[tgrundke]

Originally Posted by Chick Webb

In other news, there's this if you didn't already think people are delusional - Six in 10 adults want to become a billionaire one day, report finds

https://www.youtube.com/watch?v=-NzgmeSeySA

[RickFLM4]

Originally Posted by Chick Webb

Looks like the S&P is going to close below 3,900 today. Wish the damn market had been listening to the Fed a little earlier, dammit. Does appear that September may live up to its reputation. The power players will be back in their Wall Street offices next week, so we'll see.

In other news, there's this if you didn't already think people are delusional - Six in 10 adults want to become a billionaire one day, report finds

It's astounding to me that so many are surprised further rate hikes are coming and that rates will not be cut anytime soon. I think it's still sinking in and not fully accepted.

[Chick Webb]

Originally Posted by RickFLM4

I think it's still sinking in and not fully accepted.

The narrative is shifting pretty quickly. I'm listening to Tom Siebel (head of C3 AI) on CNBC talking about how customer deals are pushing out and not closing. He said customers in a number of segments are in preparation for a global recession. And that something "fundamentally changed" in July. This is another enterprise software company (Salesforce was one of the first) to show weakness. Their stock is down over 20% today. Okta is also getting hammered, too, down over 30%. WCLD is down 7%. Up until now everybody'd been saying that corporate demand would hold up. Doesn't look like it.

And, yet, at the same time, the unemployment claims number (232k) dropped to its lowest level in two months. If the jobs number tomorrow is strong that virtually guarantees another big rate hike. Even though inflation has rolled over (Core PCE in Jan was 5.2, down to 4.6 last month), too many jobs means inflation is not going to come down appreciably any time soon. The Fed has to put (at least) 6 million people out of work. That'll take some time.

Interesting that nobody is saying that we're experiencing stagflation, even though that's clearly what's happening. Why do I see the hand of the WH spinmeisters in this?

[RickFLM4]

Originally Posted by Chick Webb

The narrative is shifting pretty quickly. I'm listening to Tom Siebel (head of C3 AI) on CNBC talking about how customer deals are pushing out and not closing. He said customers in a number of segments are in preparation for a global recession. And that something "fundamentally changed" in July. This is another enterprise software company (Salesforce was one of the first) to show weakness. Their stock is down over 20% today. Okta is also getting hammered, too, down over 30%. WCLD is down 7%. Up until now everybody'd been saying that corporate demand would hold up. Doesn't look like it.

And, yet, at the same time, the unemployment claims number (232k) dropped to its lowest level in two months. If the jobs number tomorrow is strong that virtually guarantees another big rate hike. Even though inflation has rolled over (Core PCE in Jan was 5.2, down to 4.6 last month), too many jobs means inflation is not going to come down appreciably any time soon. The Fed has to put (at least) 6 million people out of work. That'll take some time.

Interesting that nobody is saying that we're experiencing stagflation, even though that's clearly what's happening. Why do I see the hand of the WH spinmeisters in this?

I listened to the same segment and others like it on CNBC.

On employment, I think companies have been hard pressed to find labor so they are slow to shed workers until demand is clearly impacted and will remain impacted for some time. It has just been too difficult to find labor. I think in some segments that has been evolving, but in others it is just starting. But I agree with you - companies are starting to change their narrative and Q3 earnings / Q4 - 2023 guidance will be interesting.

[gnhm3]

Who is still playing?

[antzcrashing]

Inflation not going anywhere for awhile grab a snickers

[Tyga11]

Originally Posted by antzcrashing

Inflation not going anywhere for awhile grab a snickers

There seems to be a pretty big debate about lagging inflation...and what the CPI truly means.

I don't know enough about it. I saw a tweet by Cathie Wood about raw goods coming down exponentially but I see on CNBC they're talking about egg prices going up.

Seems like people are just interpreting this as they will...

[dangerus_car]

Originally Posted by Tyga11

There seems to be a pretty big debate about lagging inflation...and what the CPI truly means.

I don't know enough about it. I saw a tweet by Cathie Wood about raw goods coming down exponentially but I see on CNBC they're talking about egg prices going up.

Seems like people are just interpreting this as they will...

Tomorrow is the producer price index. We will see if cathie wood is right about that.

[chassis]

One of many examples of commodity price declines in the chart below.

Yesterday’s CPI increase is lower this month than it was last month on a YOY basis. The inflation train has been leaving the station since Q4 2021.

[tgrundke]

Originally Posted by Tyga11

There seems to be a pretty big debate about lagging inflation...and what the CPI truly means.

I don't know enough about it. I saw a tweet by Cathie Wood about raw goods coming down exponentially but I see on CNBC they're talking about egg prices going up.

Seems like people are just interpreting this as they will...

Inflation is pernicious because it becomes a game of whack-a-mole as the costs work their way through the system. We see it immediately when gas prices go up, but those elevated fuel prices then creep through the entire economy and impact the cost of grain, which impacts the cost of a box of Wheaties.

It can take time for these costs to find their way through the system.

Conversely, as raw material costs, such as lumber, come down, it can take a *long* time for those reductions to show up at your local lumber yard or Home Depot. So, just because lumber has fallen by 60% in the past quarter doesn't mean you're going to see similar reductions for months - if ever - because other costs have gone up (labor), and those costs are sticky.

Ultimately, the only thing that tames inflation is demand destruction.

[chassis]

2-3 years from peak inflation to the next low point. This is based on the past three inflation spikes from the 70s and 80s. This suggests inflation will not be “low” until 2024 or 2025. It does suggest the inflation path from today is in the direction of lower headline inflation.

The SP500 during the inflation decline period had an annual total return of 8%+ during these times. Not earth shattering but progress nevertheless.

History repeats itself.

[medphysdave]

Originally Posted by chassis

2-3 years from peak inflation to the next low point. This is based on the past three inflation spikes from the 70s and 80s. This suggests inflation will not be “low” until 2024 or 2025. It does suggest the inflation path from today is in the direction of lower headline inflation.

The SP500 during the inflation decline period had an annual total return of 8%+ during these times. Not earth shattering but progress nevertheless.

History repeats itself.

I agree. The housing market pattern seems to show 2yr time to bottom from the time a recession is being acknowledged in the media. I'm seeing higher end inventory go up, which is usually how it starts. The people in the know try to jump ship before it gets bad. We are in for a real whammy this time in my opinion. To combat inflation requires raising interest rates. To save a housing market they need to be lowered. Uh oh.....

[chassis]

Cash is king now in my mind. Liquid investments that pay some interest allow a person to capitalize on asset price declines (cars, houses, etc) in the current and upcoming environment. As you point out, some physical asset prices are dropping. Cox says used car prices are dropping, sales volume is slowing and inventory is up.

Furthermore if one is so inclined toward European travel, the USD-EUR exchange rate has not favored the USD so much in 20 years.

I am not putting new money into equities for a while. I have no quantified definition of “a while”.

[vreihen16]

Originally Posted by chassis

Furthermore if one is so inclined toward European travel, the USD-EUR exchange rate has not favored the USD so much in 20 years.

The Euro is below the US Dollar right now as I type this! Good time to buy German cars and parts.....

[Tyga11]

Originally Posted by chassis

Cash is king now in my mind. Liquid investments that pay some interest allow a person to capitalize on asset price declines (cars, houses, etc) in the current and upcoming environment. As you point out, some physical asset prices are dropping. Cox says used car prices are dropping, sales volume is slowing and inventory is up.

Furthermore if one is so inclined toward European travel, the USD-EUR exchange rate has not favored the USD so much in 20 years.

I am not putting new money into equities for a while. I have no quantified definition of “a while”.

'Cash is king' and you will miss out on rallies. You can't time the market. You're clearly making a mistake

[antzcrashing]

All the cnbc geniuses were talking about gasoline prices falling as the catalyst for inflation falling, well I guess everything non-gas pulled out the stunts to prove them wrong. The market does this same foolish thing of rising in drunk dumb blind faith that inflation and fed policy will ease and dove, and for what the 3rd or 4th time been wrong. Everyone saying 75 basis points is now priced in, lol. The very second that 75 BP is announced by the fed it will tank again. And honestly I don't even want to know the result if fed does only 50 or 25 BP, bc long term that will be worse.

[Chick Webb]

Originally Posted by Tyga11

'Cash is king' and you will miss out on rallies. You can't time the market. You're clearly making a mistake

Unless you believe in a "V-shaped" recovery (unlikely), now that short-term bonds are yielding over 3.75% being overweight cash as a hedge is a good strategy for reducing risk. There is still significant macro risk that could take the market down another 10-20%, easy.
With Q3 earnings coming and more earnings downgrades with them, there's almost zero chance it's going to jump up that much.

If I can take zero risk with, say, 30% of my money and get nearly 4% between now and the end of the year, that beats losing my shirt when Putin cuts off the EU's gas and oil, and is threatening to nuke Ukraine because he's been backed into a corner by the $20 Billion in weapons we've sent to Zelensky. If the market tanks, I've got plenty of cash to buy deals, and if it doesn't, I'm not likely to have missed out on more than a couple of points of gains. And in the meantime I don't have to watch the Bloomberg like a hawk.

P.S. Professional money managers have more cash in their accounts right now than they have in 20+ years. I don't know why, but I'm not sure it matters. You know how they say "don't fight the fed"? Well, it's also true that I don't fight the pros, because they're smarter than I am.

[Chick Webb]

Originally Posted by tgrundke

Ultimately, the only thing that tames inflation is demand destruction.

And the only thing that destroys demand (enough) is people losing their jobs. The Fed seemed at one point to be betting that they could tighten the labor market by eliminating the number of openings vs. seekers, but that appears to be out the window.

At 3.5% unemployment, demand-driven wage growth will contribute 4+% to inflation. Unemployment has to rise to 5.5-6% to get that back down to 2%. Unfortunately that's where we're headed, I think, and it hasn't even begun yet. Unemployment ticked up a bit recently (3.6% or 3.7%, I can't recall), but that was solely because people running out of their COVID money started looking for jobs again. The number of openings has barely budged.

There is a lot of pain ahead for the job market. And it's going to drag on for a lot longer than normal, due to the amount of money still sloshing around in the economy. We probably won't even get close to that number until the end of next year.

This is, truly, a slow-motion train wreck. Patience is a virtue.

[chassis]

Originally Posted by Tyga11

'Cash is king' and you will miss out on rallies. You can't time the market. You're clearly making a mistake

Tyga11

1. How old are you?
2. How are you investing new money?

[ASAP]

Is everyone ready for the economic bath that will happen soon? It's gonna be bad... real bad. Interest rates seem to be starting to do their job and Inflation is beginning to hurt everyone. Up next - job losses... when that happens at a high enough level, major problems will start.

If only we hadn't given out ppp loans to everyone and printed so much money in the past 2 years... oh and 2% int rates during an economy that was on fire lmao... great ideas all around. This is a failure of every admin in the past 10 years.

[Tyga11]

Originally Posted by chassis

Tyga11

1. How old are you?
2. How are you investing new money?

I'm a TSLA bull - I put everything in TSLA

[antzcrashing]

Originally Posted by Tyga11

I'm a TSLA bull - I put everything in TSLA

This is my investing spirit animal.