of the year and missed the run-up will likely now overweight what's worked (the Magnificent Seven/Eight).

 

Why not? Nothing to lose if already at risk of being fired. 

 

And at least their holdings at year's end will look good, if not their performance.

[changegonnacome]

@james22 Let me separate the Monopoly 7 from the ARKK stuff.......Monopoly 7 is its own animal........its a hide out for fearful fund managers....but its also to be fair a place where AI & Metaverse dreams can play out (absent anti-trust)......these are at the end of the day finest companies ever to exist with leverage points into adjacent opportunities which are just immense if uncurtailed by competition authorities.

 

The window dressing fund thing possibly has more influence than I think....but not really interested in single digit short term moves in stocks. Not my game.

[james22]

 

3 hours ago, changegonnacome said:

The window dressing fund thing possibly has more influence than I think....but not really interested in single digit short term moves in stocks. Not my game.

 

Not really mine either, but I've made a small bet on it.

 

We'll see.

[UK]

16 hours ago, james22 said:

 

Maybe, but every money manager who is behind because they hid out in cash the beginning of the year and missed the run-up will likely now overweight what's worked (the Magnificent Seven/Eight).

 

Why not? Nothing to lose if already at risk of being fired. 

 

And at least their holdings at year's end will look good, if not their performance.

 

https://www.wsj.com/finance/investing/dan-loeb-third-point-hot-hand-goes-cold-5a2fb19

 

Funds at his firm, Third Point, fell by about 1.6% this year through August after tumbling 21.8% or more in 2022, according to investors. Both figures are worse than those of peers and the broader market. Loeb, who oversees roughly $11.7 billion, said he expected higher interest rates to take a bite out of the U.S. economy this year, so he turned cautious. As a result, he didn’t own enough technology shares to fully benefit from the summer’s AI-powered rally that drove stocks such as Nvidia skyward. Compounding the error, Loeb recently boosted stakes in tech and other riskier companies, just in time for those stocks to stumble in recent weeks. 

...

The missteps highlight the perils of wagering on a market in which interest rates are surging but the economy continues to grow, a phenomenon that has surprised some pros. For much of the year, high-price tech and other risk stocks kept moving higher, ignoring the rate rise, though they’ve faltered lately.

 

Edited September 30, 2023 by UK

[Gregmal]

8 minutes ago, UK said:

 

https://www.wsj.com/finance/investing/dan-loeb-third-point-hot-hand-goes-cold-5a2fb19

 

Funds at his firm, Third Point, fell by about 1.6% this year through August after tumbling 21.8% or more in 2022, according to investors. Both figures are worse than those of peers and the broader market. Loeb, who oversees roughly $11.7 billion, said he expected higher interest rates to take a bite out of the U.S. economy this year, so he turned cautious. As a result, he didn’t own enough technology shares to fully benefit from the summer’s AI-powered rally that drove stocks such as Nvidia skyward. Compounding the error, Loeb recently boosted stakes in tech and other riskier companies, just in time for those stocks to stumble in recent weeks. 

...

The missteps highlight the perils of wagering on a market in which interest rates are surging but the economy continues to grow, a phenomenon that has surprised some pros. For much of the year, high-price tech and other risk stocks kept moving higher, ignoring the rate rise, though they’ve faltered lately.

 

This is the risk I see over the next 6 months or so. Nothing to do with PE multiples or bond rates or any of the smart guy stuff. It’s now psychological. No one’s made money in many stocks now for years. The shorts got wrung out, frustrated, and many even then went long. The longs got crushed and then got their recovery exit bounce. I don’t think prices are extreme by and large, but who’s left to buy here? Anyone really super excited about Apple or Amazon here?

[sleepydragon]

1 hour ago, UK said:

 

https://www.wsj.com/finance/investing/dan-loeb-third-point-hot-hand-goes-cold-5a2fb19

 

Funds at his firm, Third Point, fell by about 1.6% this year through August after tumbling 21.8% or more in 2022, according to investors. Both figures are worse than those of peers and the broader market. Loeb, who oversees roughly $11.7 billion, said he expected higher interest rates to take a bite out of the U.S. economy this year, so he turned cautious. As a result, he didn’t own enough technology shares to fully benefit from the summer’s AI-powered rally that drove stocks such as Nvidia skyward. Compounding the error, Loeb recently boosted stakes in tech and other riskier companies, just in time for those stocks to stumble in recent weeks. 

...

The missteps highlight the perils of wagering on a market in which interest rates are surging but the economy continues to grow, a phenomenon that has surprised some pros. For much of the year, high-price tech and other risk stocks kept moving higher, ignoring the rate rise, though they’ve faltered lately.

 

the higher interest rate resulted in higher income for some of the cash rich companies like google. Also higher interest locked up home supplies. A bit ironic that the higher interest is having the opposite effect wished by the Fed.

 

 

[UK]

https://edition.cnn.com/markets/fear-and-greed

Edited October 4, 2023 by UK

[UK]

https://www.bloomberg.com/news/articles/2023-10-03/panic-creeps-up-as-vix-curve-inverts-for-first-time-since-march?leadSource=uverify wall

 

The setup, known as inverted VIX curve, has occurred twice in the past year and both instances heralded market bottoms. “The Treasury yield is really all that matters but a VIX term structure inverting is a sign the stress is being fully priced in,” said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group. “I would want to see a VIX term inversion before I am confident this bout of selling is over.”

[Sweet]

2 hours ago, UK said:

https://www.bloomberg.com/news/articles/2023-10-03/panic-creeps-up-as-vix-curve-inverts-for-first-time-since-march?leadSource=uverify wall

 

The setup, known as inverted VIX curve, has occurred twice in the past year and both instances heralded market bottoms. “The Treasury yield is really all that matters but a VIX term structure inverting is a sign the stress is being fully priced in,” said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group. “I would want to see a VIX term inversion before I am confident this bout of selling is over.”

Swear there are people just picking some new metric or term to generate clicks.  This is all meaningless crap.

 

 

Edited October 4, 2023 by Sweet

[Gregmal]

Yea watch long enough and you’ll see that the urge to be bearish, let alone really bearish, is often symptomatic of a small penis and a really deep need to be viewed as highly intelligent and sophisticated. Those things trump the urge to make money, which put those people in direct contrast to why most of us are in the market.

[backtothebeach]

10 minutes ago, Gregmal said:

Yea watch long enough and you’ll see that the urge to be bearish, let alone really bearish, is often symptomatic of a small penis…

Haha, LOL’d at this. You’re a funny guy…