Investing Thread

[Skatastrophy]

knew it was coming, but didn't think uncle joe could ruin the economy this fast...and he didn't even leave any chocolates.  got gas?

TIL the economy is ruined

[MU82]

knew it was coming, but didn't think uncle joe could ruin the economy this fast...and he didn't even leave any chocolates.  got gas?

need to take sumthin' for that BDS, tucker.

[MU82]

FIFY, because last quarter would have been a miss without the $0.25/share from Bitcoin cap gains taxes after he took a big position and then talked it up. Not saying that was illegal but it skirts the boundaries.

I'm just the messenger here. Not a Bitcoin investor or really even a follower of crypto at all.

[TSmith34, Inc.]

Morning take from Yahoo  Finance:

"The simplest read on the market's reaction to this data is that higher inflation will lead to earlier rate hikes from the Fed and all else equal higher rates are worse for stocks. This leaves the stocks that have done best — in this case tech stocks — most vulnerable.

‌But in thinking about the "why" driving April's price increases, it becomes less clear that this data is so reflexively negative for the stock market. Janney's chief fixed income strategist Guy LeBas said Wednesday that this data is yet another reflection of what we've covered in the last several editions of the Morning Brief: rising demand.

"There just isn't a good historical analog for today's core CPI print in the post-70s era," LeBas said. "I can tell you that what it represents is consumer demand rebounding faster than the economy can create supply in the short term. That's a good thing for corporate profits."

‌

Major sources of the price increase in April included the used car market, lodging away from home, and airfares. Flush consumers looking to move around more and travel is a straightforward re-opening theme.

‌

And as the team at Bank of America Global Research said in a note Wednesday, "more persistent sources of inflation were tamer. Rents and OER both came in at 0.2% mom, which is relatively in line with the recent trend."

‌The firm added that, "medical care inflation was flat as the boost from stimulus around the turn of the year faded."

‌Prices rising in sectors of the economy that were severely impacted by the pandemic while housing and medical costs remain tame is exactly what Fed officials mean when they say inflation pressures are likely to be "transitory."

At the end of 2020, we argued that the reason for the market's rally amid a global pandemic was driven by the same factor that over the long run always drives stock prices — higher earnings. The ability for firms to exert operating leverage after a recession and also raise prices into a strong demand environment are two positive bottom-line dynamics for corporates today.

‌

That today's inflationary backdrop should power future earnings growth does not, of course, mean that investors must or should or will price in this dynamic. And as Wednesday's action made clear, the market's interpretation of the most recent inflation data is that higher rates are coming sooner than expected.

Wall Street economists in our inbox on Wednesday also seemed to agree that even higher inflation readings are coming in the months ahead.

‌As those reports stack up, questions about whether the Fed will hold its nerve and still refer to these inflation pressures as "transitory" will only grow louder. How the market handles those data points is anyone's guess.

‌But at least for one month, a jarring inflation report still fits cleanly with an economic theme that could not be more clear: this is a demand-driven recovery."

[MU82]

Interesting round-up, TS.

Also, historically, rising rates aren't necessarily bad for stock prices. Rates were much, much higher than today during both the Reagan and Clinton market surges, for example.

[pacearrow02]

https://mobile.twitter.com/jbartash/status/1392820209359147011

[Coleman]

Question for all you old farts who lived through the inflation of the 1970s...

Do asset values (equities, commodities, etc.) generally rise with inflation? Common sense tells me that if prices are going up, revenues are also going up, which means valuations are also going up? Is that a correct assumption?

In this case really the only big losers are people holding lots of cash or low interest bonds. Correct?

[TSmith34, Inc.]

Interesting round-up, TS.

Also, historically, rising rates aren't necessarily bad for stock prices. Rates were much, much higher than today during both the Reagan and Clinton market surges, for example.

It's not the current rates, it's the direction of rates that the market considers IMO (and Buffett's FWIW).

[jesmu84]

Talk of inflation is nuts.

You're all either pushing a political bias or have PTSD from the 70s.

Go look at what wall street is saying about CPI.

Basically, it's catching up to where we would be without a pandemic. And it's all supply related to the pandemic.

Much Ado about nothing.

[reinko]

Not great for the cryptos

https://www.barrons.com/articles/binance-is-under-federal-investigation-bitcoin-coinbase-and-the-crypto-world-are-reeling-51620940200?siteid=yhoof2

[jesmu84]

Not great for the cryptos

https://www.barrons.com/articles/binance-is-under-federal-investigation-bitcoin-coinbase-and-the-crypto-world-are-reeling-51620940200?siteid=yhoof2

Money laundering? You mean the same thing that HSBC and other global financial groups have been found to do? I assume binance will get a similar slap on the wrist.

[rocket surgeon]

Talk of inflation is nuts.

You're all either pushing a political bias or have PTSD from the 70s.

Go look at what wall street is saying about CPI.

Basically, it's catching up to where we would be without a pandemic. And it's all supply related to the pandemic.

Much Ado about nothing.

  seriously?  is that you baghdad bob?  nothing to see here, eyn'a?  next thing you're gonna tell us is marketwatch is fox news in disguise?  come on man!  you a junkie?


https://www.marketwatch.com/story/u-s-inflation-climbs-in-april-to-the-highest-level-in-13-years-cpi-shows-11620823628

[Skatastrophy]

  seriously?  is that you baghdad bob?  nothing to see here, eyn'a?  next thing you're gonna tell us is marketwatch is fox news in disguise?  come on man!  you a junkie?


https://www.marketwatch.com/story/u-s-inflation-climbs-in-april-to-the-highest-level-in-13-years-cpi-shows-11620823628

Yes, for 1 month inflation was high. Before that it was very low for 1 year. Did you even read the article you posted? Here's a couple quotes relevant to the post you're refuting:

> The pace of inflation has surged after years of languishing at unusually low levels largely due to the rapid reopening of the U.S. economy.

also

> Senior Federal Reserve officials, who are supposed to protect the U.S. from high inflation, insist the increase is temporary.

I hope that you pay someone to manage your money for you.

[rocket surgeon]

Yes, for 1 month inflation was high. Before that it was very low for 1 year. Did you even read the article you posted? Here's a couple quotes relevant to the post you're refuting:

> The pace of inflation has surged after years of languishing at unusually low levels largely due to the rapid reopening of the U.S. economy.

also

> Senior Federal Reserve officials, who are supposed to protect the U.S. from high inflation, insist the increase is temporary.

I hope that you pay someone to manage your money for you.

absolutely have a money man, but re-read jesmu

talk of inflation is "nuts"??  inflation is inflation, i don't care what politics one is.  what is gas up to?  food?  i love the excuse making and the cnn talking points.  talk to most people and there is A LOT of talk of 70's syle stagflation.  i hope the hell not, even if it were to get uncle joey impeached, i don't want this upon our nation.  yes i know a potus has never and will not ever be impeached for driving our once prospering economy into the underworld, but just saying i would not sacrafice my hard earned money for that as some on the other side would have to get rid of 45. 

jemu said go look at what ww is saying about cpi-it's right there-13 year high...so far

much ado about nothing?  i hope so, but i think we are only seeing the previews.  there has been too much feigning going on.  the orange haired wonder woman spinning like a top; not what we were promised from day one

[jesmu84]

This isn't stagflation at all. This is making up for lack of price movement in 2020. This is economy reopening and supply side response.

https://twitter.com/byHeatherLong/status/1392481679596564484?s=19

https://twitter.com/greg_ip/status/1392541031850287104?s=19

[MU82]

yes i know a potus has never and will not ever be impeached for driving our once prospering economy into the underworld

you do know that the economy was doing well until the then-potus admittedly and intentionally underplayed and then totally ignored the pandemic, right? and as a bonus, he has the blood of more than half a million americans on his hands. (RIP Herman Cain) but yeah ... with the economy recovering under the current president, you're gonna go with "uncle joey is ruining the economy"? i hope tucker giving you mouth-to-mouth can help you survive your BDS.

[StillAWarrior]

This is a really enjoyable and helpful thread. Please don't get it locked.

[TSmith34, Inc.]

Stagflation? What fantasy world is that from? Wait, nevermind. Reality-proof.

And gas is up to $2.89/g here. Horrors!

[Frenns Liquor Depot]

Stagflation? What fantasy world is that from? Wait, nevermind. Reality-proof.

And gas is up to $2.89/g here. Horrors!

Complaining about gas prices is the sure sign of someone graduating to a certain age.  I thought the boomers were different, but apparently not. 

[ATL MU Warrior]

absolutely have a money man, but re-read jesmu

talk of inflation is "nuts"??  inflation is inflation, i don't care what politics one is.  what is gas up to?  food?  i love the excuse making and the cnn talking points.  talk to most people and there is A LOT of talk of 70's syle stagflation.  i hope the hell not, even if it were to get uncle joey impeached, i don't want this upon our nation.  yes i know a potus has never and will not ever be impeached for driving our once prospering economy into the underworld, but just saying i would not sacrafice my hard earned money for that as some on the other side would have to get rid of 45. 

jemu said go look at what ww is saying about cpi-it's right there-13 year high...so far

much ado about nothing?  i hope so, but i think we are only seeing the previews.  there has been too much feigning going on.  the orange haired wonder woman spinning like a top; not what we were promised from day one

This is absurd even for you, which is saying something.

[cheebs09]

Complaining about gas prices is the sure sign of someone graduating to a certain age.  I thought the boomers were different, but apparently not.

Haha this was my thought. My wife’s grandpa always asks me what the price of gas is in Milwaukee and I honestly couldn’t tell him unless I was standing right in front of the pump.

It’s just kind of a price I will pay no matter what it is. I feel if prices for everything else went up 10%, but gas stayed low, some people would be celebrating.

[Goose]

This boomer has zero idea what the price of gas, nor do I care. I have a friend that lives in NYC and whenever he asks me how much gas is in MKE, I tell him $10 a gallon.

[jficke13]

My summer before senior year of college ('09) gas was north of $4/gal. It's been 12 years and the price is still significantly lower than it was then. And, adjusted for inflation, the stagflation-era price of gas was way higher than it is now. The idea that gas prices going up to aprx $3/gal is a marker of impending economic collapse is silly alarmism. If anything, it's a regression to a long term mean.

But also, "inflation" is a crappy colloquialism. It has a technical meaning but that is largely divorced from the lived reality of normal people in this country. Sure, to economic, policy, or financial professionals the technical "inflation" matters. But to most people we really only have the things we actually spend on to gauge whether prices are rising (and, to that end that's really the only thing that matters to us... is our paycheck getting us more, less, or the same than it did a year ago)

We've beaten the dead horse of tuition inflation here, but obviously that sector of prices has skyrocketed. Rents have skyrocketed. The price of video games has not. I paid $60 for Zelda on the N64 back in the day, and if I felt like buying a new video game now, I'd pay $60. As discussed above, gas prices have fallen 25ish%. Spot prices for some things are spiking due to supply-constraints, but others are not spiking.

Is "inflation" affecting the economy? Sure. Is it higher than it was last year or the year before that? Sure. Is it high relative to literally any point in the 20th and 21st centuries? Nope. The only reason to freak out about this is if you *want* to freak out about it.

(edited to fix my math of years since 2009. I can arithmetic, I swear.)

[Goose]

As a whole, the USA consumer has been spoiled and that is going to be changing. I believe that we are in for some serious sticker shock on products that we basically considered commodities over the past twenty years. The tariffs caused an uptick but it was slowly passed on to the consumer over time. We are seeing price increases of 10-20% across the board in Asia and suppliers not holding pricing order to order in some cases.

Not to be a broken record, but these increases coupled with insane shipping costs are going to be passed on to the consumer. I have never been someone that watched inflation closely and there has not been a need to for a long time. I 100% believe that this is an issue that should be watched closely by everyone. In addition to inflation concerns, I am very concerned on supply issues on consumer goods, autos and everything in between. Our business is hearing horror stories on a daily basis.

[Uncle Rico]

This boomer has zero idea what the price of gas, nor do I care. I have a friend that lives in NYC and whenever he asks me how much gas is in MKE, I tell him $10 a gallon.

Same 😂, except the boomer part