patrick.net

Wait, nothing justifies it? Don't we have a whole thread on "bad news about the economy"? Can't have it both ways, can we?

Patrick says

Fed cut by 50 bps. The only reason to do this is to try to temper the cost of servicing the deficit

Interest rates on public debt are projected to average 3.5 percent from 2025 to 2054, compared to the average of 1.9 percent from 2014 to 2023 (Peter G Peterson Foundation).

2023: The average interest rate was 2.5%
2024: The average interest rate is projected to be 3.1%

Right now the 10 Year Treasury is 3.7%. Its highest over last 17 years is 5% set in October 2023.

The federal government mostly finances debt with 2 to 10 Year Treasuries.

I heard on the radio the federal government is hoping the 10 Year Treasury settles at or below 3.5%.

Typically the 10 Year Treasury is 1% to 1.5% greater than annual inflation.

They could have done a 25pt token cut, but no.

The Fed has outright shown it is just another partisan captured institution.

DemocratsAreTotallyFucked says

They could have done a 25pt token cut, but no.

The Fed has outright shown it is just another partisan captured institution.

Notice stock market reacted like "meh" today as it was already price in with this run-up or rally to ~5600 points.

I'll LMAO if the S&P 500 is at least 10% lower than where it is at now the day before election day.

That means the real or inflation-adjusted gain for the S&P 500 is nearly 0% for the last 3 years.

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Nope, it was a sell the news situation to freak out the retail traders to try and get them to sell. The Big Boys bought back in during the overnight futures markets.

Markets manipulated...heaven forbid.

Ron Paul has been pleading to end the fed for years. Why do we need a bunch of rich people deciding which way to go? Let the economy develop by itself on the old formula - prices be decided by the trade volume. The more 'control' the more WE have to pay these dudes for plundering us.

It’s a grift.

DemocratsAreTotallyFucked says

They could have done a 25pt token cut, but no.

The Fed has outright shown it is just another partisan captured institution.

While true, helps me. Won't change my vote for Trump. $600k loans that can be cheaper are better for me currently.

It's the person really. I can't vote for Harris for many reasons. Trump grabs 'em by the pussy and ran the country well. I'll take the latter.

No clue what Biden is doing and Harris isn't and hasn't even been doing her VP role. We have a defunct executive brach. How could anyone vote for that? I don't think most will vote for it except extreme TDS people. He's gotten shot. He's more subdued this time around or likable. Economy sucks. Harris didn't get a single vote. Walz is a clown.

I'm not partisan, but this should be a landslide. There are at least 20-30% more Trump signs in yards in my town than the previous two runs. You'd get ridiculed those years if you had a Trump sign. There will be cheating, but it will have to be EXTREMELY obvious.

Misc says

Nope, it was a sell the news situation to freak out the retail traders to try and get them to sell. The Big Boys bought back in during the overnight futures markets.

Markets manipulated...heaven forbid

Yeah, I'm particularly tracking AMZN and GOOGL and it seems like the recent volatility is a red flag for some collusion among the major traders ("Big Boys") to try to exploit retail investors.

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As far as the previous comment about the Big Boys or Major Traders manipulating the stock market around the Feds rate cut annoucement,

Googl goes about 7 to 14 days at Stochiastic RSI of +0.9 ... it dropped like a rock and now is in day 7 of a continuous rally but at 1.0 for Stochiastic RSI

let's see if it cools down for a while and then rallies (as far as trading covered calls or secure puts)
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The Fed should not exist. It is a blight on not only the US, but all of humanity:

- They bail out big banks who make bad bets.
- They steal cash from everyone holding dollars, aka the inflation rate.
- No doubt they tip off the well-connected on the direction of interest rates so they can make a killing in the bond market at the expense of fair players.

Money should be physical metal silver by weight in everyone's hands, and interest rates should always be set by the market alone.

Patrick says

The Fed should not exist. It is a blight on not only the US, but all of humanity:

- They bail out big banks who make bad bets.
- They steal cash from everyone holding dollars, aka the inflation rate.
- No doubt they tip off the well-connected on the direction of interest rates so they can make a killing in the bond market at the expense of fair players.

Money should be physical metal silver by weight in everyone's hands, and interest rates should always be set by the market alone.

when trump was potus, rates were near 0. that translates into shit economy propped up by printing press. wasn’t his fault, he had no control over it. my point is our economy is fake as shit.

Ceffer says

true, its about keeping the stock market propped up enough so Harris crosses the November election finish line before the stock market crashes or drops at least 10 to 15%

it drops 10% and we're back to fall of 2021 levels (when accounting for inflation) : https://www.multpl.com/inflation-adjusted-s-p-500

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It may be true that Powell is trying to help Kamala, but I wonder if investors who own stocks want to elect someone who wants to tax their gains.

I would never in 1000 years vote for a Democrat for this reason.

clambo says

wants to tax their gains.

Whether those gains are real or not.

clambo says

It may be true that Powell is trying to help Kamala, but I wonder if investors who own stocks want to elect someone who wants to tax their gains.

I would never in 1000 years vote for a Democrat for this reason.

Promising this kind of BS is one thing, getting it through the Congress is another. Even if Kummala wins the probability of divided government is very high. So basically it's election fluff to energize the base.

IMHO, the Fed should panic and reduce rates by 200-300 basis points right away. They ain't gonna 'cause it would look political on top of sending a message that the economy just ain't goin' so smooth right now.

Car dealers are sitting on a Yuge amount of inventory that just ain't moving. They don't pay cash for that inventory, it is all financed. People would love a new car, but they simply can't afford them now. You may have heard reports of a slowdown in the auto industry...well it is going to simply stop. This is the canary in the coal mine. Small businesses are really feeling the pinch of an economic slowdown - just take a look at the sentiment readings.

The democrats have been trying to extend and pretend by having governments hire indiscriminately, but that has to be paid for and State and local governments are gonna run out of coin.

So, a big cut in rates ain't pretty, but it is what is needed.

Cars simply became too expensive because of all
the safety/emissions crap piled onto them. First you pay for lane assist and engine strat/stop and then you go online and ask how to disable that annoying shit. 🤡

This puts a serious kibosh on the want for a new car.

they are going to start inflating asset prices again. inflation is ultimate welfare if you know how to benefit from it.

RWSGFY says

Cars simply became too expensive because of all
the safety/emissions crap piled onto them. First you pay for lane assist and engine strat/stop and then you go online and ask how to disable that annoying shit. 🤡

This puts a serious kibosh on the want for a new car.

Solana also thought the COVID buying spree was gonna last forever and overbuilt the more expensive vehicles; demand due to gas prices shifted to more efficient vehicles. Now they are truly F'd and the dealers are screwed with cars in their floorplan that aren't moving for months.

People expect rates to continue drop lower and are putting off replacing older vehicles, too. And incentives, like housing, are driving people towards new rather than used, since there are few incentives off the rate to buy trade ins/used.

Cars are just like houses now.

The difference between used and new is relatively small; but the incentives for buying new are much lower rates for a year or two. When you calculate it, why buy an old house or car when new ends up being about the same, but without the headaches and a better warranty? Not many 1975 houses are offered with incentive rates for 2 years and a 1-2 year warranty.

Spend $310k instead of $280k and get the new house with a new roof and the USB ports in the wall and all new floors and carpets and efficient HVAC warrantied for 2 years with a 2 year 5% teaser rate. Versus the house that was last updated in 1995 with billard green walls and flip-flop sticky feet vinyl in the Kitchen.

Similarly, spend $32k and get a 32mpg car with a 4% rate versus spending $25k at 8% on a 3 year old P/T Doordash/Uber driver's used model with 60k miles on it.

Aside from warranty new cars aren't really better. Take Toyota's recent covfefe with twin-turbo hybrid V6 powertrains replacing the old V8 workhorse of an engine (no, not that, the one before it). Reliability - lost, cargo capacity - diminished, fuel economy - meh. "But it accelerates better!". As if I give a fuck
how a full-size SUV accelerates: anything under 10 sec is plenty fsst enough fir such a vehicle and its intended use.

RWSGFY says

As if I give a fuck
how a full-size SUV accelerates: anything under 10 sec is plenty fsst enough fir such a vehicle and its intended use.

That's my take on cars. If I need to accelerate fast that likely means I'm in a rush. I should have left earlier. I need 7-8 passengers and towing capacity of 7k lbs at least. I'm not paying $20-30k more on a vehicle because I'm lazy for it to be zippy.

RWSGFY says

Aside from warranty new cars aren't really better.

Warranty is a secondary argument; the primary argument is both used houses and used cars don't have the lower rate incentives the new ones have, and the price points aren't far enough away to make the higher interest rates worth it.

9% on $24k, 60k miles, 72 months = $392 /month
4% on $32k, 0 miles, 72 months = $450 / month

(Assumes prime for both. All mfgs I'm looking at are 4% - or less! - for a superprime loan on NEW only for a full 72 months. Calculated with Florida sales taxes and other fees. No registration costs included).

Is it worth paying $5000 more over 6 years for a brand new vehicle? Is it worth saving $5000 but getting a several years old car with 60k miles on it, and certainly less warranty and service included? New will probably 72,000 miles on it when paid off; the used will have over 130k miles! That's easily the $5000 difference when you go to trade it in or sell it.

The 9% is good credit from https://www.nerdwallet.com/article/loans/auto-loans/average-car-loan-interest-rates-by-credit-score

AmericanKulak says

Is it worth saving $5000 but getting a several years old car with 60k miles on it, and certainly less warranty and service included?

Very likely that 5K "saving" goes to maintenance and repairs. Unless the difference is about 10k+, I'd go for new.

Blue says

Very likely that 5K "saving" goes to maintenance and repairs. Unless the difference is about 10k+, I'd go for new.

Exactly.

Driving it away with 60k miles on it already gives you only 2-3 years before you get into the 100k+ zone and major parts start need costly overhauls or replacement, regardless if well maintained.

Whereas with the new, you're not getting in that zone until a few years after it's paid off and the trade-in/resale value is higher if you decide you want another kind of vehicle.

By the time you've paid off a 3+ year old used vehicle that you brought already over 50k miles, it's already a decade obsolete and easily 100k+ in mileage, dramatically lower resale/trade-in value that will probably eat up fairly more than the $5000 you saved.

I have to remind myself it's not the decades ago when an older 60k+ mile car in good condition is a huge savings off a new one. Non-luxury Cars nearing 100k and almost a decade old are STILL going for $12k. Why bother when so many new baselines trims on so many models are only $25k? Doesn't make sense. There are no more "Grandma used this for 8 years but can't drive, only 33k miles to bridge club, church, and supermarket a couple'a times a week, take it for $7k or we'll donate it."

RWSGFY says

anything under 10 sec is plenty fast enough for such a vehicle and its intended use

Not according to any automakers marketing department.

Blue says

AmericanKulak says

Is it worth saving $5000 but getting a several years old car with 60k miles on it, and certainly less warranty and service included?

Very likely that 5K "saving" goes to maintenance and repairs. Unless the difference is about 10k+, I'd go for new.

I fail to see where would $5K go on 3-5 y.o. vehicle with under 60K on the clock. This is the kind of cars I usually buy and from my experience they are no different from new (unless wrecked and poorly fixed, flooded, CVT-equipped or German, none of which I would touch with a borrowed 10ft pole). At less then 60K a modern (i.e. something from this century) car may need a differential (if separate) and transmission oil change. It'd still have 40-60K miles till first spark plug change, 40K miles till first coolant change, timing belts are not a thing anymore... what else? Can't think of anything else. Cabin air filter? Ah, forgot the most important one: blinker fluid! 🤡

zzyzzx says

https://wtop.com/lifestyle/2024/10/mega-millions-tickets-will-climb-to-5-but-officials-promise-bigger-prizes-and-better-odds/

Mega Millions tickets will climb to $5

Article sez interest rates impact ticket sales:

Those much-hyped jackpot numbers also could take a hit as interest rates fall. That’s because on billboards or other advertisements, state lotteries emphasize the annuity payout for jackpots, distributed over decades from an investment fund. As interest rates have been high, the annuity jackpots have more than doubled the cash prizes that winners nearly always choose.

With an expectation that interest rates will drop, those annuity jackpot figures will decline, so the advertised jackpot won’t seem quite so massive.