161–170 of 698 posts
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You’re forgetting about the overpaid tech workers who are soon to be laid off, possibly underwater on their mortgages, and decide it’s time to downsize.
There are amazon, google, msft and apple, with almost $1trln annual revenue combined, they will continue paying to a plenty of workers.
I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…
We also had a previous US administration handing out cash like candy in the form of stimulus checks.
It pales in comparison to the $9 trillion in QE over the past decade given to the largest banks.
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You are right, inflation may get worse ;)
there should be factors which drive it. For last year such factors are: - increased min wage - supply chain disruptions - China lockdowns: less goods on the market -> higher prices - increased price on commodities and energy All of this already included into current good prices, so there should be something more to push farther inflation.
When you have a supply shock on raw inputs, it takes time for that to make its way through the economy. Businesses along the way keep inventory, they've locked in forward contracts, they can eat the cost increases to avoid losing market share until they're sure the price increases are persistent. But eventually they realize that everyone else in the industry is facing similar price increases and they'll go out of business if they don't, so they raise their prices too. This eventually propagates down the supply chain as inventory runs out and new contracts are negotiated. The price increases of late 2021 were triggered by the initial shock of March 2020. The Ukraine war & China lockdown shocks of early 2022 aren't going to be seen until about 2024.
By the time businesses have adapted to this round of shocks, we may be dealing with new shocks like a war in Europe or the retirement of baby boomers.
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How could there be a whole generation of CEOs who never saw a recession? Are there 13-year-old CEOs?
Recessions don't always hit you so hard if you're not an adult with a career and bills.
I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…
Why would bonds and cash be wrecked? You even say that bonds would be a good deal
But if you actually buy that bond, and the rates keep going up, then new bonds will be an even better deal than the bond that you bought, and so to sell it you'd need to sell at a discount ("wrecked").
I feel like this misses a sense of scale. Sure, everyone loses, but some choices must be superior to others in a rising-rates environment.
I agree we are working through an asset bubble in tech and housing - P/E's went quite a ways above the historical line, as did housing prices. But think about the chip shortage (automotive, consumer electronics) - raising interest rates does not "fix" supply and make prices lower. Think about oil & gas markets. Think about labor shortages. When supply is broken, it's not only a monetary policy problem. Most of these…
Housing is not a bubble, at least not in the U.S.A. The prices are supported by a fundamental shortage of the product. It is not driven by speculation but demographic pressure.
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Is WFH actually more productive? I've heard conflicting reports, but haven't seen any data.
I was very productive over 2 years working from home. I actually managed to complete a few home construction projects while answering a few slack questions from my phone once in awhile.
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> are now underwater 500K on a mortgage it will be very small fraction of homeowners: those who bought in in last 2-3 years. All others will be significantly over water, and may take equity loans instead of selling houses to preserve low mortgage interest rates.
Eventually and all sellers and no buyers market will catch up with prices. Matter of how long it can be bridged. Every equity loan taken out against higher values will shorten that bridge.
> Eventually
Eventually maybe. FED gave 20T free money to current home owners in addition to existing tax incentives, how long it will take to chew through them? Maybe generation?
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You are comparing treasury rates a bond will pay out over the next 10 years with inflation over the last year. This is apples and oranges.
Assuming you're expecting inflation to moderate over 10 years. I think people who expect we're going to go back to pre-pandemic supply chains are vastly underestimating the difficulty of bringing a complex system like the economy up from a cold start. In my experience with complex systems that are much less complex than the economy (merely a few hundred million lines of code), it can't be done . You have to increment…