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Author Topic: So much for inflation being "transitory"  (Read 3769 times)

MU82

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Re: So much for inflation being "transitory"
« Reply #50 on: September 13, 2022, 09:00:26 PM »
Thanks?
There were 681 attempts to ban or restrict access to a record 1,651 different books in schools through August of this year. What books? Mainly those written by or about people of color or that deal with LGBTQ issues.

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Lennys Tap

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Re: So much for inflation being "transitory"
« Reply #51 on: September 13, 2022, 09:10:32 PM »


I will add, sadly, that the recent run up in pricing in Florida has delayed my dream of moving there in the next 5-7 years, but such is life.

Goose

Mortgage rates have risen from 2.8% to 5.9%. And they’re going higher. Home prices are already off their highs in most markets and will fall everywhere eventually as fewer and fewer can qualify. But supply is short so in the most desirous locations price drops may be modest. All depends how long this mess lasts.

MU Fan in Connecticut

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Re: So much for inflation being "transitory"
« Reply #52 on: September 13, 2022, 09:28:29 PM »
Glad he’s still bullish. At some point he’ll be right, I hope soon. But the S+P is down 18% in the last 8 months. The Nasdaq (where the real money has been made in the market) is down 28%. As corrections in this bull market are concerned, this one is deep and extended.

That's not his position that's Ameriprise the financial corporation's.   Because the numbers are down as you say the history says where they are now is the bottom and will rise from here.

ZiggysFryBoy

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Re: So much for inflation being "transitory"
« Reply #53 on: September 13, 2022, 09:39:54 PM »
Thanks?

Made me honestly think about doing what you posted too.

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MU82

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Re: So much for inflation being "transitory"
« Reply #54 on: September 13, 2022, 10:02:11 PM »
For those interested in more information on I Bonds, this Seeking Alpha author writes fairly often about them. His reports are comprehensive and easy to read. Here's his latest:

https://seekingalpha.com/article/4539511-should-you-invest-in-i-bonds

There were 681 attempts to ban or restrict access to a record 1,651 different books in schools through August of this year. What books? Mainly those written by or about people of color or that deal with LGBTQ issues.

BAN ASSAULT RIFLES, NOT BOOKS!

MuggsyB

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Re: So much for inflation being "transitory"
« Reply #55 on: September 13, 2022, 10:17:33 PM »
For those interested in more information on I Bonds, this Seeking Alpha author writes fairly often about them. His reports are comprehensive and easy to read. Here's his latest:

https://seekingalpha.com/article/4539511-should-you-invest-in-i-bonds

Ty MU82.

Sultan Sultanberger

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Re: So much for inflation being "transitory"
« Reply #56 on: September 14, 2022, 04:28:11 AM »
The Fed didn't act quickly enough.  There's no need for a political discussion but the most recent spending bills have not helped the overall economy. 

Gotcha. Agree on the fed. And the latest spending bills have way too much long term spending to help the economy. But I don’t think they have much impact on inflation either.
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TSmith34

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Re: So much for inflation being "transitory"
« Reply #57 on: September 14, 2022, 07:07:11 AM »
As an old codger, I'm aware of the impact of the 1973 and 1979 oil shocks on the economy. While there were many reasons why inflation was out of control in the 1970s, the price of oil was a huge issue then and it is now.

We will not have inflation under control until we get control of energy prices. Petrochemicals, natural gas and carbon-based fuel underlies almost everything we do, from heating and cooling our homes to transportation to manufacturing to refining of raw materials to agriculture. In the past two years, we've seen a doubling in the cost of gasoline and a barrel of crude rise from $42 to almost $100 a barrel. Because this is sustained, we have inflation.

Energy prices drop and we get back to something close to normal.

Perhaps true in the 70s, but not true today. If oil was the principal driver of inflation we would have seen huge spikes between 2004 and 2014 when oil surged, at one point to over $140/barrel. We didn't.
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PBRme

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Re: So much for inflation being "transitory"
« Reply #58 on: September 14, 2022, 08:20:17 AM »
Gotcha. Agree on the fed. And the latest spending bills have way too much long term spending to help the economy. But I don’t think they have much impact on inflation either.

The markets are a leading indicator and spending bills are stimulus.  In addition, the dollar is at close to all time highs (typically a disinflationary impact) as Ukraine/Energy shocks dissipate and the dollar moves back down there is another round of inflation coming and the market is anticipating this.  I think we will see 7+% inflation for the next 2-3 years maybe higher depending on the dollar.  Abd in general i think the fed is always out of phase with reality (too early or too late)
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MUBurrow

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Re: So much for inflation being "transitory"
« Reply #59 on: September 14, 2022, 09:01:19 AM »
Goose

Mortgage rates have risen from 2.8% to 5.9%. And they’re going higher. Home prices are already off their highs in most markets and will fall everywhere eventually as fewer and fewer can qualify. But supply is short so in the most desirous locations price drops may be modest. All depends how long this mess lasts.

I am really interested to see if home prices drop off, or if they just flatten out.  I'm on the younger side, and was kind of molded in the post-08 economy, so I always assume that houses are like stonks and prices will drop in a weak market.  But my limited understanding is that the 2000s were one of the first times ever that home prices actually dropped, and that a slowdown has traditionally always meant suppressed rises in prices, but that homes have not traditionally lost value.  Although I can imagine a lot of places in Florida probably are outliers to that trend (to the extent I have it correct) given the higher volatility in prices there and the less elastic demand of retirees looking to locate there.

Scoop Snoop

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Re: So much for inflation being "transitory"
« Reply #60 on: September 14, 2022, 09:15:37 AM »
I am really interested to see if home prices drop off, or if they just flatten out.  I'm on the younger side, and was kind of molded in the post-08 economy, so I always assume that houses are like stonks and prices will drop in a weak market.  But my limited understanding is that the 2000s were one of the first times ever that home prices actually dropped, and that a slowdown has traditionally always meant suppressed rises in prices, but that homes have not traditionally lost value.  Although I can imagine a lot of places in Florida probably are outliers to that trend (to the extent I have it correct) given the higher volatility in prices there and the less elastic demand of retirees looking to locate there.

Keep in mind that the post 08' crash in home prices was triggered largely by a massive number of defaults resulting from reckless lending practices in the preceding years. While the real estate market is not locked in with the cost of labor and materials for construction, those are factors. Neither the cost of labor nor materials are likely to decline in my opinion.
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MU Fan in Connecticut

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Re: So much for inflation being "transitory"
« Reply #61 on: September 14, 2022, 09:22:19 AM »
I am really interested to see if home prices drop off, or if they just flatten out.  I'm on the younger side, and was kind of molded in the post-08 economy, so I always assume that houses are like stonks and prices will drop in a weak market.  But my limited understanding is that the 2000s were one of the first times ever that home prices actually dropped, and that a slowdown has traditionally always meant suppressed rises in prices, but that homes have not traditionally lost value.  Although I can imagine a lot of places in Florida probably are outliers to that trend (to the extent I have it correct) given the higher volatility in prices there and the less elastic demand of retirees looking to locate there.

FWIW, per my Financial Adviser last week said Ameriprise's position is home prices will stabilize for more or less what you said. 

Sultan Sultanberger

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Re: So much for inflation being "transitory"
« Reply #62 on: September 14, 2022, 09:43:26 AM »
I think home prices are going to stabilize, mostly due to higher interest rates, but there is a massive supply shortage in a lot of markets that will keep prices from sliding significantly. I read something last week that the 2008 recession slowed down people moving into the skilled trades because there just weren't job opportunities for carpenters, electricians and plumbers.  Now all those professions are needed because we just need more housing units.
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forgetful

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Re: So much for inflation being "transitory"
« Reply #63 on: September 14, 2022, 10:21:11 AM »
FWIW, per my Financial Adviser last week said Ameriprise's position is home prices will stabilize for more or less what you said.

I guess it depends on time scale. Right now in my area, homes are selling at ~5-10% lower than they were in April and May, and inventories are rising.

Now, my area saw an extreme increase, that was essentially unaffordable.

If inflation continues, I would expect a similar situation nationwide with home prices falling at least 5-10%, and more in areas that experienced rapid increases.

MU Fan in Connecticut

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Re: So much for inflation being "transitory"
« Reply #64 on: September 14, 2022, 11:11:15 AM »
I guess it depends on time scale. Right now in my area, homes are selling at ~5-10% lower than they were in April and May, and inventories are rising.

Now, my area saw an extreme increase, that was essentially unaffordable.

If inflation continues, I would expect a similar situation nationwide with home prices falling at least 5-10%, and more in areas that experienced rapid increases.

And that's probably where they will stabilize at in the 5-10% reduction range. 

Weren't home prices up 30-40%?

forgetful

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Re: So much for inflation being "transitory"
« Reply #65 on: September 14, 2022, 11:36:35 AM »
And that's probably where they will stabilize at in the 5-10% reduction range. 

Weren't home prices up 30-40%?

Yes, they were up crazy amounts. We are in agreement then.

A crisis could be on the horizon if we keep seeing inflation and get back to a point where those that bought during the 30-40% run up, cannot afford their mortgage and we see another rash of foreclosures.

JWags85

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Re: So much for inflation being "transitory"
« Reply #66 on: September 14, 2022, 11:41:06 AM »
And that's probably where they will stabilize at in the 5-10% reduction range. 

Weren't home prices up 30-40%?

If you think home prices, given the market the last few years, will stabilize in a 5-10% reduction range and then move upwards again, I don't know what to tell you.  And if they do, there are huge issues under the surface that are being painted over yet again.  I'm not an alarmist, but a realist and healthy markets just don't work like that.  And free money that heats up economies is never truly free.

And with all due respect to your relationship at Ameriprise, its been my experience that large corporate financial advisors never preach any sort of meaningful or concerning downside.

rocky_warrior

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Re: So much for inflation being "transitory"
« Reply #67 on: September 14, 2022, 12:35:29 PM »
And free money that heats up economies is never truly free.

The biggest amount of "free money" that nobody is mentioning was a Fed benchmark rate 2.5% or under since 2008!  So much money has been flowing because of that - because loans have basically been free.  It did go on for far too long - and is being rectified now. 
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real chili 83

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Re: So much for inflation being "transitory"
« Reply #68 on: September 14, 2022, 12:45:21 PM »
Nothing more than a fire sale, eh?

MuggsyB

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Re: So much for inflation being "transitory"
« Reply #69 on: September 14, 2022, 12:53:21 PM »
Concerns about a potential railway strike?

Hards Alumni

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Re: So much for inflation being "transitory"
« Reply #70 on: September 14, 2022, 12:55:23 PM »
I think the issue is the way "transitory" was positioned or used.  Some, not all, tried to brush aside inflationary concerns as something that would pass in weeks or a few months.  Whether it was for political reasons, to bide time to find a solution, or just cause the full extent wasn't known, that doesn't really matter.  I don't think its the end of the world, and agree that economies, even the strongest economies, ebb and flow, but honesty and living in reality is important.

Inflation or economic stumbles can never be placed at the foot of one party or politician or policy.  But in this partisan era, there seems to be a need to immediately blame or scapegoat something, thus this discussion.  That being said, there are a disturbing number of people lacking even the most remedial economic education that don't seem to understand what causes inflation, what can make it worse, and what can be done to solve it, and that is obnoxious.

IBTL

/thread

Hards Alumni

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Re: So much for inflation being "transitory"
« Reply #71 on: September 14, 2022, 01:01:46 PM »
As an old codger, I'm aware of the impact of the 1973 and 1979 oil shocks on the economy. While there were many reasons why inflation was out of control in the 1970s, the price of oil was a huge issue then and it is now.

We will not have inflation under control until we get control of energy prices. Petrochemicals, natural gas and carbon-based fuel underlies almost everything we do, from heating and cooling our homes to transportation to manufacturing to refining of raw materials to agriculture. In the past two years, we've seen a doubling in the cost of gasoline and a barrel of crude rise from $42 to almost $100 a barrel. Because this is sustained, we have inflation.

Energy prices drop and we get back to something close to normal.

So you're saying, drop the sanctions on Venezuela and normalize relations?  I'm in.

Hards Alumni

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Re: So much for inflation being "transitory"
« Reply #72 on: September 14, 2022, 01:13:09 PM »
The Fed didn't act quickly enough.  There's no need for a political discussion but the most recent spending bills have not helped the overall economy.

On the contrary, they've absolutely helped the economy.  Arguing otherwise is objectively wrong.

Without that spending, the economy as a whole would be in shambles.  Will it hurt us for a while?  Yeah probably, but the whole of the world is hurting.

Hards Alumni

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Re: So much for inflation being "transitory"
« Reply #73 on: September 14, 2022, 01:40:51 PM »
I think home prices are going to stabilize, mostly due to higher interest rates, but there is a massive supply shortage in a lot of markets that will keep prices from sliding significantly. I read something last week that the 2008 recession slowed down people moving into the skilled trades because there just weren't job opportunities for carpenters, electricians and plumbers.  Now all those professions are needed because we just need more housing units.

I think home prices will continue to rise, but more slowly.  With interest rates the highest they've been in a generation (think about that) that should slow the average buyer, and will continue to put upward pressure on 'starter homes'... since people will continue to look for 'deals'... especially for investment reasons.

So We have:
1.  Interest rates pushing prices downward
2.  Materials cost pushing prices upward
3.  Inventory pushing prices upward

The number one thing that a lot of people forget is the continued urbanization of the US population.  Single family homes can continue to be built, but they will continue to be built further and further from urban centers.  Which goes contrary to what people want. 

What does all of this mean?  Who can afford new housing in desirable places?  People with a ton of money who can subvert interest rates by paying cash.  Buy real estate in urban centers in cash and charge rent to people who want to live in those places but have been priced out of ownership by high prices and high interest rates.  With rental prices continuing to rise, they'll be perpetual renters spending 30-50% of their income on housing.  I've been saying this for a couple of years now, but we are well on the path to Neofuedalism.  Unless the US promotes legislation that stops investment firms from owning and renting homes, condos, and apartments in large numbers we will run  into the same problem that Canada has.

https://financialpost.com/real-estate/investors-own-nearly-a-third-of-homes-in-major-canadian-markets-2


Lennys Tap

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Re: So much for inflation being "transitory"
« Reply #74 on: September 14, 2022, 03:15:48 PM »


So We have:
1.  Interest rates pushing prices downward
2.  Materials cost pushing prices upward
3.  Inventory pushing prices upward




#1 is no doubt true. #2 has been, but commodity prices topped out in June and the slowdown that interest rate hikes portends will bring them lower still. #3 is true, but again, hikes in interest rates will make the pool of potential buyers smaller. So (imo) one pushing prices lower, one having no effect and one supporting prices (but not to the extent that it had been). I think prices will pull back for the near and intermediate term.

 

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