patrick.net

zzyzzx says

https://finance.yahoo.com/news/world-plunging-towards-societal-collapse-154000368.html

World ‘plunging towards societal collapse’ as era of cheap money ends

Its just an adjustment or almost a reset. When accounting for inflation, the S&P 500 has about a 5% negative return since February 2020. Housing may take about 2 to 3 years to adjust as well.

I see a lot of the homes converted to vacation rentals or AirBnB homes will start to lower their rates also as part of this adjustment.

Let's just hope the 22 to 35 year old population who gets laid off can handle this and pull themselves by their bootstraps. This may mean temporarily working 2 part time jobs, in order to make ends meet as well as continue to get back into a similar job.

I remember 2001 and 2008 and they were hard times as far as layoffs. But it seems this time that the population in general is fragile compared to back in 2001 and 2008.

At least we likely won't see a deflationary spiral. Perhaps at worst we get mild amount of stagflation.
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ad says

At least we likely won't see a deflationary spiral.

You wrote "deflationary spiral" as if it were a bad thing...

https://www.reddit.com/r/Economics/comments/ymspxe/summers_sees_risk_fed_needs_to_hike_past_6_to/

Summers Sees Risk Fed Needs to Hike Past 6% to Curb Inflation

https://finance.yahoo.com/news/october-consumer-prices-inflation-data-cpi-november-10-210744752.html

October CPI: Inflation moderates, rising at annual 7.7% over last year

The Consumer Price Index (CPI) in October reflected a 7.7% increase over last year and 0.4% increase over the prior month, the Bureau of Labor Statistics said Thursday. Economists had expected prices rose at an annual 7.9% clip and 0.5% month-over-month, per Bloomberg consensus estimates.

CPI was 8.2% (for last 12 months) for September 2022. With October 2022's CPI of 7.7%, this is a good sign and trend given that June 2022's was 9.1%.

So annual inflation or CPI has been slowly trending down. I suspect though the Fed will still raise the Fed Funds Rate in December from 4% o 4.25% at least.

All the tech stocks from Meta, Google, Amazon, and Apple are up a lot today. Never seen it go that krazy krazy. AMD is unreal today also.

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I follow the W5000 and it had a good bounce today.

Fed's Powell: "You are all worthless and weak!"

Federal Reserve Chairman Jerome Powell will speak about the economy and the labor market on Wednesday, Nov. 30, only two days before U.S. central bank officials stop talking publicly to prepare for their mid-month policy meeting.

https://www.marketwatch.com/story/feds-powell-to-speak-on-economy-on-nov-30-two-days-before-blackout-2022-11-18

https://finance.yahoo.com/news/mortgage-qualifying-rate-canada-may-184048144.html

Mortgage-Qualifying Rate in Canada May Top 8% After Latest Central Bank Hike

High interest rates create strong men because high rates create/support conservatism.

https://www.bloomberg.com/news/articles/2022-12-09/fed-s-peak-rates-for-longer-seen-dashing-hopes-for-2023-cuts

Fed Expected to Keep Peak Rates for Longer, Dashing Hopes for 2023 Cuts

No rise?

https://www.cnbc.com/2022/12/14/fed-rate-decision-december-2022.html

Fed raises interest rates half a point to highest level in 15 years

zzyzzx says

https://www.cnbc.com/2022/12/14/fed-rate-decision-december-2022.html

Fed raises interest rates half a point to highest level in 15 years

Why would they talk about lowering rates in 2024 and 2025? Amazingly they can see that far ahead concerning lowering rates but not that far ahead when raising rates is needed?

The screaming souls mourning their lost equities ring in the ESP verse.

Volker above created sky high interest rates.

zzyzzx says

Will it work?

13 States are increasing the minimum wage in 2023. This will drive up wages among the entire population without increasing output.

Whaddya think is going to happen?

GNL says

Will it work?

If they do a 50 basis point rise every month of 2023, it might. The fed also needs to sell off all it's mortgage backed securities.

Misc says

13 States are increasing the minimum wage in 2023. This will drive up wages among the entire population without increasing output.

Whaddya think is going to happen?

Only if the minimum wage is higher than the current prevailing bottom wage. For example, the minimum wage in VA is now $11/hr, yet Target, McDonalds et al are starting people at $15/hr.

https://finance.yahoo.com/m/d373673e-a093-3af0-bb42-b5fe65ac2cf3/the-fed-needs-to-jack-rates.html

The Fed needs to jack rates up by 10% right now

https://finance.yahoo.com/news/inflation-isnt-coming-down-without-162416982.html

Inflation isn't coming down without a recession and interest rates will continue to skyrocket, JPMorgan Asset Management investment chief says

The bank's chief investment officer said prices would only cool if the labor market weakens and predicted interest rates would top 6%.

Misc says

13 States are increasing the minimum wage in 2023. This will drive up wages among the entire population without increasing output.

Where's @Patrick with his chart about productivity and wage increases?

Wages are way behind productivity gains for about 50 years, there's plenty of room for wage improvement.

Plus we had decades of low interest rates and money printing, so capital is definitely not the problem.

There is massive disillusionment in the workforce and rightly so. Wages have not kept up with inflation, to buy a house they are looking at near record low affordability, about 40% carry a balance on their credit card and that balance keeps rising and companies long ago stopped promoting from within.

What does the workforce do??

Productivity is down 4.1% on an annualized basis, the biggest decline since the government started keeping track of the number back in 1948. --- Oct 7, 2022

The Fed wants to increase unemployment in an environment where there are not enough workers. That'll just stress out those that are already overworked even more. The country is headed for that great socialist paradise that many counties have failed into.

zzyzzx says

https://finance.yahoo.com/news/inflation-isnt-coming-down-without-162416982.html

Inflation isn't coming down without a recession and interest rates will continue to skyrocket, JPMorgan Asset Management investment chief says

The bank's chief investment officer said prices would only cool if the labor market weakens and predicted interest rates would top 6%.

Rates are already 6%. "Skyrocket"?

GNL says

zzyzzx says

https://finance.yahoo.com/news/inflation-isnt-coming-down-without-162416982.html

Inflation isn't coming down without a recession and interest rates will continue to skyrocket, JPMorgan Asset Management investment chief says

The bank's chief investment officer said prices would only cool if the labor market weakens and predicted interest rates would top 6%.

Rates are already 6%. "Skyrocket"?

He was talking Fed funds rate.

It's greed, pure and simple.

The greatest trick the establishment ever did, was convince the savers, that we need low interest rates, so that the Rich People wont have to spend so much money rewarding us for borrowing our money in their banks.

It's like chickens keeping the knives sharp for the farmer.

AmericanKulak says

Where's Patrick with his chart about productivity and wage increases?

Wages are way behind productivity gains for about 50 years, there's plenty of room for wage improvement.

Plus we had decades of low interest rates and money printing, so capital is definitely not the problem.

Here's the chart:




https://patrick.net/post/1341417/2021-09-20-wtf-happened-in-1971

Tenpoundbass says

The greatest trick the establishment ever did, was convince the savers, that we need low interest rates

Savers were not tricked into thinking low interest rates was a good idea, low interest rates were steamrollered onto savers with the support of reckless borrowers.

https://finance.yahoo.com/news/feds-williams-says-fed-needs-233645417.html

Fed's Williams says Fed needs more rate rises to cool inflation

zzyzzx says

https://finance.yahoo.com/news/feds-williams-says-fed-needs-233645417.html

Fed's Williams says Fed needs more rate rises to cool inflation

Thursday the U.S. central bank has more rate hikes ahead

GOOD!

https://finance.yahoo.com/news/federal-reserve-interest-rates-decision-february-1-174421486.html

Federal Reserve raises interest rates another 0.25%

The Federal Reserve raised short-term interest rates Wednesday by a quarter percentage point, bringing its benchmark rate to a new range of 4.50% and 4.75%, the highest level since October 2007.

Stocks for the long run.

clambo says

Stocks for the long run.

Are you saying stocks are at a low? Higher rates will help?

I'm saying I am happy that they raised interest rates only 0.25%, and the stock market was happy too.
Higher rates don't help, rather hurt stock prices.
When interest rates were almost 0%, and the the stock market dividend yield was 1.9%, everyone loved buying stocks.
When interest rates go much higher than the dividend yield, investors think about owning something besides stocks.
There is always new money out there looking for a place to be invested.
I'm going to let my capital appreciate for a few more years, and then start concentrating on income investments such as bond funds, dividend stock funds ("equity income" funds).

There is a significant response lag (9 months?) for the rise in rates to hit the economy. We are just seeing the effects of the initial rate hikes. Stay tuned.

Weak. .25 means the next hikes, if they occur, will also be measly .25 which isn't going to tame inflation anytime soon.

clambo says

There is always new money out there looking for a place to be invested.

I wish the mf'ers would stop printing it.