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Updated almost 2 years ago, 01/14/2023
Housing crash deniers ???
Unfortunately I've been away for a few months while taking care of some personal matters, so I haven't been able to keep up on discussions.
However, several months ago there were ample amount of folks here insisting that a market crash/ correction was impossible and that prices would only continue to increase.
Curious if there are still people out there who feel this way? If so, I'd love to see some data that supports your view that the market isn't going to crash/ correct.
Quote from @Greg R.:
I clearly said “ We will see how this all unfolds as real estate adjusts to higher interest rates…it’s this new era of real estate that is going to require skill, and a great “system”
Anybody who could qualify for a loan last 10 years had made money. Most people will do what they always did and that won’t work. every time interest rates go up, that’s more money that gets transferred from the “investor” to the “bank” in the cash flow formula. Every hike is a tax to the investor.
I clearly said “ We will see how this all unfolds as real estate adjusts to higher interest rates…it’s this new era of real estate that is going to require skill, and a great “system”
Most people. That's a tough on to quantify since it's so broad. Most here look at the cash flow and CoC. If it makes them money they will still do it. I fit doesn't they won't. The principals there haven't really changed.
Most will also have to put 25% down now anyway so the lending should stop the true idiots.
In my mind it's pretty clear as to how it will unfold. In economics/ business competitive landscapes there is a fundamental concept called "barrier to entry". The barrier to entry regarding REI and basic home ownership just had a significant shift. It's much more difficult now for investors and aspiring home owners to "get in" than what it's been in the last decade +.
Most investors, or at least most smart ones aren't going to buy a property that isn't going to make money - even if they are in position to place a big down payment and live with a 7% + rate. So again, something's got to give. Investors are only going to buy if there's money to be made (CF, COC, appreciation), and aspiring home owners are only going to buy if 1) they're able to (rates & qualification), and 2) if it's less expensive than renting.
Rates are over 7% and seem poised to keep climbing. A lender that I spoke to yesterday said that he thinks rates will come down probably beginning-mid 2024 prior to the elections, which I think is possible. Makes a lot of sense that politicians and bureaucrats would try to give people temporary amnesia prior to an election. But who knows what the heck can happen between now and then.
Yeah they do this stuff all the time. Our government has been depleting the oil reserves when price per barrell was in the 80s. Come on…that’s reserved for when oil goes to 130-150. And what happened, opec punched us in the face with a oil cut. Government is full of morons
Quote from @Greg R.:
Most investors, or at least most smart ones aren't going to buy a property that isn't going to make money - even if they are in position to place a big down payment and live with a 7% + rate. So again, something's going to has to give. Investors are only going to buy if there's money to be made (CF, COC, appreciation), and aspiring home owners are only going to buy if 1) they're able to (rates & qualification), and 2) if it's less expensive than renting.
Rates are over 7% and seem poised to keep climbing. A lender that I spoke to yesterday said that he thinks rates will come down probably beginning-mid 2024 prior to the elections, which I think is possible. Makes a lot of sense that politicians and bureaucrats would try to give people temporary amnesia prior to an election. But who knows what the heck can happen between now and then.
I do agree with you on the barrier to entry. On the flip side that might push rents up more again which is good for those who are left. Rate differences on last purchase between 20% and 25% down were massive.
BUt you hit the nail on the head for me which is how long will rates stay this high. I don’t see it like the 80’s - don’t think we have that elasticity. If they stay about this point for the next year we will see a nice shift and then back to normal in about 15-18 months. as we climb back down to 5% which seems to be a safe target on all fronts.
And i’ll enjoy that more because my CF will go up then at those rates. IN the mean time, have to do something with the money.
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Quote from @Michael Wooldridge:
Quote from @James Hamling:
Quote from @Michael Wooldridge:
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @John Carbone:
looks like the fed is pricking the car bubble finally. Just received this email from a car dealer. To put this in perspective this vehicle mentioned below had a 5k premium above msrp 3 months ago. Now, it’s 4K below msrp, so in the matter of months 17 percent drop in value for new vehicle from peak.
Over the summer heard the same BS from the car gurus..”but there’s a car shortage from the chips, the chips, the chips, it will take years to recover….then rates spiked and poof there goes the demand.
Actually CAR and FOOD prices already goes down.
Read the chart here:
https://www.zerohedge.com/mark...
For Food it's already trending down including meat. Only cereal slightly up than last month.
Read the chart here:
https://www.fao.org/worldfoods...
To be honest I don't understand why the Fed is so crazy fighting inflation when inflation is already almost normalized. These grand-pa really needs to be replaced their way of thinking LOL
Carlos, my friend, I am not sure why you think inflation is under control, not even close. This is just the begining of it all. And the Fed is freaking out because of exactly what I have been saying and warning is the Front-Loading of the economy coming into this with huge shortages "nerf'd" the ability of rates to impact the inflation in meaningful ways as it should, and there seeing that.
They are kicking out oil from strategic reserve like crazy, it's barely keeping fuel prices at this inflated level at best, they've done all these rapid rate hits, it's not pressing things down in any meaningful response. There pooping themselves thinking "Holly F#$k we are screwed once we stop kicking out oil if we can't get things knocked down because trans. cost will shot through the roof and with it, everything and spur another inflation run, WTF do we do J-POW-wow, what-do-we-do???".
Know what J-POW says "F'd if I know, you morons made this mess! WTF do I gotta clean up your sh#t for all the time?!" And he's right.
If the domestic tap doesnt get turned back on, and fast I mean like 35 days and ticking fast, oh man, things are gonna rip again. Buckle up kiddo's, the rides just getting started.
And guess what, when they can't get costs under control, when they realize they can't kill this Hulk called inflation, there going to flip gears and go to the next which is some way some how of people having $$$$ to get through it. I 100% guarantee, watch. And if you say no-way, well did ya think they'd pay people to sit at home, and they sure as heck did that didn't they. That has now set a presidence so yes 100% they can solve inflation by kicking out a national stipend, some kind of inflation-emergency-assistance-act, watch.
Oh, but kicking out all that $$$$ will make inflation you say, lol, yeah, no kidding, but apparently Joe-Jo don't know-know because he just keeps doing it don't he. Didn't stop him before and what did he say then? That were all too dumb to get it, the gov issuing out these payments won't make inflation, no, we plebians just don't get it. Yeah, remember that.
As I have been saying, if your planning for any big discount on anything, good luck with that, you have no idea what kind of ride were in store for, it's a whole different horror show.
Jesus I don’t even know where to begin with this other than say first you are letting politics get in the way of money. Money has no business dealing with emotional reactions.
1) Barrels per day for the month of July was equal to barrels per day in 2019 July - https://www.eia.gov/dnav/pet/h... - fuel is up for oh so many reasons not thel east of which is russia/ukraine.
2) the money paid out to people back in 2020 was beyond nominal in the grand scheme of things. It’s still nominal today. What wasn’t nominal? The trillions of dollar pumped into the financial system. You can’t do that and not drive up inflation. So your right govt money hit but it was nothing to do with handouts to people.
3) this time bomb has been in place in 2020. During that year though there was no avoiding it. It is what it is.
The reality is there is no steering away from this until the jobs get hit. Simple as that. It’s why the fed wants to go after it. However, at the same time covid brought extra retirees and baby boomer retirement is accelerating. So labor force participation is down.
At this point I’m not even sure how they get jobs down without crashing the economy, Trying to predict where the macro economy is going to go is a lost cause. but the way we got here is an absolute massive amount of factors all hitting at same time.
On the flip side economically - we are still ine one of the strongest positions of any country in the world. Which is a feat in itself at this point.
If you think Politics and Money are in some way separate, well I don't know where to go from there, because I am sorry to say but Santa just does not exist.
Not to mention the obvious that politics have been running this entire money ship. But I get it, you voted your guy, be dammed if hes anything but the greatest on earth and for that nobody and question any of the actions and were just going to pretend none of the last 2 years happened. Ok.
On oil being same as 2019, quick question, how many autos are on the road today relative to 2019? Is there no more autos then in 2019? Is there no more trucks then 2019? Is there the exact same demand on oil as 2019? No, there is more, a lot more demand then in 2019. Your smart enough to know this was complete BS stat to use, you knew your were just skewing things. Why do you do that? I don't understand.
And how today, with the inflation a fact IN THE FACE and still saying it had nothing to do with the trillions kicked out by Gov, how can you bury your head so deep in the dirt and ignore the obvious? Where else do you think the inflation came from? Inflation ferries?
Couldn’t be more wrong. I don’t vote. I could care less about politics. I pay attention to policy swings (which both sides cause) that relate to economics. But other than that could care less so no don’t care who is in office. Now somebody in this thread does care about office and it’s obvious from your emotional response you do.
Consumption. Funny stat you’d actually be wrong about whats consumed per day, especially with remote work and the way EPA has changed. here’s a historical chart against it:
https://www.statista.com/stati...
As to inflation. I specifically pointed to the trillions kicked out by the gov into the financial system - so literally said it was the cause. Just not the slanted way you claimed it was.
but decade of low rates (should have been raised starting in 2017 btw), longest bull run ever, reduced labor force participation, massive tax cuts leading to the great stock buybacks no cuts to spending, Covid, and then yes covid spending globally. We were overdue for a correction to say the least and then accelerated it.
If you want to argue govt money overall happy to have a real discussion about it. And even that isn’t so simple after a 12 year bull run and free money.
Here is your own data chart, that you using to argue oil consumption is so low. It was low, and is obviously stepping back up. How about 2022? How high now? And, let's look up how major the decreases have been in production in last 20 months.
If oil production was a-ok, why is the U.S. Strategic reserve being used?
When they stop nerf'ing down the REAL cost of fuel, via release from strategic reserve, transport cost will jump over night. When transport costs jump, so will all goods that have any transport component or oil component, which is everything. You can see our last few years have been abnormally low consumption.
- James Hamling
Quote from @James Hamling:
Quote from @Michael Wooldridge:
Quote from @James Hamling:
Quote from @Michael Wooldridge:
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @John Carbone:
looks like the fed is pricking the car bubble finally. Just received this email from a car dealer. To put this in perspective this vehicle mentioned below had a 5k premium above msrp 3 months ago. Now, it’s 4K below msrp, so in the matter of months 17 percent drop in value for new vehicle from peak.
Over the summer heard the same BS from the car gurus..”but there’s a car shortage from the chips, the chips, the chips, it will take years to recover….then rates spiked and poof there goes the demand.
Actually CAR and FOOD prices already goes down.
Read the chart here:
https://www.zerohedge.com/mark...
For Food it's already trending down including meat. Only cereal slightly up than last month.
Read the chart here:
https://www.fao.org/worldfoods...
To be honest I don't understand why the Fed is so crazy fighting inflation when inflation is already almost normalized. These grand-pa really needs to be replaced their way of thinking LOL
Carlos, my friend, I am not sure why you think inflation is under control, not even close. This is just the begining of it all. And the Fed is freaking out because of exactly what I have been saying and warning is the Front-Loading of the economy coming into this with huge shortages "nerf'd" the ability of rates to impact the inflation in meaningful ways as it should, and there seeing that.
They are kicking out oil from strategic reserve like crazy, it's barely keeping fuel prices at this inflated level at best, they've done all these rapid rate hits, it's not pressing things down in any meaningful response. There pooping themselves thinking "Holly F#$k we are screwed once we stop kicking out oil if we can't get things knocked down because trans. cost will shot through the roof and with it, everything and spur another inflation run, WTF do we do J-POW-wow, what-do-we-do???".
Know what J-POW says "F'd if I know, you morons made this mess! WTF do I gotta clean up your sh#t for all the time?!" And he's right.
If the domestic tap doesnt get turned back on, and fast I mean like 35 days and ticking fast, oh man, things are gonna rip again. Buckle up kiddo's, the rides just getting started.
And guess what, when they can't get costs under control, when they realize they can't kill this Hulk called inflation, there going to flip gears and go to the next which is some way some how of people having $$$$ to get through it. I 100% guarantee, watch. And if you say no-way, well did ya think they'd pay people to sit at home, and they sure as heck did that didn't they. That has now set a presidence so yes 100% they can solve inflation by kicking out a national stipend, some kind of inflation-emergency-assistance-act, watch.
Oh, but kicking out all that $$$$ will make inflation you say, lol, yeah, no kidding, but apparently Joe-Jo don't know-know because he just keeps doing it don't he. Didn't stop him before and what did he say then? That were all too dumb to get it, the gov issuing out these payments won't make inflation, no, we plebians just don't get it. Yeah, remember that.
As I have been saying, if your planning for any big discount on anything, good luck with that, you have no idea what kind of ride were in store for, it's a whole different horror show.
Jesus I don’t even know where to begin with this other than say first you are letting politics get in the way of money. Money has no business dealing with emotional reactions.
1) Barrels per day for the month of July was equal to barrels per day in 2019 July - https://www.eia.gov/dnav/pet/h... - fuel is up for oh so many reasons not thel east of which is russia/ukraine.
2) the money paid out to people back in 2020 was beyond nominal in the grand scheme of things. It’s still nominal today. What wasn’t nominal? The trillions of dollar pumped into the financial system. You can’t do that and not drive up inflation. So your right govt money hit but it was nothing to do with handouts to people.
3) this time bomb has been in place in 2020. During that year though there was no avoiding it. It is what it is.
The reality is there is no steering away from this until the jobs get hit. Simple as that. It’s why the fed wants to go after it. However, at the same time covid brought extra retirees and baby boomer retirement is accelerating. So labor force participation is down.
At this point I’m not even sure how they get jobs down without crashing the economy, Trying to predict where the macro economy is going to go is a lost cause. but the way we got here is an absolute massive amount of factors all hitting at same time.
On the flip side economically - we are still ine one of the strongest positions of any country in the world. Which is a feat in itself at this point.
If you think Politics and Money are in some way separate, well I don't know where to go from there, because I am sorry to say but Santa just does not exist.
Not to mention the obvious that politics have been running this entire money ship. But I get it, you voted your guy, be dammed if hes anything but the greatest on earth and for that nobody and question any of the actions and were just going to pretend none of the last 2 years happened. Ok.
On oil being same as 2019, quick question, how many autos are on the road today relative to 2019? Is there no more autos then in 2019? Is there no more trucks then 2019? Is there the exact same demand on oil as 2019? No, there is more, a lot more demand then in 2019. Your smart enough to know this was complete BS stat to use, you knew your were just skewing things. Why do you do that? I don't understand.
And how today, with the inflation a fact IN THE FACE and still saying it had nothing to do with the trillions kicked out by Gov, how can you bury your head so deep in the dirt and ignore the obvious? Where else do you think the inflation came from? Inflation ferries?
Couldn’t be more wrong. I don’t vote. I could care less about politics. I pay attention to policy swings (which both sides cause) that relate to economics. But other than that could care less so no don’t care who is in office. Now somebody in this thread does care about office and it’s obvious from your emotional response you do.
Consumption. Funny stat you’d actually be wrong about whats consumed per day, especially with remote work and the way EPA has changed. here’s a historical chart against it:
https://www.statista.com/stati...
As to inflation. I specifically pointed to the trillions kicked out by the gov into the financial system - so literally said it was the cause. Just not the slanted way you claimed it was.
but decade of low rates (should have been raised starting in 2017 btw), longest bull run ever, reduced labor force participation, massive tax cuts leading to the great stock buybacks no cuts to spending, Covid, and then yes covid spending globally. We were overdue for a correction to say the least and then accelerated it.
If you want to argue govt money overall happy to have a real discussion about it. And even that isn’t so simple after a 12 year bull run and free money.
Here is your own data chart, that you using to argue oil consumption is so low. It was low, and is obviously stepping back up. How about 2022? How high now? And, let's look up how major the decreases have been in production in last 20 months.
If oil production was a-ok, why is the U.S. Strategic reserve being used?
When they stop nerf'ing down the REAL cost of fuel, via release from strategic reserve, transport cost will jump over night. When transport costs jump, so will all goods that have any transport component or oil component, which is everything. You can see our last few years have been abnormally low consumption.
@Greg R. Lowest MBA mortgage market index since '97, and it is going to get worse.
The Feds are still holding ~$2.5-3 Trillion in Mortgage Backed Securities on their Balance Sheet.
Facts are facts, as much as feelings can drive a market.
#1 Market Trends & Data Contributor
Quote from @Jorel Williams:
@Greg R. Lowest MBA mortgage market index since '97, and it is going to get worse.
The Feds are still holding ~$2.5-3 Trillion in Mortgage Backed Securities on their Balance Sheet.
Facts are facts, as much as feelings can drive a market.
Agree feeling is not important, what is important is their future plan. Which is to reduce/sell MBS purchases.
#1 Market Trends & Data Contributor
This 2022 is really history in the making. The very reason why the US oil reserve is used is that US and Europe are in a chaotic moment, they may lose Saudi --the biggest oil producer-- as a friend and may no longer be used to help US interests.
#1 Market Trends & Data Contributor
Fed is really the only institution right now that's against the direction of the policy of the US government, US people, western corporations, wall street, the working class, the Bank of England, the Bank of Japan, or any CB in Europe.
Their action only benefitted exporter countries like China, Saudi, and Russia as well.
This is a strange time in history
Quote from @Carlos Ptriawan:
Fed is really the only institution right now that's against the direction of the policy of the US government, US people, western corporations, wall street, the working class, the Bank of England, the Bank of Japan, or any CB in Europe.
Their action only benefitted exporter countries like China, Saudi, and Russia as well.
This is a strange time in history
#1 Market Trends & Data Contributor
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Fed is really the only institution right now that's against the direction of the policy of the US government, US people, western corporations, wall street, the working class, the Bank of England, the Bank of Japan, or any CB in Europe.
Their action only benefitted exporter countries like China, Saudi, and Russia as well.
This is a strange time in history
He and one guy named Vladimir is really the biggest historical influencer of 2022. These two guys make history in biblical proportion in 2020 alone.
Btw for all seriousness, the previous Fed policy when they face inflation is to make FF larger than inflation. Now that's impossible because mortgage rate would like double digit LOL and USD will be super ultra strong which is making the entire world collapse as nobody can purchase oil.
#1 Market Trends & Data Contributor
I think what really happen in the background is really much more complicated than this. Russia obviously has strong confidence because they're the largest third oil producer in the world, just after USA and Saudi. Russia can invade Ukraine and doesn't care about western isolationism because they have experienced this before and they know entire Europe depends on them due to Russian oil and gas dependencies to countries from Finland to Germany. So when Russia attacked Ukraine, they already hoped they will receive sanctions. IT'S A TRAP. Their export is banned HOWEVER Russia then sell their oil to a non-western country like China and India with RUBBLES NOT USD. Even country like the Philipines now considering purchasing Russian oil and gas. What can the US do ? nothing. So the purchase of this oil from Russia, end up making Rubble extremely strong as non-west country is purchasing oil with RUBBLE. It' virtually created two world system. Saudi as the biggest oil producer at the beginning seems to play neutral by following US order to increase oil output. But then after the strong Dollar causing the biggest headache for the rest of the world, what would a country such as Saudi will do ? of course, cutting oil production as it's virtually making them filthy rich.
Thanks to the Fed.
This is like multiple wrong policies in so many lines.
Quote from @Carlos Ptriawan:
I think what really happen in the background is really much more complicated than this. Russia obviously has strong confidence because they're the largest third oil producer in the world, just after USA and Saudi. Russia can invade Ukraine and doesn't care about western isolationism because they have experienced this before and they know entire Europe depends on them due to Russian oil and gas dependencies to countries from Finland to Germany. So when Russia attacked Ukraine, they already hoped they will receive sanctions. IT'S A TRAP. Their export is banned HOWEVER Russia then sell their oil to a non-western country like China and India with RUBBLES NOT USD. Even country like the Philipines now considering purchasing Russian oil and gas. What can the US do ? nothing. So the purchase of this oil from Russia, end up making Rubble extremely strong as non-west country is purchasing oil with RUBBLE. It' virtually created two world system. Saudi as the biggest oil producer at the beginning seems to play neutral by following US order to increase oil output. But then after the strong Dollar causing the biggest headache for the rest of the world, what would a country such as Saudi will do ? of course, cutting oil production as it's virtually making them filthy rich.
Thanks to the Fed.
This is like multiple wrong policies in so many lines.
They are playing with “house money” until assets revert back to pre Covid levels, then they will panic. Fed does this stuff all the time, inflate, deflate, inflate….they feel if they don’t do what they are doing they lose all credibility and risk the dollar becoming Weimar. they will reverse course when it’s at the last moment.
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
I think what really happen in the background is really much more complicated than this. Russia obviously has strong confidence because they're the largest third oil producer in the world, just after USA and Saudi. Russia can invade Ukraine and doesn't care about western isolationism because they have experienced this before and they know entire Europe depends on them due to Russian oil and gas dependencies to countries from Finland to Germany. So when Russia attacked Ukraine, they already hoped they will receive sanctions. IT'S A TRAP. Their export is banned HOWEVER Russia then sell their oil to a non-western country like China and India with RUBBLES NOT USD. Even country like the Philipines now considering purchasing Russian oil and gas. What can the US do ? nothing. So the purchase of this oil from Russia, end up making Rubble extremely strong as non-west country is purchasing oil with RUBBLE. It' virtually created two world system. Saudi as the biggest oil producer at the beginning seems to play neutral by following US order to increase oil output. But then after the strong Dollar causing the biggest headache for the rest of the world, what would a country such as Saudi will do ? of course, cutting oil production as it's virtually making them filthy rich.
Thanks to the Fed.
This is like multiple wrong policies in so many lines.
They are playing with “house money” until assets revert back to pre Covid levels, then they will panic. Fed does this stuff all the time, inflate, deflate, inflate….they feel if they don’t do what they are doing they lose all credibility and risk the dollar becoming Weimar. they will reverse course when it’s at the last moment.
#1 Market Trends & Data Contributor
Btw there's this research paper from one investment bank that's saying it's exactly the game in town, they will sell all MBS to zero and reverse the Fed balance to pre-covid level. A double-digit mortgage is quite possible.
I personally, don't believe USD will become the new Weimar even with a 0% interest rate, because the whole of Europe has a negative interest; there are more countries with GDP-to-debt ratios higher than USD and the dollar is still the major reserve currency.
What US has to fix actually, it has to fix the balance of trade and more drilling in oil and gas
It should not raise the dollar by artificially burning the dollar, but it has to enhance its productivity sector (like a normal country).
Quote from @John Carbone:
It depends what their objectives are. Information Warfare or Psy Opps.
“The American People always do the right thing. As soon as every other alternative has been exhausted.”
#1 Market Trends & Data Contributor
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Quote from @Carlos Ptriawan:
Before it becomes very messy, Shelter/Rent/Owner Mortgage is one of the very important relative factors for CPI/Inflation calculation.
Isn’t this true with any asset though. For example, stocks rise and fall daily, but only a small percent of shares trade hands on a given day. We have a 40 trillion dollar housing market, a lot of the “inflation” out there is not actually in the system since it’s just “equity” doing nothing in
I am able to demonstrate about what I meant by showing the data from the Fed itself,using the data from the Fed it self, take a look a comparable charts here (read it slowly) :
2022 Sticky CPI(including shelter) is comparable to '90 Inflation
https://en.macromicro.me/colle...
While 2022 Flexible CPI is comparable to '70 inflation (this is the chart the Fed keeps sharing with the latest reading of 8.3% inflation)
In here, without OER component: https://fred.stlouisfed.org/se...
2022 Sticky CPI LESS SHELTER is actually comparable to July 2008 !
RESULT: Our inflation number is actually 5%-ish only (when we consider OER data as laggard/invalid reading)
Now I'm curious what's the 30YFRM in July 2008: it is 6.43% mortgage, which is the highest mortgage from 2008-2021
https://www.freddiemac.com/pmm...
Question: Is this the reason the Fed maxed out their Fund rate to only 4.5 ? ?
So this inflation is simple to understand, to make the inflation low every landlord has to reduce their rent or sell your home at the 2020 price :)
LOL this is one way to make the Fed happy
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Quote from @Carlos Ptriawan:
I think what really happen in the background is really much more complicated than this. Russia obviously has strong confidence because they're the largest third oil producer in the world, just after USA and Saudi. Russia can invade Ukraine and doesn't care about western isolationism because they have experienced this before and they know entire Europe depends on them due to Russian oil and gas dependencies to countries from Finland to Germany. So when Russia attacked Ukraine, they already hoped they will receive sanctions. IT'S A TRAP. Their export is banned HOWEVER Russia then sell their oil to a non-western country like China and India with RUBBLES NOT USD. Even country like the Philipines now considering purchasing Russian oil and gas. What can the US do ? nothing. So the purchase of this oil from Russia, end up making Rubble extremely strong as non-west country is purchasing oil with RUBBLE. It' virtually created two world system. Saudi as the biggest oil producer at the beginning seems to play neutral by following US order to increase oil output. But then after the strong Dollar causing the biggest headache for the rest of the world, what would a country such as Saudi will do ? of course, cutting oil production as it's virtually making them filthy rich.
Thanks to the Fed.
This is like multiple wrong policies in so many lines.
What can the U.S. do, they can tank the Rus oil game, by turning American production potential BACK ON!
We can complete the oil lines with Canada adding massive supple to U.S. via Canada, cutting any need on others. And at that time inform Saudis they can play ball together, of we can just crush them right along and happily drive oil into $30 per bl range if they'd like to experience that.
There is not just a hot-war in Ukraine going on, there is a currency war and now an economy war kicking off. No time for the timid. Timidness makes for protraction.
U.S. needs to kick into gear of production, and get to net exporting. Yes, it's will urk OPEC but same time reduce anyone's reasoning to jump on the Ruble bandwagon. OPEC can be mitigated, there is ways for that.
Not to mention U.S. steps up production and export, this helps stabilize Europe energy sector, not fix but would be a help, and that could help calmer heads to prevail. Maybe, just maybe starting a cycle of calming, and getting to work of solutions vs freaking out over problems.
Or, just keep letting Rus fill that void, use the influence from such, and all just stays contentious.
- James Hamling
#1 Market Trends & Data Contributor
Quote from @James Hamling:
What can the U.S. do, they can tank the Rus oil game, by turning American production potential BACK ON!
We can complete the oil lines with Canada adding massive supple to U.S. via Canada, cutting any need on others. And at that time inform Saudis they can play ball together, of we can just crush them right along and happily drive oil into $30 per bl range if they'd like to experience that.
I have a lot of Data on this which primarily suggests the biggest oil growth consumer is China only while Russia's oil production is pretty stagnant.
I totally agree, making the oil to $26 per barrel again will make everyone happy, only XOM guys are going to cry but who cares right :) LOL
I think Russia-Ukraine war is going to stop when oil hits $26.
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
I think what really happen in the background is really much more complicated than this. Russia obviously has strong confidence because they're the largest third oil producer in the world, just after USA and Saudi. Russia can invade Ukraine and doesn't care about western isolationism because they have experienced this before and they know entire Europe depends on them due to Russian oil and gas dependencies to countries from Finland to Germany. So when Russia attacked Ukraine, they already hoped they will receive sanctions. IT'S A TRAP. Their export is banned HOWEVER Russia then sell their oil to a non-western country like China and India with RUBBLES NOT USD. Even country like the Philipines now considering purchasing Russian oil and gas. What can the US do ? nothing. So the purchase of this oil from Russia, end up making Rubble extremely strong as non-west country is purchasing oil with RUBBLE. It' virtually created two world system. Saudi as the biggest oil producer at the beginning seems to play neutral by following US order to increase oil output. But then after the strong Dollar causing the biggest headache for the rest of the world, what would a country such as Saudi will do ? of course, cutting oil production as it's virtually making them filthy rich.
Thanks to the Fed.
This is like multiple wrong policies in so many lines.
What can the U.S. do, they can tank the Rus oil game, by turning American production potential BACK ON!
We can complete the oil lines with Canada adding massive supple to U.S. via Canada, cutting any need on others. And at that time inform Saudis they can play ball together, of we can just crush them right along and happily drive oil into $30 per bl range if they'd like to experience that.
There is not just a hot-war in Ukraine going on, there is a currency war and now an economy war kicking off. No time for the timid. Timidness makes for protraction.
U.S. needs to kick into gear of production, and get to net exporting. Yes, it's will urk OPEC but same time reduce anyone's reasoning to jump on the Ruble bandwagon. OPEC can be mitigated, there is ways for that.
Not to mention U.S. steps up production and export, this helps stabilize Europe energy sector, not fix but would be a help, and that could help calmer heads to prevail. Maybe, just maybe starting a cycle of calming, and getting to work of solutions vs freaking out over problems.
Or, just keep letting Rus fill that void, use the influence from such, and all just stays contentious.
The problem is there is 0 chance of that happening. The White House is on a crusade to eliminate the oil industry in its current form. The opportunity to do what you are saying is long gone. I have a cousin who worked in shale industry, he got laid off last January due to uncertainty. Turns out he was better off from this and he got a job paying double in another industry.
White House will continue to blame others for oil prices, and fed will keep hiking hoping they can crush demand enough to get everything to drop, and Saudi will keep cutting production so they can stack valuable USD.
Quote from @Carlos Ptriawan:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Quote from @Carlos Ptriawan:
Before it becomes very messy, Shelter/Rent/Owner Mortgage is one of the very important relative factors for CPI/Inflation calculation.
Isn’t this true with any asset though. For example, stocks rise and fall daily, but only a small percent of shares trade hands on a given day. We have a 40 trillion dollar housing market, a lot of the “inflation” out there is not actually in the system since it’s just “equity” doing nothing in
I am able to demonstrate about what I meant by showing the data from the Fed itself,using the data from the Fed it self, take a look a comparable charts here (read it slowly) :
2022 Sticky CPI(including shelter) is comparable to '90 Inflation
https://en.macromicro.me/colle...
While 2022 Flexible CPI is comparable to '70 inflation (this is the chart the Fed keeps sharing with the latest reading of 8.3% inflation)
In here, without OER component: https://fred.stlouisfed.org/se...
2022 Sticky CPI LESS SHELTER is actually comparable to July 2008 !
RESULT: Our inflation number is actually 5%-ish only (when we consider OER data as laggard/invalid reading)
Now I'm curious what's the 30YFRM in July 2008: it is 6.43% mortgage, which is the highest mortgage from 2008-2021
https://www.freddiemac.com/pmm...
Question: Is this the reason the Fed maxed out their Fund rate to only 4.5 ? ?
So this inflation is simple to understand, to make the inflation low every landlord has to reduce their rent or sell your home at the 2020 price :)
LOL this is one way to make the Fed happy
Yes, this is why I have been calling for prices to come back to near pre Covid levels (a little above due to actual inflation). Mortgage rates above 7 now are having a higher premium right now due to the volatility and uncertainty of yields potentially going even higher. If they get to 4.5 and hold there, I believe historically mortgage rates tend to be 2 percent higher than fed funds rate, so the 6.5 percent mortgage could be the new normal.
with home values back at 2020 level range, fed will feel like they have done their job. The longer markets stay above 3000 spx, the longer they will continue to hike and hold, they have no reason not to. Jobs and housing lag behind 4-6 months, wouldn't be surprised if fed coordinates with another central bank to get another market rally on some more FUD thinking they will cut as a short term bounce.
I don’t see why most everyone is so against the notion that home values cant drop back to 2020 levels. If something goes up fast with low rates, surely sky high rates can bring it back down. That study (someone here posted a week ago) about how 75 percent of homebuyers during covid regretting their purchase sound like they could be eager sellers, where they can profit still, rent something for a year, and then buy what they actually want a year later. I can just hear the arguments in the family (we can sell for c profit and live somewhere for a year for free with the profit, and maybe have a little extra for next down payment in a year - it’s a no brainer). Also, all the Covid boom towns where people worked remotely and being called back in, those are eager sellers too.
I think fed will get what they want. I can’t imagine what the melt up will look like in the equities when the official pivot happens though, it may be a one day rally for the ages (double digit). The irony about this is that something like this is likely to occur when the economy is in ruins, but grandpa Powell will save the day.
#1 Market Trends & Data Contributor
Wow, this could be one the best post related to this Fed interest rate and hiking. I read ton of charts, research, and data conclusion is the same.
This Fed action is a pre-MEDIATED game. I could understand what they want to do now, both domestically and long term.
As summary :
- Since the housing statistical method the Fed had is lagging for 12 months, expect the rate to keep high
- THe inverse "v" curve may happen next year or 2024.
- The FASTEST WAY to reduce CPI Inflation; I calculated OER component has 40% weighting after comparing sticky CPI with shelter and non-shelter; is by reversing the rent back to December 2020 level and reducing home price back to December 2020 level.
This is already happening in the west region market. However, as data is lagging, we would see the impact in the inflation perhaps starting March-2023. The second way to manipulate inflation is by intervening in the Future Oil and gas market and increasing the production.
- There's this very beautiful paper from Fannie Mae in 2021 that give suggests to the Fed to increase the interest rate EARLIER ... everything what the Fed did today is already recommended by Fannie Mae early last year .. WOW
https://www.fanniemae.com/rese...
- So why the CPI started inflating in Q2-2021 but not noticeable in Q1-2021 is because CPI # is more sensitive to PPI changes but not that sensitive to housing numbers. If the oil starts rising we may see 8% CPI for some more time.
- For the international front, Fed may just want to weaken the Euro and European market, perhaps, in the end, Fed will bailout them LOL They may bail out thru Canadian FX Swaps Banks. I found out the UK has even worse financial shape than I thought before.
- There're very few countries that have benefited from all these Fed actions/Russia action, mainly BRICS country, China, Saudi, Indonesia, and Taiwan. For Europe what's happening today is like 1998, except this time, the Asian country is in much better position when Dollar rallies and Europe is in turmoil.
This may be the last decade for Europe. After 2040 maybe the developed country is only the US and some Asian countries. This is truer if Ukraine conflict lasts for too long. Man 2022 is really a century history book in the making in biblical proportion.
John please send your email in PM I will send some stuff related to this.
The ingredients just are not present for a huge housing crash! I firmly believe what we are seeing in the market today is a market shift. Now is it impossible, no (and I recognize that every market is different). Only a fool would claim anything is impossible in todays world BUT I strongly believe that we are approaching a new norm!
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
What can the U.S. do, they can tank the Rus oil game, by turning American production potential BACK ON!
We can complete the oil lines with Canada adding massive supple to U.S. via Canada, cutting any need on others. And at that time inform Saudis they can play ball together, of we can just crush them right along and happily drive oil into $30 per bl range if they'd like to experience that.
There is not just a hot-war in Ukraine going on, there is a currency war and now an economy war kicking off. No time for the timid. Timidness makes for protraction.
U.S. needs to kick into gear of production, and get to net exporting. Yes, it's will urk OPEC but same time reduce anyone's reasoning to jump on the Ruble bandwagon. OPEC can be mitigated, there is ways for that.
Not to mention U.S. steps up production and export, this helps stabilize Europe energy sector, not fix but would be a help, and that could help calmer heads to prevail. Maybe, just maybe starting a cycle of calming, and getting to work of solutions vs freaking out over problems.
Or, just keep letting Rus fill that void, use the influence from such, and all just stays contentious.
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Quote from @Terrell Ramlakhan:
The ingredients just are not present for a huge housing crash! I firmly believe what we are seeing in the market today is a market shift. Now is it impossible, no (and I recognize that every market is different). Only a fool would claim anything is impossible in todays world BUT I strongly believe that we are approaching a new norm!
I see some argue nothing is impossible, well feel free to walk out into the front yard, flap your arms as hard as possible, and fly. Lol.
What people discuss things like the housing market and state things are not possible, it's a reference to the data inputs and conditions as they are, and on the horizon. Change those inputs, yes, of course the variables of potentials change.
Strap a device to ones back, say a glider, and all of a sudden the front-yard-fool can "fly". It was a change of the inputs.
As far as what unknowns could come, what "black-swans" are out there beyond the horizon, yeah it's literally anything and everything imaginable and unimaginable. The what-if's could go on for years right.
When such as this are discussed, it's supposed to be from a fact base deposition, not on the sci-fi think-tank of "what if".
As data holds today we have 2 things, no ingredients facilitating a national housing crash, and lot's and lot's of turmoil in the world. That's it, that's what we got, those are the facts on the ground. Could the turmoil change things? Well "Duh". If nukes start dropping will that change things, see reference "Duh". If the world steps back and takes a collective chill pill, again "duh".
Anything is possible in any world until it is done, or not done. What is referenced by statement of possible or impossible is referencing probable or improbable to degrees that verge on near impossible or absolute certainty.
It is not impossible to be hit by lightning while being mauled by a bear, although we call this "impossible", yes? Same thing. The housing market is nationally set for a "crash" about as likely as one is to be hit by lightning while being mauled by a bear. It "could" happen, but wow, the factors that have to come to pass to make it happen.
"crash" as defined as a sudden drop to national median home sale/value price of 30% or more.
- James Hamling
#1 Market Trends & Data Contributor
Quote from @Greg R.:
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Not to mention U.S. steps up production and export, this helps stabilize Europe energy sector, not fix but would be a help, and that could help calmer heads to prevail. Maybe, just maybe starting a cycle of calming, and getting to work of solutions vs freaking out over problems.
Or, just keep letting Rus fill that void, use the influence from such, and all just stays contentious.
I am 20000% agree with this too.
Btw the rig active count in the US now is better than in 2020, but still much less than in 2014, there're still a lot of rigs that can be activated.
What the US gov and Fed must do is sell those treasury and use the money short the oil futures :)