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jyl is continuing to make good sense here. Hyperbole is fun and exciting, but the world may not suddenly collapse into dystopia. As some folks seem to be predicting. Here is what we know with certainty: Markets will fluctuate. This is what they do. Manage your investments accordingly.
Then again, I know a drummer who is expecting a wholesale restructuring of markets, of our federal government and even our entire social structure. Very soon, he says. |
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A period of wild inflation can help people in the right circumstances build wealth. Especially if relatively short and followed by low inflation. It can pretty much destroy those that are not in the proper situation. |
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That was his retirement strategy .... Another guy I worked with had dozens of vintage, restored farm tractors .... his retirement fund also. Whaddaya call a drummer with no current girlfriend? A: Homeless :D Both guys were no dummies.... just sticking with what they knew best... |
Vintage drum sets are crap, IMHO. At least...the hardware certainly is/was.
I too have a friend who collected and restored antique tractors. John Deere. What's the difference between a drummer and a family size pizza? The pizza can feed a family of four. What are the members of a typical rock band? Three musicians and a drummer. |
Funny...many of those old jokes can use "Pool player" instead of "drummer". A similarity there...many try to make it to the top...few do.
There are some who are doing the cruising of garage and estate sales and reselling on ebay. Gotta know your stuff though. In the more legit markets...Tabs mentioned short term Treasuries. Probably the best move if looking for safety, which is what we oldsters should do. That's nothing new...when young, it's pretty safe to assume you'll have the time to ride out downturns...as you age that time span is diminished. |
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According to FRED....the Velocity of money slid down a cliff in 08 and never recovered... and fell off a cliff in 20 and has stayed there, at the beginning of 2022 the V was at 1.14 and with inflation is a stellar 1.19 on 11/30/22...so all of this inflation has resulted in a 0.05 increase in the velocity of money...the earth is trembling with anticipation of a robust econ with that one.. I want some of what JYL is smoking. Money has become ever more stagnant since 08...more USD applied has not moved the needle...Money is hardly moving... Now that the FED is taking money off the table what is going to prop up the econ? They delayed taking it off for as long as they could...but were forced to raise rates...and decrease the Balance sheet because........the USD and Bonds had lost credibility globally. As Walmart has explained their revenues are up, but electronics, sports equip, apparel prices are declining because of excess inventory...it is not selling... low margin stuff like food and essentials is what is driving Walmarts revenues.. so you are seeing DEMAND DESTRUCTION for consumer goods while food etc is still in inflation mode... The American consumer is using the credit card to make ends meet and NO LONGER HAS THE DISCRETIONARY INCOME TO BUY STUFF..that means factory jobs are going to be lost...and no job means no money to buy food. That is why China is in big dodo...and is probably why you have not heard about Taiwan lately. The shipping rates from China for Sept were down 90% to the west coast and 78% to the est coast...year over year...that means less ships with less stuff on board...no one is buying.. I would think that there are going to be some wicked sales after the holidays as retailers are gona want to move the merch real bad.. after the merch is moved it won't be replaced with as much...empty shelf space..and if that new merch doesn't move...that means the Chinese guy aint gotta job no more.. The age of ABUNDANCE and seeming prosperity is over, gone, done, Kaput. Now it is a grm reality of down to the bone.. |
What do ya Boyz make of Jeff Bezos coming out and saying that Americans should hold back on buying new TV's and keep that money in their pockets or at least off their cards..for a rainy day....so why would a guy who makes his living by selling TV's tell you to hold off on buying that TV from him?
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Interesting stuff tabs. -thanks
As for Jeff Bezos coming out and saying that Americans should hold back on buying new TV's and keep that money in their pockets I think he is 'in' on plans to soft land the pain. (I am not saying it will work) Psychological Operations in motion. (Don't spook the herd.) |
The Days Of The 99 Cent Shrimp Cocktails In LV Are Over
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Jack Welch backin 12 was sayin that they were cookin the books..to make it appear that all was swell...but ifn you dug into those numbers well the pix was a dif story. Now the media isn't tellin ya the whole story neither...cause they want you to keep on buyin them radials and drinkin that beer instead o becomin upset...nice lil sheep ba ba ba.... Good little sheep Governments, royalty and big corporations, Slowly over taking every nation, Poison in the water, Poison in the food, It is no wonder we wake in a foul mood. Follow us blindly like good little sheep, we steal your freedoms while you flutter and sleep, Do not question, only repeat, Follow our orders and gain our ****, **** away blindly you silly little fools, you will not see us bend the nations rules. This is our little bubble that you will not burst, It is your freedoms that we thirst! Calleen 2020 And the funny thing is that most all of you have bought it.. you all think well it aint that bad, and opportunities will abound for the vigilant and smart...when it all blows over... Some might hold their cash, some might invest in commercial RE in LA some are just keepin their heads down while whistling past the grave yard at midnight...It is all gona come back cause it always has before..or so they tell ya on CNBC.. |
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The scenario where simply raising interest rates for a few months is going to make what has been done in the past 3 years “go away” - that doesn’t seem plausible. |
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Just my humble, somewhat uninformed opinion. |
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I think I’m going to move some money out of stocks and into cash, hopefully we have a rally I can sell into.
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Cynical thinking, I know. But BlackRock's fear-porn is focused on the short-term, and they want people focused on that which can be made most scary. - Volatility, uncertainty... like never before... Yeah, well it feels exactly like times before. Obviously they continue to play the long game. |
I’ve been on this forum for, what, like 20 years? Tabs predicts complete economic meltdowns every year to my knowledge.
Eventually you’ll be right buddy…. …but I hope not. |
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Be we pulled our draggin' azz jeans back up tight and here we are :)... |
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But mostly tabs describes a general arc of history, and in that regard, he is correct. History has proven that 100% of the time. There’s been 6 or so world currencies over the past 6 or 7 centuries, the holder of the world currency is always holds the world credit card and is thus the economic superpower. The world can never imagine that the World Order will ever change, but it always does, and it always follows the same pattern. The arc is always the same. The emerging power leads in innovation, productivity, technology, culture, education, financial markets etc. They over extend, get complacent, lose competitiveness, increasing wealth gaps, etc., while the next power starts to rise. Finally on the downside the power always incurs large debts, starts printing huge amounts of money, has inflation (a fun early example is Rome started watering down its coins with cheap metals), has weak leadership, increasing internal conflicts, loss of world currency status and eventually an upheaval, either by economic conquest, war, civil war or revolution. A new power (I.e. a new world order) arises to fill the void and a new arc of history begins. This has been the now predictable pattern for hundreds of years, Spain, Portugal, France, Netherlands, UK, US, etc. If you lay tabs’ posts over that framework, you’ll see that he knows and learns from history and is correct. When you look at the arc and factors set forth above, what’s gone on in the US the last 70 years or so, and what’s happening now, you see history merely repeating itself. And tabs is prescient and is and will be correct (just on a bit of a longer timeline than most think in). |
The outgoing power of course always survives, so the “doom and gloom” isn’t that we’re going to cease to exist.
But what does happen, on the human level, is a much reduced standard of living for the majority. The Age of Prosperity for a huge middle class is kaput. |
The interesting question, and one I’ve asked many times over the years, is assuming the above is true, what can you do? As I recall (and I may be wrong), tabs’ answer to that is basically either there’s nothing much you can do, or to acquire things that you can use to protect yourself (spoons) or provide for yourself “off the grid.”
Looking at history, imo the answer has been clear - immigrate to the new up and coming superpower. That’s why much of Europe and the world came to the US post WWII - and that was a very wise move. I don’t think this time around that option is going to be available to very many, though. |
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..but I recall advice to buy silver and ammunition. We've never been there. I hope his record of being wrong continues. |
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You have to be omniscient to be able to calculate all the variables that are in play to pick a specific hour and day. I did say in 2017 that I thought 2022 would be the year..that all the problems would take time to line up and come to fruition. To that end Robert Kiosaki author of "Rich Dad Poor Dad" says we are already in collapse.. Black Rock has recently said, "The reset is here." Which means the system as we know it is done and a new normal is about to emerge. I think that Black Rock reflects the gossip around the water cooler at the FED. Then there is the long list of other Masters of the Universe who are proclaiming the brown stuff is hitting the fan..where bad things are about to happen.. So take a look around, check what the Masters have to say about the circumstances and draw you own conclusions. |
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10 yr T Bill = 3.42 % 3 month T Bil = 4.33% SP 500 day after 0.5% rate hike to 4.25% to 4.5%....<99.57> to 3895.75 The inversion indicates that investors do not believe that the economy can be turned around by the FED..After not being able to turn things around for over a decade people are finially giving up on the FED and are criticizing it's every move. The requisite that I outlined in Sept 2012 was that so long as the FED maintained credibility Equities and the economy would hold together..now the length of time where things have not gotten better has created a fatigue..reflected by dissatisfaction of the FEDs job performance. Trending is the hopelessness of despair that the malaise will ever be rectified or alleviated. Retail sales were down 0.6% in November Mfg order are continuing to decline in December even though inflation is abating. In spite of declining prices (one would think because of Demand Destruction) retail sales have not picked up. Hey ifn you want a pair of Allen Edmonds and can not afford the $400 price tag...I can fix you up with a nice pair of used Edmonds that will serve you well for a price you can afford . |
My two cents, again.
Probability of a synchronized global downturn in 1H23 is rising. - US: Fed is focused on inflation, and will do what it thinks is needed to bring inflation back down to 2%, at the cost of a recession if that’s what it takes. Pundits are saying “Powell is going to be surprised when jobs go negative in 1Q”. Fed SEP (basically survey of FOMC members’ economic expectations) has unemployment 4.4-4.7% by end 2023, from 3.7% now, each 1% is 1.6MM jobs if no change in labor force, and Fed isn’t seeing growth of labor force, so that means Fed expects up to 1.6MM net job loss over 2023. So, no, Powell won’t be surprised. Pundits are saying “employment is a lagging indicator, Fed is driving looking in the rear view mirror, when it sees the downturn and job losses it will pivot and start lowering rates”. The Fed has more economic analytical horsepower than anyone, I think it is driving looking through the windshield, it sees the downturn and job losses ahead, and intends to keep driving to 2% inflation. So, unless inflation rapidly and convincingly recedes, the odds of a recession starting in 1H23 are rising. Oh, Powell knows goods inflation is declining and housing inflation will decline in 2023, but services are 55% of the inflation index and Fed believes that won’t be brought under control until it has forced the labor market “into balance”, and means job losses. TL.DR - The Fed is not trying to “turn things around” if by that you mean avoid a downturn. The Fed is trying to kill inflation fast and avoid a repeat of the 1970s. Jobs, stock prices, house prices - all will be sacrificed if need be. - Europe: ECB raised 50 bp, said it will not let high inflation expectations get entrenched, and will continue raising. Europe is being pummeled by energy costs and the Russian war. Their recession has probably already started. - UK: Similar to Europe, with Brexit another self-inflicted wound. Similar to Europe, and BOE is explicitly forecasting a recession and raising rates into that. - China: Their economy was bad already, Xi has gutted the housing sector and hobbled the tech sector, now they’ve hastily dropped almost all Covid measures and are starting what’s going to be a huge Covid wave, with mediocre vaccines, low vax rates, many vaccinations over a year old, and a very poor medical system. Xi has driven local governments to the financial brink with years of staggeringly expensive hard Covid lockdowns (what does it cost to PCR test the entire propulation of a city every three days?) and his economic reforms. Now he’s trying to revive the economy by reopening but economies don’t revive during a huge Covid wave with people hiding at home. I think all this comes together in 1H23. Bond market gets it. Bond guys are smarter than stock guys, when it comes to economics. Stock market doesn’t. Equity investors see falling 10Y yields and think “yaay, raise valuations”. But it matters *why* 10Y yields are falling. Yields falling and inverting because the economy is slowing is not bullish. Before CPI report, I took portfolios more defensive. That felt bad on Tuesday, by end of Wed SP500 had given up its CPI pop, and today I wish I’d gone more defensive yet. For the sake of all the people who are going to get hurt, I should hope my outlook is wrong. But their sakes are their problem, and so I hope I’m right. I’m set up to survive the slide to low 3 handle with tolerable losses and emerge with mountains of cash to scoop up cheap stocks, and I want those bargains. |
It is getting worse and worse for people on the edge. Maybe they will wake up when they start getting hungry.
That said, I just bought a 6mth T Bills today at 4.807% noncompetitive bid. Not too shabby considering the tax advantages...and as easy as a click on my computer (on the Treasury Direct web site). Still not great with regard to inflation...but low risk compared to other "opportunities". |
Good analysis, but things are so hard to predict, because most analysis is done assuming at least a semi-rational and responsible government.
Which we no longer have. For example, who could have predicted that the massive over-reaction, lockdowns, shutdown of almost the entire economy in the face of a virus that had almost no health effect on 75-90% of the population would cause a giant economic “boom.” (In quotes because it was of course a fake boom, the “gains” are rapidly evaporating, leaving us holding non empty bag of inflation and instability). Where you’d expect everyone to responsibly share in some collective economic pain in the face of a negative event, the Govt (on a bipartisan consensus) instead threw the biggest party/orgy in the history of the world. We now have a govt that acts as a guarantor of everything (esp if the negative consequence can be shown to affect certain groups in any way). So, unemployment goes up? That’s a crisis! Need another Inflation “Reduction” Act to print and distribute a few hundred billion more. People can’t pay mortgages? Crisis! Make others pay for it. People don’t want to work or pay rent? Crisis! Let and encourage them to steal it. So living in a world where any crisis” can be manufactured or exploited, it’s very difficult to predict what the Govt is going to do, and it has a huge effect on the economic system. Living in a world that no longer seems to recognize or value objective reality (e.g. having the cojones to call a clearly pro-inflationary law an “Inflation Reduction Act,” or calling clearly dangerous and persistent inflation “transitory”) also leads to much instability and unpredictability. The bottom line is it seems that “normal” economic analysis isn’t good enough anymore, it feels like it needs to also at least try to reflect some of the insanities of the world we now live in. |
The percentage of Americans living paycheck to paycheck has risen to 63% yet we are borrowing massive amounts of money to send all over the world as "aid" (even to our enemies). One has to wonder just how much worse this will be as we have to service the exploding debt during a deep recession.
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I’d add that making bets on the medium-term (few months to a year or two) is, I think, very different (and easier) than making long-term bets. At least if you’re talking about macro economic stuff.
Like right now, you can say with some confidence what Congress will do in the coming several months. Answer: probably nothing much, other than play chicken with the debt ceiling, assuming no big external event that it has to react to. That inaction, in the face of pressing issues, is part of the insanity. What might Congress do over the next five years? No clue, other than play chicken with the debt ceiling. |
Maybe we could just stop spending millions on things like the "gain of function research" in China that has restarted (brought us COVID last time) and importing illegal immigrants. At least until the bleeding stops.
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The only thing that can be counted on is massive spending, entitlement expansion and debt increase is now never going to stop, or even be slowed in any meaningful way. That ship has sailed. To me, given what’s happened in the past 3 years, it feels like inflation is going to be much harder to tame than people think. It feels like whatever the opposite of “transitory” is. (I don’t have any hard analysis to support that feeling though). |
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Investment-wise, I think what we think Congress should do is not important, what matters is what it will do, and “what will” is easier to figure out. |
I’m just grasping for some hope that long term solutions even exist :)
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not with a ridged no tax no hope of any tax
the dogma forbids the tax option as that would effect those who gain from inflation small weak governments can not stop inflation one of the main flaws in the Gop gospel markets can't control price spirals if they effect the whole market not just a small bit |
On China, it needs to get its consumers spending and develop its consumer economy, but the Chinese system directs so little money to households to spend with. Something like 1.1BN Chinese make less than USD 300 per month per person in the household.
“in 2019, there were about 100 million people in China with a per capita household monthly income of less than 500 yuan ($72), about 310 million people with less than 1,000 yuan, and about 710 million people with less than 2,000 yuan.” Caixinglobal article. |
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Smile and be happy:) |
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That notion is about to be wiped clean.. |
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It is not that difficult to work hard and smart. Almost anyone can do it. I have no ill-gotten gains. I am pretty happy. I am blessed. |
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