The Investment Thread

[igor67]

Yes cash is tricky to track, but that is why we have a plethora of anti-money laundering laws that to regulate the currency. As I have said the crypto hype has progressively moved the arguments about why it should exist. Fiats are different because an investment in a fiat is ultimately a bet on that countries economy and policies, so even if abstract it is still tied to real things. Generally if crypto was properly taxed for it's energy consumption and clearly regulated I would guess it would disappear, but I recognize that if people trade something long enough that belief can sustain some value.

[NeedMoreFans]

14 hours ago, nate82 said:

If BlackRock fails I have no problem with the teacher and government pensions going down the drain with them.  They made their bed with them let them sleep in it. 

Most teachers and government workers that work in states that offer a pension have absolutely no say in how their pensions are invested.  I have two choices; keep 100% my funds in the core fund or put 50% in the variable fund.  And I'm required to contribute to the pension, I cannot opt out.  Maybe there are some states where individual or state-wide unions have more say, but I highly doubt the average teacher or government worker has any influence in how their money is invested. So we're not "making our bed" if WRS is going heavy in investment properties because I have no choice in the matter.

[LouisEly]

I think the happy medium is that pensions should be regulated and limited as to how much they invest in residential real estate, and pension executives should be prosecuted for putting pensions at risk for doing so, not penalizing union members who have no say. 

Back to real estate.

Good agents are worth it, bad agents are a plenty.  The easiest way to tell the difference is to ask them what type of maintenance that type of home needs.  If they can't answer things like how often the roof needs to be replaced, how often the siding needs to be replaced/painted/brick needs to be tuckpointed and sealed, foundation sealing/repair, how to recognize and test for water behind walls, etc., then do not hire them.  I've never lived in a brick building before and didn't know the unique maintenance needs of that type of building and it has cost me tens of thousands of dollars in repairs and hundreds of hours of my life.

[nate82]

9 hours ago, igor67 said:

Yes cash is tricky to track, but that is why we have a plethora of anti-money laundering laws that to regulate the currency.

You do know crypto falls under those same anti-money laundering laws?  

 

9 hours ago, igor67 said:

Fiats are different because an investment in a fiat is ultimately a bet on that countries economy and policies, so even if abstract it is still tied to real things.

Incorrect a fiat can disappear tomorrow and all you will have is a coin or a piece of paper having very little to no value.  There is no law or regulation on fiat currencies.

For example if the US government decided to change the currency tomorrow and make the money you have worth nothing there is nothing you could do about it.  You would just have to go with it and start over.  Or the government could go with a stupid monetary policy and cause hyperinflation.  A countries fiat isn’t even tied to anything unless you are talking about the gold standard which no longer exists.  The US dollar is tied to nothing.  Nothing is backing up these fiats and they can be removed with zero consequences.

[BrewerFan]

On 3/23/2024 at 3:57 PM, nate82 said:

Incorrect a fiat can disappear tomorrow and all you will have is a coin or a piece of paper having very little to no value.  There is no law or regulation on fiat currencies.

Incorrect, huh? 

On 3/23/2024 at 6:21 AM, igor67 said:

. Fiats are different because an investment in a fiat is ultimately a bet on that countries economy and policies

You're saying THIS is incorrect?

When you talked about how their point was "blabbering nonsense," I knew you were a little emotional on this subject, but if you're arguing THIS isn't "incorrect," it's clearly more than that. 

 

You are right though. The US could just totally arbitrarily decide to blow up the US Economy(and the Global Economy) on a whim and just say the dollar is worth nothing. You think that's a viable argument here? That the US could do that tomorrow? 

That COULD happen. Now hold that up against the different Cryptocurrencies that had no regulation that have been scams. I'd say I'd bet on the dollar because of the US Economy, but I guess the US could just tomorrow say they're changing it to the Yen or... something that made absolutely zero actual sense.

 

Quote

  The US dollar is tied to nothing.  Nothing is backing up these fiats and they can be removed with zero consequences.

With zero consequences? Man, you argued so far to the extreme, that there's no possible way anyone can agree with this. 

You think just eliminating the dollar tomorrow would have "zero consequences?" To the people in charge, who make that decision...to world? 

 

[MrTPlush]

Less than half a decade ago, 7 states required a six-figure income to afford a house. That number is now 22 states. The median priced home in America requires a salary of approx. $110k to buy. 

That gets much worse when those figures assume you can put down 20%. $85k if you are wondering, up $20k since 2020.

In these 22 states, you need a six-figure income to afford a typical home, analysis finds (msn.com)

[LouisEly]

Jobs report out this morning, bond yields are up, but the job gains were almost entirely part-time.  No significant job gains for a few months now in full-time jobs.  Still less full-time employment per person than in 2019.  Labor force participation rate has changed little in the last year despite the job gains, suggesting that immigration is driving the job gains.

February jobs number revised down by 5,000 but January is now 100,000 lower than the initial estimate.  Jobs numbers have almost always been revised downward over the last year.

I hope the Fed is paying attention.

[nate82]

12 minutes ago, LouisEly said:

I hope the Fed is paying attention.

They are however don't expect a rate cut any time soon.  Inflation is still too high for a few of the governors and the job market and spending look to be all healthy.  If anything I think the Fed will just hold its course and won't increase or decrease the rates this year.  I still believe the Fed will hold and won't decrease rates until Q4 2024 or Q1 2025.  If spending and the job market stay where they have been I don't see the Fed doing much of anything but if inflation starts to creep back up again I fully expect a rate increase to happen again. 

[BrewerFan]

7 hours ago, nate82 said:

They are however don't expect a rate cut any time soon.  Inflation is still too high for a few of the governors and the job market and spending look to be all healthy.  If anything I think the Fed will just hold its course and won't increase or decrease the rates this year.  I still believe the Fed will hold and won't decrease rates until Q4 2024 or Q1 2025.  If spending and the job market stay where they have been I don't see the Fed doing much of anything but if inflation starts to creep back up again I fully expect a rate increase to happen again. 

Powell again just recently reiterated the still plan on the 3 cuts this year. 

[nate82]

39 minutes ago, BrewerFan said:

Powell again just recently reiterated the still plan on the 3 cuts this year. 

Powell is just one person and he doesn't decide if there will be a cut or rate increase the board of governors do when they vote on this.  The majority of the board of governors are saying no cuts if the economy stays the way it is. 

[LouisEly]

10 minutes ago, nate82 said:

Powell is just one person and he doesn't decide if there will be a cut or rate increase the board of governors do when they vote on this.  The majority of the board of governors are saying no cuts if the economy stays the way it is. 

One person said that this week and he doesn't have voting rights until 2026.

[Fear The Chorizo]

16 minutes ago, LouisEly said:

One person said that this week and he doesn't have voting rights until 2026.

I think the biggest issue is the fact there's an election in about 6 months and regardless of what party is in control of washington, the govmint will be leaning extremely hard on the fed not to do what they should be doing right now (continuing to RAISE rates, not stand pat and definitely not lower them) so the economy doesnt cycle into the recession it needs to get prices back in line with reality before votes start getting cast.  It's the status quo to keep kicking the can down the highway and hope it doesn't get smashed by the oncoming semi truck when they kick it one time too far and can't get it back.

[LouisEly]

10 hours ago, Fear The Chorizo said:

not to do what they should be doing right now (continuing to RAISE rates, not stand pat and definitely not lower them)

They absolutely should not be raising rates now.  If you take shelter out of the CPI the inflation rate is under 2% and high rates cause rents to increase.  The jobs reports are getting majorly revised downward and the household survey tells a completely different story.  The BLS jobs report for January showed 350k jobs created, but that's already been revised downward by 124k jobs and the household survey for January showed a drop of 31k jobs and the number of multiple job holders is rising:

https://schiffgold.com/exploring-finance/jobs-the-household-survey-tells-a-different-story-2/

And the unemployment rate for people age 25 and older with a bachelor's degree has been ticking upward since late 2022:

https://fred.stlouisfed.org/series/LNS14027662

The employment level for management, professional, and related occupations has dropped since October of 2023:

https://fred.stlouisfed.org/series/LNU02032201

All of the jobs gains have been in part-time jobs and no significant growth in full-time jobs for several months.  That's not an environment that they should be raising rates in.

[homer]

11 hours ago, Fear The Chorizo said:

I think the biggest issue is the fact there's an election in about 6 months and regardless of what party is in control of washington, the govmint will be leaning extremely hard on the fed not to do what they should be doing right now (continuing to RAISE rates, not stand pat and definitely not lower them) so the economy doesnt cycle into the recession it needs to get prices back in line with reality before votes start getting cast.  It's the status quo to keep kicking the can down the highway and hope it doesn't get smashed by the oncoming semi truck when they kick it one time too far and can't get it back.

Every president since George Bush Sr. has complained about the Fed to no avail. Bush blamed his 92 loss on Greenspan. Fed is gonna Fed.

[Fear The Chorizo]

14 hours ago, LouisEly said:

They absolutely should not be raising rates now.  If you take shelter out of the CPI the inflation rate is under 2% and high rates cause rents to increase.  The jobs reports are getting majorly revised downward and the household survey tells a completely different story.  The BLS jobs report for January showed 350k jobs created, but that's already been revised downward by 124k jobs and the household survey for January showed a drop of 31k jobs and the number of multiple job holders is rising:

https://schiffgold.com/exploring-finance/jobs-the-household-survey-tells-a-different-story-2/

And the unemployment rate for people age 25 and older with a bachelor's degree has been ticking upward since late 2022:

https://fred.stlouisfed.org/series/LNS14027662

The employment level for management, professional, and related occupations has dropped since October of 2023:

https://fred.stlouisfed.org/series/LNU02032201

All of the jobs gains have been in part-time jobs and no significant growth in full-time jobs for several months.  That's not an environment that they should be raising rates in.

I get your points, all of them - and to an extent I agree that there is a wide gap between main street and wall street in terms of what this economy feels like....and the biggest problem in my opinion is the fact prices have solidified at levels that aren't sustainable and the only way to drive them back down to a decent level is for wall street to get the same kick in the teeth that main street has had to deal with.  That means a significant recession and all that comes with it, too....but I think that's better in the longterm than propping up a stagnant economy everywhere else with monetary policy focused far more on benefitting wall street than it is on main street.

[nate82]

4 hours ago, Fear The Chorizo said:

.but I think that's better in the longterm than propping up a stagnant economy everywhere else with monetary policy focused far more on benefitting wall street than it is on main street.

This!!!!!

If the Fed does drop rates it is not going to have a good impact on the middle and lower class.  A rate cut is going to help the upper class and big businesses far more than it will help everyone else.  An up tick in inflation doesn't hurt the upper class as much as it does the middle and lower class.  Cutting interest rates now will bring the inflation rate above what anyone should be comfortable with. 

We also need to keep in consideration that the SPR is also not going to be refilled which is going to artificially keep oil down well somewhat.  OPEC will also keep supply down as they will be reducing production.  So oil should flatten and maybe increase to where it should be if the SPR were to be refilled.  We are coming up on travel season real quick here.  I think we may see an increase in inflation around June and I think the Fed will be too scared to raise rates and instead of cutting will just do nothing. 

If the Fed raises rates in June you will have the far leftists screaming election interference by the Fed and if the Fed lowers rates the right will also be screaming election interference by the Fed.  I think this is another point where the Fed just does nothing especially if the economic indicators are telling them to increase rates or to lower rates.  Actually I don't think there will be a case for lowering rates as inflation is still not at the point the Fed wants them to be and consumer spending is still very healthy along with positive job growth that the Fed is looking at.  I think they will just stand pat regardless of what is being said. 

[owbc]

On 4/7/2024 at 2:07 AM, nate82 said:

This!!!!!

If the Fed does drop rates it is not going to have a good impact on the middle and lower class.  A rate cut is going to help the upper class and big businesses far more than it will help everyone else.  An up tick in inflation doesn't hurt the upper class as much as it does the middle and lower class.  Cutting interest rates now will bring the inflation rate above what anyone should be comfortable with. 

We also need to keep in consideration that the SPR is also not going to be refilled which is going to artificially keep oil down well somewhat.  OPEC will also keep supply down as they will be reducing production.  So oil should flatten and maybe increase to where it should be if the SPR were to be refilled.  We are coming up on travel season real quick here.  I think we may see an increase in inflation around June and I think the Fed will be too scared to raise rates and instead of cutting will just do nothing. 

If the Fed raises rates in June you will have the far leftists screaming election interference by the Fed and if the Fed lowers rates the right will also be screaming election interference by the Fed.  I think this is another point where the Fed just does nothing especially if the economic indicators are telling them to increase rates or to lower rates.  Actually I don't think there will be a case for lowering rates as inflation is still not at the point the Fed wants them to be and consumer spending is still very healthy along with positive job growth that the Fed is looking at.  I think they will just stand pat regardless of what is being said. 

In 2023, national gas prices went from $3.54 in March to $3.68 in June to $3.95 in August. This year we were also at $3.54 in March. So anything less than a ~$0.45/gal increase by August is going to make the inflation numbers look good. 

The upcoming commercial real estate crisis is the real looming threat, but it doesn't look like it's going to be a serious problem until after the election...2025 or 2026. I think the wall street folks are expecting a bailout. Local government budgets are going to be completely screwed. 

I agree that rates are going to stay flat, there's no reason to do anything until the recession starts. We all know it's coming, it's just impossible to know exactly when. 

[Fear The Chorizo]

4 hours ago, owbc said:

In 2023, national gas prices went from $3.54 in March to $3.68 in June to $3.95 in August. This year we were also at $3.54 in March. So anything less than a ~$0.45/gal increase by August is going to make the inflation numbers look good. 

The upcoming commercial real estate crisis is the real looming threat, but it doesn't look like it's going to be a serious problem until after the election...2025 or 2026. I think the wall street folks are expecting a bailout. Local government budgets are going to be completely screwed. 

I agree that rates are going to stay flat, there's no reason to do anything until the recession starts. We all know it's coming, it's just impossible to know exactly when. 

It will be more than a $0.45/gallon increase this summer, and the only way it won't be is if the economy goes in the crapper sooner than what many are expecting and demand craters.

[LouisEly]

On 4/7/2024 at 4:07 AM, nate82 said:

A rate cut is going to help the upper class and big businesses far more than it will help everyone else. 

What doesn't help the upper class and big businesses far more than it will help everyone else?

It's not about what will help who the most.  It's about what will hurt who the most.  The upper class and big businesses will figure out how to make money regardless of what the fed/guvmint does.  But if rates get raised, businesses will layoff more people, and the middle class will get hurt.  As I pointed to above, it's already happening.

And it already happened to me.  7 months unemployed and now I'm making 20% less than I was making a year ago.  I'm in a permanent mild recession.

[Fear The Chorizo]

CPI higher than expected, inflation for March higher than expected....

shocker

[LouisEly]

https://www.cnbc.com/2024/04/10/heres-the-inflation-breakdown-for-march-2024-in-one-chart.html

Some bright spots:

• Food: 2.2% YoY
  • Driven by Food Away From Home (4.2%)
  • Food at Home: 1.2%
• Energy: 2.1% YoY
  • Driven by Electricity (5%)
  • Gas: 1.3%

Inflation is being driven primarily by two things:

• Shelter (5.7%)
• Motor Vehicle Insurance (22.2%)

What are consumers supposed to do about those things?  Go without insurance?  Can't tell you how many damaged vehicles I've seen driving around because people only have liability insurance (and the cost of repair, also up 11.6%).  People have to live where the jobs are, plus millions of immigrants/migrants are taking up the housing on the low end of the spectrum forcing people to higher rents.  That, and high interest rates make home ownership less affordable, increasing the demand for rent.

Don't get me started on Juices & Drinks (27.5%).  $9.99 for a 12-pack at my local store now.  Seriously Coca-Cola and Pepsi? 

[LouisEly]

No talk of rate hikes in the Fed minutes.

[nate82]

37 minutes ago, LouisEly said:

No talk of rate hikes in the Fed minutes.

I doubt they hike but I still believe they will stay where the rates are at right now.

A rate hike should only happen if inflation rises overly high.

[owbc]

Rate hikes are not going to help with shelter and insurance. Those will have to be solved with policy. 

 

[Fear The Chorizo]

2 hours ago, LouisEly said:

https://www.cnbc.com/2024/04/10/heres-the-inflation-breakdown-for-march-2024-in-one-chart.html

Some bright spots:

• Food: 2.2% YoY
  • Driven by Food Away From Home (4.2%)
  • Food at Home: 1.2%
• Energy: 2.1% YoY
  • Driven by Electricity (5%)
  • Gas: 1.3%

Inflation is being driven primarily by two things:

• Shelter (5.7%)
• Motor Vehicle Insurance (22.2%)

What are consumers supposed to do about those things?  Go without insurance?  Can't tell you how many damaged vehicles I've seen driving around because people only have liability insurance (and the cost of repair, also up 11.6%).  People have to live where the jobs are, plus millions of immigrants/migrants are taking up the housing on the low end of the spectrum forcing people to higher rents.  That, and high interest rates make home ownership less affordable, increasing the demand for rent.

Don't get me started on Juices & Drinks (27.5%).  $9.99 for a 12-pack at my local store now.  Seriously Coca-Cola and Pepsi? 

Policy is driving all of the sustained inflationary pressures, unfortunately - we are long past self-correcting supply and demand cycles.  What really sucks is the policies driving things over the economic cliff won't change until after the crash landing, in large part because those policies are the only thing still propping up sectors that have to this point prevented an official macro economic recession.  When those sectors run out of gas and the rest of the sectors are still suffering/stagnant due to price pressures....ish.

When you look at it, we're getting pretty darn close to celebrating the 100 yr old birthday of the worst economic period in US history....and this current period actually has alot of similarities to those roaring 20s.