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Post by newtecher on Apr 6, 2023 2:00:20 GMT
- ISM service sector prices paid is plunging (inflation fight has been won!)
This is somewhat misleading. The ISM services prices paid indicator, which correlates with services inflation, has fallen from about 80 a year ago to 59.5. However, it is still above 50, meaning that more managers are reporting prices increasing than decreasing.
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Post by Fearchar on Apr 6, 2023 8:16:42 GMT
- ISM service sector prices paid is plunging (inflation fight has been won!)
This is somewhat misleading. The ISM services prices paid indicator, which correlates with services inflation, has fallen from about 80 a year ago to 59.5. However, it is still above 50, meaning that more managers are reporting prices increasing than decreasing. Good point! Inflation has not been soundly defeated. Yes, good progress has been made. So despite Scott's declaration, the FED is very unlikely to cut rates any time soon.
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Post by Fearchar on Apr 27, 2023 1:16:07 GMT
April 25, 223 blog update from Scott Grannis:
M2 declined in March 2023 and is now down $900B (-4.1%) since its peak. Gap between where M2 is and where it should be is expected to be closed around Jan/Feb next year.
This is occurring despite increasing federal deficit; that is deficits are no longer being monetized.
Inflationary pressures have subsided and some semblance of normal can be expected by year end. So, no need for the FED to tighten monetary policy any further!
M2 is now about 78% of nominal GDP (it should eventually be nearer to 70% or less)
==========================================================================
As much as I respect Scott Grannis, I also know that the FED is not going to listen to him. The futures market is clearly expecting a hike next week and holding steady until September 20, 2023 meeting. Real cut from current levels is not expected until Nov 1, 2023 meeting and that will be just the start of the FED's huge correction.
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Post by johnsmith on May 8, 2023 23:57:46 GMT
scottgrannis.blogspot.com/2023/05/swap-and-credit-spreads-still-say-no.htmlThis is interesting in one respect to me; Grannis says that there is plenty of liquidity in the banking system, while Eurodollar maven, Jeff Snider, says that it's dry as a sun bleached bone (I exaggerate) and that portends deflationary forces. I for one, trust Jeff Snider; I hedge by diversifying my assets.
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Post by Fearchar on May 10, 2023 0:40:50 GMT
Thanks johnsmith , If I am not mistaken, I don't believe Jeff Snider sees an immediate recession. I think he's saying it's inevitable, but has not quantified if will be mild, moderate or deep. Scott Grannis is also stating that a recession isn't immediate. His message that resonates with me was from April 12th when he stated that the FED needs to cut rates: "There is absolutely no reason the Fed needs to raise rates further, and every reason they should begin cutting rates—beginning with the May 3rd FOMC meeting if not sooner."and "To paraphrase Wayne Gretsky, the Fed should be focused on where CPI is going, not on where it has been. It's on its way to zero, and that means the Fed should cut rates—and the sooner the better."My take on this is that the likelihood of a recession is increasing until the FED actually cuts rates from where they were back in early April. That they raised rates last week just allows more problems to build. Jeff may be getting ahead of the game and perhaps he's already concluded that the FED won't be doing a good job; ergo a depression.
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Post by Fearchar on May 14, 2023 1:07:25 GMT
Highlights from the May 12th Blog of the Calafia Beach Pundit:
Scott points out more signs as shown by graphs that inflation is well under control and that there is a risk of actual dis-inflation in the future.
He cautions that mistakes by the FED as the proximate cause of every recession in his lifetime.
"If the Fed doesn't ease up on the monetary brakes soon, we could be seeing some deflation before too long."
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Post by steadyeddy on May 14, 2023 3:52:22 GMT
Highlights from the May 12th Blog of the Calafia Beach Pundit: Scott points out more signs as shown by graphs that inflation is well under control and that there is a risk of actual dis-inflation in the future. He cautions that mistakes by the FED as the proximate cause of every recession in his lifetime. "If the Fed doesn't ease up on the monetary brakes soon, we could be seeing some deflation before too long." Fed doesn't like QQQ flying high nor Crypto flying high. So, they have to press forward with higher interest rates until they break the backs of QQQ and Crypto.
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Post by johnsmith on May 15, 2023 14:51:48 GMT
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Post by steadyeddy on May 15, 2023 15:00:59 GMT
johnsmith , just like SVB and others had balance sheet deterioration really quickly, persistently high rates will cause consumer balance sheets to deteriorate as well. Just don't know when. Credit card usage has been steadily rising during the last year or so. So.. inflation will cool once consumers are forced to think about their available credit or cash balances.
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Post by Fearchar on May 15, 2023 15:51:23 GMT
While they may technically be negative right now or recent past, that would be a high risk assumption over the longer term. However, it does imply that rates may have to be held at these levels for a longer period of time to have desired effect, which carries with it a lit of risk.
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Post by Fearchar on May 25, 2023 11:29:09 GMT
Update from Scott.
Now he is blogging that a soft landing is entirely possible as long as the Fed does not mess it up. In other words, they have some time before they really need to cut rates. His post explains this... in short excess M2.
Now, I am beginning to have some doubts...
If I made a mistake however by going to over 90% cash, at least it was on the side of caution. 5.08% Annually really is not all that bad.
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Post by FD1000 on May 25, 2023 12:39:18 GMT
Update from Scott. Now he is blogging that a soft landing is entirely possible as long as the Fed does not mess it up. In other words, they have some time before they really need to cut rates. His post explains this... in short excess M2. Now, I am beginning to have some doubts... If I made a mistake however by going to over 90% cash, at least it was on the side of caution. 5.08% Annually really is not all that bad. Not surprising, if I owned stocks, most would be in growth, just as I would own value/higher div in 2022. The markets/charts don't lie, after all it's real trades in real time. Attachments:
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Post by Chahta on May 25, 2023 15:01:00 GMT
Update from Scott. Now he is blogging that a soft landing is entirely possible as long as the Fed does not mess it up. In other words, they have some time before they really need to cut rates. His post explains this... in short excess M2. Now, I am beginning to have some doubts... If I made a mistake however by going to over 90% cash, at least it was on the side of caution. 5.08% Annually really is not all that bad. Not surprising, if I owned stocks, most would be in growth, just as I would own value/higher div in 2022. The markets/charts don't lie, after all it's real trades in real time. If you were paid for advice would you tell a client to put 100% in QQQ today? Then hold until a 3-line break down?
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Post by steelpony10 on May 25, 2023 15:46:56 GMT
Fearchar , Beware the known unknowns. How about the Fed will hold until unemployment rises? How about keep investing in government paper to directly finance Fed spending? Keeping money from corporations will slow things down. Russia has to be finished off, permanently. How about the Feds finally fix the damn roads and bridges as mandated? Fed rates are not about protecting the moneyed classes who own stocks (only at times apparently). There’s many unknowns that affect the economy and all the other people in the world. So maybe still just muddling along. Grandmas crystal ball says the S hits the fan in the next 2 years and then we’ll see what’s left a few years after that.
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Post by uncleharley on May 25, 2023 16:03:02 GMT
I agree with your Grandmas crystal ball, but for today and possible the next 2 yrs or more I am having a lot of fun with TQQQ. I clearly remember the PC and Internet revolution. I believe the AI revolution will be bigger.
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Post by Chahta on May 25, 2023 16:04:27 GMT
Fearchar , Beware the known unknowns. How about the Fed will hold until unemployment rises? How about keep investing in government paper to directly finance Fed spending? Keeping money from corporations will slow things down. Russia has to be finished off, permanently. How about the Feds finally fix the damn roads and bridges as mandated? Fed rates are not about protecting the moneyed classes who own stocks (only at times apparently). There’s many unknowns that affect the economy and all the other people in the world. So maybe still just muddling along. Grandmas crystal ball says the S hits the fan in the next 2 years and then we’ll see what’s left a few years after that. Just to be clear do you believe the assumed coming recession and recovery will be well after 2025? Seems like a real long time. If so how can PTY (and others) keep paying it's yield with corporations defaulting (bankrupt)? I am trying to process this exteremly negative outlook. If so today is a great time. If the S hasn't hit the fan what has happened already?
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Post by steelpony10 on May 25, 2023 16:48:25 GMT
Fearchar , Beware the known unknowns. How about the Fed will hold until unemployment rises? How about keep investing in government paper to directly finance Fed spending? Keeping money from corporations will slow things down. Russia has to be finished off, permanently. How about the Feds finally fix the damn roads and bridges as mandated? Fed rates are not about protecting the moneyed classes who own stocks (only at times apparently). There’s many unknowns that affect the economy and all the other people in the world. So maybe still just muddling along. Grandmas crystal ball says the S hits the fan in the next 2 years and then we’ll see what’s left a few years after that. Just to be clear do you believe the assumed coming recession and recovery will be well after 2025? Seems like a real long time. If so how can PTY (and others) keep paying it's yield with corporations going bankrupt? I am trying to process this exteremly negative outlook. If so today is a great time. It’s a pure crap speculation. No value whatsoever. This is either just a slowdown brought on by world events starting with Covid probably or the world is teetering on the brink of disaster. So says daily headlines. Naturally I favor disaster because I invest for cheap income. As far as timing who knows but I hope this drags on and on. There’s a lot of moving parts. In regards to PTY and the like I originally invested the most under similar conditions in 2009-10. Got all that money back by now. Just this year we’re up about 5% in income alone mostly by staying in markets compounding (5-10%) and auto investing in devalued shares. That’s continued progress beyond my personal inflation rate. Someday maybe we’ll get some cap gains again as a bonus. So whose making significant cap gains or yields above 5% after taxes until this is all in the past? It’s always helps when weak players are weeded out, companies or professional investing managers. That strengthens the survivors and reduces my risk.
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Post by Capital on May 25, 2023 18:19:12 GMT
Sounds to me that someone or quite a few someones been baked on the beach a wee bit too long here - LOL - with all this speculating and hypothenating going on in here. Howdy folks just checking in with the sanity police from Florida en tow.
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Post by FD1000 on May 25, 2023 21:35:53 GMT
Not surprising, if I owned stocks, most would be in growth, just as I would own value/higher div in 2022. The markets/charts don't lie, after all it's real trades in real time. If you were paid for advice would you tell a client to put 100% in QQQ today? Then hold until a 3-line break down? Since I don't think your question is serious, you should take the biggest margin and invest all your money in TQQQ.
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Post by Chahta on May 26, 2023 0:23:20 GMT
If you were paid for advice would you tell a client to put 100% in QQQ today? Then hold until a 3-line break down? Since I don't think your question is serious, you should take the biggest margin and invest all your money in TQQQ. You know me. I am serious. I do not necessarily have nerve enough to try that myself. I own SCHD at a low cost basis and I am curious about if this is a smart move after QQQ has perfomed so well this year. Maybe the point should be that the trade should have been made at the right time earlier this year.
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Post by anitya on May 26, 2023 1:57:28 GMT
I agree with your Grandmas crystal ball, but for today and possible the next 2 yrs or more I am having a lot of fun with TQQQ. I clearly remember the PC and Internet revolution. I believe the AI revolution will be bigger. uncleharley, TQQQ and many of its underlyings gapped up today. But if I look at the quotes in a continuum (i.e., extended hours market), then I do not see a gap up on many and probably TQQQ also would not show a gap up. Could you please opine on how to deal with gaps that do not otherwise exist if extended hours market is taken into account? Do I take extended hours market into account when trying to look at other chart measures like a three line break, which may reduce whipsaws but also may give me a more delayed signal? P.S.: I have not followed this thread. Just reading UH posts and replying. Thanks.
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Post by FD1000 on May 26, 2023 12:14:40 GMT
Since I don't think your question is serious, you should take the biggest margin and invest all your money in TQQQ. You know me. I am serious. I do not necessarily have nerve enough to try that myself. I own SCHD at a low cost basis and I am curious about if this is a smart move after QQQ has perfomed so well this year. Maybe the point should be that the trade should have been made at the right time earlier this year.Yep. If it was me, I would sell SCHD+all value months ago and keep SPY/VOO. This reminds me of 2022, after years of growth dominance, value was better in 01/2022 and all year. Too late now. Either you follow a system or you don't. Remember, slower indexes/funds are easier to trade. Attachments:
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Post by bb2 on May 26, 2023 17:18:46 GMT
Re Califa Beach, it's fun to come off smarter than the Fed but it doesn't help much when guessing what the fed will do next. The fed lowered from 1975-76 and inflation immediately took off again. They learned a lesson. 25 bp coming. Today's number cemented it.
I forgot to mention I'm always wrong about this stuff. Watch May come in at 4%.
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Post by Chahta on May 26, 2023 18:37:13 GMT
Looked at Fed Watch. 33% to hold and 67% to raise, if I’m reading it correctly.
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Post by Fearchar on May 26, 2023 20:04:28 GMT
Chahta , Yes that's correct. Probability of a hike in June is rising and was at 66.5% just a few minutes ago.
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Post by Fearchar on May 31, 2023 22:48:37 GMT
May 31, 2023 Blog Post:
John Cochrane:
The debate over work requirements for social programs is hot and heavy. I'll chime in there as I don't think even the Wall Street Journal Editorial pages have stated the issue clearly from an economic point of view. As usual, it's getting obfuscated in a moral cloud by both sides: How could you be so heartless as to force unfortunate people to work, vs. how immoral it is to subsidize indolence, and value of the "culture" of self-sufficiency.
Economics, as usual, offers a straightforward value-free way to think about the issue: Incentives. When you put all our social programs together, low income Americans face roughly 100% marginal tax rates. Earn an extra dollar, lose a dollar of benefits. It's not that simple, of course, with multiple cliffs of infinite tax rates (earn an extra cent, lose a program entirely), and depends on how many and which programs people sign up for. But the order of magnitude is right.
Since 1967, average inflation-adjusted transfer payments to low-income households—the bottom 20%—have grown from $9,677 to $45,389. During that same period, the percentage of prime working-age adults in the bottom 20% of income earners who actually worked collapsed from 68% to 36%.
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Post by uncleharley on Jun 1, 2023 12:12:22 GMT
The tough close for the S&P yesterday seems to be signaling a great day for today.
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Post by Fearchar on Jun 16, 2023 15:24:09 GMT
June 14th blog from Scott Grannis at scottgrannis.blogspot.com/Few signs that monetary policy is too tight YoY CPI of 4% above FEDs 2% target is meaningless as it will almost certainty fall to <2% over past 6 months CPI has risen 3.2% CPI less shelter cost has risen 0.8% Housing prices have not increased over past year YoY PPI is less than 2% 6 month PPI has gone negative At ~105, the dollar is still relatively strong Crude prices are weak (down 40% from last summer's peak) CRB Raw Industrial index is at levels equivalent to a decade ago In real terms, oil cost about half of what it did a decade ago Cheap energy can be a powerful tonic for economic health Yield curve is invested Real interest rates are not punishingly high Credit and swap spread are still quite low, which suggest recession risk is low S&P500 has been climbing while VIX (fear) has been declining The market knows it is only a matter of time before the Fed starts easing My comment: Real Fed Fund are clearly positive ~1%. If inflation drops as expected, then real rates will rise.
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