Macroeconomics / Stock Market Thread

[Paul in uhh]

Don’t want to clutter up the other threads but we have a lot of smart folks here who watch the markets. Thought it might be nice to have this thread going.

I’ll start by mentioning that Canada raised their rates by 50bps this week.. wonder what the Fed follows with when you consider that the latest inflation print shows that it’s the highest it has been in 4 decades

 

[Bob Sugar]

Got an alert that mortgage rates are now at an 11 year high. I'd expect them to keep ticking up. I am glad I re-financed last year. The 'Murican dream is 'bout to get real expensive.

 

[Wexahu]

Got an alert that mortgage rates are now at an 11 year high. I'd expect them to keep ticking up. I am glad I re-financed last year. The 'Murican dream is 'bout to get real expensive.

Thought this might be an exaggeration but it is not. I imagine home price appreciation is about to hit a brick wall or start going negative but what do I know.

A $300,000 mortgage is about $350/month more expensive than it was just a few months ago.

 

[Dogfrog]

Don’t want to clutter up the other threads but we have a lot of smart folks here who watch the markets. Thought it might be nice to have this thread going.

I’ll start by mentioning that Canada raised their rates by 50bps this week.. wonder what the Fed follows with when you consider that the latest inflation print shows that it’s the highest it has been in 4 decades

I don’t know but have seen estimates of two 50bp moves over the summer. That alone would put the fed funds rate at 1.5 with likely at least 4-5 moves yet to go. Some wild speculation out there about whether ffr could hit Jimmy Carter levels, 20% in 1980. Doubt it and certainly hope not.

 

[TxFrog1999]

I don’t know but have seen estimates of two 50bp moves over the summer. That alone would put the fed funds rate at 1.5 with likely at least 4-5 moves yet to go. Some wild speculation out there about whether ffr could hit Jimmy Carter levels, 20% in 1980. Doubt it and certainly hope not.

Inflation won't be allowed to go that high unless they begin calculating inflation like they did back in the 80's. In fact, using the 80's calculations we are already above 17%, so we'd need to hit over 30% true inflation for the current index to get close to Jimmy Carter "levels."

 

[Dogfrog]

Inflation won't be allowed to go that high unless they begin calculating inflation like they did back in the 80's. In fact, using the 80's calculations we are already above 17%, so we'd need to hit over 30% true inflation for the current index to get close to Jimmy Carter "levels."

To clarify, the 20% was the highest fed funds rate we got up to in 1980, it’s the rate the fed sets for banks to borrow cash from each other in overnight transactions. So the fed rate went to 20% to combat inflation that got to double digits and the year 1980 avg never got over 14%. Again, just don’t think that happens again.

 

[Paul in uhh]

Got an alert that mortgage rates are now at an 11 year high. I'd expect them to keep ticking up. I am glad I re-financed last year. The 'Murican dream is 'bout to get real expensive.

Home prices will have to decline as a result I imagine, even in dfw

 

[An-Cap Frog]

Paid off my house back in 2014 [hundinnen ]!

 

[Army Frog Fan]

Home prices will have to decline as a result I imagine, even in dfw

I think this is going to be an interesting example of micro-economics supply and demand. I would imagine that, like me, there has been an increase in potential buyers (demand) over the last 12-18 months with the expectation that mortgage rates are about to go through the roof. I mean we built a new home and moved in just under 4 years ago, with the expectation of living here for 10+ years. I started looking at upgrades last summer, such that if the perfect one was available, we'd take a serious look at it. Now, that window has probably passed and we will stick with our current plan. But the increase in rates will reduce potential buyers and likely stall home price increases.

 

[Paul in uhh]

A must watch for lumber pricing concerns.. since this interview in 2021 prices fell and are now back to a high level

 

[FrogUltimate]

Some signs that supply chain issues are easing. Skyrocketing mortgage rates should slow the housing market. A year of high inflation will set the denominator level higher, so inflation rate will come down.

I’m hopeful in the next 12 months inflation returns to a normal range and we don’t need continued rate rises. Unfortunately the damage will be done to a degree… inflation has spiked prices so high and will continue to do so in 2022, and even if inflation slows, highly doubt we see any deflation back to old prices.

Elephant in the room is the stock market. Very well may end up with the trifecta in 2022… negative stock market, high inflation, rising/high rates. Hopefully that won’t result in the kill shot of rising unemployment. Lot of people got materially poorer in the last 12 months despite some wage increases (me included)

 

[Paul in uhh]

Some signs that supply chain issues are easing. Skyrocketing mortgage rates should slow the housing market. A year of high inflation will set the denominator level higher, so inflation rate will come down.

I’m hopeful in the next 12 months inflation returns to a normal range and we don’t need continued rate rises. Unfortunately the damage will be done to a degree… inflation has spiked prices so high and will continue to do so in 2022, and even if inflation slows, highly doubt we see any deflation back to old prices.

Elephant in the room is the stock market. Very well may end up with the trifecta in 2022… negative stock market, high inflation, rising/high rates. Hopefully that won’t result in the kill shot of rising unemployment. Lot of people got materially poorer in the last 12 months despite some wage increases (me included)

With material prices being high, interest rates rising, and all companies seeking to maintain profitability, I am sure you can count on layoffs over the next couple years.

It may take months of rising unemployment to get the fed to ease off on the rate hikes.

I’m admittedly more bearish than many but I don’t see any way we don’t have a recession on our hands with some tough consequences coming in the months ahead.

I don’t see this first quarter as being the “bottom” by any means. We have a long way to go. IMHO of course

 

[FrogUltimate]

With material prices being high, interest rates rising, and all companies seeking to maintain profitability, I am sure you can count on layoffs over the next couple years.

It may take months of rising unemployment to get the fed to ease off on the rate hikes.

I’m admittedly more bearish than many but I don’t see any way we don’t have a recession on our hands with some tough consequences coming in the months ahead.

I don’t see this first quarter as being the “bottom” by any means. We have a long way to go. IMHO of course

While it's a poor consolation, I'm at least glad to see the economic theories I thought to be true are finally playing out. I've been bearish since March 2020, and was utterly confused and beside myself through mid-2021 with how the market and overall economy was performing. But it wasn't that I was wrong, I just didn't properly gauge the amount of time it would take for impacts to show. You can't do what the world did with COVID and not have huge repercussions. I'm worried in future history the Russia/Ukraine conflict will get the blame instead of where it really lies.

 

[Paul in uhh]

While it's a poor consolation, I'm at least glad to see the economic theories I thought to be true are finally playing out. I've been bearish since March 2020, and was utterly confused and beside myself through mid-2021 with how the market and overall economy was performing. But it wasn't that I was wrong, I just didn't properly gauge the amount of time it would take for impacts to show. You can't do what the world did with COVID and not have huge repercussions. I'm worried in future history the Russia/Ukraine conflict will get the blame instead of where it really lies.

I think part of it is that there are a lot more retail traders than there used to be.. and many don’t have permission from their brokers to short so they only have one hammer to swing.

 

[TxFrog1999]

Yeah I just put a hold on construction plans here at the homestead for a second time in two years. Can’t quite get my ducks lined up for the drop in material costs so I’ll just keep my wait and see stance over the rest of 2022.

 

[Michael Milton's Jaw]

A must watch for lumber pricing concerns.. since this interview in 2021 prices fell and are now back to a high level

This guy is all over the place. Is it not enough trees or not enough mills? Lumber was between $250 and $400 between 2000 and 2020. We rocket up to $1,500 this time last year, collapse back to $500 last fall, back up to $1,300 in Feb 2022 and now we are back down to $900.

 

[Sweat Equity]

Some signs that supply chain issues are easing. Skyrocketing mortgage rates should slow the housing market. A year of high inflation will set the denominator level higher, so inflation rate will come down.

I’m hopeful in the next 12 months inflation returns to a normal range and we don’t need continued rate rises. Unfortunately the damage will be done to a degree… inflation has spiked prices so high and will continue to do so in 2022, and even if inflation slows, highly doubt we see any deflation back to old prices.

Elephant in the room is the stock market. Very well may end up with the trifecta in 2022… negative stock market, high inflation, rising/high rates. Hopefully that won’t result in the kill shot of rising unemployment. Lot of people got materially poorer in the last 12 months despite some wage increases (me included)

I agree abt supply chain issues but, the opinion that follows is coming from the fund manager in me, you simply cannot print as much $$ as we did 2019-2022 and not see a disastrous outcome. (And I am the eternal optimist of the board.)

 

[TxFrog1999]

This guy is all over the place. Is it not enough trees or not enough mills? Lumber was between $250 and $400 between 2000 and 2020. We rocket up to $1,500 this time last year, collapse back to $500 last fall, back up to $1,300 in Feb 2022 and now we are back down to $900.

The number one exporter of wood is Russia, and they have about 10-15% of the plywood market which currently has no viable alternative to Baltic Birch plywood. A lot of mills closed during COVID, and a lot of concessions lost labor and their ability to modify and transport logs. So, in essence shortage of trees and shortage of mills is correct.

 

[Bob Sugar]

Some signs that supply chain issues are easing. Skyrocketing mortgage rates should slow the housing market. A year of high inflation will set the denominator level higher, so inflation rate will come down.

I’m hopeful in the next 12 months inflation returns to a normal range and we don’t need continued rate rises. Unfortunately the damage will be done to a degree… inflation has spiked prices so high and will continue to do so in 2022, and even if inflation slows, highly doubt we see any deflation back to old prices.

Elephant in the room is the stock market. Very well may end up with the trifecta in 2022… negative stock market, high inflation, rising/high rates. Hopefully that won’t result in the kill shot of rising unemployment. Lot of people got materially poorer in the last 12 months despite some wage increases (me included)

The problem is COVID “stimulus” injected steroids into the government grifter demographic. Dems will promise more free money to those getting crushed by the economy and continue to paint hardworking successful people as the enemy. You can’t I ring that bell.

 

[FrogUltimate]

The problem is COVID “stimulus” injected steroids into the government grifter demographic. Dems will promise more free money to those getting crushed by the economy and continue to paint hardworking successful people as the enemy. You can’t I ring that bell.

Yeh I underestimated how much those stimulus payments would juice the economy. Short term high for long term pain unfortunately