Is The Bottom Almost Here?

[Castanza]

1 hour ago, Spekulatius said:

5% unemployment and 2% inflation is better than 5% inflation and 2% unemployment. There I said it.

 

That answer depends entirely on where you fall on the socio-economic ladder. You widen the wealth gap doing this because you force poor families to cut back more on spending and wage growth at the bottom of the ladder also stagnates. Both of these reduce savings (less income) and economic mobility (fewer job opportunities). 

 

Who isn't affected? Those in the upper class. The middle class is affected as well, but they generally can absorb it and have more mobility. In the end Your always fucking the poor. 

 

I'm not a fan of all the meddling personally. I think what you read in textbooks doesn't work in the real world as it's intended. Frankly I don't think anyone knows what the fuck they are doing when it comes to managing complex economic systems. It's just guess work and dick swinging. Not a single policy between 1970 and 2018 has been a net positive for the middle and lower class individuals. 

 

 

US Unemployment Rate

 

US Inflation Rate

[clutch]

I think Fed wanted to push the rates higher (perhaps irrespective of inflation) while they can so they could use rate cuts when things started to break... in the back of their mind, they probably knew that there'd be no soft landing and we'd have to face a recession.

 

Now because something actually broke earlier than anticipated, they are now in a messy situation.

 

 

[Gregmal]

10 minutes ago, Ross812 said:

@Gregmal what is the correct course of action? We have had a decade of ZIRP which resulted in hard equities and RE to inflate while goods, services, and average wages stayed put. Continuing ZIRP into the future isn't healthy and doesn't allow for loose monetary policy when things crash. Part of the reason we got the helicopter money in 2020/21 was because we started with low rates. If we had entered 2020 at 5-6% I would imagine we would have seen a far different outcome. The current hiking cycle should have stared in 2016 and certainly shouldn't have been abandoned in 2018/19.

 

We have had - 

13 years of ZIRP

Interest rates hiked then cut again in 18/19

A huge tax cut effectively stimulating the economy

Further rate cuts to 0 and helicopter money

A forced year of saving

 

Tax increases and rate increases are the way out, but the former is unpalatable so we are left with rate increases and tightening the money supply. What else can be done? 

-Raise to about 4-5% and hold. Especially in the absence of ANY real, current inflation of any substance.

-Eliminate this tunnel vision obsession with killing jobs.

-Stop acting like people who went a decade plus without material wage increases or job leverage now are the problem. IE if I say you will be safer if you avoid people in low income neighborhoods wearing hoodies past midnight you can all read between the lines in reference to what Im saying...but this guy keeps talking about services inflation and its like oh he just wants equilibrium LOL gtfoh

-Quit brandishing you obviously incorrect and useless "projections" as if theyre data dependent when clearly they are not(otherwise why, with a major decline in reported inflation and absence of real current inflation, are we still talking tough about more rate hikes?)

-wait and see?!?! This is the biggest one. You admit theres lags to all this....and then act like theyre supposed to work instantaneously? 

-Use IDK one of the thousands of economists at your disposal to figure out that forcing banks to hold the same sort of securities youre now purposely devaluing may at some point create problems?

 

 

[clutch]

@Gregmalas you alluded to earlier, they need to save their face from their earlier mistake when they waited too long on the "transitory" inflation. So, they probably didn't want to wait and see now in case they are called for not acting fast again. Again, their credibility is shot and a lot of their talks and actions are now more about restoring that credibility.

 

But the SVB event has flushed any of their remaining credibility down the toilet.

Edited March 14, 2023 by clutch

[Red Lion]

53 minutes ago, Castanza said:

 

That answer depends entirely on where you fall on the socio-economic ladder. You widen the wealth gap doing this because you force poor families to cut back more on spending and wage growth at the bottom of the ladder also stagnates. Both of these reduce savings (less income) and economic mobility (fewer job opportunities). 

 

Who isn't affected? Those in the upper class. The middle class is affected as well, but they generally can absorb it and have more mobility. In the end Your always fucking the poor. 

 

I'm not a fan of all the meddling personally. I think what you read in textbooks doesn't work in the real world as it's intended. Frankly I don't think anyone knows what the fuck they are doing when it comes to managing complex economic systems. It's just guess work and dick swinging. Not a single policy between 1970 and 2018 has been a net positive for the middle and lower class individuals. 

 

 

US Unemployment Rate

 

US Inflation Rate

Is it so bad to fuck the poor when the top 10% literally pays for all of the handouts that the poor survive on? Food stamps, section 8, Medicaid, welfare, discounted utility bills, SNAP, free college, etc? 
 

Our system is designed to fuck the rich and the poor just fuck themselves. There I said it. 

[Paarslaars]

Well the poor don't fuck themselves, genetics fuck them.

Being born with an IQ below 85 almost guarentees it... not really their fault.

[Gregmal]

All I can say is that we talk about this greater benevolence to the current scheme being perpetuated…but who’s collecting more interest? Who’s buying houses? Who’s having the debate about stocks vs bonds. Who’s waiting to “take advantage of the situation”? The logic is that 5% is totally unacceptable even though most wouldn’t be able to tell you the difference between 3 or 5 even if it was in their daily lives. Case in point is the people today still talking about energy prices. The low and middle income people today have a job market I couldn’t have imagined in my wildest dreams. It’s truly spectacular and guess who hired Jerry Powell to change that?

[Castanza]

6 minutes ago, RedLion said:

Is it so bad to fuck the poor when the top 10% literally pays for all of the handouts that the poor survive on? Food stamps, section 8, Medicaid, welfare, discounted utility bills, SNAP, free college, etc? 
 

Our system is designed to fuck the rich and the poor just fuck themselves. There I said it. 

 

Maybe the poor wouldn't need handouts if they weren't constantly getting fucked by the rich. I am against welfare and the expansion of it for 90% of people. But with all the meddling that has gone on for the past two decades and zero growth to show for it in terms of wages for the middle and lower middle class how can anyone continue to justify more economic planning? 

 

The rich get their cake, eat it, then just expand welfare to feel better about themselves. How many people making sub 50k a year were buying stocks the past two days? 

 

4 minutes ago, Paarslaars said:

Well the poor don't fuck themselves, genetics fuck them.

Being born with an IQ below 85 almost guarentees it... not really their fault.

 

I do agree that many poor "fuck themselves". I agree with the IQ statement and have said the same thing on this board before. It's a real problem. 10% of the pop has IQ below 83 and we also have a 10% poverty rate. Coincidence? I think not. 

 

@RedLion Say the Fed cuts 2-3m jobs. Whos jobs? It will be mom and pop shops, service industry jobs, construction jobs, labor jobs. So you can say the poor fuck themselves (I agree, a lot of them do). But they are also the primary ones who get fucked in situations like this. 

 

I think what pisses me off most is all of these policies lead to more corporatocracy. Same thing during Covid...who got shut down? Not the big guys. 

 

 

 

 

[Gregmal]

But hey, it’s easier for the C-suite to budget on an annual basis when multiplier is sub 1.05 LOL

[Red Lion]

13 minutes ago, Castanza said:

 

Maybe the poor wouldn't need handouts if they weren't constantly getting fucked by the rich. I am against welfare and the expansion of it for 90% of people. But with all the meddling that has gone on for the past two decades and zero growth to show for it in terms of wages for the middle and lower middle class how can anyone continue to justify more economic planning? 

 

The rich get their cake, eat it, then just expand welfare to feel better about themselves. How many people making sub 50k a year were buying stocks the past two days? 

 

 

I do agree that many poor "fuck themselves". I agree with the IQ statement and have said the same thing on this board before. It's a real problem. 10% of the pop has IQ below 83 and we also have a 10% poverty rate. Coincidence? I think not. 

 

@RedLion Say the Fed cuts 2-3m jobs. Whos jobs? It will be mom and pop shops, service industry jobs, construction jobs, labor jobs. So you can say the poor fuck themselves (I agree, a lot of them do). But they are also the primary ones who get fucked in situations like this. 

 

I think what pisses me off most is all of these policies lead to more corporatocracy. Same thing during Covid...who got shut down? Not the big guys. 

 

 

 

 

So far the fed seems to be hurting high paying tech jobs and we still have a huge number of unfilled low qualification jobs. 
 

As an anecdotal piece of evidence, my wife and I are both small business owners and it has been extraordinarily hard to find unskilled support staff ever since Covid, and wages are up 50%. 
 

I completely agree with your last statement and have noticed this myself. Covid was a a complete debacle that had permanently damaged our country and probably the whole world economy not to mention an entire generation of children. 

[mattee2264]

I don't see a financial crisis brewing. But at the very least deposit flight is going to make it harder for banks to lend and continue to tighten credit conditions to the detriment of the real economy. And I wouldn't be holding banks either as they'll have to raise deposit rates now reducing their net interest margins and they are also likely to face credit losses as we go into recession. 

 

What is annoying as hell is that across the board prices are around 20% higher since pre-COVID and prices aren't going to fall back down. So you can understand why the Fed is determined to establish its credibility and anchor inflation expectations even if they have to break a few things in the process. 

[Castanza]

6 minutes ago, RedLion said:

So far the fed seems to be hurting high paying tech jobs and we still have a huge number of unfilled low qualification jobs. 
 

As an anecdotal piece of evidence, my wife and I are both small business owners and it has been extraordinarily hard to find unskilled support staff ever since Covid, and wages are up 50%. 
 

I completely agree with your last statement and have noticed this myself. Covid was a a complete debacle that had permanently damaged our country and probably the whole world economy not to mention an entire generation of children. 

 

The difference is Joe who gets laid off from the local bus garage making $16/hr with decant benefits isn't going to be picking from 6 other bus garages paying similar wages. No, he's going to be looking at the local salvage yard, two men and a truck, or a shelf stocking job at Petco. 

 

All those tech people are getting laid off from over inflated positions with overinflated salaries. They will ALL land on their feet just fine. Most of them (if smart) should have a decent savings and be able to afford living expenses for a few months while they figure it out. And if they don't that's on them. 

 

Meanwhile Joe from the bus garage is three weeks into finding a new job. Probably has less than 5k in his bank account at any given time. Joe doesn't have enough money to relocate to a new area with more jobs. Joe is one car breakdown or dentist/doctor visit from his kid to having to max his credit cards or worse pull from his 401k to make a payment. 

 

Just like a business FCF is king. Rich people make decision to be levered to the gills. Poor people are leverage by default. All I'm saying is, there is a lot less flexibility for the lower class than there is for us. When we make a choice between going to a steak house or Chipotle, there is someone else making the choice of putting money into a new muffler or paying their kids Little League initiation fee. 

 

I can see both arguments. I don't envy Powell and his position as it's not easy (dare I say impossible) to balance all that. there will always be unintended consequences. 

[Spekulatius]

52 minutes ago, Castanza said:

 

Maybe the poor wouldn't need handouts if they weren't constantly getting fucked by the rich. I am against welfare and the expansion of it for 90% of people. But with all the meddling that has gone on for the past two decades and zero growth to show for it in terms of wages for the middle and lower middle class how can anyone continue to justify more economic planning? 

 

The rich get their cake, eat it, then just expand welfare to feel better about themselves. How many people making sub 50k a year were buying stocks the past two days? 

 

 

I do agree that many poor "fuck themselves". I agree with the IQ statement and have said the same thing on this board before. It's a real problem. 10% of the pop has IQ below 83 and we also have a 10% poverty rate. Coincidence? I think not. 

 

@RedLion Say the Fed cuts 2-3m jobs. Whos jobs? It will be mom and pop shops, service industry jobs, construction jobs, labor jobs. So you can say the poor fuck themselves (I agree, a lot of them do). But they are also the primary ones who get fucked in situations like this. 

 

I think what pisses me off most is all of these policies lead to more corporatocracy. Same thing during Covid...who got shut down? Not the big guys. 

 

 

 

 

So what fucks the poor (however you define it) more?

a) 5% unemployment and 2 % inflation or b) 5% inflation and 2% unemployment?

 

Quite frankly, it is not clear to me.

 

I think the middle class is fucked more by b).

Edited March 14, 2023 by Spekulatius

[Castanza]

15 minutes ago, Spekulatius said:

So what fucks the poor (however you define it) more?

a) 5% unemployment and 2 % inflation or b) 5% inflation and 2% unemployment?

 

Quite frankly, it is not clear to me.

 

I think the middle class is fucked more by b).

Id rather have a job and choose to cut back, drive less and spend less than not have a job and pay less when I have less money to spend in the first place

Edited March 14, 2023 by Castanza

[Paarslaars]

The middle class are always the ones being fucked...

 

The rich are in power and want to keep the poor class poor to scare the middle class so the latter spends most of their life working for the rich. The system works for them.  

[Gregmal]

14 minutes ago, Spekulatius said:

So what fucks the poor (however you define it) more?

a) 5% unemployment and 2 % inflation or b) 5% inflation and 2% unemployment?

 

Quite frankly, it is not clear to me.

 

I think the middle class is fucked more by b).

3% annual raises to account for inflation….with optionality for better work from a once in a lifetime job market….or roulette with your w2 and a scenario where you’d be lucky to land a rebound job? There’s 2% difference there maybe….and that s a big maybe because again…what’s currently inflating? If currently and going forward we have negligible inflation, then Jerry is making a massive mistake charging ahead with the tough guy routine regarding jobs. Today, right now, that inflation outlook to me seems way more realistic than the one where people just shout the cpi figure and demand action. 
 

We saw what the job market looked like at 5% unemployment, and it was nothing like it is today. I’d honestly be shocked if we ever see a job market as robust as it’s been the last 2 years again. 

[Gregmal]

16 minutes ago, Castanza said:

Id rather have a job and choose to cut back, drive less and spend less than not have a job and pay less when I have less money to lane din the first place

Yup. Folks are acting like they are getting screwed…and it’s just not true. They have choices. Dealing with inflation even if it’s 5% Isn’t tough. 

[mattee2264]

The average might be 5%. But the stuff like matters like food, rent etc is up way more than 5%. I'd say 20-30% over the last few years. 

[Dinar]

23 minutes ago, Paarslaars said:

The middle class are always the ones being fucked...

 

The rich are in power and want to keep the poor class poor to scare the middle class so the latter spends most of their life working for the rich. The system works for them.  

Just because you want the poor to stay poor does not mean the rest of us want to!  I would be delighted if everyone around me prospered.  

[SHDL]

Let me throw in a scary looking figure to get you folks excited:

 

 

[Spekulatius]

3 hours ago, SHDL said:

 

Has the Fed ever actually said that?

I don’t think so. This would be quite a statement actually. I don't recall them  putting out hard numbers on housing valuation.

[Gregmal]

13 minutes ago, SHDL said:

Let me throw in a scary looking figure to get you folks excited:

 

 

He’s not wrong. This guy Jerry is utterly clueless and looking at data fed to him by people with an agenda. In what world is there still meaningful inflation? Not this one. As Mattee said, stuff is up 20-30% from pre COVID. It’s not coming down barring a disaster. But it’s done going up. Everyone just needs to get with reality and wake the F up. I mean even oil which is like fundamentally built to be ripping into the stratosphere price was…cant. Things are fine and they need to stop fucking with things or it’s gonna be bad for the majority of the country. One day there will actually be a post mortem and it’s gonna go something like “they had the most robust jobs market and economy we d seen in ages and a bunch of academics and hedge fund managers convinced delirious old guys at the federal reserve we were on the verge of hyper inflation so they killed it”. 

Edited March 14, 2023 by Gregmal

[vinod1]

It is said that the last refuge of scoundrels' in patriotism. 

 

I find the last refuge of underperforming investment managers/investors is blaming the fed. Low rates, fed is enriching the rich. High rates, fed is hurting the poor. 

 

The fed did get a few things wrong. Some of their choices are a bit baffling, but not entirely so if you can just try to think from their point of view.  I think they are doing a wonderful job. Perhaps the best of any government institution in USA. 

[Gregmal]

5 minutes ago, TwoCitiesCapital said:

 

Oil prices are down big since the post-war spike, but are largely flat outside of that. That's despite drawing down the SPR by more than 200+ days of marginal supply for U.S. demand. That's a ton of marginal supply in what has been less than a calendar year. 

 

Oil would likely be significantly higher if not for the SPR release and will likely trend higher when those releases stop and demand works its magic on diminished supply. 

So you’d agree that short term supply and demand imbalances or interference can create a situation that may not be what it appears? 
 

Either way I am bullish long term on oil and besides Short Selling Joe said he’d replenish the SPR at $70 so nice trade Mr President…but I just get a kick out of hearing about all this nonexistent inflation and the one thing that’s known to ooze sensitivity to inflation…oil, year over year is at like $72 from $125….which by itself is quite the confirmation that last years price spike which so many pointed to as proof of the sticky inflation, was also not indicative of reality. 

Edited March 14, 2023 by Gregmal

[SHDL]

30 minutes ago, Gregmal said:

He’s not wrong. This guy Jerry is utterly clueless and looking at data fed to him by people with an agenda. In what world is there still meaningful inflation? Not this one. As Mattee said, stuff is up 20-30% from pre COVID. It’s not coming down barring a disaster. But it’s done going up. Everyone just needs to get with reality and wake the F up. I mean even oil which is like fundamentally built to be ripping into the stratosphere price was…cant. Things are fine and they need to stop fucking with things or it’s gonna be bad for the majority of the country. One day there will actually be a post mortem and it’s gonna go something like “they had the most robust jobs market and economy we d seen in ages and a bunch of academics and hedge fund managers convinced delirious old guys at the federal reserve we were on the verge of hyper inflation so they killed it”. 

 

They'll probably pause the hikes soon if not at the next meeting. They have a perfectly good excuse to do so now that they've thrown a big wrench in the banking system which should tighten credit by a lot for a while. The big question is whether they have already overdone it or not.