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How This Ends

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Re: How This Ends

#401

Post by chewz »

matthewaveryusa wrote: post #185
lettergram wrote: post #154

I kind of disagree with the analysis, largely because there’s now a large block of the world separated from western commerce. Russia isn’t purchasing goods, yet the west is giving them wealth for oil, natural gas, wheat, etc. That’s effectively wealth leaving the system and entering there’s. More over, the west is increasingly looking at China as a threat AND China has locked down a large amount of economic output. T…

Genuinely curious : Russia’s GDP is < 10% that of the US or China. What’s up with this fascination with Russia (economically speaking — the humanitarian tragedy they are creating is a different topic)? The only question is if they align with the west or with china —-they’ve already lost as a super power, and their best strategic choice is to become a prized and expensive proxy between the west and china. The thing is…

> so the calculus for russia is losing on all fronts

Look at EURRUB at 7 years high... with forecast of going much higher.. Rouble is best performing currency (after short drop) this year (YTD)...

Looks like Russia is wining the war big time...

[] Ruble Hits 5-Year High as Gas Buyers Bend to Putin’s Will - https://www.bloomberg.com/news/articles/2022-05-20/ruble-sur...

Re: How This Ends

#402

Post by margalabargala »

lettergram wrote: post #154

I kind of disagree with the analysis, largely because there’s now a large block of the world separated from western commerce. Russia isn’t purchasing goods, yet the west is giving them wealth for oil, natural gas, wheat, etc. That’s effectively wealth leaving the system and entering there’s. More over, the west is increasingly looking at China as a threat AND China has locked down a large amount of economic output. T…

Are you claiming that since Russia invaded Ukraine and various sanctions were applied, the value of goods that we purchase from them has not decreased as much as the value of goods that we sell them? That's the opposite of what I would expect, do you have a source on that?

Re: How This Ends

#403

Post by [deleted] »

nostrademons wrote: post #318
staticman2 wrote: post #270

Earlier quoted context omitted.

The 10 year breakeven inflation rate is less than 3 percent. Is it a perfect estimate of inflation? No. But I would trust it more than hot takes from non experts.

Luckily, this is completely tradable, so if you believe that inflation is going to average 3% over the next 10 years you can buy all those treasuries and I can short all those treasuries and one of us will be rich and the other broke. Events will tell who is who.

[deleted]

Re: How This Ends

#404

Post by steveBK123 »

CSMastermind wrote: post #212
steveBK123 wrote: post #98

Long term demographics shifting older and growth shifting lower has driven interest rates down since as long as most of the posters here have been alive. We have hit an inflection point where interest rates are being raised as a tool to fight generational highs in inflation. This is the usual tool the central banks use in such a scenario. The resulting slowdown in markets and economy is the usual result. How smooth t…

> So far what we've seen is GDP/unemployment have not really reflected the same bearish picture (yet). This has been puzzling me so far. Tech hiring is hot as ever even with a few notable companies doing hiring freezes to various degrees. Can't help but feel like the market has to cool at some point.

Is it lag and is the hiring real?

re: Lag - someone joining a new job today was probably given an offer 3 months ago, and begun their recruiting process 6 months ago.

re: Realness 1) I've been through a number of interview rounds at a number of firms in the last 3 months where either the role itself or the comp previously discussed suddenly became in question, and the process delayed or went on hold. I have 2x as many irons in the fire as usual this job hunt as I find continual head fakes, ghosting and just general flakiness.

2) From the other end I can tell you my management has asked our team to do what-if scenarios for anything from -50% to +50% staffing recently. With scenarios of cutting some/most consultants with 0 backfills, or converting some, adding full-timers, etc.

3) Even some of the shops I interview have made mention of cutting consultants as of late, so some of the hiring could just be conversion.

4) Lot of tech headlines of hiring freezes or pauses or chills

Re: How This Ends

#405

Post by sebmellen »

ripper1138 wrote: post #247
mym1990 wrote: post #142

My view is that capital and investment will dry up and companies that are operating at a loss(many in tech right now) will either have to downsize or close up completely. This will cause a domino effect. People will lose jobs, and some of those people will have bought a million dollar shack in the past 2 years and they might have to sell at a loss or foreclose. Generally I think we have yet to see any real macroecono…

That could be true but the impact would still be limited compared to 2008. Credit/bank failures are far worse for the general economy than some tech startups failing.

I'm not 100% sure of that. Think of how many services depend on tech, and how much of that tech is built by companies operating at a loss.

For example, if Cloudflare were to do mass layoffs, and potentially fail/go bankrupt, what would the ripple effects be on enterprises throughout the US?

Re: How This Ends

#406

Post by BigBubbleButt »

fny wrote: post #290
vintagedave wrote: post #171

Earlier quoted context omitted.

So for non-finance-experts, what should we be doing with our money? Investing in what? Keeping in the bank? It sounds from your comment like there is _nothing_ that won't be devalued, even gold. Is real estate worthwhile? (Note: I am in the EU not US.)

I actually don't have a good answer for this. Not financial advice. Talk to a fiduciary. The problem with inflation is that you need to protect yourself before the fact, and at this point, it's difficult to read to what extend the fed will respond with rate hikes and how much inflation we get going forward. In my personal view, it would be stupid to hike to 10% since that will also cut off the needed supply response:…

> In my personal view, it would be stupid to hike to 10% since that will also cut off the needed supply response: this will decapitate energy, farm, and housing expansion while at the same time decimating all forms of wealth. But there is a possibility depending on how trigger happy the fed becomes.

The only reason Volcker managed to bring down inflation is because he was willing to actually do what needed to be done. If borrowing money is cheaper than inflation, why would anybody not just continue to borrow money indefinitely? The Federal Reserve can fight inflation or it can fight a recession; it cannot do both simultaneously.

You have to decide which is a bigger problem: a recession, or inflation. The notion that you can walk a tight rope between the two is disconnected from reality. And while you continue to make inflation worse, you only make the inevitable recession worse. Tick tock.

> You need complete despair.

I agree. We are fucked.

Re: How This Ends

#407

Post by chewz »

yung_steezy wrote: post #271
bjornsing wrote: post #249

Are Americans this certain that the Fed will put an end to inflation? The economic incentives to let it rip are extraordinary… In Sweden there’s a lot of political debate around this, and many are arguing that it would be better to let inflation eat the debt burden.

Inflation is the most destablising thing in an economy. It would be wise to keep raising interest rates until inflation gets back to 2/3% even if that causes a recession.

FOMC members are paid 250 thousand dollars per diner not by American savers but by bankers and high asset value types. FED will go back to inflating asset bubbles at the first opportunity.

Re: How This Ends

#409

Post by zby »

fny wrote: post #24

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…

If they hike the rates too much then debt servicing would be costly. This is different from 1980, because back then US gov debt was about 30% of GDP and now it is 120% of GDP (https://fred.stlouisfed.org/series/GFDEGDQ188S#0)

What are the realistic values here? I have no clue, but a good analysis should cover this.

Re: How This Ends

#410

Post by lumost »

chmod600 wrote: post #376
architravesty wrote: post #283

Earlier quoted context omitted.

Worst part is the utterly absurd shortage means RE is never going to meaningfully dip for any period of time without serious structural reforms. The focus on interest rates as the main RE driver is almost completely cope and I wish I could believe it. Low-rate mortgages certainly aren't helping, but they're "not helping" in the same way that hucking an armload of kindling into an already-raging house fire is "not hel…

I agree that local zoning is a problem, but I've seen a trend to try to turn it into the wild west. I'm not sure people building duplexes in R1 is really a solution. It seems like we need more medium density in commercial areas (e.g. four stories of apartments on top of one floor of commercial). That could bring down rents and improve quality of life, and improve the suburbs as well. If you drive by a poorly-maintain…

The problem is that everyone has their own oppinion on the matter, and will block anyone from trying out any other opinion.

At some point, you just need to build. If some ideas don’t pan out… then people will move, investors will lose. At present, even in densely populated Boston, any type of housing will command a high rate.

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