2021 - Is inflation finally back in the conversation?

[Cheeseweasel 26443]

10 minutes ago, troph said:

If we can finally reestablish our broad manufacturing base (not just cutting edge stuff and limited strategic manufacturing) in the US I’ll be thrilled. That alone is a massive improvement. 

[troph 25247]

2 minutes ago, jimmyjazz said:

The rocket launch started in April 2021 (March 2021 2.6%, April 2021 4.2%).  That March print was essentially "normal", as inflation rates had bounced around below 3% for years.

It's going to be a while before we back get to that level, but if the current trend continues, we should see that ~ 4.2% number in the next couple of months.  In context, that's pretty good news.

quoting you because you are talking about the point I want to make - i'm not disagreeing with you at all.

I do think as the trend continues then the numbers become a timing issue that is really easy to analyze.  If monthly increases remain low, then we just have to wait for the rolling twelve months to improve.  Here's a chart of monthly numbers showing annualized inflation:

 

 

For 2023 we have already improved the 1/2023 - 12/2023 numbers by .9% in January, 1.9% in February and 3.5% in March. The peak was March through September so the annualized numbers will start looking even better -- provided the month over month numbers continue to look good.  I really don't care what the specific monthly expectations are so long as the trend is the right direction. The market can flip out over missing expectations by 0.1-0.2%, that's just silly.

And here are those month over month numbers for the last few years...

 

if you annualize the last 9 months we are sitting at 3.2% annualized inflation.  That goes back to July 2022. 

Here is the recent history of rate increases from the fed:

 

July when inflation dropped below 0.6% on a monthly basis (and has not returned since), the fed funds rate was 2.5%.  Since then we've been making really good progress.  We are on target to finish the year closer to 3% than 5% and if that happens, I suspect 2024 will be a great year.

of course, all kinds of shit can happen, banking bullshit, Putin can throw a tantrum and nuke Ukraine, or inflation can spike again like it did in the 70s/80s but right now, it looks like it's going really well.

 

[troph 25247]

13 minutes ago, Cheeseweasel said:

touching yourself doesn't count as getting laid bro.

[Cheeseweasel 26443]

3 minutes ago, troph said:

touching yourself doesn't count as getting laid bro.

Technicality. I'll allow it.

[B00M 6736]

1 hour ago, FirstTimeCaller said:

I'd say 40% Fed bad, 20% Dem bad, and 40% no matter what the economic news is, things are absolutely terrible. 

One day we will go into recession and I think this thread might celebrate like January 4, 2006.

sorry man I graduated into the Great Recession and I’ve paid attention since then. Recessions are painful but they’re an important, natural part of the economy. They punish bad investment and increase economic efficiency. It’s like a fire sweeping through a forest. It stimulates NEW growth and innovation. 
 

So yes, I will celebrate if the fed and policy makers in DC stay the fuck out of the way and allow a pricing correction. Especially if essential “assets” like fucking homes come down to sane prices for our children. This everything bubble and money printing and kicking the can down the road with unprecedented leveraging has real world consequences that long term HURT our economy much more than they help.

[Cheeseweasel 26443]

24 minutes ago, B00M said:

They punish bad investment and increase economic efficiency.

You have been banned from the Stonks thread

[Hefeweizen 5453]

38 minutes ago, troph said:

touching yourself doesn't count as getting laid bro.

Rosey Palms is real to me, dammit.

A lot of good discussion in here and I agree that we’re going to go through some deferred pain for a little while.  There is all of a sudden a lot of distressed projects available because of underwriting 2 or 3 years ago for construction loans, which depended on long term financing now at rates 300 basis points lower than where they are.  I think smart operators with cash are going to make a killing the next two years.

[Cheeseweasel 26443]

4 minutes ago, Hefeweizen said:

 I think smart operators with cash are going to make a killing the next two years.

This. People who understand how to run businesses correctly (Cash management, strong supply chain, strong inventory management, etc.) will dominate. Those who thought JIT inventory management/ being a complete asshole to your vendors / massive debt would work long term are dead.

[Incredulity 11880]

6 minutes ago, Cheeseweasel said:

being a complete asshole to your vendors

This has become a SOP since start of COVID.  There are so many people I have dealt with in the last 3 years whose suffering would unleash maximum possible schadenfreude.  I hope you are right. 

[Mullet Free 39]

2 hours ago, troph said:

And thus far we are on target for what the so called experts claimed - end of 2023 for on target inflation under 3%

I would take the bet that we don’t see a single print under 3% before EoY. 
 

13 minutes ago, Hefeweizen said:

Rosey Palms is real to me, dammit.

A lot of good discussion in here and I agree that we’re going to go through some deferred pain for a little while.  There is all of a sudden a lot of distressed projects available because of underwriting 2 or 3 years ago for construction loans, which depended on long term financing now at rates 300 basis points lower than where they are.  I think smart operators with cash are going to make a killing the next two years.

You’re in multi-family right? 
 

The next big shoe to drop imo will be with commercial real estate. Big write downs have to happen on a lot of properties and their debt. That debt is owned by a large spectrum of investors. Will touch pretty much everyone. What size of bailout will that demand?
 

 

[Cheeseweasel 26443]

5 minutes ago, Incredulity said:

This has become a SOP since start of COVID.  There are so many people I have dealt with in the last 3 years whose suffering would unleash maximum possible schadenfreude.  I hope you are right. 

I am right. Ultimately, you have to fire a few shitty customers. Then they become someone else's shitty customer until they can't find anyone. Circle of life.

3 minutes ago, Mullet Free said:

What size of bailout will that demand?

If we bail out Blackrock, we fucking riot.

[Brisketexan 107011]

I agree with you.  Also, I need to get laid.

One Troph to unite them all.

Huh. I’m on team Troph on her posts here, all the way. They are measured, rational, and likely closer to the target than the various extremes of wishcasting (positive and negative) that we usually see.
And, you know…getting laid is good.

[Incredulity 11880]

6 minutes ago, Cheeseweasel said:

I am right. Ultimately, you have to fire a few shitty customers. Then they become someone else's shitty customer until they can't find anyone. Circle of life.

I know you are, and I've been around long enough to see it happen.  Sometimes it just takes way longer than it seems like it should, I than I hope it would.

[Hefeweizen 5453]

I’m not a developer, thank God.  I’m way too risk averse for that.  I consult so I make money either way.  But obviously it’s better if development is going on and is making money.

 I’ve lived through three big recessions in business at this point, looks like time to relax and enjoy another one. 

[troph 25247]

1 hour ago, Mullet Free said:

I would take the bet that we don’t see a single print under 3% before EoY. 
 

You’re in multi-family right? 
 

The next big shoe to drop imo will be with commercial real estate. Big write downs have to happen on a lot of properties and their debt. That debt is owned by a large spectrum of investors. Will touch pretty much everyone. What size of bailout will that demand?
 

 

it's on target for 3% but I think it lands under 4% but not 3% or less.  missteps, banking crisis, nukes, etc. could cause problems.

Edited April 19, 2023 by troph

[troph 25247]

1 hour ago, Hefeweizen said:

I’m not a developer, thank God.  I’m way too risk averse for that.  I consult so I make money either way.  But obviously it’s better if development is going on and is making money.

 I’ve lived through three big recessions in business at this point, looks like time to relax and enjoy another one. 

we have 2 sizable properties we are stuck holding. one will be fine, the other has partners that suck, so fml.  just got the capital call too and just got off the phone ranting about how shitty those partners are.

[troph 25247]

1 hour ago, Brisketexan said:

 

Huh. I’m on team Troph on her posts here, all the way. They are measured, rational, and likely closer to the target than the various extremes of wishcasting (positive and negative) that we usually see.
And, you know…getting laid is good.

if all else fails, sex. we were made to eat and fuck so one of those two motivations has to work, right?

[Cheeseweasel 26443]

2 minutes ago, troph said:

if all else fails, sex. we were made to eat and fuck so one of those two motivations has to work, right?

Either way, we're getting screwed, right?

[Brisketexan 107011]

54 minutes ago, troph said:

if all else fails, sex. we were made to eat and fuck so one of those two motivations has to work, right?

Do you even both, lady?

 

[troph 25247]

Not going to lie you can take the gal out of the guy but you can’t take the guy out of the gal. 

Interpretation - she’s made me more than a few sammiches over the years. Why’d you think I’d marry her? 

[Cheeseweasel 26443]

7 minutes ago, troph said:

Not going to lie you can take the gal out of the guy but you can’t take the guy out of the gal. 

Interpretation - she’s made me more than a few sammiches over the years. Why’d you think I’d marry her? 

[Fudge Nuggets 19473]

On 4/18/2023 at 2:09 PM, FirstTimeCaller said:

And like I said. Lol.

Don’t you know that inflation is supposed to go straight from 9% back to 2%?

[Guest]

1 minute ago, Fudge Nuggets said:

Don’t you know that inflation is supposed to go straight from 9% back to 2%?

Should I insert a gif here, or...

[Hefeweizen 5453]

45 minutes ago, FirstTimeCaller said:

Should I insert a gif here, or...

 

I got ya fam.

[gmr548 16704]

You’re in multi-family right? 
 
The next big shoe to drop imo will be with commercial real estate. Big write downs have to happen on a lot of properties and their debt. That debt is owned by a large spectrum of investors. Will touch pretty much everyone. What size of bailout will that demand?
 
 

I’d separate CRE into tiers.

Multifamily and industrial will be fine. Maybe some short term oversupply concerns (I wouldn’t want to be overweight on construction or lease up projects right now) for both but fundamentally fine. Multifamily also has the agencies.

Retail and office, yeah no thanks.

[Mullet Free 39]

Missed this a few days back. This screams to me that they’re preparing for more bailouts. Next up Blackrock and all their real estate? Pensions? Insurance companies? Basically any massive players underwater from rate increases  

 

 

 

[Cheeseweasel 26443]

Prepare your anus.

[Mullet Free 39]

4 minutes ago, Cheeseweasel said:

Prepare your anus.

Pre-Brrrrt

[Incredulity 11880]

Retail and Office CRE meltdown isn't just going to require a investor bailout, but also a large swath of major metro area governments whose funding is almost completely dependent on property tax.

[tbone_ 14463]

I’d suspect most taxes will still get paid. Owners/lenders/whoever won’t want to forfeit the property. Although it probably takes a while to foreclose, shits gotta get very very bad for taxes to not get paid.

[Mullet Free 39]

M2 continues contracting. 
 

 

[Incredulity 11880]

3 hours ago, tbone_ said:

I’d suspect most taxes will still get paid. Owners/lenders/whoever won’t want to forfeit the property. Although it probably takes a while to foreclose, shits gotta get very very bad for taxes to not get paid.

It's not just if they are paid.  It's the loss in value that will get on the tax roll eventually.

The major west coast cities are headed for disaster unless something changes fairly soon.  SVB and small cap tech challenges are gasoline on the work from home/covid fire.

 

[Hefeweizen 5453]

They are eventually going to fall into the ocean anyway, that will put out the fire.

[gmr548 16704]

1 hour ago, Incredulity said:

It's not just if they are paid.  It's the loss in value that will get on the tax roll eventually.

The major west coast cities are headed for disaster unless something changes fairly soon.  SVB and small cap tech challenges are gasoline on the work from home/covid fire.

 

Houston and DFW lead the nation in vacant office space, FYI. I'm not saying there's absolutely nothing to your point, but a lot of startup/small cap tech firms were already full remote or in a WeWork type situation prepandemic.

[gurt 796]

i've heard people throw out the possibility of turning vacant office space into residential units.  Is that at all actually feasible? Seems like an easy way to pivot, but I'm sure there are a lot of barriers I'm unaware of.

[Guest]

Be interested if anyone has good source data for CRE info (occupancy, rents, etc.)

Completely anecdotally, I'd think that there would be so many more people working from home but rush hour traffic seems same as it ever was. But if 20% of people are now WFH, you'd think that would have a major impact on traffic.

[Cheeseweasel 26443]

12 minutes ago, FirstTimeCaller said:

But if 20% of people are now WFH, you'd think that would have a major impact on traffic.

WFH = Go to Starbucks and hangout

[jimmyjazz 47309]

1 hour ago, FirstTimeCaller said:

Completely anecdotally, I'd think that there would be so many more people working from home but rush hour traffic seems same as it ever was. But if 20% of people are now WFH, you'd think that would have a major impact on traffic.

Austin?  You can't discount the continued and massive influx into the metro, something in excess of 50K people per year.  They're on the roads.  I seriously doubt the work-from-home crowd offsets that completely.

[gmr548 16704]

i've heard people throw out the possibility of turning vacant office space into residential units.  Is that at all actually feasible? Seems like an easy way to pivot, but I'm sure there are a lot of barriers I'm unaware of.

Anything is possible, and there are some projects in works, but they’re built fundamentally differently. Plumbing, windowless units, HVAC… the list goes on.

It will be interesting to see how some of these early adopters pan out.

[Cheeseweasel 26443]

Nimby!

[Incredulity 11880]

Not in my building, yokel!

 

???

Edited April 26, 2023 by Incredulity

[bluto 5000]

On 4/25/2023 at 5:15 PM, Incredulity said:

It's not just if they are paid.  It's the loss in value that will get on the tax roll eventually.

The major west coast cities are headed for disaster unless something changes fairly soon.  SVB and small cap tech challenges are gasoline on the work from home/covid fire.

 

Meanwhile Dallas CAD has assessed office buildings at a ~20% aggregate value increase over 2022 final values. Absolute blood bath on those tax appeals. 

[Mullet Free 39]

Put this here instead of SVB thread since it addresses Fed policy as much as banking screw ups. 1/2 of banks insolvent?

 

[Captainant 28596]

Noted socialist rag states the obvious:

https://www.wsj.com/articles/why-is-inflation-so-sticky-it-could-be-corporate-profits-b78d90b7

 

[UT_OB1 2266]

On 4/26/2023 at 10:20 AM, gurt said:

i've heard people throw out the possibility of turning vacant office space into residential units.  Is that at all actually feasible? Seems like an easy way to pivot, but I'm sure there are a lot of barriers I'm unaware of.

Property managers - And now let me show you something you just won’t get in traditional apartments. This is your decorative shit pipe running through your living room!  You can paint it whatever color you like. All the sewer lines from the 30 floors above you run right through here. 

[Incredulity 11880]

12 hours ago, UT_OB1 said:

Property managers - And now let me show you something you just won’t get in traditional apartments. This is your decorative shit pipe running through your living room!  You can paint it whatever color you like. All the sewer lines from the 30 floors above you run right through here. 

I would assume the main mechanical/electrical and plumbing paths for office towers and residential towers are more similar than that.  The difference would probably be floor by floor distribution of services with the costs and associated engineering challenges of refitting each floor.

[UT_OB1 2266]

22 minutes ago, Incredulity said:

I would assume the main mechanical/electrical and plumbing paths for office towers and residential towers are more similar than that.  The difference would probably be floor by floor distribution of services with the costs and associated engineering challenges of refitting each floor.

All the office bathrooms are going to line up. Residential you’ve got all the showers, shitters, washing machines, and sinks that need enough slope. I also wouldn’t assume the main and vents sized for bathroom use only are big enough for full time occupancy with baths, dish washers, washing machines, etc.  Yeah, the main line probably isn’t going to go through a living room, but holy shit the retrofit needed could be insane. Best hope is probably that ceilings are tall enough to add a floor with crawl space. 

[Incredulity 11880]

27 minutes ago, UT_OB1 said:

All the office bathrooms are going to line up. Residential you’ve got all the showers, shitters, washing machines, and sinks that need enough slope. I also wouldn’t assume the main and vents sized for bathroom use only are big enough for full time occupancy with baths, dish washers, washing machines, etc.  Yeah, the main line probably isn’t going to go through a living room, but holy shit the retrofit needed could be insane. Best hope is probably that ceilings are tall enough to add a floor with crawl space. 

agreed.

It would be no small thing and surely underestimated by a layman.  

Kind of like when the wife says, "lets expand the living room, can we move that wall back 3 feet".

"that wall"  being  a structural support or a wet wall. 

 

Edited May 3, 2023 by Incredulity

[tbone_ 14463]

Total nightmare retrofitting office to resi. Zero times out of 10 it come in anywhere near budget. Creating opening windows and balconies suck.

We wouldn’t touch it with a 100 fr pole. There’s one going on here in Phoenix. It’s a year and a half past schedule. No way it makes money.

Much much better to just build from scratch.

[UT_OB1 2266]

4 minutes ago, Incredulity said:

agreed.

It would be no small thing and surely underestimated by a layman.  

Kind of like when the wife says, "lets expand the living room, can we move that wall back 3 feet".

"that wall"  being  a structural support or a wet wall. 

 

Every. Fucking. Week. 
 

Hey, let’s turn our attic (single story house) in to an office/ library. We can just move the AC and water heater, and knock out those boards that are in the way attached to the underside of the roof.