Where Does the Global Economy Go From Here?

[Gregmal]

7 minutes ago, ERICOPOLY said:

 

There are already help wanted signs everywhere so it becomes a bidding war for labor.  Then there is a wage price spiral.  Businesses can't just keep raising their labor costs without raising prices to maintain profitability.

So on one end we virtue signal about China while typing on our iPhones. We propose bringing jobs back home. Acknowledged is that costs will go up but we re virtuous so it’s ok. Then the Fed mistakes this all for some weird side effect of inflation and others say it’s because of “money printing”. Seems like everyone is just chasing their tails into a self inflicted recession. 

[Spekulatius]

24 minutes ago, ERICOPOLY said:

 

There are already help wanted signs everywhere so it becomes a bidding war for labor.  Then there is a wage price spiral.  Businesses can't just keep raising their labor costs without raising prices to maintain profitability.

We haven't even started this whole nearshoring yet - Inflation would be ridiculous if we did. Without immigration, nearshoring isn't going to happen anyways.

 

Who is going to be running the manufacturing plants and fabs? I don't think they will get engineers to do these job unless we let them immigrate from Europe, Russia or Asia. Skilled labor with tech background is another issue, it just doesn't exist in the US to the extend needed. Maybe Mexico can help a little here or there.

[ERICOPOLY]

20 minutes ago, Gregmal said:

So on one end we virtue signal about China while typing on our iPhones. We propose bringing jobs back home. Acknowledged is that costs will go up but we re virtuous so it’s ok. Then the Fed mistakes this all for some weird side effect of inflation and others say it’s because of “money printing”. Seems like everyone is just chasing their tails into a self inflicted recession. 

 

Anti-immigration at the same time.  So there's that.  Anti-globalism and anti-immigration all during the tightest labor market in at least my lifetime and during the wave of boomer retirements to boot.

Edited September 23, 2022 by ERICOPOLY

[Gregmal]

5 minutes ago, ERICOPOLY said:

 

Anti-immigration at the same time.  So there's that.  Anti-globalism and anti-immigration all during the tightest labor market in at least my lifetime and during the wave of boomer retirements to boot.

At least most of the anti immigration people are farmers who don’t use Iphones lol 

[ERICOPOLY]

1 hour ago, Gregmal said:

At least most of the anti immigration people are farmers who don’t use Iphones lol 

 

When have the farmers been against using undocumented labor?

[Guest]

Not to sound too much like a sadist but isn't this blood beautiful!  Go, go, go! 

[Gregmal]

It’s hilarious the contradictions you see if you follow the whole poor/middle class anti immigration crowd who tend to be construction or farm workers. The GC who hates Mexicans and poor liberals who don’t pay taxes has Julio and Jose doing off the books labor at his sites and then on weekends unpermitted renovations on his primary home. 

[crs223]

2 hours ago, ERICOPOLY said:

anti-immigration

 

anti-illegal-immigration is the complaint.

 

Why not have a policy/law/rule and follow it?  The policy can even be “allow 1,000 immigrants for every unfilled job opening”.

 

And the policy can be updated weekly.

 

There has to be something between “open borders” and “you are all racists”.

Edited September 23, 2022 by crs223

[Guest]

I do wonder how much illegal immigration one political side would allow if we ran a balanced budget.

Edited September 23, 2022 by stahleyp

[crs223]

“The one political party that doesn’t like illegal immigration” … you mean the “anti-globalists”?  Aka “racists”?

 

Doesnt matter what you call them… they dislike illegal immigration.  Even if we changed to a flat tax.

[ERICOPOLY]

1 hour ago, Gregmal said:

It’s hilarious the contradictions you see if you follow the whole poor/middle class anti immigration crowd who tend to be construction or farm workers. The GC who hates Mexicans and poor liberals who don’t pay taxes has Julio and Jose doing off the books labor at his sites and then on weekends unpermitted renovations on his primary home. 

 

The great political lie is that the liberals of California are bringing them into the state, when the conservative and rural areas of the state have lured them here in the first place for picking strawberries.

[crs223]

Farmers do not speak for all CA conservatives.

 

I’ve never met one, but I’m sure they exist.

[Gregmal]

42 minutes ago, ERICOPOLY said:

 

The great political lie is that the liberals of California are bringing them into the state, when the conservative and rural areas of the state have lured them here in the first place for picking strawberries.

The conservatives rope them in and the liberals make them stay! J/K as honestly I have no clue really other than both parties are frauds on the subject 

[ERICOPOLY]

5 minutes ago, Gregmal said:

The conservatives rope them in and the liberals make them stay! J/K as honestly I have no clue really other than both parties are frauds on the subject 

 

Keeping the strawberries cheap and issuing debt to fund social services.  Government subsidized strawberries.  Farmers getting the subsidy.

Edited September 23, 2022 by ERICOPOLY

[boilermaker75]

3 hours ago, Gregmal said:

It’s hilarious the contradictions you see if you follow the whole poor/middle class anti immigration crowd who tend to be construction or farm workers. The GC who hates Mexicans and poor liberals who don’t pay taxes has Julio and Jose doing off the books labor at his sites and then on weekends unpermitted renovations on his primary home. 

 

My daughter is just moving into a condo she had remodeled in West Hollywood, CA. Our architect told us not to go the permit route. We did have a great person who did her previous condo renovation for her who would have done it if we didn't go the permit route. The permit route cost her an addition 6 months delay, while she had to pay $5k per month rent, over $10k for the permits and no where near the quality we would have gotten from the no-permit guy. 

[ERICOPOLY]

On 9/21/2022 at 7:49 AM, changegonnacome said:

 

Depends on the housing equity/debt math too.....did they buy in late 2021 in say Phoenix.......a $2m mortgage being inflated away against an equity base thats declined by 30%....still puts you in negative equity.

 

It's probably easier to see the benefit if we're talking about a fixed mortgage in an investment property and rents are going up with inflation and where the mortgage payment never changes.  Ignoring what's going on with the equity, the cash flow is improving because of inflation.  Homeowners also enjoy this imputed benefit although it's not as obvious.

 

And the equity base will recover if inflation persists because wage increases will follow.

Edited September 24, 2022 by ERICOPOLY

[Gregmal]

The thing you don’t appreciate with rentals, until you do, is that you literally don’t do shit. Maybe once a decade you make a major repair or improvement assuming you did proper diligence. Outside of that it takes next to no time once setup and then one day you look at your equity and it’s like whoa. Not a stock, not a bond, but kinda like a high yield savings account with random lottery tickets attached.

[crs223]

3 hours ago, Gregmal said:

The thing you don’t appreciate with rentals, until you do, is that you literally don’t do shit. Maybe once a decade you make a major repair or improvement assuming you did proper diligence. Outside of that it takes next to no time once setup and then one day you look at your equity and it’s like whoa. Not a stock, not a bond, but kinda like a high yield savings account with random lottery tickets attached.

 

When your renting out at $6k/mo like Eric you might have to deal with little things … “handle is loose” type stuff… at least that was my experience.

[Gregmal]

20 minutes ago, crs223 said:

 

When your renting out at $6k/mo like Eric you might have to deal with little things … “handle is loose” type stuff… at least that was my experience.

You have to deal with that at $700 a month too. But there’s ways to manage it and over time you learn the tricks of the trades. 

[Gregmal]

The secret with rentals is common sense. Don’t chase yield. Take high credit score, w2, maybe profile a little bit. A 70 year old on a pension beats a 30 year old single mother who’s a 1099. One can argue about the political correctness but one bad tenant wipes out 5 years of good ones. 

[nwoodman]

A rather irate Jeremy Siegal.  “Calling it poor monetary policy is an understatement”.  

 

Sure is creating some interesting opportunities either way.  Flushing of weak hands and crappy businesses is a pleasing outcome. Cathie Wood stepping down from a couple of her shittier ETFs should mark the beginning of the end

 

 

[UK]

On 9/22/2022 at 4:50 PM, changegonnacome said:

Suspect we’ll touch something in the late 2000’s on SPY….settling somewhere in low 3000’s where the next, hopefully decade long expansion, can build out from.

 

Some type of ‘financial event’ is very likely between now and when price stability is returned. I won’t even guess it’s exact source but changing the most important price in the economy (the price of money) so rapidly and so aggressively after such a prolonged period of ultra low rates has 1st and 2nd order effects way beyond the capacity of anyone to predict.

 

https://www.wsj.com/articles/the-market-still-isnt-priced-for-a-proper-recession-11663857523

 

i have no idea, but just for fun, speaking about this whole FCF vs rate question, I think in the 1H and until yesterday most of the stock market drop was driven by rate vs fcf and valuation rerating of more expensive/growth companies, together with long bonds. No idea if and when, but If market starts to price some hard landing, earnings drop and some second order effects (just look at GBP), lower inflation, and then deflation:), then value/high FCF/short duration/leveraged things could lead decline? either way very exiting times possibly is coming again:)

 

UK  

 

 

 

Edited September 24, 2022 by UK

[UK]

1 hour ago, nwoodman said:

Sure is creating some interesting opportunities either way.  Flushing of weak hands and crappy businesses is a pleasing outcome. Cathie Wood stepping down from a couple of her shittier ETFs should mark the beginning of the end

 

And TSLA still >CAP 800 B!

[UK]

In the oher news: https://www.cnbc.com/2022/09/22/turkey-cuts-interest-rates-again-as-country-struggles-under-inflation.html

 

Erdogan, meanwhile, remains optimistic, predicting that inflation will fall by year-end. “Inflation is not an insurmountable economic threat. I am an economist,” the president said during an interview Tuesday. Erdogan is not an economist by training. 

 

[scorpioncapital]

7 hours ago, crs223 said:

 

When your renting out at $6k/mo like Eric you might have to deal with little things … “handle is loose” type stuff… at least that was my experience.

 

How do rental prices adjust downward in a recession or deflation? You seldom see it as prices have always galloped forward but does the landlord just one day say to the tenant your rent is now going DOWN? Or the tenant asks for a lower price cause they don't have enough money and threaten to walk and the landlord either takes it or risks to find someone else which they are not at all sure can pay the same price?  What is the protocol? Also do advertisements just start showing lower monthly rental figures over time for new rentals?

Edited September 24, 2022 by scorpioncapital