do you work for fun? because if its not fun, then quit?
Rents are driven by wage inflation. No way to increase housing supply fast enough to meet demand. So higher wages means higher rents. Especially in California cities that restrict growth like South Lake Tahoe.
True inflation is caused by wage inflation. Other causes like oil food and other commodities are transient. Once wage inflation gets baked in with automatic raises inflation becomes a cancer on the economy like in the 70s. Now we have something worse. We have a baked in backstop. Even the homeless get free food free medical SSI( easy to get disability SSI) and other subsidies. That add up to over $40k per year. In other words people making under $20/h have little incentive to work( well at least for legal W2 jobs)
So inflation is baked in… In South Lake Tahoe it means single people can afford $1000/m per rent. Meaning 3br modest houses rent for $3000/m vs $1500/m 6 years ago when $500/room was minimum rent.
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Also mortgage rate and property tax.
Excessive free money.
Kathy Wood and Jeffrey Gundlach think deflation is coming soon. It takes quite a bit of time for interest rate increases to impact the economy, so we’ll eventually get the delayed impact of multiple increases. Rate cuts hit the economy much faster.
This is a very helpful article to help parse today’s inflation report:
We are still tracking Waller’s “4% terminal rate” Scenario No. 1:
Fed Governor Christopher Waller described his decision tree Friday at a question-and-answer session for the Institute for Advanced Studies in Vienna, Austria:
- Scenario No. 1: If inflation follows the June Summary of Economic Projections: “In that case, I would support our policy rate peaking near 4%.”
- Scenario No. 2: If inflation doesn’t slow or rises further: “Then in my view the policy rate will probably need to move well above 4%,” he said, emphasizing the words “well above.”
- Scenario No. 3: If inflation decelerates quickly: “Then in my mind the policy rate might peak at less than 4%.”
My guess is that Fed will do 0.75% next week and continues to talk tough. A full 1% hike seems too much of a shock to the market, and I don’t think we need that much that fast.
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The Fed and the giveaways for Covid19 relief created a mess that Powell is ill equipped to deal with. His idol Volker tanked the economy with 18% interest rates
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What would happen if Sep headline CPI is below 8.3?
Stock market would 
is a good guess.
Mark the date. Oct 13 
for Sep CPI prints.
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When Biden is done selling SPR oil to China by end of this month, oil will shoot back up above 100 very quickly. Gas price drop is temporary and its yet another trick by Biden admin to buy votes. So do not hold your breath on inflation coming down anytime soon. Its pure fantasy that inflation will come down with pigmy 4% rate hike. Wages have gone up and will keep going up; workers would simply refuse to work for anything less. Consumers will keep spending with debt and then ask for debt forgiveness. These behaviors will further feed the inflation. Unless Fed thoroughly crashes the stock market, Crypto market and RE bubble, inflation will not break down.
Even if FED crashes the stock market, Real estate will not have so much impact like Crypto and stock market.
Real estate is like bond (and follows bond market too) and naturally low volatility. Above all, this recession is introduced by oil and supply chain. This is not like year 2008.
If anyone understand the concept, they win otherwise they fail !
Year over year inflation is dumb, big lagged indicator.
Month over Month is more clear, and it was 0.1%!! Annualized that’s 1.2%
If MoM inflation was 0.1% in the future, that would actually be under the desired 2% YoY inflation mark.
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While retail investors are panic selling, institutions/ smart monies are BTFDing.
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That’s my point that inflation will shrink soon, because we are comparing to a higher number from last year.
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Yup. Given that in 2021: July is 5.4% & Aug is 5.4%, unless we face huge recession no way for YoY inflation to drop. 2021 Sept is 5.4%, Oct is 6.2%, Nov is 6.8%, Dec is 7% => we will start to see YoY number go down in Oct (say best case is 7.6 to 7.7%) and Nov (7.4 to 7.5%), and Dec (~7.3%).
Fed is going to most likely increase 0.75 in September and slow down in November). Stocks most likely will fall seeing September CPI numbers in October, and start recovery expecting a much lower number for October CPI. Wonder if there is a good strategy to trade and make money on these swings…
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Yesterday was a clear short squeeze after 5% Nasdaq down.
See market is in free fall stage, it is hard to judge market day by day. When FED meetings, esp like this time of uncertainty on rate hikes, better to stay away from market until clarity comes.
I just mentioned like this => You have lot of assumptions.
This is a big discussion issue, I may be exhausted if I discuss here.
Given that rates are already at the highest since 2008 and the real wages are roughly same as 2018 levels there is no fundamental reason stocks or RE should be any higher than 2018 levels. As Fed slowly squeezes out liquidity via QT, both stocks and Rae will keep inching towards 2018 levels. It’s a matter of when not if.
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Have always referring to GSPC when talking about stock market not individual stocks
A few days and you think it will break below Jun 16 low? IMHO, no way it will break below Jun 16 low.
Those who want to BTFD GSPC instead of using DCA should buy some here.
Your mood swings according to price change because you think in terms of trading.
It’ll break 2018 levels, be patient. Interest rates are like gravity that decides how high assets float. With highest rates in 15 years, they will come back to the floor.