patrick.net

Eman says

https://x.com/charliebilello/status/1749147837181358589?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

Eman, I'm not a gold or silver bug, but gold is at least continuing to track with (or exceed) inflation.

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ad says

Eman says

https://x.com/charliebilello/status/1749147837181358589?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

Eman, I'm not a gold or silver bug, but gold is at least continuing to track with (or exceed) inflation.

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The data suggests gold has about doubled the CPI in the last decade.

We all know how real estate has performed in the last decade. We also know how much rents have gone up, which means likely higher cash flow. The mortgage principal has also been paid down.

Real estate has 4 ways of making money: 1) value-add/sweat equity aka forced appreciation, 2) market appreciation, 3) cash flow, and 4) principal pay down.

Leverage is a double-edge sword. History suggests it has a high probability of success if it’s prudently used.

If you go back to around Y2K, then gold has outperformed all other markets (obviously not individual stock picks, but then again, we're all not Congress).

stereotomy says

If you go back to around Y2K, then gold has outperformed all other markets (obviously not individual stock picks, but then again, we're all not Congress).

This is where it gets muddy. I don’t believe gold can be leveraged like real estate where 20-25% down can control an asset.

My wife bought this house in 1999 for $300k. She put 20% down. It’s worth $1,486M now. Equivalent rent used to be $1,800/month and now $4.2k. How do we calculate the ROI? This is where I find Robert Shiller’s formula is off. Almost no one buys a house with 100% cash especially a starter house. Some people put down as little as 3%.

Eman says

My wife bought this house in 1999 for $300k. She put 20% down. It’s worth $1,486M now. Equivalent rent used to be $1,800/month and now $4.2k. How do we calculate the ROI? This is where I find Robert Shiller’s formula is off. Almost no one buys a house with 100% cash especially a starter house. Some people put down as little as 3%.

ROI is based on equity of about $1,186,000 (accounts for mortgage balance and cost to sell) from the $60,000 deposit. I will assume worst case of $0 net income (i.e., revenue minus expenses equals zero).

From 1999 to present day, you earned about $19 for every $1 invested for that residential real estate investment.

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Interestingly, we bought this house in 2013 for $440k as the housing market was coming out of the Great Recession. We had to put 25% down as it was an investment property. We rented it for $2,650/mo then and gradually raised it to $4k before we took the house back last year. It’s worth $1.4M today.

From an ROI perspective, I guess this one performs better. Right timing can really magnify the ROI.

AD says

Eman says

My wife bought this house in 1999 for $300k. She put 20% down. It’s worth $1,486M now. Equivalent rent used to be $1,800/month and now $4.2k. How do we calculate the ROI? This is where I find Robert Shiller’s formula is off. Almost no one buys a house with 100% cash especially a starter house. Some people put down as little as 3%.

ROI is based on equity of about $1,186,000 (accounts for mortgage balance and cost to sell) from the $60,000 deposit. I will assume worst case of $0 net income (i.e., revenue minus expenses equals zero).

From 1999 to present day, you earned about $19 for every $1 invested for that residential real estate investment.

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I think gold was around $250-$300/oz around 2000? Then it has gone up about 8x in 24 years?

https://twitter.com/mazemoore/status/1749243622061744376

The_Deplorable says

https://twitter.com/mazemoore/status/1749243622061744376

So, he's just like every president. Tell me anything that any president has taken responsibility for including Trump.

People are rich. Just give me the cash. I don’t have to watch the Super Bowl.



https://x.com/charliebilello/status/1752367848888955020?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

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got in mail today ... looks like a good deal for whopper meals in Florida panhandle .. same coupon price of $6.99 as back in 2021 ...

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https://x.com/kobeissiletter/status/1753892934347338121?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

You can make a ton of money at market tops, but watch that timing.

Misc says

You can make a ton of money at market tops, but watch that timing.

If we could time the market, we would all be rich.

I did it one time, thanks to iTulip - cashed out silver at ~$49. What happened next was not nearly as profitable until 2020. Ugh.

If this is true, why is the Fed holding back on cutting rates while CRE is on the verge of imploding? History suggests the Fed will likely be late gain in cutting rates.

Eman says

why is the Fed holding back on cutting rates while CRE is on the verge of imploding?

If the Commercial Real Estate sector is dependent on subsidized low interest rates to stay afloat, then the sector is just a popping bubble. What you are calling a crash is just a return to actual market prices from an easy credit runup. The purpose of the FED is not to keep CRE prices elevated.

For anyone who believes he’s smarter than the Fed, Powell said 3 rate cuts this year. WallStreet is trying to twist the Fed’s arm into 5-6 cuts. 😂

Anyways, the number of rate cuts is highly dependent on the state of the economy.



https://x.com/triplenetinvest/status/1754301062784413755?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

How does he know there will be 3 cuts if he has no idea if 12-month inflation will remain at or below 2.25% for at least 2 consecutive months?

Annual PCE is 2.6%. Seems like he is being pressured by the Biden White House and Elizabeth Warren.

Still, that is 3 rate cuts too many.

Looks like the inflation may get much worse within very few years!

https://thehill.com/homenews/4447860-powell-the-us-is-on-an-unsustainable-fiscal-path/
Powell: ‘The US is on an unsustainable fiscal path’
Federal Reserve Chair Jerome Powell said “the U.S. is on an unsustainable fiscal path” in a “60 Minutes” interview with Scott Pelley released Sunday.

“The U.S. federal government’s on an unsustainable fiscal path. And that just means that the debt is growing faster than the economy. So, it is unsustainable. I don’t think that’s at all controversial,” Powell said when asked if the national debt is a danger to the economy.

The U.S. national debt topped $34 trillion for the first time ever in early January, just over three months after surpassing the $33 trillion mark, according to data released by the U.S. Treasury.

Congress has punted on spending deadlines three times since the end of September as it grapples with how to fund the government amid tensions about the ballooning national debt.

Blue says

“The U.S. federal government’s on an unsustainable fiscal path. And that just means that the debt is growing faster than the economy. So, it is unsustainable. I don’t think that’s at all controversial,” Powell said when asked if the national debt is a danger to the economy.

That is why debt needs to be normalized as far as measuring it as (1) debt payment or servicing as a percentage of the federal budget (2) debt payment as a percentage of tax revenue (3) debt payment as a percentage of GDP and (4) total federal debt as a percentage of GDP

Now you could also look at debt not owned by the social security trust fund... call it adjusted debt and examine that as a percentage of GDP

They need to at least "cut spending" by only increasing it at least 2% below annual inflation for a minimum of 3 consecutive years.

Then see how that impacts the total debt to GDP ratio as it should lower it from presently around 120% to pre pandemic levels (about 105%).

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I’m not smart enough to know if the data is manipulated or not. Boots on the ground suggests the hitech job market has been tough the last year or so while blue collar jobs aren’t



https://x.com/vigilantfox/status/1754140246873190876?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

The Fed said only 3 cuts this year so bond yields are rising. We’ll continue to sit on our rear end and do nothing.

Small caps continue to struggle. History suggests small caps tend to do well when the Fed starts to cut rates. Let’s see how it will play out this time.

A new "inflationary shock" was predicted for the Russian economy

Having experienced the strongest devaluation of the ruble in eight years and a sharp acceleration of inflation, the Russian economy may face a new shock next year, warns Alfa Bank.

According to his forecast, by the end of the year, the dollar rate will again rise to the 100 ruble mark, which it broke through last summer. "The key factor for the ruble exchange rate should be the search for new sales markets" for Russian goods, Alfa Bank explains: if this can be done, the inflow of foreign exchange earnings will increase.

But there are still problems with it: according to the results of last year, export revenues of the Russian economy fell by almost 30%, to $422.7 billion, the lowest level since the 2020 pandemic. This promises "risks of weakening of the ruble", which, in turn, "create the threat of new inflationary shocks", write analysts of Alfa Bank.

https://t.me/moscowtimes_ru/18973

https://x.com/thinkappraiser/status/1756794715251560583?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

https://amp.cnn.com/cnn/2024/02/06/business/mcdonalds-prices/index.html

$3 for a single McDonald’s hash brown? Customers are fed up and pushing back

zzyzzx says

https://amp.cnn.com/cnn/2024/02/06/business/mcdonalds-prices/index.html

$3 for a single McDonald’s hash brown? Customers are fed up and pushing back

McDonald's net income $5.92 billion in 2018, and only $6.18 billion in 2022

They should at least slightly streamline and cut operating costs while keeping prices the same or increase them at 1/2 the rate of annual inflation

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Actual CPI for January 2024 was 0.3% monthly increase and 3.1% annual increase.

Economists surveyed by Dow Jones had been looking for a monthly increase of 0.2% and an annual gain of 2.9%.

I see the Federal Reserve likely will not start to decrease the Federal Funds rate until the 4 month average for annual inflation is at least below 2.6%.

That is why we may not see a reduction in the Fed Funds rate until this October or November.
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AD says

That is why we may not see a reduction in the Fed Funds rate until this October or November.

Still too early.

https://x.com/charliebilello/status/1757453832324341971?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

HeadSet says

AD says

That is why we may not see a reduction in the Fed Funds rate until this October or November.

Still too early.

Democrats within the federal bureaucracy will cook or massage the numbers to get it to their desired range for inflation.

This will then have Senator Pocahontas to put pressure on Powell to lower the Fed Funds rate at least 4 months before the upcoming Presidential election.

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Eman says

https://x.com/charliebilello/status/1757453832324341971?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

yeah Mister Eman, from what I've read, the Fed Funds rate is usually set about 1.5% above annual inflation, when inflation steadies out ... I read that gives the Fed enough margin above annual inflation to ensure inflation does not steadily increase

10 Year Treasury should be about 1.5% above annual inflation and the 30 Yr mortgage rate about 1.5% above the 10 Yr Treasury

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AD says

This will then have Senator Pocahontas to put pressure on Powell to lower the Fed Funds rate at least 4 months before the upcoming Presidential election.

If the Fed Funds rate is lowered then inflation will jump up. May not be the best move for Pocahontas.

The Fed is getting caught between a rock and a hard place.

1) They get pressured to lower rates due to high debt service for the new issued bonds.

2) They get pressured to lower rates due to the amount of losses and stress they put on the bank and their balance sheets.

3) They get pressured to lower rates because this is the election year.

Everything is not rosy as it looks on the surface

Eman says

1) They get pressured to lower rates due to high debt service for the new issued bonds.

Yeah Mister Eman, that is why the federal budget should increase no more than at a rate equal to annual inflation. And they need to cut spending slightly to use the savings to pay down the debt.

They can do this as painless as possible for a 5 to 7 year duration in order to reduce the debt to GDP ratio as well as interest payment to GDP ratio.

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Why in the world would the Fed lower interest rates at all this year? Wages are outpacing CPI by about 1.4% on an annual basis. The effects of an increase in minimum wages for 25 states that implemented them still have not fully percolated through the system, and the unemployment rate is at 3.7%. Additionally, it looks like every month there is a couple hundred thousand additional Americans that think they can get ahead by taking a 2nd part time gig.

On the fiscal side, the federal government is forecasted to spend an extra $2 trillion more than it is bringing in. This is before the more free money programs that are currently in the works. We've got an enhanced Child credit coming for about $90 billion extra (we can argue whether it is good policy or not, but it is inflationary). Then there are the extra free money initiatives for aid to the Ukraine and Israel.

We already have deflation in goods. It is services that show the inflation. We would have even more price reductions in goods, but the Biden administration WANTS higher prices. Tariffs on Chinese made crap (especially keeping their electric cars outta America) inflated the price of goods.

With unemployment at 3.7%, let's just say that employers have to hire the less than best. Productivity growth...well that can be something hoped for.

As far as the other pieces of "free money": rents, equities and real estate, those seem to be at all time highs. (Ok, office buildings are in a bit of a dumper, but all other classes are at all time highs). The banks are just now getting around to advertising for people to pull money out of their home equity via HELOCs.

Additionally, corporations are continuing their debt binge by issuing a record amount of bonds.

So, the higher interest rates haven't slowed the overall economy at all.

Misc says

Why in the world would the Fed lower interest rates at all this year?

Because the fed mostly does the wrong things.