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Hi Logan,
Can you please give a short summary for "Dummies" please? Something like "will go up by x%, or will go down by x%"?
I don't understand the charts or what they mean really, not my industry.
Yellow Journalism, Or Bubble and Crash talk is very popular this century so it makes sense for them to be very down beat on humanity itself.
Marc Faber is another one in the group
The one disagreement I have with that statement is it skips over the necessity of the economy correcting through recession. This step was skipped just as Hope indicates.
The one disagreement I have with that statement is it skips over the necessity of the economy correcting through recession. This step was skipped just as Hope indicates.
I sometimes wonder what the consequences in a long run will be. The "too big to fail" were total crap and are now crap that is in charge and is even bigger. Can't think of this being anything good in a long run.
I don't understand the charts or what they mean really, not my industry.
7. U.S. Economics
The strong dollar and the collapse in oil and the mining sectors have taken a bite out of economic output in certain states, but auto sales and other personal consumption metrics have kept the US economy on a slow and steady growth path. I predicted 2.5% growth in 2015 with job gains around 210K a month. GDP growth is going to be slightly lower than I predicted, unless Q4 falters. YTD job gains are running at 209K per month with one more jobs number left to be revealed for the year.
Prognosticators, who have been calling for a recession due to the commodity crash, are missing the point. This is not a U.S. story but is a significant issue for other countries like China, Japan, Europe, Russia and Brazil who are suffering through both the commodity crash and the demographic trend of aging populations. I predict 1.9% to 2.3% growth in the U.S. for 2016. I predict job creation numbers to be down slightly to about 190 -205K/month. The JOLTS data (Job Opening Labor Turnover Survey) is now showing that we are entering into a phase of a tighter labor market. With the unemployment rate at 5% and 5.4 million job openings, we are seeing the first breath of a tight labor market.
On the other hand, prime age labor force is not growing fast enough to create a major boom in job creation numbers. The demographic group ages 21-25, is huge for the U.S., but they need a few more years before they impact the labor market in a significant fashion.
On Recession Watch?
For our friends who constantly post “a recession is coming, a recession is coming†here are a few recession indicators to follow in 2016 to determine if a recession is, in fact, coming.
1. The Fed has started to hike rates, and, typically, the Fed is well into the rate hike cycle before any recession.
2. Unemployment claims would need to rise well above the 300K, on a 4-week moving average, without a 1-time economic event as a reason, such as the Sandy storm/flood. As you can see below, even with the commodity crash and jobs lost due to it, we haven’t experienced an increase in claims.
( Higher Claims Is Bad) - Job losses
Also you would need to see more sectors with increased unemployment claims . Mining companies were negative in job creation number, and manufacturing jobs were barley positive – but these two sectors alone cannot bring the US economy into a recession.
3. If leading economic indicators (LEI) trend lower for 4-6 months, with rising unemployment claims, then we may have a recessionary trend forming.
In Short
Fed rate hike cycles starts, watch for first level stages unemployment claims to rise and Leading Economic Indicator to fall at the same time before any major recession calls or crashes happening
The one disagreement I have with that statement is it skips over the necessity of the economy correcting through recession. This step was skipped just as Hope indicates.
Exactly. This could be likened to any personal financial situation...I buy too much house, really nice cars, etc., but I don't have the income to pay for them. So, I take out tons of loans and max out credit cards to live such a lavish lifestyle. Any personal advisor would say that my life is gonna come crashing down, but I could "prove him wrong" if I'm continually able to find new credit to continue the facade...now it's just a matter of how long I'm able to continue the facade before tragedy hits. Can I really grow myself out of all this with all the debt and easy money I've taken advantage of? Highly doubtful.
2015 Commodity ETF Returns
Oil: -46%
Nat Gas: -41%
Broad Commodities: -28%
Agriculture: -17%
Silver: -12%
Gold: -11%
It's unclear why the inflationistas use external/global resources in their predictions as obviously it is hard to spot manufactured inflation in a good that the producer nations are spewing out like no tomorrow. Demand is currently totally overwhelmed by supply. Yet, gas prices are higher than they should be. As soon as local factors such as refineries and taxes come in you can clearly see the inflationary path we have been on. If you take the local essentials such as shelter, education/care, healthcare and (local organic) food you can clearly see inflation, actually stagflation rearing its ugly head. That's why inflationistas and deflationistas are rarely right, because the reality is and has been a combo of both. and it is clear that the current administration and the past have bee simply kicking the can down the road with the help of the Fed. Those trillions of debt do matter, federally and municipally as taxes and cost of living have been creeping up while wages cannot keep that pace. Schiff though did nail the housing bubble and deserves mucho credit for coming on public TV and having assholes laugh in his face (perhaps he saved a couple of sentient homeowners from the pain it unleashed) as opposed to the armchair quarterbacks claiming that they "totally knew about the bubble" as well. And the next one has been inflated.
Household debt service payments as a percent of disposable personal income dip to 10.025% http://bit.ly/1YLWPwQ
I don't understand the charts or what they mean really, not my industry.
7. U.S. Economics
Thanks Logan. The problem is that most want to know a recession is coming "before" it hits because that's when investment strategies have to be realigned (e.g., get out of stocks). On both of those charts you posted, any of those indicators could start turning at any moment...this means cash/bond/stock investments have to change quickly and not by the time a recession has been declared, which is too late.
Yet, gas prices are higher than they should be
Back in the old days you would see production cuts by now but a nasty fight going on to see how many oil companies can BK at this stage
The problem is that most want to know a recession is coming "before" it hits because that's when investment strategies have to be realigned
Timing markets is very difficult in terms of long term portfolio game plans. I totally get that people like to trade in and out of markets and a recession makes shorting a lot stocks much easier because estimates falling usually is a 6 to 8 quarter thing.
I am always 100% invested in my long term portfolio
80% Stocks
50% U.S.
20% International
10% MASI ( Ticker Symbol)
15% Bonds
5% Reits
Add money each month, never leave, the lowest I can go with equity % is 60% and the highest 80%
Trading account that is a whole different story and much more fun, but that is something I keep close to my chest, I rarely talk about it outside some of my trading friends.
I sometimes wonder what the consequences in a long run will be.
Logan will indicate that because of the "king dollar" there won't be any consequences. For the foreseeable future he is right. At some point the dollar will be replaced by the BRICSIZ and that will change things very quickly. This is because it is unlikely that there will be two competing reserve currencies, i.e. it has not happened in history. The other is that reserve currencies do not go on forever.
For now the inflation is exported, meaning that other countries currency does not float as the dollar does with the US. So the other countries debase their currency to keep even. But there is always a time lag (margin) that gives the country who first receives the inflated dollars (the US) an advantage
In effect the US does not have price discovery which is true with communist countries as well. The problem with this is that price discovery is the benchmark of value. So we see graphs like this:
Yet, gas prices are higher than they should be
While there are many factors at play, we have now the same oil prices as 2004 where gas was roughly 90 cents cheaper on average (correct me if I'm wrong). That's a 50% markup. Not many can say that for their wages since 2004.
replaced by the BRICSIZ
BRICS
China, Demographics issues, big time ... it's just starting for them as well
Russia, Toast.... another demographic bad county that has been destroyed with the crash of oil
Brazil, Inflation, Inflation, Inflation
South America and India are the only decent players left and they're under-performing considering how good their demographics are
The U.S. is sitting very pretty for the next 30 years against the BRICS
Not many can say that for their wages since 2004.
Uneducated, unskilled, those on disability, non high school, non college, non trade show, drug users and criminal active Americans are struggling big time yes, but America is doing fine, we have a concentrated poverty problem for sure but as a country there is a reason why the U.S. has the best domestic economy in the world for a mature country.
Yup but Rome was replaced
sickness, in fighting , too much expansion and the Huns hated them big time
sickness, in fighting , too much expansion and the Huns hated them big time
No sign of that is the US...
So, they can't ever say anything good really because their followers would leave them. This is the Zero Hedge game plan.
Yellow Journalism, Or Bubble and Crash talk is very popular this century so it makes sense for them to be very down beat on humanity itself.
Marc Faber is another one in the group
He he, funny. I left Bloomberg years ago because of the sensational nature of articles. Half the articles on Zero Hedge provide better insight than Bloomberg. Otherwise, just read FT.
Logan, in 2005-2008, what was the total volume subprime loans did you originate?
The U.S. is sitting very pretty for the next 30 years against the BRICS
China started a clean up and will come out much stronger eventually, probably in five years. Making statements with 30 year horizon does not make you any better than Dent or anybody else that peddles sensationalism.
Logan, in 2005-2008, what was the total volume subprime loans did you originate?
Zero Sub Prime Loans I did outside of 1 Sub Prime refinance from 7.5% 30 year fix to a 6% 30 year fix with a person with 53% LTV
Zero foreclosures on my record since I have been working and yes even through the entire housing bubble start and finish . I admit I am super conservative ;-) tr6 says
China
They're trying to diverse their economy to a more consumption economy which is a plus, but I believe their issues are more demographic in nature, their stock market is meaningless and what a ride they had in 2015
No sign of that is the US...
We have 2 oceans protecting the U.S. and 2 friendly neighbors
It really has been a interesting century so far, you have to admit
A lot has happened since 1790
We have 2 oceans protecting the U.S. and 2 friendly neighbors
I was being sarcastic, there is infighting, sickness (mental), and hate from many countries I.e. the US has a military presence in 140+ countries.
If you want to start a position in TOL or XHB you have my blessing today since TOL is at 32.70 you can stop loss 29.70 because below 30 has some more downside
True, but come 2020-2024 according to Logan's stats there will be inflation
I can't wait until years 2020-2024 come around because their is going to be a stand off on inflation and rates
Does the 35 year trend stay and yield fall lower those year
Or does the demographic larger story of world deflation keep the 10 year under 4% in those years...
Which even a 10 year in 3%-4% core CPI inflation running at 3%-4% means that the 35 plus year cycle of 2% lower mortgage rates in each new economic cycle has stopped
Only time will tell!
The definition of inflation by the much respected Austrian(and rational) view is an increase in the money supply. coupled with demand.
There has been an increase in the money supply with QE and ZIRP, however in the bigger picture the increase is dwarfed by the 60 trillion total credit market.
War creates inflation by an increase of the money supply, we have had non stop wars for 15 years now.
The missing ingredient will come with with the millennials and it will change the trend as it did on your graph starting in the 60s coincident with the Vietnam war
This is my understanding-> QE is simply a means to get to ZIRP, which then feeds an increase in the overall credit market. The $2.4T in assets that the Fed bought (as part of QE), was only a means to reduce interest rates by keeping that money as excess reserves for "member banks" only. Because there was so much in their reserves, the member banks lowered their interest rates which then influences all other lending institutions to follow suit because borrowers won't borrow from them at a higher rate when there's competition from member banks at lower rates.
So, it's true that the $2.4T is small in comparison to the overall credit market and probably isn't being lent out, but that doesn't matter because that money was only a means to an end...not the end itself.
If you want to start a position in TOL or XHB you have my blessing today since TOL is at 32.70 you can stop loss 29.70 because below 30 has some more downside
No stop loss for me. It's a question of how much profit I want to make. If you like home builders, ITB is more appropriate, as XHB contains retailers like Bed Bath & Beyond.
ITB is more appropriate,
Well, if you wanted to buy TOL ever, yesterday was your day in the $32 area, not the $39-40 all the firms were touting, but the ITB is much better than the XHB even though the XHB gets more of the headline
ITB is more appropriate,
Well, if you wanted to buy TOL ever, yesterday was your day in the $32 area, not the $39-40 all the firms were touting, but the ITB is much better than the XHB even though the XHB gets more of the headline
I have TOL. I'm fully invested right now. Overweighted in real estate and home builder stocks.
It's easy to predict these stocks will go up because we have a shortage. "When" will they go up is the hard part.
"When" will they go up is the hard part.
We have had this conversation for 3 years now. This is what I found interesting when I went to the UCLA Anderson Housing Conference in 2013. Everyone was using old model metrics to count for the builders expansion.
April 2013, All I heard for analyst in other conferences ( they are funny bunch too) is that because sales are low, strong demand will lead to higher profit margin sales price with rising volume. Fair enough
But It's 1/5/2016
Today TOL is where it was in 2012 ( What Happened)
This is why I have been trying to tell people to be cautious on TOL but it's a better buy at 2012 levels than it was last year when everyone was hyping the hell out if
All #QE did was create excess reserve, they couldn't lend it out.
QE was a horrible experiment, thankfully the Fed's recent paper said it didn't do much for the economy.
This was my main thesis against Bernanke poor #QE velocity thesis due to tight lending, that was a horrible economic thesis , back in 2013
QE was a horrible experiment, thankfully the Fed's recent paper said it didn't do much for the economy.
I don't disagree, but all those cash reserves are only for banks that participated in the QE program. The point wasn't just to lend out reserves on that graph you posted, but to influence all other lenders to lower interest rates in alignment with the banks that participated in QE. So to be fair, we can't judge QE's effectiveness based solely on that graph, which is what makes it difficult to determine the success of the program.
to lower interest rates in alignment
When ever #QE ended yields went lower every-time, in fact it had the opposite effect on long term rates.
It was the biggest waste of time and $ ever, it had no velocity and yields even today are now where close to where it was when the last $10 Billion ended.
Also, on MBS securities, purchases, that had a mute impact too
We will never see such a waste as #QE, it did nothing, this is why American didn't crash when #QE ended in 2014 as many as predicted.
If something didn't cause a boom, it can't create a bust either .
The only saving grace is that the Federal Reserve finally got it that it was waste and we will never see #QE again in this cycle, because the velocity was dreadful. That at least is the one positive sign
It was the biggest waste of time and $ ever, it had no velocity and yields even today are now where close to where it was when the last $10 Billion ended.
Also, on MBS securities, purchases, that had a mute impact too
We will never see such a waste as #QE, it did nothing, this is why American didn't crash when #QE ended in 2014 as many as predicted.
If something didn't cause a boom, it can't create a bust either .
Now you are getting your head right.
When ever #QE ended yields went lower every-time, in fact it had the opposite effect on long term rates.
I'm playing devil's advocate now. Was QE only meant to affect long term rates or mortgage rates? What about short term rates such as those applied in money market accounts or shorter-term loans? If the Fed could influence lower short term rates, that should (in theory) spark more short-term borrowing, less short-term investing (e.g., CDs) in order to chase higher yields such as those in the stock market or long term bonds, and more activity in the adjustable rate mortgage business. This is why long term yields are so low and why the stock market has seen all these investment dollars chasing it.
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http://loganmohtashami.com/2015/12/30/bloomberg-interview-2016-housing-predictions/
Another note, since I went on CNBC (June) and warned that TOLL Brothers was over rated and Builders index is pricing in too much growth and not growth from a low bar...
Both have fallen double digits from the top, XHB, barely positive for the year, all that hype early on with housing, fell flat toward the end of the year
#Housing
#Economics