2021 - Is inflation finally back in the conversation?

[Cheeseweasel 26439]

TIL there was a Global Supply Chain Pressure Index (GSCPI).

[statsman 5693]

Am I wrong to think, with rising interest rates, annual budget deficits are a big deal? Sure, we have trillions in old debt, at low interest rates. The payments on new debt can end up being a big part of the budget, right? 

[52-80 19377]

motherfuck, the 2 year yields are a few basis points from hitting 4.00%; 10 year are above 3.5%

for a while i was indiscriminately long both, but got out at 3.2x and never got back in because i thought it was too hot already

[Humble Beast 258]

No easing of inflation to be seen in Germany. 
 

2 hours ago, statsman said:

Am I wrong to think, with rising interest rates, annual budget deficits are a big deal? Sure, we have trillions in old debt, at low interest rates. The payments on new debt can end up being a big part of the budget, right? 

That is the big difference between now and Volcker/early 1980s. We can’t hikes rates higher than inflation.
 

As far as the deficits go, they’re relatively fixed. Interest rates can be more easily changed, so that’s what will eventually happen. We will have to ease at some point. 
 

Over the long term, we will eventually have Fed implement yield curve control to keep rates down. I’ve outlined why there will be less buyers of our debt as we continue to issue increasing amounts. The Fed will be the buyer. 

[Cheeseweasel 26439]

1 minute ago, Humble Beast said:

No easing of inflation to be seen in Germany.

Remind me what happened the last time inflation rose this fast in Germany...

[Humble Beast 258]

30 minutes ago, Cheeseweasel said:

Remind me what happened the last time inflation rose this fast in Germany...

Point taken. But to be fair it’s wholesale prices. Also there were other cultural factors at play that helped lead to Nazis etc. 

But elevated inflation can definitely help fuel populist movements. 

[Cheeseweasel 26439]

2 minutes ago, Humble Beast said:

Point taken. But to be fair it’s wholesale prices. Also there were other cultural factors at play that helped lead to Nazis etc. 

But elevated inflation can definitely help fuel populist movements. 

Nazis? I was talking about Germany winning the World Cup.

 

 

 

 

[Humble Beast 258]

42 minutes ago, Cheeseweasel said:

Remind me what happened the last time inflation rose this fast in Germany...

Hyperinflation is a different animal. 
 

 

[Laxtonto 13302]

So 3Q GDP estimates are down to 0.5% with 10 days left and a 3 major indicators back to back to back have all missed badly, with the housing starts being the latest. 
 

Anyone really believe that we end up with a positive GDP? It’s has tanked the last 3 weeks and I have a hard time expecting anything to come out in the next 10 days to change the trend.

More scary to me is there are rumors of multiple retailers canceling orders for Q4 due to severe changes is thier internal consumer spending models. If we see a massive slide in Q4 along with a best case it seems 0/stagnant growth in Q3 things will get ugly..

[Cheeseweasel 26439]

28 minutes ago, Laxtonto said:

things will get ugly.

More ugly.

[Parliament 14598]

1 hour ago, Laxtonto said:

 

More scary to me is there are rumors of multiple retailers canceling orders for Q4 due to severe changes is thier internal consumer spending models. If we see a massive slide in Q4 along with a best case it seems 0/stagnant growth in Q3 things will get ugly..

Just in time for Christmas shopping.  Hooray...

[Trey3216 15452]

3 hours ago, Laxtonto said:

So 3Q GDP estimates are down to 0.5% with 10 days left and a 3 major indicators back to back to back have all missed badly, with the housing starts being the latest. 
 

Anyone really believe that we end up with a positive GDP? It’s has tanked the last 3 weeks and I have a hard time expecting anything to come out in the next 10 days to change the trend.

More scary to me is there are rumors of multiple retailers canceling orders for Q4 due to severe changes is thier internal consumer spending models. If we see a massive slide in Q4 along with a best case it seems 0/stagnant growth in Q3 things will get ugly..

Yeah, Q4 is looking to be the worst Quarter since the COVID shutdown, and could result in 4 straight quarters of negative GDP (I'm betting Q3 is negative at this point).  A lot of retailers have had to pre-bleed Q4 into Q3, so it's not gonna be pretty.  Housing starts and mortgage apps are absolutely atrocious right now.  

[Cheeseweasel 26439]

11 minutes ago, Trey3216 said:

4 straight quarters of negative GDP

Good thing we aren't in a recession. 

[Humble Beast 258]

These are always fun 

They forgot to mention that with food prices rising, people make more bologna sandwiches at home for work. That has less of a carbon footprint than going out to eat.  Win/win  

 

[Cheeseweasel 26439]

You vill eat ze bugs.

[Parliament 14598]

Without reading the thread, I'm gonna say that guy is an idiot.

[Laxtonto 13302]

2 hours ago, Parliament said:

Just in time for Christmas shopping.  Hooray...

The holiday season is going to be a shit show. Telling all my buddies with little kids to shop early, limit gifts to something more manageable, be worried about anything tech skyrocketing in price and go ahead and buy both your Christmas ham and Thanksgiving turkey sooner rather than later....

It is not going to be a great holiday season this year I dont think

 

[babysdaddy 2731]

The holiday season is going to be a shit show. Telling all my buddies with little kids to shop early, limit gifts to something more manageable, be worried about anything tech skyrocketing in price and go ahead and buy both your Christmas ham and Thanksgiving turkey sooner rather than later....
It is not going to be a great holiday season this year I dont think
 

Respectfully, retailers are going to have a glut of inventory. That means prices will drop. Technology specifically. The retailers fucked up on orders coming out of the pandemic. Target earnings out front shoulda told ya

[Biff Tannen 46168]

13 hours ago, Cheeseweasel said:

Remind me what happened the last time inflation rose this fast in Germany...

 

13 hours ago, Humble Beast said:

Point taken. But to be fair it’s wholesale prices. Also there were other cultural factors at play that helped lead to Nazis etc. 

But elevated inflation can definitely help fuel populist movements. 

https://www.pbs.org/show/us-and-holocaust/

[Laxtonto 13302]

1 hour ago, babysdaddy said:

Respectfully, retailers are going to have a glut of inventory. That means prices will drop. Technology specifically. The retailers fucked up on orders coming out of the pandemic. Target earnings out front shoulda told ya

The question is going to be how much of that glut is going to be there with many retailers, including target, slashing orders. Buy it now, because much like 2018 (I think) when they are out, they are out this year.

The tech side is more because many of the raw material parts, especially anything with lithium batteries, are going to see a major cross the board price hike, and it doesn’t matter what price the inventory they have on hand was bought at, they are going to adjust the retail price to match the environment. They need to hit their margins somewhere…

[bernorange 8385]

Quote

...
However, according to the latest report from Joe Foster, portfolio manager and strategist, and Imaru Casanova, deputy portfolio manager of the VanEck International Investors Gold Fund, the Federal Reserve could be closer to the end of it aggressive tightening cycle than markets currently expect.
...
... they said that the central bank could face growing political pressure to end its tightening cycle as rising interest rates will make servicing its debt more expensive.

The Federal Reserve's balance sheet, while falling, is valued at $8.8 trillion.

Quoting data from the Wall Street Journal, Foster and Casanova said that if the Fed raises interest rates to between 3.25% and 3.50%, it would cost the Treasury $195 billion annually to fund the U.S. central bank.

"As the targeted Fed Funds rate (currently 2.5%) rises above 3%, the interest it pays will exceed the revenue gained from its portfolio assets," the analysts said.
...

https://www.kitco.com/news/2022-09-20/There-is-a-limit-to-how-high-the-Fed-will-take-interest-rates-VanEck.html

As mentioned several times in this thread, the Fed can't really "go full Volcker" with rate hikes to tame inflation because of debt service constraints. 

[bernorange 8385]

Hindsight is fun! (from 2020):

Quote

The U.S. should issue 50- to 100-year bonds and use the proceeds to pay off as much of its short-term Treasury notes as practicable; otherwise, we’ll have to refinance that short-term debt at higher interest rates when rates rise. There is likely to be no better time — because interest rates are at record lows.

Other countries have done it. But Treasury Secretary Steven Mnuchin is resisting, and for the wrong reasons.

Most of the $25 trillion in U.S. debt matures in one to five years and will have to be repaid by borrowing at higher rates if interest rates rise.

That risk is more acute than proponents of modern monetary theory (MMT) recognize. They argue that a government that issues bonds denominated in its own currency won’t ever default because it can always print enough money to pay its debt.

But interest rates the government has to pay will rise if investors lose confidence that the U.S. economy is strong enough to justify continued low rates. The damage that the COVID-19 virus could wreak on our economy is incalculable and could shake that confidence, sending Treasury rates higher.

Proponents of MMP would tolerate printing excessive amounts of money, but that can lead to inflation and higher rates. Although inflation seems remote now, it could return in a recovery if the economy begins to approach its full potential.

No matter what causes rates to rise, it’s critical to reduce our refinancing risk now.

But Mnuchin has bowed to political resistance against doing this. Short-term notes have political value: They make government officials look more fiscally responsible because their low rates keep deficits lower than the higher rates on long-term bonds.
...

https://thehill.com/opinion/finance/498902-now-is-the-time-for-treasury-to-issue-ultra-long-bonds/

[52-80 19377]

2Y yield futures hit 4%
 

[Humble Beast 258]

Analysis of FOMC today from macro guy. 
 

My position remains that easing will be forced on the Fed, but the tough talk continues. 
 

 

[FORTY NINE TO ZERO 2651]

On 9/19/2022 at 8:22 AM, Hefeweizen said:

Yeah the big question is does inflation slow quickly enough that the rate hikes don’t get overdone?  And I really wonder how much longer supply chain issues persist.  Because it’s anecdotal but I still see them in a ton of things in my business.  Pipe, pumps, electrical gear, control panels.  It is all fucked still.

I own an industrial pump distributor in houston.

a few things have gotten better, but most are just as bad or worst.  At least the random 6.5% price increases have slowed down.

 

all that said, we are busier than ever.  Demand is through the roof.  We are by far having our best year ever.  

[UT_OB1 2266]

27 minutes ago, ONE YARD said:

I own an industrial pump distributor in houston.

a few things have gotten better, but most are just as bad or worst.  At least the random 6.5% price increases have slowed down.

 

all that said, we are busier than ever.  Demand is through the roof.  We are by far having our best year ever.  

shoot me a dm with your contact

It seems like we aren’t getting a monthly 10-20% chemical increase. It felt like they got together and planned them so that we’d get one every week. We’ve got stupid long lead times on everything from hoist motors to plastic bushings, and all of it is stuff we used to order regularly w/on issue. Hell, I think we are still waiting on some lights we ordered 3 months ago. It seems amazing we can keep the plant running.  

[FORTY NINE TO ZERO 2651]

2 hours ago, UT_OB1 said:

shoot me a dm with your contact

It seems like we aren’t getting a monthly 10-20% chemical increase. It felt like they got together and planned them so that we’d get one every week. We’ve got stupid long lead times on everything from hoist motors to plastic bushings, and all of it is stuff we used to order regularly w/on issue. Hell, I think we are still waiting on some lights we ordered 3 months ago. It seems amazing we can keep the plant running.  

Just tried, but says “UT_OB1 cannot receive messages.”

 

guess you have a setting on?  Or the update borked something?  Feel free to DM me.  

[Biff Tannen 46168]

7 hours ago, Humble Beast said:

Analysis of FOMC today from macro guy. 
 

My position remains that easing will be forced on the Fed, but the tough talk continues. 
 

 

Can I get an analysis from a crypto guy?

[Humble Beast 258]

1 minute ago, Biff Tannen said:

Can I get an analysis from a crypto guy?

You wouldn’t get it. 

[Biff Tannen 46168]

1 hour ago, Humble Beast said:

You wouldn’t get it. 

[Guest]

On 9/20/2022 at 4:17 PM, Laxtonto said:

The holiday season is going to be a shit show. Telling all my buddies with little kids to shop early, limit gifts to something more manageable, be worried about anything tech skyrocketing in price and go ahead and buy both your Christmas ham and Thanksgiving turkey sooner rather than later....

It is not going to be a great holiday season this year I dont think

 

Hey everybody, it’s Dave Ramsey. 

[52-80 19377]

5 hours ago, Biff Tannen said:

Can I get an analysis from a crypto guy?

buttcoin goes down

[Anastasis 23720]

There was a discussion a few pages back about Austin Energy, rates, inflation, weather, etc.  Seems relevant.

https://austinenergy.com/ae/about/news/news-releases/2022/austin-energy-submits-annual-adjustments-to-utility-pass-through-charges

The needed adjustments include a 71% increase in the Power Supply Adjustment and a 24% increase in the Regulatory Charge. There is no change to the Community Benefit Charge. As proposed, an Austin Energy residential customer who uses a system-average of 860 kWh in a month will see an increase of $20 — or 24% — to their monthly electric bill for these combined increases.

 

https://www.austinmonitor.com/stories/2022/09/impartial-examiner-report-backs-up-austin-energy-base-rate-proposal-but-critics-arent-giving-up/

Among Austin Energy’s proposals are a 150 percent increase in its fixed residential charge from $10 to $25 per month, as well as a restructuring of the five-tiered system currently used to incentivize conservation through premiums for high consumption. The publicly owned utility says such changes are needed to stabilize its deteriorating finances, arguing that the present model is too volatile for it to reliably recover costs to provide service.

“Since Austin Energy’s last ratemaking test year, prices measured monthly by the consumer price index for urban consumers, fuels and utilities have increased 16.5 percent while rates have remained unchanged,” Austin Energy attorney Thomas Brocato said. “This year alone, overall inflation has been above 8 percent within the city, and Austin Energy is not immune to these impacts.”

[DaysOff 8209]

26 years of airline flying and I've never seen mid-september airport crowds like this. It looks like Thanksgiving week out there. I don't know if it's covid revenge travel, but don't you people have school and jobs? If there is a recession and inflation happening nobody told the American traveler.

[Captainant 28539]

11 minutes ago, DaysOff said:

26 years of airline flying and I've never seen mid-september airport crowds like this. It looks like Thanksgiving week out there. I don't know if it's covid revenge travel, but don't you people have school and jobs? If there is a recession and inflation happening nobody told the American traveler.

I think much of what you're seeing is increased pressure because there's fewer flights and more anxiety about flying in general right now. So folks show up 3 hours early instead of 2, and all of a sudden your airport is jam packed with fewer travelers moving through overall

[Cheeseweasel 26439]

4 minutes ago, Captainant said:

I think much of what you're seeing is increased pressure because there's fewer flights and more anxiety about flying in general right now. So folks show up 3 hours early instead of 2, and all of a sudden your airport is jam packed with fewer travelers moving through overall

Gotta get there early if you want to film the crazy people to post on the Flight Disrupting Assholes Thread of Shame!

[bernorange 8385]

Quote

As the world waited for the Federal Reserve to deliver its third “jumbo” interest-rate hike, Bridgewater Associates founder Ray Dalio shared a warning for anybody still hanging on to the hope that beaten-down asset prices might soon bounce back.

In Dalio’s estimation, the Fed must continue to substantially raise interest rates if it hopes to succeed in taming inflation. Because of this, and other factors like the ongoing war in Ukraine, Dalio anticipates that stocks and bonds will continue to suffer as the U.S. economy likely slides into recession either in 2023 or 2024.
...
Fed Chairman Jerome Powell has pledged that the central bank will do everything in its power to curb inflation, even if it crashes markets and the economy in the process. But to accomplish this, Dalio believes the Fed must raise benchmark interest rates to between 4% and 5%. Now that the Fed has delivered its third 75 basis point interest-rate hike, the Fed funds rate will climb back above 3% for the first time since before the financial crisis.

“They need to get interest rates — short rates and long rates — up to the vicinity of 4.5%-ish, it could be even higher than that,” he said. Because the only way the Fed can successfully fight inflation is by doling out “economic pain.”

Futures traders are anticipating that the Fed could raise the benchmark rate, which underpins trillions of dollars in assets, as high as 4.5% by July, according to the CME’s FedWatch tool. But traders only see an outside chance that the rate will reach 5% before the Fed decides to start cutting rates again.
...

https://www.marketwatch.com/story/ray-dalio-says-stocks-bonds-have-further-to-fall-sees-u-s-recession-arriving-in-2023-or-2024-11663777067?rss=1&siteid=rss

2023 going to suck donkey balls.

[DaysOff 8209]

33 minutes ago, Captainant said:

I think much of what you're seeing is increased pressure because there's fewer flights and more anxiety about flying in general right now. So folks show up 3 hours early instead of 2, and all of a sudden your airport is jam packed with fewer travelers moving through overall

 

Domestically we're exceeding 2019 levels in most markets, and that was the bestest year since Orville and Wilbur. Now, if you want to go to China...

[washparkhorn 9973]

Yen stronger against USD with unilateral BOJ FX intervention (the guess is 1% of BOJ reserves selling USD and buying Yen). Japan (chronic disinflation) is a different beast than the US. 

[Neonmoon 38130]

1 hour ago, Captainant said:

I think much of what you're seeing is increased pressure because there's fewer flights and more anxiety about flying in general right now. So folks show up 3 hours early instead of 2, and all of a sudden your airport is jam packed with fewer travelers moving through overall

Eh, there’s still a lot of people traveling. People are still burning through their accounts happy to be able to travel.

[Humble Beast 258]

1 hour ago, washparkhorn said:

Yen stronger against USD with unilateral BOJ FX intervention (the guess is 1% of BOJ reserves selling USD and buying Yen). Japan (chronic disinflation) is a different beast than the US. 

 

Seems like JPY is in the crosshairs of the market. Japan is still short energy and Fed is tightening. I think it will be difficult to stave off further devaluation. 
 

 

[Trey3216 15452]

2 hours ago, washparkhorn said:

Yen stronger against USD with unilateral BOJ FX intervention (the guess is 1% of BOJ reserves selling USD and buying Yen). Japan (chronic disinflation) is a different beast than the US. 

Japan is a net retiring society.  For decades, Japan used US Treasuries as an arbitrage system against the negative yielding BoJ bonds for building pension plans on the fixed side.  Now that the retirees are having to raise cash, they have to sell the treasuries and get dollars, converting them to Yen for distribution.  The one reason why Japan's treasury holdings are an infinitely larger risk to US debt financing than the China argument.  

[Cheeseweasel 26439]

31 minutes ago, Trey3216 said:

Japan is a net retiring society.  For decades, Japan used US Treasuries as an arbitrage system against the negative yielding BoJ bonds for building pension plans on the fixed side.  Now that the retirees are having to raise cash, they have to sell the treasuries and get dollars, converting them to Yen for distribution.  The one reason why Japan's treasury holdings are an infinitely larger risk to US debt financing than the China argument.  

[Humble Beast 258]

 

[Cheeseweasel 26439]

Slogan: Fuck the Poor 2023

[NotActuallyALonghorn 4999]

So we're heading for a repression?

[Captainant 28539]

1 hour ago, Cheeseweasel said:

Slogan: Fuck the Poor 2023

and with the TCAJ tax cuts phasing out for wage earners through 2025, we're only gonna fuck em harder - MURICA!

[bernorange 8385]

6 hours ago, NotActuallyALonghorn said:

So we're heading for a repression?

[StassneyHorn 6775]

Revenge travel is about as real as revenge sex. They were always going to do it.

[Stunns38 3805]

26 years of airline flying and I've never seen mid-september airport crowds like this. It looks like Thanksgiving week out there. I don't know if it's covid revenge travel, but don't you people have school and jobs? If there is a recession and inflation happening nobody told the American traveler.

I’ve been seeing a lot of school-aged kids flying weekdays during “school hours” too.