Is The Bottom Almost Here?

[aws]

7 minutes ago, Sinbius said:

Dont' worry about inflation...we have a plan!!!

 

Relief checks: At least 20 states are sending cash to their residents this year — and more could be coming (yahoo.com)

 

Can someone explain it?...I don't get it...

 

States need to maintain balanced budgets, unlike the federal government, so when they do these it's more like returning money to residents and not printing money.

[Ross812]

10 minutes ago, Sinbius said:

Dont' worry about inflation...we have a plan!!!

 

Relief checks: At least 20 states are sending cash to their residents this year — and more could be coming (yahoo.com)

 

Can someone explain it?...I don't get it...

 

States have to balance their budget and can't print. So residents are choosing what to spend money on instead of the state I guess? Almost like when and insurance company gives back a residual.

[Sinbius]

15 minutes ago, aws said:

 

States need to maintain balanced budgets, unlike the federal government, so when they do these it's more like returning money to residents and not printing money.

Thank you for the info ^^ ...not as bad as i thought...still skeptical on this kind of redistributions of wealth... (my reference ideas on economics is mainly the book Henry Hazlitt: economics in one lesson...it could be wrong or partially wrong but it really makes sense to me...)

 

 

Edited July 13, 2022 by Sinbius

[Gregmal]

Isnt kind of funny how obsessed people are with the CPI and "inflation running hot theme", within the context of, 1) why are you concerned with what LAST months figures looked like compared to LAST years figure in term of what it means TODAY? and 2) most of those people would have a hard time naming one or two things that have actually gone up recently! I asked one of my stock broker friends if they can name one thing, anything thats gone up in the past month and he had to sit there and think for a while before jokingly stating he cant even get his dick up in this environment.

 

This is actually a good example of why long term investing can be so easy. EVERYONE is consumed with the topic of the month which is really kind of irrelevant to pretty much everything meaningful right now. You cant have inflation if EVERYTHING is headed south, which it currently is. I mean the action on the 10 year and even the indexes today speaks volumes. Piker head fake for the win. 

[Ulti]

Bottom is in TODAY.

https://finance.yahoo.com/news/july-13th-bottom-why-jim-151800689.html?.tsrc=fin-srch

 

HAHA

 

[Gregmal]

4 minutes ago, Ulti said:

Bottom is in TODAY.

https://finance.yahoo.com/news/july-13th-bottom-why-jim-151800689.html?.tsrc=fin-srch

 

HAHA

 

Ugh now I’m feeling much less good. Cramer macro calls almost always mean we re in for a good 2-5% drop in the relatively short order. Not that I’d let that deter me from investing but whenever he’s sure of something the only sure thing is he’s wrong. 

[Spekulatius]

4 hours ago, Gregmal said:

Yup. They’re probably do one more 75, maybe another 50 hike and then it’s a job well done. Last week someone asked me why we re so laser focused on the inflation reports when they tell us what happened LAST month and I just shrugged. Anyone with eyes can see what’s happened recently on prices of just about everything. It’s funny watching the 10 year though. Recession. Inflation. Recession. Inflation! Red light. Green light. Fed light. The brokerages must love this. 

It's possible, but I think the Fed may have to do more. My guess is we have seen the peak in CPI but the sticky components (or core inflation) may not back down. That could be  a disaster too.

 

Just check the 70's if you think that's the playbook. Inflation was not consistently high - it varied quite a but, but tended to surprise people on the upside and that's not a good thing.

 

Just putting it out there. I don't think I am smart enough to predict what is going to happen.

[Gregmal]

9 minutes ago, Spekulatius said:

It's possible, but I think the Fed may have to do more. My guess is we have seen the peak in CPI but the sticky components (or core inflation) may not back down. That could be  a disaster too.

 

Just check the 70's if you think that's the playbook. Inflation was not consistently high - it varied quite a but, but tended to surprise people on the upside and that's not a good thing.

 

Just putting it out there. I don't think I am smart enough to predict what is going to happen.

I honestly haven’t looked but isn’t core inflation stuff like car prices? Whether by slowing demand or commodity input cost reduction, hard to see how that doesn’t get straightened out. I think it already has. The numbers are y/y which I think are meaningless. 

[Gregmal]

And…while maybe jumping the gun, for those who have followed my COVID flow of money theory, and the tell tale pump and dump looking chart that has hit virtually everything just in different phases, that 10 year chart is starting to…..

[nafregnum]

Interesting detail I heard this morning about inventory levels and discounting that's upcoming.  Animal Spirits podcast today mentioned that some liquidator companies are picking up container deliveries directly instead of having those products flow through their intended retailers first -- that kind of seems like a bullish indicator for stores like TJ Maxx and Ross, but it also seems like there'll be some better than usual deals on appliances and such in another month or two, and Black Friday -- and that may push inflation down a little more as well.

[boilermaker75]

1 hour ago, Gregmal said:

 I asked one of my stock broker friends if they can name one thing, anything thats gone up in the past month

 

I noticed one thing this week. I have been going to ATMs since they first existed. They have always spit out twentys. I went this past weekend and my $200 was given to me as four $50 bills! Not a higher price on a thing, but my first thought was $50s are the new $20s.

[Sinbius]

1 hour ago, Gregmal said:

Isnt kind of funny how obsessed people are with the CPI and "inflation running hot theme", within the context of, 1) why are you concerned with what LAST months figures looked like compared to LAST years figure in term of what it means TODAY? and 2) most of those people would have a hard time naming one or two things that have actually gone up recently! I asked one of my stock broker friends if they can name one thing, anything thats gone up in the past month and he had to sit there and think for a while before jokingly stating he cant even get his dick up in this environment.

 

This is actually a good example of why long term investing can be so easy. EVERYONE is consumed with the topic of the month which is really kind of irrelevant to pretty much everything meaningful right now. You cant have inflation if EVERYTHING is headed south, which it currently is. I mean the action on the 10 year and even the indexes today speaks volumes. Piker head fake for the win. 

Trying to understand your point of view better...

 

Are you of the idea that inflation is going lower AND it will keep going lower next months too until reach something around 2-3%?

And you think it is going down because supply is reaching demand or because demand is getting lower and will keep getting lower (recession)?

 

[LearningMachine]

I think we shouldn't ignore the probability of inflationary psychology setting in.  Here is a commentary from someone's point of view: https://www.barrons.com/articles/inflation-consumer-prices-sentiment-51649268928 .  You could choose to decide that the author is not credible, but I think it is still worth a read. 

 

 

Inflation may not happen in each category every month.  Even if it is "episodic" in Munger's words, i.e. happens in spurts here and there, it is still inflation. 

 

I'm seeing inflation all around, and I'm seeing my own behavior change to be less price-sensitive because my neural net sees money losing its value right in front of it.  For example, take lawn mowing.  Before covid, you could pay someone $100 to get it done. Now, you get multiple bids over $600, and then folks ask for more after they start the work.  Subway prices are about double at least at some locations.  I don't pay attention to prices month-to-month, but when I notice a change in prices pre-covid and post-covid, it changes my behavior going forward. 

 

How do you change people's psychology to not ask for more, and to not be willing to pay more?  Labor supply has to exceed demand by a lot, and that will take a recession.  

 

In 1980s, we had someone like Paul Volcker who was willing to cause a recession.  Listen to Powell's words - he wants to just close the gap in vacancies and people.  I don't think Powell and either party wants to cause a recession this time.  In 1970s also, I presume both parties were trying to avoid severe recession, and then we got lucky to get someone like Volcker.  This time, don't know how long it would take to get someone like Volcker.

 

I'm not saying for sure that inflation will continue, but I think we will be too naive to ignore the probability that inflation continues. 

Edited July 13, 2022 by LearningMachine

[Spekulatius]

58 minutes ago, Gregmal said:

I honestly haven’t looked but isn’t core inflation stuff like car prices? Whether by slowing demand or commodity input cost reduction, hard to see how that doesn’t get straightened out. I think it already has. The numbers are y/y which I think are meaningless. 

Core inflation does contain inflation, rents, lot's of services etc.

 

Let's play the guessing game - assume inflation cools off, but core inflation sticks around at 5-6% the remainder of this year. Bullish or bearish? I think it's the latter. What is the Fed is going to do in this case?

Edited July 13, 2022 by Spekulatius

[Gregmal]

39 minutes ago, Sinbius said:

Trying to understand your point of view better...

 

Are you of the idea that inflation is going lower AND it will keep going lower next months too until reach something around 2-3%?

And you think it is going down because supply is reaching demand or because demand is getting lower and will keep getting lower (recession)?

 

I am currently of the belief that prices have peaked and that a combination of supply chain and production normalization plus some demand destruction accomplishes that. CPI to me is useless and not worth following. Last year was what? 4% when real world was like 15–20%. It’s all a joke and eventually even the Fed will see you can’t have everything going down and claim there’s inflation because of last years stuff. I’m fact, it’s this exact backwards looking approach that lead them to be so horribly wrong on last years “transitory” conclusion.

[LearningMachine]

10 minutes ago, Spekulatius said:

Core inflation does contain inflation, rents, lot's of services etc.

 

Let's play the guessing game - assume inflation cools off, but core inflation sticks around at 5-6% the remainder of this year. Bullish or bearish? I think it's the latter. What is the Fed is going to do in this case?

 

Bulish or bearish: it will depend on the company and valuation at the time. 

 

If unemployment starts to go up, I think Fed is going to stop raising interest rates, let inflation continue, and if inflation accelerates too much again, get back to raising rates, i.e. continue playing catchup without getting inflation in control like in 1970s, because until the pain from inflation is so long and heavy that people want to get rid of inflation while bearing high unemployment, we may not get someone like Volcker. 

[Sinbius]

12 minutes ago, Gregmal said:

I am currently of the belief that prices have peaked and that a combination of supply chain and production normalization plus some demand destruction accomplishes that. CPI to me is useless and not worth following. Last year was what? 4% when real world was like 15–20%. It’s all a joke and eventually even the Fed will see you can’t have everything going down and claim there’s inflation because of last years stuff. I’m fact, it’s this exact backwards looking approach that lead them to be so horribly wrong on last years “transitory” conclusion.

Thank you for the clarification.

[Xerxes]

3 hours ago, Gregmal said:

Isnt kind of funny how obsessed people are with the CPI and "inflation running hot theme", within the context of, 1) why are you concerned with what LAST months figures looked like compared to LAST years figure in term of what it means TODAY? and 2) most of those people would have a hard time naming one or two things that have actually gone up recently! I asked one of my stock broker friends if they can name one thing, anything thats gone up in the past month and he had to sit there and think for a while before jokingly stating he cant even get his dick up in this environment.

 

This is actually a good example of why long term investing can be so easy. EVERYONE is consumed with the topic of the month which is really kind of irrelevant to pretty much everything meaningful right now. You cant have inflation if EVERYTHING is headed south, which it currently is. I mean the action on the 10 year and even the indexes today speaks volumes. Piker head fake for the win. 

in 2014-15, the obsession was about the Baker-Hughes measure of rig count. 
 

market locks in on one thing every now and then and gets obsessed about it 

[crs223]

2 hours ago, Gregmal said:

I am currently of the belief that prices have peaked

 

CPI to me is useless and not worth following.

 

Which prices do you believe have peaked?  I assume you're not talking about CPI... or North Florida real estate!

[Castanza]

8 hours ago, Sinbius said:

Thank you for the info ^^ ...not as bad as i thought...still skeptical on this kind of redistributions of wealth... (my reference ideas on economics is mainly the book Henry Hazlitt: economics in one lesson...it could be wrong or partially wrong but it really makes sense to me...)

 

 

Agreed, would be better if they didn’t take it in the first place. 

[Gregmal]

10 minutes ago, crs223 said:

 

Which prices do you believe have peaked?  I assume you're not talking about CPI... or North Florida real estate!

The big ones to me are the commodity stuff. That impacts virtually everything. Steel, lumber, I mentioned wheat. Even energy now coming in. Think about how all those things through a derivative relationship, impact things like auto, housing, food. That’s why writing was on the wall last year. 
 

Side note is it’s funny how the Fed may be focused on how expensive the shelter element of CPI is, ain’t they the ones making mortgage and rental payments more expensive? Housing gets solved by building more, same as always. When the inputs come back to earth and are readily available, so will prices. I wouldn’t expect that to result in a huge drop, but simple more and better options for homebuyers. A lot of where the bear argument falls flat for housing is seeing price cuts. 75% of the listings I see in Florida are price drops? But if you know the area you see through the shallow “housing is faltering” conclusion from people who don’t know any better, you’d see it’s because all the quality stuff is gone. Or gets listed and sold. The result is there’s a low inventory massively populated with overpriced junk, and sellers know this. A nice new build in a good community sells. A 30 year old crapper in a second rate area isn’t worth triple the precovid but that doesn’t stop people from listing it for that. The market is currently flooded with the later. Facilitating building will help with the former.

[Gregmal]

25 minutes ago, crs223 said:

 

Which prices do you believe have peaked?  I assume you're not talking about CPI... or North Florida real estate!

And obviously supply chain clearing up. Hi Target and co. Most of those inventory issues once the demand is fixed it’s over. Once ford can get heck to normal production it’ll be impossible for have a widespread car shortage again. 

[Gregmal]

Recall we live in a world where within a 6-12 month period the majority of people thought zoom and peloton were hundred billion dollar companies of the future. Where no one would ever go to a mall again. Now this year it’s apparently cars will appreciate forever and 2x4s can’t be overproduced. I don’t know why I seem to be immune to falling for this crap, but if you remove yourself from the moment and put it back into historical context it’s really easy to see. 
 

Everything within its moment in the sun seems more important and sustainable than it really is. 

Edited July 13, 2022 by Gregmal

[Parsad]

1 hour ago, Gregmal said:

Recall we live in a world where within a 6-12 month period the majority of people thought zoom and peloton were hundred billion dollar companies of the future. Where no one would ever go to a mall again. Now this year it’s apparently cars will appreciate forever and 2x4s can’t be overproduced. I don’t know why I seem to be immune to falling for this crap, but if you remove yourself from the moment and put it back into historical context it’s really easy to see. 
 

Everything within its moment in the sun seems more important and sustainable than it really is. 

 

I disagree with you on Zoom...certainly not $100B, but it is one of the few millennial stocks with some legs, no debt and real profits.  I think it will get to a certain size and competitors will say easier just to take it out.  

 

Cheers!

[Guest]

I hope we keep dropping and people hate the stock market again.