patrick.net

Maybe Trumpligula would be better off with Michael Cohen as his doctor and Dr. Bornstein as his attorney.

"Screw the so-called facts, where's my fucking fee!"

Oh we're still doing Dick jokes?

This is the genius that said by definition you can't rape your wife. Every time I here something about this guy, he is fucking something up.

Nothing but Blue Skies, from now on!

You wrote that:

"One of the biggest bull runs ever recorded in bonds occurred from June 1984 to July 1986. (approximately) It was massive recording a dead drop in interest rates from 14% to 7% in just two years."

First, as I've stated, bond yields crashed (quickly and massively) well before the bull (that JUST began in 1982) started.

In fact, they crashed so fast that Volker was accused of trying to help Reagan, as he raised the fed funds rate to 15.5% approx in 1979, to thwart massive inflation that coincided with the oil embargo and Carter's Iran hostage crisis.

This very high fed funds rate caused mortgage rates to spike to 12% and even 14% on conventional 30 year mortgages in 1979- to late 1980, which caused a literal housing crash, which Carter was blamed for (subsequently losing his re-election bid to Reagan.

Rates had already fallen to 7% and lower by 1982, well before the equity bull got legs.

Bond yields HAD ALREADY BOTTOMED well before the equity bull began, let alone by the time it got a full head of steam.

In current cycle, BOND YIELDS FELL FOR 4 1/2 YEARS DURING THE SAME PERIOD IN WHICH EQUITIES ROSE BY 180% - 200% (not counting approx 2012 to 2016).

We're in an artificial, warped environment, that's primarily the result of asset'class mis-pricing, due to global central bank coordination in pinning short and long-term yields to the lower (or zero) bound (negative yields in Japan and parts of Europe).

I have clients developing subdivisions, apartments, condominium developments now (as well as commercial properties).

Here's what will happen: We're going to see a repeat, in some rough form, of the 1980-1982 period, not because of high interest rates, but because of LOW INTEREST RATES (perversely), which will cause cost-push inflation to mark housing/rent prices to the breaking point of unaffordability no matter how low interest rates are!

This is because money is fungible; it doesn't matter if $1 goes to interest or $1 goes to principal on rent or mortgage payments.

So artificially low rates have allowed material producers and contractors to raise prices of building based on non-fundamentals. Housing prices/rents have risen accordingly, and will continue to do so as the Fed is subsidizing this inflation through offsetting low interest rates.

Let me give you a real world example:

In 2009, the cost of building a production house - stick-built, conventional construction (BUILDER'S COST, not including land/lot, utilities, permits, engineering, etc.) was about $64-$70/sq ft.

Today, that same house costs $88-$94/sq ft to build (think 2,000 to 3,000 square foot, subdivision with 70'x130' lots).

I can't explain it more simply than this:

Equities continued to rise from the specific and narrow 1984 to 1986 time frame you keep referencing, but bond yields were flat or may have actually started to rise again (I need to check) during that same, short period.

So bonds and equities typically move inversely - this is assumed to be a normal functioning market as equities are "risk assets" and bonds are "safe assets." Investors are therefore willing to accept lower returns for low-beta assets (high credit bonds) than higher-beta assets (equities).

Even during the specific, narrow 1984 to 1986 range you keep citing as your equity bull market, bond yields didn't plunge 500 basis points (as they did from 2008 to 2012).

You're being argumentative now or are obtuse.

Freespeech is correct.

Bond yields ARE RISING or at least volatile during the 1984-1986 "bull market" you keep referencing, unlike the prior 8 years.

WTFBBQ DUDE.

I can't explain it in any more basic terms to him, not to mention that he's significantly culled his range on his "equity bull market" from a prior 1982 baseline, to a now 1984-1986 specific period (the bull was very nascent in 1982; it was more of a stop of a decline and a reversal beginning in '82).

tr6 says

Can bond holders sitting in ultra long bonds?

Holders of bond funds, if they hold them for a period equal to the effective bond fund duration (e.g. for TLT it is ~17 years), will not loose capital (and will of course collect the yield). There are simulations from the time when rates were rising showing that this is true. Of course there will be pain in the short term.

Also, in the past, reversal from down to up trend in rates has been slow, slower than reversal from up to down trend.

FP says

Of course there will be pain in the short term.

One thing that economists can agree on is that raising minimum wage is inflationary. California minimum wage will rise to $15 per hour by 2021. Does this hurt CA bonds or it does not matter since the rest of the world is not raising wages? Trying to figure out if to get into NAC if dips into 14s.

The 4 millon dead voters have been purged from the rolls, and the 10 million bogus voter registrations have been purged.

The Liberals rigged election is unraveling, the next step may be Trump's assasination. Then the 2nd American revolultion will begin.

Tenpoundbass says

The 4 millon dead voters have been purged from the rolls, and the 10 million bogus voter registrations have been purged.

The Liberals rigged election is unraveling, the next step may be Trump's assasination. Then the 2nd American revolultion will begin.

You need to get out more. Seriously.

tr6 says

Does this hurt CA bonds or it does not matter since the rest of the world is not raising wages? Trying to figure out if to get into NAC if dips into 14s.

I have no idea. With leveraged funds, the spread between the long term rates and the rate at which the funds borrow also matters.

My approach to muni closed end funds is - enter when the yield is above 6% (based on the market price) and there is a nice discount. When there is a large discount, the distributions are more sustainable. Recently many CA muni CEF's cut the distributions (a few years ago one could get yields about 7%). Some national munis are now more attractive. See for example. NZF, NEA, NAD, NVG. So, I switched some allocations to them. If prices continue to fall, I'll do some tax harvesting and will put some more $, gladly collecting 7% tax free income.

"Many people always expect a recession. If and when we have the start of one, the federal reserve will immediately push down interest rates to prevent a recession."

The fed funds rate is at 1/2 a percent.

It was at 5.25% during the onset of the 2008 downturn, allowing the fed to cut rates some 65 times between 2008 and 2012, down to 1/4 of a percent interest.

Since then, there's been ONE 0.25 hike, back in December of 15, up to a "lofty" .05 fed funds rate.

There's no ammo to cut rates meaningfully, as they are now nominally close to zero, and negative in real, inflation-adjusted terms already.

There is no more there there, and you speak nonsense.

You fail Economics 101.

Strategist says

the federal reserve will immediately push down interest rates to prevent a recession.

They can't push it down much lower than zero, maybe couple points NIRP, they haven't even raised them yet!
Bearish on housing from here on, though no crash in sight at this point I agree with (for that we need to see layoffs and defaults/increase in foreclosures and/or cash buyers exiting). Still worth considering a short here. SRS may have bottomed around $33 and may be a good hedge against a bear market.

well-considering other double digit lead polls- 4% means he is strengthening?

Are the news reports of a flattening/declining rents correct? If so, how does that affect investments? Or is the story just reporting on a temporary lull before another monster increase?

10-Year yields spike dramatically in 1986, dip, then spike even more dramatically in 1987 (which I realize is barely outside of your pre-ordained, narrow, convenient "1984 to 1986" equity bull market period).

Perhaps it is you who needs lessons on chart reading, even per the ones that you very selectively post.

The larger lesson that 1984-1986 and 2008 through present LITERALLY could not be more different remains intact.

Yep, not a big surprise. Ecuador's policy is no interference in other's elections, so letting Assange use their internet would make them look hypocritical.

Doesn't matter, and he was probably warned on the downlow. Not stopping the leaks.

Hillary's shit gets out, even if it's dumped illegally down a stormdrain.

He is absolutely correct that layoffs will be the trigger that will cause the next downturn, and we will see mounting layoffs (maybe en masse if conditions set up in historical patterns) should cost-push inflation drop end-user demand for finished goods and especially labor/services.

The U.S. sees mass layoffs in manufacturing and service sector industries in all recessions (Greater or lesser), but the real vulnerability now is that a) service sector is disproportionately sustaining consumption and aggregate-demand (however weak) compared to past cycles, and b) interest rates/yields are already pinned to-pegged at the lower bound (ZIRP), so there's nearly no monetary stimulus available as the fed reserve's main response tool in their emergency kit.

I did not even get into global macro eco events such as currency debasement wars (EU/Japan/China/etc) nor geo-political risks (which are always present, but are running really hot lately).

They must be getting desperate. The over sampling is getting worse.

Yes, price wise, Asian B people have competed local E people out of palo alto, and they will continue to compete them out of morgan hill. Those landscapers who saved to buy a morgan hill house will happily see the price go up until the new E buyers taps out like those in palo alto.

Rent wise, besides supply, it is driven by VC deals. 2016 may be the year VC start to get cautious.

Higher interest rate will hurt domastic, but strong dollar will hurt international more. or maybe somebody just tell fed to inflict some pain so that they can move some agenda? who knows.

but the key thing is that price/rent is close/over 30 for a lot of bay area towns. Where B people will park their cash, whether fed will raise rate, whether VC deals are cooling off are alll speculations over a bad fundamental.

you see a large pile of dry grass, but you can keep speculating that nobody will lit a match.

exfatguy says

Are the news reports of a flattening/declining rents correct?

Anecdotal data. For fun, last month I started following the rents of 3bd units offered by the 5 biggest complexes near me. Over the last 20 days, 4 of them have had multiple discounts. The fifth is now the most expensensive. The average rent has gone down almost 5%.

Could be a seasonal effect. Will see.

An ASSHOLE!

"What can I say. Eating pizza with my fingers makes them the wrong shade of orange. My orange is very important to me and has become the object of a great deal of banter."

Yes, these are the effemintate affectations plied by the Bloviating Twit.

Ironman says

Tim Aurora says

From all I know in 2012 , many polls

You didn't answer the question, do you think there is 14% more Dem voters in the country today like this poll claims?

After several decades of open borders, amnesties and "oops, we gave citizenship to people on deportation list, sorryaboutthat"? I wouldn't rule it out.

Tim Aurora says

From all I know in 2012 , many polls including Gallup was giving Romney the edge and he was nowhere close.

Give it up on Trump.You guys chose the wrong candidate and Its a done deal

Rosie O'Donell has not sung yet.

I had two courses in statistics in college as an undergrad, so I GENERALLY accept that rigorous, well-designed polling can lead to reliable projections (within stated margin of error).

With that said, this is a highly unusual year, which is shaping up to be a wave-turnout type year, but in almost opposite direction of the Obama 2008 wave election.

This year, I believe that white, working and middle-class turnout, with many such people previously apathetic & non-participatory in casting ballots, will be extremely energized, and sill turn out and cast ballots in unprecedented numbers; if their usual participation rate is a historical 63% in presidential elections, I'm going to guess it will ebb closer to 74% this year.

That's a 11% differential. Does that sound like much?

If one assumes that this demographic comprises roughly 60% of the demographic that typically casts ballots in POTUS elections, and that there are approx 107 million votes cast in such years, that's 64,200,000 such votes from this voting block in not al times.

However, if 11% more votes from this group are cast, that equals 7,062,000 additional votes.

Let's assume that 70% of these extra votes go to Trump (that's fairly conservative, but let's stick with it); he'll pick up 4,943,400 additional votes than what polls may be able to predict using conventional methodology.

That's a lot of % increase, not being able to be modeled accurately by the current polls.

Now, here's the other component that works against democrats this year. Hillary is having the opposite effect on the traditional dem base; this has been revealed by the rift between her and Sanders and other indicia.

So, dem turnout, which usually significantly trails republican turnout, will even lag further on a relative basis.

Also, Hillary may only receive 70% to 75% of the black vote that was allocated to Obama (as the 1st African American candidate for president), which will drop her numbers significantly (this is why Michelle has been reluctantly on the campaign trail for uninspiring Hillary).

Blacks represent 13% of the overall population, but probably close to 28% of the democratic voting base.

This also is a huge problem for Hillary, and coupled with lack of millennial turnout, could yield 3 million to 4 million fewer votes for Hillary.

Now the math gets big, if this is a wave election, in similar fashion to 2008, but with opposite demographics being e energized, where it's possible Trump could net a +7,000,000 gain in Republican votes versus 2008 (nearly +5 million R votes and Hillary's - 2 million (maybe 3 million) fewer votes.

This will matter hugely in Ohio, Florida, Pennsylvania... where the election will be won or lost.

Maybe the bigger hidden issue is psychology. I'd bet a lot of Trump voters won't tell pollsters who they are really going to vote for, because they know all too well that having incorrect political opinions can result in the loss of a job (see the case of Brendan Eich at Mozilla) or other professional harm (see the case of Doug Crockford).

Or heck, look at Billy Bush, fired 10 years after interviewing Trump.

It depend on what your definition of "personal" is.

The shy Trump voter hypothesis has not been supported by the primary data. Trump underperformed his polling for most of the primary season.

It's at least as likely that his anemic ground game will be more important.

Do you think cherry picking data refutes my point?

Here is a image representation of how he's in the lead.

Sure.

You can see the median is -1.1, and that includes the very end of the primary where he outperformed polling because all the candidates had dropped out.

Good articles for you here:

http://fivethirtyeight.com/features/trump-supporters-probably-arent-lying-to-pollsters/
http://www.ogdenonpolitics.com/2016/03/trumps-continued-underperformance-may.html
http://www.usnews.com/news/articles/2016-07-01/are-voters-too-embarrassed-to-say-they-support-trump
http://www.nytimes.com/2016/02/03/upshot/polls-were-way-off-on-donald-trump-heres-what-it-means.html

Nate said a lot that has never happened. Nate is whachu call a "Dreamer".

None of those articles were written by Nate Silver, but his polling analysis and demographic models were spot on for the entire primary season.

And, yes, I know. Every article that is the slightest bit negative towards Trump is because the author is biased.

JZ says

Asian B people have competed local E people out of palo alto,

Can someone translate this into English?

More political sodomy of America

The world wont last 2 years of it.

See Jabba no Badda.