2021 - Is inflation finally back in the conversation?

[Parliament 14,260]

Only if Wally is short.

[babysdaddy 2,725]

Read somewhere the buyback tax in the bill the senate just passed does t kick in until 2023. Might have some buyback activity get pulled forward that could give some bounce

[52-80 19,161]

2 hours ago, Parliament said:

Only if Wally is short.

wally went bull on berkshire hathaway

https://www.nasdaq.com/articles/berkshire-hathaway-posts-massive-%2443.8-bln-loss-operating-results-improve

Aug 6 (Reuters) - The slide in U.S. stock prices punished Berkshire Hathaway Inc's bottom line in the second quarter as the company run by billionaire Warren Buffett posted a $43.8 billion loss.

 

[Humble Beast 258]

Don’t get triggered people. It’s just jokes 
 

 

[Incredulity 11,675]

1 hour ago, Humble Beast said:

Don’t get triggered people. It’s just jokes

Unpossible

[Hefeweizen 5,324]

Troll meme posts are always great.

 Meanwhile the movement is picking up pace to convert SF for sale product to SF for rent.  The National builders are quietly asking people to land bank projects because the low end of housing is faltering.  Investors are still flush and there is still a shortage of housing so inventory is not going to cause builders to drop prices.

All the new market analysis i am seeing in Texas is that price appreciation is over for SF for a while.  The biggest question in all of them is whether inventory will start to build up or not.

 

[Snake Diggity 4,625]

I have not researched the details of the IRA enough to know for sure, but is the bill a test of the MMT theory that inflation can be tamed by removing money supply via taxation?  If so it’ll be interesting to see the impact.  I am not a believer in MMT because I don’t have faith in politicians to be disciplined enough to levy additional taxes at the right times.  My understanding of the basics of this bill is that it is intended to tax more than it spends, but I could be wrong about that.

[Humble Beast 258]

17 minutes ago, Snake Diggity said:

I have not researched the details of the IRA enough to know for sure, but is the bill a test of the MMT theory that inflation can be tamed by removing money supply via taxation?  If so it’ll be interesting to see the impact.  I am not a believer in MMT because I don’t have faith in politicians to be disciplined enough to levy additional taxes at the right times.  My understanding of the basics of this bill is that it is intended to tax more than it spends, but I could be wrong about that.

So $30B in deficit reduction per year. Will not have a huge impact from that standpoint imo. The big unknown wrt inflation is how much will accelerated move to alternative energy affect energy prices in the months and years ahead. 

[bernorange 8,362]

Quote

So far this month the daily cash reports from the U.S. Treasury are demonstrating reasonably consistent cash outflows and debt buildup. There is a huge amount of noise in daily cash movements, but the gross debt is close to $30.6 trillion versus a statutory debt limit of $31.38 trillion, compared to an amount of $28.43 trillion on October 1, 2021. So there is not too much headroom with the debt and it looks like the time is near when efforts will be made to obfuscate the real position.

Resetting the debt limit has become something of a charade, with neither political party wanting to be blamed for the federal government's being unable to pay its bills, but negotiations will need to be well underway before too long.
...
The extent of "quantitative tightening" reported by the Fed yesterday is still far below the Fed's initial claim that it would be running off $60 billion of government debt per month and $35 billion of mortgage debt. ...
...
So in 19 weeks the Fed has reduced its holdings of government debt by $40 billion and of mortgage securities by $21 billion -- nothing like the speed promised.

In the five weeks since June 29 there has been a reduction of $44 billion in the Fed's holdings of government securities, from $5,763 billion, and an increase of $9 billion in its holdings of mortgage securities, from $2,709 billion. Again, it looks like there is no real evidence of QT being used in recent weeks at anything like the pace that was suggested. It still seems highly unlikely that QT can be used at anything like the rate forecast, but the next few weeks will reveal more.

https://gata.org/node/22122

As I understand it, the Fed is between the rock and hard place with respect to QT, so they aren't (so far) bringing any meaningful pressure on inflation from a money supply standpoint.  The profligate spending of the government is somewhat forcing their hand.  So a change in budgeting priorities in DC to spend less that they take in in taxes will help give the Fed the breathing room they need to QT in earnest.

[Trey3216 15,346]

21 minutes ago, bernorange said:

https://gata.org/node/22122

As I understand it, the Fed is between the rock and hard place with respect to QT, so they aren't (so far) bringing any meaningful pressure on inflation from a money supply standpoint.  The profligate spending of the government is somewhat forcing their hand.  So a change in budgeting priorities in DC to spend less that they take in in taxes will help give the Fed the breathing room they need to QT in earnest.

[52-80 19,161]

2 hours ago, Snake Diggity said:

I have not researched the details of the IRA enough to know for sure, but is the bill a test of the MMT theory that inflation can be tamed by removing money supply via taxation?  If so it’ll be interesting to see the impact.  I am not a believer in MMT because I don’t have faith in politicians to be disciplined enough to levy additional taxes at the right times.  My understanding of the basics of this bill is that it is intended to tax more than it spends, but I could be wrong about that.

https://www.tremendouslysizeddongs.com/watch/1164666/emma-butt-pegging-nowthis

Risk in Network Economies

Economic models with input-output networks assume that firm or sector (unit) growth is driven by a weighted sum of trade partners' growth and an independently-drawn idiosyncratic shock. I show that the idiosyncratic risk assumption in a broad class of network models implicitly generates restrictions on the network weights which are unrealistic. When allowing for correlated shocks, units are exposed to an additional risk term which captures the ability to substitute away from supply and demand shocks propagating through the network. I provide empirical evidence that changes in substitutability between trade partners are inversely related to changes in the panel of realized industry variance. Moreover, I find that supply-side (demand-side) substitutability is closely related to technological (product) dispersion of a unit's suppliers (customers). To synthesize these results, I propose a production-based asset pricing model in which supply chain substitutability is a function of dispersion in product/technology space and correlation in supply and demand shocks is driven by shared customers and suppliers between firms. The model predicts that assets which are positively exposed to average propagation of upstream and downstream shocks are useful hedges and thus earn lower average risk premia. Consistently, I find that estimated upstream (downstream) propagation factors earn return spreads of -11.4% (-4.2%) and are negatively associated with aggregate consumption, output, and dividend growth.

[gsoda3 3,262]

On 8/5/2022 at 8:42 AM, gmr548 said:

528k jobs added in July. The term recession (sweater god, anything can be politicized in this stupid fucking country) has become almost arbitrary with squabbling over the definition, but regardless, this is a very oddly behaving slowdown if you don’t want to use the r-word, or oddly behaving recession if you do.

Fed gonna go hard later this month unless inflation data is way below expectations.

 

unemployment rate going back into the late 40s.  for perspective, the shaded grey areas are recessions.  

 

[jimmyjazz 45,961]

20 minutes ago, gsoda3 said:

unemployment rate going back into the late 40s.  for perspective, the shaded grey areas are recessions.  

Any takeaway besides "unemployment rate climbs during recessions"?

[Humble Beast 258]

On 8/4/2022 at 11:09 PM, Hmbre97 said:

Audit rates from prior to the IRS being intentionally defunded don't bare that out though. Sure, there will probably be an increase in the number of "little guys" getting audited but at a MUCH smaller clip to the biggest offenders. I don't buy it. It would be like someone living in a town where the police budget has been slashed over the last 10 years and crime has risen over that time. A new mayor is elected and says we want to increase the police budget to help fight crime and the argument against it is let's not do it because some normally law abiding citizens might get a small increase in the amount of traffic tickets issued. 

 

How many more agents can they assign to the Mississippi Delta?

 

[Hefeweizen 5,324]

I guess they really don’t audit the NE US?  What a bizarre statistic.

[gsoda3 3,262]

7 minutes ago, jimmyjazz said:

Any takeaway besides "unemployment rate climbs during recessions"?

germane to the discussion for the past few months is the unemployment rate at the start of recessions.  the rate we're at now, though low, doesn't preclude us from being in a recession.  referencing strong employment numbers isn't a good argument against a recession.

[Incredulity 11,675]

looks like a inverse population density map.

[gsoda3 3,262]

2 minutes ago, Hefeweizen said:

I guess they really don’t audit the NE US?  What a bizarre statistic.

maybe the data scientist was out sick the day they compiled the NE numbers.

[Hefeweizen 5,324]

3 minutes ago, Incredulity said:

looks like a inverse population density map.

Nope.  Nevada has no density at all and no audits.  I question the data in that one.

 

And South Dakota needs to prepare their asshole.

[washparkhorn 9,939]

The Fed is utilizing demand destruction by design to combat inflation.

MMT theory would focus on the source of the inflation (cost-push/supply) and invest in additional supply to meet demand. The Fed does not have that power. 

[Incredulity 11,675]

9 minutes ago, Hefeweizen said:

Nope.  Nevada has no density at all and no audits.  I question the data in that one.

 

And South Dakota needs to prepare their asshole.

Harry Reid fought hard for his constituents?

[Snake Diggity 4,625]

1 hour ago, jimmyjazz said:

Any takeaway besides "unemployment rate climbs during recessions"?

I suppose one could look at that and assume recession is imminent pretty much anytime unemployment goes below 3.5%.  I don’t believe that but I could see someone taking that away from that chart.

[jimmyjazz 45,961]

30 minutes ago, Snake Diggity said:

I suppose one could look at that and assume recession is imminent pretty much anytime unemployment goes below 3.5%.  I don’t believe that but I could see someone taking that away from that chart.

yeah, that's a little too "crystal-bally" for me.

[Neonmoon 38,129]

1 hour ago, Snake Diggity said:

I suppose one could look at that and assume recession is imminent pretty much anytime unemployment goes below 3.5%.  I don’t believe that but I could see someone taking that away from that chart.

You would have to ignore all the other data points 

[pronghorn 44]

 

[washparkhorn 9,939]

Animal spirits and inflation. Below is good news that is bad news for those hoping for a quick Fed pivot. The Fed shows no sign of slowing QT or slowing rate hikes.

1 hour ago, pronghorn said:

 

The Fed has to tighten in order to have room to ease if there is a hard landing. 

[bernorange 8,362]

1 hour ago, washparkhorn said:

... The Fed shows no sign of slowing QT ...

Well, they aren't even doing what they said they would yet (see my previous post #2810)

[52-80 19,161]

 

[washparkhorn 9,939]

11 minutes ago, 52-80 said:

 

Bad news is good news for Fed to pivot?  
 

More importantly, evidence of demand destruction by design through rate hikes. 

[Incredulity 11,675]

I was told there wouldn't be a housing slow down.

interdasting.

[Gravy Train 974]

Pivot:  The new builds aren't grey-washed shiplapped vinyl-floored cheap enough for the rentlords to over-lever themselves into anymore.

[Bozo_Casanova 26,472]

7 hours ago, 52-80 said:

 

MOAR!!!!

[Incredulity 11,675]

Quote

grey-washed shiplapped vinyl-floored

 

the shag carpet of the 2020s

[Humble Beast 258]

Our national nightmare is over. Market is pumping based, likely, on hikes being slowed to stopped. 

[Cheeseweasel 26,438]

4 minutes ago, Humble Beast said:

Our national nightmare is over. Market is pumping based, likely, on hikes being slowed to stopped. 

I'm fucking you. Just .2% less that you think you should be fucked.

[gmr548 16,580]

I was told there wouldn't be a housing slow down.
interdasting.

Define housing slowdown?

Buyers getting priced out of the market due to rising rates, causing builders to see less demand for existing inventory and pulling back on projects in the near term future is not really a surprise.

I wouldn’t call it a housing slowdown though, rental market is on fire. Said fire has just burned a lot of its fuel in the for sale sector and moved toward the plentiful fuel on the for rent side.

[jimmyjazz 45,961]

Austin Board of Realtors hasn't released July data yet, but for June the median sales price was up 7%, sales $ volume was down 16%, and months of inventory was up 1.1 months (to 1.8 months), all year-over-year.  I don't think it's rash to say the market has lost some heat, but that inventory number is still a long way below "balanced" (6 months).

[Wally Fairway 5,550]

21 minutes ago, jimmyjazz said:

Austin Board of Realtors hasn't released July data yet, but for June the median sales price was up 7%, sales $ volume was down 16%, and months of inventory was up 1.1 months (to 1.8 months), all year-over-year.  I don't think it's rash to say the market has lost some heat, but that inventory number is still a long way below "balanced" (6 months).

I know a couple of people in the business (not in Austin, but much smaller markets) and it is exactly like you put it. Houses are still selling, but not with multiple cash offers over the listing price; and they are taking 2-3 weeks to sell, instead of owners getting offers as soon as the listing goes up.
They put it as rationalization of the marketplace, I hope they are right but it could certainly be one of many steps towards a much bigger slow down in real estate. 
Another friend is a high end builder - typically $3mil & up, custom homes. Some of his owners (typically Drs or 2nd/3rd gen from family money) have projects ongoing with short-term construction or bridge loans. It will be interesting to see where they end up with permanent financing now that the Fed isn't driving rates to all time lows. He is certain that some can just pay in cash, but others are on an "allowance" and it could be problematic.

[jimmyjazz 45,961]

5 minutes ago, Wally Fairway said:

I know a couple of people in the business (not in Austin, but much smaller markets) and it is exactly like you put it. Houses are still selling, but not with multiple cash offers over the listing price; and they are taking 2-3 weeks to sell, instead of owners getting offers as soon as the listing goes up.

An interesting counter, at least in the City of Austin:  time on market dropped year-over-year in June from 15 days to 13 days.

[StruggleBus 3,922]

19 minutes ago, Wally Fairway said:

They put it as rationalization of the marketplace, I hope they are right but it could certainly be one of many steps towards a much bigger slow down in real estate. 

I mean, real estate needs a correction. This isn't sustainable. 

[washparkhorn 9,939]

Signs of demand destruction, but still inflating faster than wage growth. Consumers using more credit at elevating interest rates. Fed selloff of MBS well under their self-imposed caps (thanks @bernorange). 

[Cheeseweasel 26,438]

14 minutes ago, washparkhorn said:

Consumers using more credit at elevating interest rates

[52-80 19,161]

6 hours ago, washparkhorn said:

Fed selloff of MBS well under their self-imposed caps (thanks @bernorange). 

Not sure if you you already considered it in assessment, but their reporting is supposed to have a lag of up to a quarter.  Says this guy who used to actually work on the Fed's trading desk.

 

[52-80 19,161]

On 7/28/2022 at 4:41 PM, 52-80 said:

Like a very common definition of a ‘bear market’ is when equities are 20% below their peak. 

Why would you spend energy trying to reargue the definition (unless for point scoring)?  Its a cutoff. The answer is a binary above or below.  

But its also arbitrary. So rather than argue the indisputable fact that it is, you might say that only 1 sector-specific equity index is bear, or that the numbers are below threshold but trending upwards.  Etc. 

Nasdaq 100 index is now +20% from its prior low.  So now technically it has re-entered a 'bull market'.

https://www.wsj.com/articles/global-stocks-markets-dow-update-08-10-2022-11660116855

 

[Humble Beast 258]

IRS doing their best to boost the economy. Now hiring for their newly funded deficit reduction task force. Sounds like they have big plans!

 

[Hefeweizen 5,324]

Meh fuck tax evaders.  I pay my fair share, usually high five digits, and I take it with a grumpy attitude but pay.  I seethe at the motherfuckers who can game the system and    Their cronies who enable them.  I have no problem with the irs increasing enforcement.

[statsman 5,471]

12 hours ago, Hefeweizen said:

Meh fuck tax evaders.  I pay my fair share, usually high five digits, and I take it with a grumpy attitude but pay.  I seethe at the motherfuckers who can game the system and    Their cronies who enable them.  I have no problem with the irs increasing enforcement.

I do my family’s taxes. My wife is a realtor, self-employed. I don’t cheat and never have. Every time, turbo tax uses its macro to review deduction amounts and says that our chance of an audit is very low. 

If/when this bill passes, I’m having pros do our taxes. I just do not need the hassle and stress of an audit; let the paid preparer deal with it (I suspect CPA prepared taxes will be less likely to be audited). I guess this law will stimulate the economy- the tax preparation part of the economy😂

[Humble Beast 258]

2 hours ago, statsman said:

 I guess this law will stimulate the economy- the tax preparation part of the economy😂

Another boon for the non productive class. 
 

14 hours ago, Hefeweizen said:

Meh fuck tax evaders.  I pay my fair share, usually high five digits, and I take it with a grumpy attitude but pay.  I seethe at the motherfuckers who can game the system and    Their cronies who enable them.  I have no problem with the irs increasing enforcement.

I guess you don’t leave cash tips then. 
 

I wonder what percentage of audits are actually successful and return a substantial amount of funds?
 

There will be tons of fruitless and/or unjustified audits. These agents will have to find something to do once their firearms training is done. Look out Mississippi Delta and Rio Grande Valley. 

[Hozz 1,017]

Doubling the size of the IRS is bad for everyone.  Tax payers and tax cheats included.  It blows my mind that anyone could have a different take on that, unless they work for them or at another alphabet agency.  Look into who gets audited, they already go after poor people and the people least likely to put up a fight.  You think these new 90K guys are being hired to fix that?  Haha.

[washparkhorn 9,939]

16 hours ago, 52-80 said:

Nasdaq 100 index is now +20% from its prior low.  So now technically it has re-entered a 'bull market'.

https://www.wsj.com/articles/global-stocks-markets-dow-update-08-10-2022-11660116855

 

So - Inflation was transitory, or, is this technical bull market transitory?

 

Edited August 11, 2022 by washparkhorn