10-09-2022, 01:07 PM | #7284 |
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10-11-2022, 01:37 AM | #7285 | |
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The last thing I want is to have to liquidate a bunch of assets to fund the first few years of my retirement. My cash flow requirements in retirement are going to be significant for a while and de-risking right now makes a lot of sense for us. My sons, in their 20's? I tell 'em not to look at their statements and just keep piling the money in. Totally different for them. |
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10-13-2022, 01:55 PM | #7288 |
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10-13-2022, 03:43 PM | #7289 |
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10-13-2022, 04:27 PM | #7290 | |
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Part of today's action was driven by the S&P touching of 3500. That triggered the selling of a lot of hedges and the resulting cash being reinvested then drove the market back up. It looks like we may be in for another short-term rally, since not even a hotter-than-expected inflation report could scare people off today. But there's no way this is the bottom, IMHO. Inflation is still high, too many people have jobs, and people haven't figured out how bad earnings are going to get in the coming recession. How long will this latest bear market rally last? It could be over tomorrow, since it's the start of earnings season. All will depend on the earnings, since P = M * E. M's already come down because higher interest rates create a higher discount on future earnings. If there's going to be another 5-10% leg down, it'll be due to earnings coming down. We'll see. |
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10-13-2022, 08:05 PM | #7291 |
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10-13-2022, 08:07 PM | #7292 | ||
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10-13-2022, 08:19 PM | #7293 | |
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I'm just trying to think outside the box |
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10-13-2022, 08:28 PM | #7294 | ||
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"Another large jump in food prices boosted the headline number. The food index rose 0.8% for the month, the same as August, and was up 11.2% from a year ago. That increase helped offset a 2.1% decline in energy prices that included a 4.9% drop in gasoline. Energy prices have moved higher in October, with the price of regular gasoline at the pump nearly 20 cents higher than a month ago, according to AAA. Closely watched shelter costs, which make up about one-third of CPI, rose 0.7% and are up 6.6% from a year ago. Transportation services also showed a big bump, increasing 1.9% on the month and 14.6% on an annual basis. Medical care services costs rose 1% in September." CNBC I would disagree that fed can't impact housing, if they hike enough it will translate, but it tends to lag more |
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10-13-2022, 08:41 PM | #7295 | |
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10-13-2022, 09:08 PM | #7296 | ||
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As one of the Fed's mandated objectives, price stability itself is an end, or goal, of policy. Fundamentally, price stability preserves the integrity and purchasing power of the nation's money. When prices are stable, people can hold money for transactions and other purposes without having to worry that inflation will eat away at the real value of their money balances. Equally important, stable prices allow people to rely on the dollar as a measure of value when making long-term contracts, engaging in long-term planning, or borrowing or lending for long periods. |
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10-13-2022, 09:15 PM | #7297 | |
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10-13-2022, 09:43 PM | #7298 | |
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Mortgage interest rates have more than doubled in a year. That is a big shock and it's put a halt to the bidding wars and %5-over-asking offers we were seeing just last fall. Prices have started to drop a little, but it will be a while before that merd really hits the fan. That'll happen when people have to sell b/c they are moving to take a new job, or they can't afford the mortgage b/c they lost one, or some other circumstance that makes them desperate to sell. The pool of potential buyers at last year's price has shrunk dramatically, so prices will have to come down to the buyer's ability to pay. Plus, the fed is taking $90 Billion a month out of the economy now (called Quantitative Tightening or QT). That is going to further tighten credit availabilty for everyone. Builders need loans to buy land, materials, pay laborers, etc., in order to build new homes. Even municipalities will be affected, as they typically issue bonds for improvements such as the new roads, sewers, schools, etc., that are needed for new housing development. All will be paying more to borrow, and will likely borrow less, which will slow the economy and reduce demand in a broad context. Frankly it's the QT that worries me more than the interest rates. That has a tendency to cause these "Lehman moments", when hidden credit risks and complex cross-party leveraged positions suddenly become untenable and major portions of the economy threaten to cease functioning, literally overnight, without intervention from a Central Bank. That's what happened in the UK, and something like it could certainly happen here. It's why I'm not 100% in cash. If the Fed really breaks something and has to turn around and start pumping liquidity into the economy again, the markets are going to rally big in moments, and I don't want to miss it. Well, not all of it, anyway. |
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10-13-2022, 09:44 PM | #7299 |
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Let's talk about the housing market. It's tight for reasons of underbuilding since the GFC.
The past two years of unusual behavior in every way, shape and form, doesn't change the fact that the housing market is underbuilt. Raising interest rates to the heavens won't change the fact that the housing market is underbuilt. Summary: underlying demand for housing is strong enough to withstand significant interest rate increases, due to underbuilding since the GFC. So the Fed would be in error to attempt to reduce housing demand by raising interest rates. Higher interest rates will blunt housing demand from speculators, and a small number of non-speculative but discretionary buyers. It will not change fundamental underlying demand based on household formation and housing units taken out of the market due to obsolescence, demolition, etc. |
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10-13-2022, 10:29 PM | #7300 | |
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That said, I want to buy a second house, hoping the San Diego market drops by 20% then I'm in. |
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10-14-2022, 12:59 AM | #7301 |
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Bloomberg said that today bounce is probably most likely technical reason. The bounce happens to hit the 50% half point between covid low in 2020 and january 2022 high.
Most institutions who place puts then cash in then buy back the share. |
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10-14-2022, 06:21 AM | #7302 | |
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When you look at the median take home pay, an increase across your basket of goods against a fixed income is pretty disastrous. If you take someone with a $50k salary that leaves them with around $400/week in disposable income after fixed items like rent and taxes are factored in. If you assume $200/week in food, that's $28/day you have available. Now imagine you've got several mouths to feed.... |
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10-14-2022, 06:24 AM | #7303 | |
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Now, add in the last 24 months of shortages and inflation and you're adding even more cost to a home. |
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10-14-2022, 10:30 AM | #7304 |
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We had a nice bounce when the market opened and now back to reality.
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