Where Does the Global Economy Go From Here?

[ERICOPOLY]

17 minutes ago, Spekulatius said:

I personally think we are getting to the point where owning a single family home will be the exception not the rule. the building codes and lack of available land make sure of this. Short of a  trend where many  move back to the countryside which would reverse hundred of years of urbanization. the result is probably more multi family and apartments down the road.

 

In a way housing demand is a bit flexible too - yes you need a roof over your head, but a family can live with 1000 Sqft of 300 sqft and the amount of living space is a lifestyle choice to some extend.

 

Then there are factors impacting demand like institutional buying of single family homes which I actually think will lead to a higher possibility of a crash down the road, or the AirBnB trend which could run into trouble with city/town regulations.

 

The trouble is that small homes aren't even allowed in most towns.  In most areas you aren't allowed to build a one bedroom 400 sqft home.  It's bizarre.  I mean, there's all this public hand wringing about housing affordability but then there are rules literally requiring your home to be larger than you need and therefore less affordable.

 

[Gregmal]

And as folks continue migrating to the same states they have been for decades, aka MPC dominated states, even building friendly ones, it’ll only get worse. There’s communities with 2500-3500 sq/ft minimums…imagine that?

[ERICOPOLY]

With all this talk of high grocery bills.  Chicken drumsticks can be had for $1.19 a pound.  That's not much at the end of the day.

 

https://www.walmart.com/ip/Freshness-Guaranteed-Fresh-Chicken-Drumsticks-5-lb/613823324?fulfillmentIntent=Pickup&athbdg=L1600

 

 

[stockman500]

Anyone else following the British Bank of England thing with the rate hikes up? 

Anyone think things can start getting crazy very soon.

 

Kuppy has been tweeting a lot about it recently.

[IceCreamMan]

5 hours ago, ERICOPOLY said:

Same with scanning and bagging our own groceries.  The cpi does not impute the wage for doing your own work.

 

Good point. I guess any time there's a significant technological innovation that saves somebody money, it depresses the CPI? For example, if all of a sudden people started having video chats instead of in person meetings, the official inflation figures would look lower than otherwise... and then if people went back to in person, inflation figures would spike?

[Gregmal]

26 minutes ago, stockman500 said:

Anyone else following the British Bank of England thing with the rate hikes up? 

Anyone think things can start getting crazy very soon.

 

Kuppy has been tweeting a lot about it recently.

If there’s a VIX 50+ moment coming it s in the next month or two. 

[ERICOPOLY]

8 hours ago, Spekulatius said:

The only thing in the super market that never went up in price is beer, especially the larger regional craft beers.

 

The average price of a 6 pack was $5.58 in 1991. 

 

Pretty amazing how gasoline is about 4x higher today, but beer is only 35% higher.

 

[UK]

6 hours ago, stockman500 said:

Anyone else following the British Bank of England thing with the rate hikes up? 

Anyone think things can start getting crazy very soon.

 

Kuppy has been tweeting a lot about it 

 

https://www.wsj.com/articles/the-banker-and-bailey-circus-andrew-bailey-liz-truss-britain-bond-purchases-bank-of-england-monetary-policy-11664401241?mod=hp_opin_pos_1

https://www.bloomberg.com/opinion/articles/2022-09-29/uk-can-t-afford-to-look-as-ridiculous-as-truss-kwarteng-have-with-gilts-crisis?srnd=premium-europe

https://www.bloomberg.com/opinion/articles/2022-09-29/the-uk-s-trussonomics-market-mess-has-france-fearing-contagion?srnd=premium-europe

Edited September 29, 2022 by UK

[Paarslaars]

4 hours ago, ERICOPOLY said:

 

The average price of a 6 pack was $5.58 in 1991. 

 

Pretty amazing how gasoline is about 4x higher today, but beer is only 35% higher.

 

Still too expensive for american beer  

[mattee2264]

My understanding is that there was an issue for insurers/pension funds to do with collateral when bond yields spiked (and bond prices crashed). Obviously bond yields spiked because there is now a massive risk premium involved in holding UK government bonds because the market has lost confidence in its ability to repay. And we are talking about a move from sub 4% to over 7%. If there is some contagion there might be some loss of confidence in other countries government debt and an associated risk premium being priced in. 

 

US should be relatively insulated and even benefit as there is a flight to the safety of US government bonds but contagion is a funny thing and not always rational. 

 

But I think it is quite inevitable that there will be some form of yield curve control which I think is essentially what the BoE is doing by using QE to buy long bonds. 

 

I think that a combination of increasing interest rates while doing a bit of QE to facilitate orderly market adjustments should still allow gradual tightening and suppression of inflation. 

 

And of course it is bullish for markets because it means central banks are going to be a bit less aggressive going forward. 

 

 

 

[Spekulatius]

5 hours ago, Paarslaars said:

Still too expensive for american beer  

A craft beer (from the larger regionals) has been $13.95/12 pack forever (when on sale). They are pretty good. Used to be $12.95 but $1 over a couple of years is not too bad. No beerflation.

 

The small nanobreweries have increased their prices much more.

 

I don't see much inflation  with meats, beer and pizza's (frozen or when you assemble them yourself) and what else do you really need?

 

We have seen monster inflation with imports of asian food goods from Hmart or other asian stores. I think my wife mentioned some fish or oyster sauces that went up about 3x. Walmart has the cheapest Sriracha and ran out for month. How the hell did we run out of Sriracha in 2022?

Edited September 29, 2022 by Spekulatius

[Gregmal]

https://nypost.com/2022/09/29/larry-summers-warns-global-economic-risk-approaching-pre-great-recession-level/
 

Awfully rich. He may be right.. But comparing it to 2007 when few people had a more direct role in creating that scenario than Larry himself? Guy was totally corrupted and at best blind in 2005/06/07 and getting paid by hedge funds to tell folks everything was great. Of course like much else on WS, in hindsite Larry knew it was coming and did everything to avoid it. These people…

[Spekulatius]

Yeah, everything went great when Leisure suit Larry was in charge.

Edited September 29, 2022 by Spekulatius

[Spooky]

Seems like every pundit and podcast is talking about holding cash / a further crash from here. Don't see any optimism out there. Probably means its a good time to buy...

[rkbabang]

On 9/23/2022 at 4:12 PM, crs223 said:

“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.

 

 

I love when I talk to someone who takes great pains to say he's only against "illegal" immigration not legal immigration.  I then say well we need a whole lot more immigrants so we should let in a hell of a lot more in legally, only to see a look of horror on the face of the person who really just doesn't want more brown people in "his" country. Every time.

 

[Guest]

47 minutes ago, rkbabang said:

 

 

I love when I talk to someone who takes great pains to say he's only against "illegal" immigration not legal immigration.  I then say well we need a whole lot more immigrants so we should let in a hell of a lot more in legally, only to see a look of horror on the face of the person who really just doesn't want more brown people in "his" country. Every time.

 

 

Immigration should be done at a slow pace. If you let too many people in, it's much harder to assimilate them into the country. It's easier to not assimilate if you have a lot of people celebrating the country/values that you left.

 

So I am against illegal immigration but I also don't think we need to bring them in by the masses either. 

 

 

 

[Gregmal]

12 minutes ago, stahleyp said:

 

Immigration should be done at a slow pace. If you let too many people in, it's much harder to assimilate them into the country. It's easier to not assimilate if you have a lot of people celebrating the country/values that you left.

 

So I am against illegal immigration but I also don't think we need to bring them in by the masses either. 

 

 

 

Every growth place in the world was/is built off the back of migration. To the extent that it’s supported and done responsibly it should be at whatever pace the ground zero location can handle. 

[Gregmal]

A tribe of 100 Vikings didn’t just settle somewhere and create a world power because they were magicians on the infrastructure front and could turn dirt into dollars. You need population growth because ultimately it creates the value(generally an economic base) necessarily to keep funding future growth. 

[rkbabang]

2 minutes ago, Gregmal said:

Every growth place in the world was/is built off the back of migration. To the extent that it’s supported and done responsibly it should be at whatever pace the ground zero location can handle. 

Exactly. The first generation never really assimilates.  My grandparents never learned English.  You bring them in, they have kids and the kids are Americans.

[Guest]

I don't know about that. I know a lot (a lot) of my first generation Americans and all of them assimilated. My in-laws are first generation (and technically my wife) and they assimilated well. 

 

But, I also agree that their kids assimilated (for the most part) even better.

[Guest]

15 minutes ago, Gregmal said:

Every growth place in the world was/is built off the back of migration. To the extent that it’s supported and done responsibly it should be at whatever pace the ground zero location can handle. 

 

I agree. Immigrants also tend to be much, much harder working than the average American. 

[Gregmal]

Those in the 55-65 crowd, unfortunate enough to still be working, who thought they put in their time grinding, saved the peasant wages and relied on employer contribution, and were about to retire…

 

[crs223]

3 hours ago, rkbabang said:

only to see a look of horror on the face of the person who really just doesn't want more brown people in "his" country. Every time.

 

 

Well I’m okay with legal immigration and i’m not okay with illegal immigration.  Even if we have to increase the limits.  Even brown people.  No horror-face.

 

So now you cannot say “every time” anymore.

[UK]

9 hours ago, Gregmal said:

https://nypost.com/2022/09/29/larry-summers-warns-global-economic-risk-approaching-pre-great-recession-level/
 

Awfully rich. He may be right.. But comparing it to 2007 when few people had a more direct role in creating that scenario than Larry himself? Guy was totally corrupted and at best blind in 2005/06/07 and getting paid by hedge funds to tell folks everything was great. Of course like much else on WS, in hindsite Larry knew it was coming and did everything to avoid it. These people…

 

I have no idea and do not invest based on such things, but after reading about all this "pension margin call" situation, you really start to wonder, that it feels a little bit like 2007, when everyone quickly started getting educated on subprime stuff:). It was zero interest rates and unlimited QE policy for 14 years and 10 years from last major financial/market dislocation (EUR crisis until whatever it takes). At the start of the year, almost all assets where on the expensive side, if not in a bubble and when rates go up by such magnitude after such long time (and before this bond market was in bull market like forever), who knows what interesting things could happen? In 2018, when FED tried to raise rates, markets went down like 20 per cent and it pivoted:) But this time I think it not so easy to do or very hard for them to do in a major way before time. At least not until major dislocation (hopefully/probably not in US at first) or at least more substantial market drop:). However it leads to a much more exiting times in the markets, just look at GOOGL, was at like 30+ PE year ago, now it is <18, on relative basis, on par with SNP!, on absolute basis, taking growth into account, perhaps also well above 10 per cent return at this price in the long term.

 

More on LDI (new term for me:)): https://www.bloomberg.com/opinion/articles/2022-09-29/uk-pensions-got-margin-calls?srnd=premium-europe&leadSource=uverify wall

 

UK

 

 

 

Edited September 30, 2022 by UK

[Spekulatius]

12 hours ago, Gregmal said:

Those in the 55-65 crowd, unfortunate enough to still be working, who thought they put in their time grinding, saved the peasant wages and relied on employer contribution, and were about to retire…

 

This crowd can achieve now significantly higher income from their investments. Lower inflation will also be good for them. They supposedly have locked in a low cost mortgage. I would say what is happening now is a plus for them, unless they had an imprudently risky asset allocation.