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Tickerguy 188k posts, incept 2007-06-26
2022-09-20 10:16:54

Yep.

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NASA faked out a computer instead of running the test.
Then tried to launch and aborted instead of going "BOOOM!"
Did they abort the JABS after faking THOSE tests?
Shadowmask 4k posts, incept 2021-05-24
2022-09-20 10:27:41

Because of my age, I've always assumed I'd never retire. So like @boredfree and others, living way below paycheck and saving is the best option. Mandatory retirement 101k won't be worth the paper the statement is printed on when it can be withdrawn without penalty.

Someone upthread mentioned downsizing. Good luck finding a house. Most downsized houses are in the ghetto plus you're competing against GenX and Millennials for what's not. The new construction is McMansions, no help there.

smiley
Thethinman 59 posts, incept 2017-11-08
2022-09-20 10:28:01

Tickerguy Quote:
You just shoved the slavery "over there"

This morning from Germany, PPI has accelerated to 45.8% in Aug YoY from 37.2% in Jul, highest price increase ever since start of statistic in 1949.
Wait for it.......
Dwva68 13 posts, incept 2022-03-27
2022-09-20 10:29:19

"Reynolds-wrapped nonsense". Love it!
N9lhm 123 posts, incept 2010-01-28
2022-09-20 10:29:25

Thanks Karl for the real-world economics lesson. Like most people, I assumed the opposite was true, that the Fed controlled the rates and the market and economy responded. It's impossible to argue with that graph.
Tickerguy 188k posts, incept 2007-06-26
2022-09-20 10:31:33

EVERY SINGLE ONE of the "End The Fed" screamers flatly-ignores this fact. All of them.

I've dressed down more than a few over the years and this is why.

The reason THEY do it is because it means they don't have to go after Congress, which is where the problem actually lives, and attack THEM. You see, making an example out of a few of them would actually fix it, but also would shut off their gravy train, so...... yeah.

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NASA faked out a computer instead of running the test.
Then tried to launch and aborted instead of going "BOOOM!"
Did they abort the JABS after faking THOSE tests?
Nashville 101 posts, incept 2018-02-27
2022-09-20 10:38:34

This Ticker is great in illustrating the FED usually follows the market, but the FED also has privileged data a few weeks before the rest of the world. Their plan being to raise rates - plus QT till markets cry "uncle". But I think they also realize they may have a very short window of time to accomplish this feat?

QT - selling bonds in a rising rate environment means they must show their losses on paper. Rather than holding issues at some fantasy value on their books. If they allow this situation to play out for too long, will they not have losses which can not simply be papered over? More deficit spending to accommodate, bonds to sell, losses to take. Dwindling "profits" to remit to the Treasury each year? Each day that passes, more short term issues turnover at ever higher rates.

It would seem to me they must accelerate their work to effect the "kill shot" sooner - rather than later. Getting ahead of the curve with more drastic rate changes that will convey their seriousness. Timing is everything but they are perhaps feeling hamstrung due to upcoming elections. No? So might they wait to crush Christmas or deflate New Year exuberance? Springtime to delfate RE markets. Never a good time to take the medicine.
Greenrebellion 833 posts, incept 2009-01-03
2022-09-20 10:49:38

Long term rates starting to get kinda nasty too. 10 year yields highest since 2011. That chart is ugly.
Voyager 89 posts, incept 2021-12-02
2022-09-20 10:49:42

I wonder what the typical lag and range of lag is?

It seems like, if the Fed is always behind the curve, it would be interesting to know if they are behind by a consistent degree, or if it is very variable, and if so, how variable it might be?

Might be a useful rule of thumb to gauge how bad things are going to get. I'd assume a low lag, highly responsive Fed would tend to stabilize things faster, while a laggy, late to the scene Fed would probably correlate with major problems?

I also find myself wondering how high up the "Arc of History" delusionals have gotten in the fed, and how much that may impact responsiveness? I know there is a non-trivial portion of the younger generations who are certain that the Arc of History has ensured their victory, but I've only just realized that and have not had time to investigate just how widespread and how old the mentality goes.
Workerbee23 135 posts, incept 2021-09-15
2022-09-20 10:59:37

@Boredfree

Yep. Shopping at Goodwill is one of my favorite pastimes. As I'm living close to a resort area, the finds can be great. Gently used jackets, the occasional cashmere sweater, household goods (amazing how people give away canning jars!) Barely used candles, cooking utensils, etc.

A friend turned me on to a website for local estate sales. I will be checking those out for tools and believe it or not, cleaning supplies. My parents are boomers and years ago my Dad worked in construction and woodworking. Their garage is full of saws and other tools just sitting around. My husband has been given free range to take what he likes and even some of the fishing gear that is getting dusty in a corner. Since we currently live on a lake, the gear will come in handy.

Waste not, want not!
Boredfree 660 posts, incept 2021-09-15
2022-09-20 11:20:49

I've learned a lot from this ticker, and the comments.

Or, should I say, unlearned a lot of bullshit I've read over the years.

Thanks!

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The problem is most people want to point a finger rather than their thumb when dealing with challenges.
Joedirt11 44 posts, incept 2022-07-08
2022-09-20 12:05:38

@Boredfree, "My retirement plan has been to work until I die, which might sound horrible to some if you, but is the best way I know of staying mentally and physically healthy".

This is so true. Living here in deaths waiting room (FL) I see this all the time. Newly retired move here. Some stay busy exercising and golfing and fishing and some stay inside watching TV and on the computer eating HoHO's. The ones doing nothing typically have an ambulance call in two to three years. I am fortunate I love what I do and will be able to do it for a long time.

My wife and I purchased the home we live in May of 2019. It is now worth more than double what we paid for it. I would sell but my wife loves it here and I don't know where else to go. Even if the market crashes by 50% we are still way ahead and if we don't see some inventory come to the market I believe the value is going higher. At some point though, the cash buyers will dry up. I have no idea when that will happen but I suspect by 2024.

Even with rates rising the pending sales are outpacing new listings again. I live in an area that is maybe not representative of most of the country so take this with a grain of salt. That said, I am seeing cracks in the market. The national builders are bringing back buyer and Realtor incentives. The last two years Lennar reduced Realtor commissions to 1%. Needless to say I didn't go near a Lennar community. They will be paying 4% again soon and I will still steer clear of the greedy fucks there as much as possible.
Tdurden 1k posts, incept 2015-01-29
2022-09-20 12:06:42

Re: Trade sequestration: how much of the inflation today are we seeing as a direct result of that unwind? Has the Fat Lady already sung or is that bitch just warming up before the show?

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"I'd like to live just long enough to be there when they cut off your head and stick it on a pike as a warning to the next 10 generations that some favors come with too high of a price." -Vir Cotto Ba
Jesjohn94 803 posts, incept 2019-05-07
2022-09-20 12:06:47

It will be interesting to see what happens to the $. It is very strong which is helping with domestic inflation numbers. I'm sure a good part of that is due to expected interest rate increases but other countries are raising too. The strong USA economy with interest rates increasing must also be a big part of that $ strength. I don't see how we avoid a recession. Will the $ stay as strong once that happens?
Rollformer 2k posts, incept 2013-02-13
2022-09-20 12:06:53

I seem to remember doing some research a few years ago. Looked like the cumulative trade deficit since about 1971 equaled the change in foreign central bank holdings of Treasuries. I think this is the sequestration effect you speak of?

Now, those dollars are coming back to buy stuff, or at least they won't be accumulated. It's funny that people complain about "twin deficits", but it was the trade deficit that financed a whole hell of a lot of the fiscal deficits.

The other thought I have had, is could the increasing interest rates stoke inflation? With the leverage in the system, could over-levered companies try to make up for rising debt service by raising prices? Of course, if the consumer cannot pay, the point is moot.
Checkthisout 327 posts, incept 2010-10-01
2022-09-20 12:11:06

I have a choice on an upcoming RE investment. Fix and flip or keep as a rental. I'm going with the flip. Although the current cap rate is strong, once all these rate hikes make their way through the system I foresee rents falling and the property depreciating, ruining the cap rate. As this would be a long term rental investment property, I'll take the cash now and save it for future investment.

I just have to get it sold fast enough so I don't catch that falling knife

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There are no gun free zones where free men tread.
Tdurden 1k posts, incept 2015-01-29
2022-09-20 12:11:20

Workerbee23, Boredfree: I've made a not insignificant amount of money the past 2 years rescuing old tech from estate sales and to a lessor extent, thrift stores. I near mint condition Apple eMac I picked up for $1 and sold for $100. The old Hams are dying off so their collections of old radios and vacuum tubes and antique electronic test equipment. More recently I'm in competition with people like me, but a lot of this stuff would have gone into the landfill because people didn't know what dad/grandpa really had or how to refurb and sell it. I've managed to put back some choice pieces for my personal collection like a Westinghouse RA-DA re-gen radio and some old Zeniths.

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"I'd like to live just long enough to be there when they cut off your head and stick it on a pike as a warning to the next 10 generations that some favors come with too high of a price." -Vir Cotto Ba
Tickerguy 188k posts, incept 2007-06-26
2022-09-20 12:10:56

@Tdurden - There has been almost-no unwind, but what you've seen thus far is simply the impact of the increase in level stopping.

Consider how this actually works.

I make something in Timbuckfuck. You want to buy it in America. Ok, I have to get paid. You pay me in dollars, which I take because America is more-stable politically and from a currency point of view than my country, therefore it is a "free" benefit.

I deliver, you pay, all's good. I then use those dollars to buy more materials and the cycle repeats. This is thought of as "no big deal" because the cycle repeats (I spend the dollars to get more materials) and that's true except for one thing: The volume of international trade generally rises over time, therefore the amount sequestered at any individual point tends to rise over time too.

Ok, now you sanction Russia. Suddenly all those people who took dollars and have them for things "in the pipe" no longer view that as safe, as you might confiscate the money. NOW I demand paying in Timfuckbucks. Sequestration goes to zero. What WAS sequestered takes quite a while to come back out, but no NEW sequestration takes place.

NOW any credit emission by Congress shows up immediately in prices, where before it did not, and might not show up at all! Now it does.

Oops.

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NASA faked out a computer instead of running the test.
Then tried to launch and aborted instead of going "BOOOM!"
Did they abort the JABS after faking THOSE tests?
Dbigkahunna 382 posts, incept 2010-01-10
2022-09-20 12:17:37

Have a friend who built and financed a $750,000 home. Pretty high end for this part of the world. But in a development of 18 homes. His interest rate is 3.9% for 30 years. Got this last year.
Only question is, who is he going to sell it to? As well as his neighbors.
Things are good in the oilfield right now, but what happens when it bust?
And all the other people who have low rate mortgages, is there enough $$$ for somebody to purchase your house, at what you paid for it, at 6 or 7% interest?

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Blessed, Grateful and Living a Dream
Clay3482 2k posts, incept 2008-11-13
2022-09-20 12:20:41

Yes the market leads and the fed follows.

As far as speed and when? Every day we have QT and not QE a little more debt is paid off, rolls off or it is defaulted on. In a leveraged environment that is compounded by the leveraged asset disappearing. That means less dollars. which mean the dollar goes higher.

All of that puts huge stress on foreign markets, like China, India, Russia, Europe, 3rd world countries etc etc. That makes food, energy, life more expensive. We are just now working through what was happening 18 months ago. NONE of the current cost inputs at the PPI level have showed up yet. All of them start to show up through 2023 and 2024.

That will cause less dollars, and more dollar strength which will cause more pain for the rest of the world.

Hyperinflation has already happened - from De-Gaul wanting gold from the US in the 70's until Feb 2022. Now we get the deflation.
Tdurden 1k posts, incept 2015-01-29
2022-09-20 12:32:13

Got it. Or for a more dramatic explanation:

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"I'd like to live just long enough to be there when they cut off your head and stick it on a pike as a warning to the next 10 generations that some favors come with too high of a price." -Vir Cotto Ba

Reason: Fix formatting
Abelardlindsey 1k posts, incept 2021-03-26
2022-09-20 12:44:00

@Nashville

Quote:
We know we need to move and downsize, and may have missed the R.E. peak but inertia keeps us here - for now.


Presumably after living in it for 34 years, I would assume your mortgage was paid off long ago. If so, why do you need to "downsize"? I would just stay put and enjoy the room of a big house. Perhaps your neighborhood is going to hell in a hand basket.

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It's all in the mitochondria.

"It's the future, and...you're not."
Abelardlindsey 1k posts, incept 2021-03-26
2022-09-20 12:57:04

How did this trade sequestration thing work with regards to controlling inflation over the past 25 years? Was it just the dominance of the US Dollar as the reserve currency?

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It's all in the mitochondria.

"It's the future, and...you're not."
Tickerguy 188k posts, incept 2007-06-26
2022-09-20 12:59:33

It has nothing to do with "reserve anything" @Ableardlindsey; that's just more bullshit.

It is simple mechanistic reality -- a firm making a thing for export has to get paid for it somehow. The two obvious choices are the currency of the seller and that of the buyer. The seller decides, and they will choose the more-stable of the two since they have to fund the acquisition of materials for the next sale.

Sanctioning some tin-pot dictator's crap doesn't change anything in terms of balance, because that instills no fear the supplier is next.

Sanction some big nation that's real and material, well......that changes a LOT.

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NASA faked out a computer instead of running the test.
Then tried to launch and aborted instead of going "BOOOM!"
Did they abort the JABS after faking THOSE tests?
Abelardlindsey 1k posts, incept 2021-03-26
2022-09-20 13:20:01

Got it.

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It's all in the mitochondria.

"It's the future, and...you're not."
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