thehousingbubble@gmail.com
Blog

The Way Money Disappears Could Rival Houdini

A weekend topic starting with the Real Deal. “Commercial broker Jaret Turkell is ready to rock and roll. Turkell posted a GIF of Minions dancing with the tagline: ‘It’s time to PARTYYYYYY!” shortly after Federal Reserve Chairman Jerome Powell announced on Wednesday that the Fed was keeping interest rates unchanged, and signaled it would make three 0.25 percentage point rate cuts next year. ‘We are back baby. LFG!!!!!!’ reads another tweet from Turkell, who focuses on multifamily and investment land sales at Berkadia in South Florida. (LFG stands for ‘let’s f**king go.’) ‘Massive distress is going to be somewhat off the table, at least I hope so,’ he added.”

“Still, asset classes like office and multifamily could suffer disproportionately, especially as suburban office tenants continue to downsize and multifamily landlords struggle to turn a profit. ‘There will be pain and distress in that market, no question about it,’ said Jaime Sturgis, CEO of Fort Lauderdale-based Native Realty. Some multifamily landlords and developers ‘were already operating on razor thin margins to begin with,’ Sturgis adds. ‘The smallest variations in that model can break it.’ Multifamily developer Asi Cymbal, who has projects in Miami Gardens, Fort Lauderdale and Dania Beach, agreed that rate cuts won’t solve major problems, such as if a developer overpaid for land.”

Business Insider. “Some economists worry that the Fed’s signals could prompt another wave of price increases. As it is, US inflation hasn’t quite reached the Fed’s target rate of 2% — in November, the Consumer Price Inflation rose 3.1% year-over-year. ‘The shored-up sentiment among market participants has caused financial conditions to become the loosest they have been during the central bank’s tightening campaign, which is likely to create a renewed bout of inflation,’ wrote Jose Torres, a senior economist at Interactive Brokers. He noted that all commodities have risen sharply in anticipation of ‘re-accelerating inflation’ in the months ahead. ‘I thought Powell was too early in discussing rate cuts, something he remarked as premature just two weeks ago,’ added Torres, referring to Fed Chair Jerome Powell.”

“‘I don’t see how the Fed is going to get inflation down to 2% if they’re going to start cutting interest rates,’ Robert Brusca, president of FAO Economics, told MarketWatch on Thursday, adding that robust wage growth was also driving inflation. Cutting interest also comes with risks. After all, if the US economy doesn’t slow to near recessionary growth in the next quarter, ‘inflation will be higher down the road, and sooner,’ wrote Steven Blitz, the Chief US Economist of GlobalData.TSLombard.”

KVUE in Texas. “‘Hopefully, my parents will leave me their house,’ Patricia Zermeno said. An Austinite of 12 years and a former homeowner, Zermeno jokes about the state of the housing market. She said with interest rates as high as they are, it feels impossible to own again. ‘It is very hopeful that it is going down,’ Zermeno said. ‘[But] I don’t know how much I would trust the Federal Reserve saying that they’re not hiking the interest rates any further.'”

KXAN in Texas. “The report shows that the median home price in the Austin and Round Rock region – around $425,000 – is down nearly 10% compared to last month. Though prices are dropping, they remain considerably high relative to pre-pandemic princes, ABOR said. ‘On a year-over-year basis, we certainly saw a decline in November,’ said Clare Losey, the housing economist for the Austin Board of Realtors. ‘However, relative to November of 2019, the median sales price in the Austin [metropolitan sales area] is about 40% higher. So overall, home prices are still very much elevated,’ Losey continued.”

Construction Coverage. “While the real estate market appears to finally be cooling down, home price growth has been a defining economic trend in recent years. Over the past decade, which has included recoveries from both the Great Recession and the COVID-19 recession, U.S. home values grew by more than 100%. In comparison, average hourly earnings saw a modest 41% increase, while the Consumer Price Index rose by just 32%. The most substantial increases in home prices have been concentrated in Western states and select states in the Southeast. Since 2013, Idaho and Florida have witnessed the most significant growth, with median home prices increasing by 165.0% and 158.5%, respectively. Other top states include Nevada (+142.6%), Georgia (+141.2%), Washington (+136.9%), Utah (+135.4%), and Arizona (+134.8%).”

“At the city level, locations in Florida notably stand out for their remarkable surge in home prices. For instance, in Miami Gardens, FL, median home prices skyrocketed from approximately $106,000 in 2013 to nearly $436,000 today, marking a 312% increase. Eight Florida cities reported price increases of over 200%—roughly twice the national average—over the past decade.”

From Newsweek. “Home foreclosures in the U.S. dropped last month, but financial experts don’t expect the numbers to continue in that direction in the new year. For three states in particular, foreclosures are surging, indicating troubling economic times ahead. Delaware, Maryland and Ohio had the highest rates of completed foreclosures, while Bakersfield, California, and Cleveland, Ohio, were the two metropolitan areas with the highest rates. Financial and retirement adviser Drew Stevens said the overall yearly uptick in foreclosures can be attributed to confidence in the economy slipping. Many companies, from Hasbro to Maersk, are laying off employees, which inevitably fuels a potential spree of foreclosures.”

“‘Employees who bought high-priced pandemic homes are not able to afford them,’ Stevens told Newsweek. ‘Adjustable rate mortgages are still available, and with interest rates 40 percent higher than two years ago, many who bought high-priced homes at low rates can no longer afford the higher payment.'”

The Manila Times. “Current optimism about the Philippines’ economic prospects could be misplaced, ING Bank said, with growth likely to markedly slow next year. Capital formation, meanwhile, dropped by 1.6 percent in line with a slowdown in bank lending to productive activities — likely a consequence of Bangko Sentral ng Pilipinas (BSP) rate hikes to combat stubborn inflation. A sharp drop in price growth and a BSP easing could provide an upside to next year’s GDP result, ING said, but the ‘wild card … will be government spending, which is expected to be capped by elevated debt levels.’ ‘We believe that GDP growth can outperform our initial base case scenario but only if government spending is able to expand by double digits for all of 2024,’ it added.”

News.com.au in Australia. “Living in Sydney has become a financial nightmare and the ever-rising cost of housing, food and bills is forcing more and more people to call the city quits, new data shows. A few years ago, Sydney businesswoman Renae Smith swapped her pokey two-bedroom house in Newtown in the city’s inner-west, which she rented for $500 per week, for a huge country home in Burgundy in the French countryside. The ‘massive”’ property with five bedrooms, sprawling grounds and a pool, cost her ‘peanuts’ compared to what she forked out back at home.”

“‘I lived like a king,’ Ms Smith, founder of the public relations agency Atticism, recalled. ‘But it wasn’t just that the house that was cheaper – the lifestyle was cheaper. We’d drive to Nice for the weekend, fly to Barcelona for 15 euros (AU$25) and spend the weekend on the beach, or I’d get the fast train into Paris for the day. My life was so full, and at the same time, nowhere near as expensive as the nine-to-five grind I paid for in Newtown.'”

“When her visa expired, Ms Smith and her family relocated to Britain while they plotted their next move. ‘I couldn’t bear the thought of going back to Sydney,’ she said. ‘My business is there – so Australia is my day-to-day focus – but I had huge anxiety about the idea of going back to paying such huge amounts of money to live in Newtown. The UK is also ridiculously expensive. In short, I also hate it here. The weather is literally the worst and the food is averagely below par, unless you visit London and pay a million dollars for something nice.'”

“But the family agreed to use the UK as a base while travelling. Ms Smith said they spent a lot of time exploring small islands in Greece. Earlier this year, while wandering through Lefkada, she and her husband spotted an ad in a local real estate agent’s window for a 4600sqm block of land on a hill facing the sea. It was surprisingly cheap, so they bought it. Next year, they’ll build a comfortable home and make a new life for themselves in Greece. ‘For less than what we spend in three months [in the UK], we will be able to live for an entire year in Greece. We can work less, pay less, and live more.'”

“For younger Sydneysiders, living here means making huge sacrifices to cover the essentials like rent and food. Olivia Eddy moved from New Zealand at the start of the year for work and found ‘the way money disappears could rival Houdini.’ ‘Despite my best efforts to save each month, I’ve been pocketing pennies,’ Ms Eddy said. ‘Any savings are quickly eaten up as soon as any big expense arises. I had to sacrifice things like going home to see my family during the year. I also haven’t been able to do other things on my Sydney bucket list, such as a trip to the Blue Mountains or seeing a show in the Opera House. Meeting basic living expenses unfortunately had to come before these things.'”

“Next year, Ms Eddy will move to Adelaide. Leaving Sydney so soon wasn’t something she planned, but ‘when looking at the budgets between the city cities, the choice was easy.’ For the stage of life she’s in, staying in Sydney ‘is not sustainable’. She’ll miss Sydney but said she’s excited to move – ‘as is my bank account.'”

The Globe and Mail. “The end of the year has been good for just about every asset class, everywhere. Bonds have shot up in value, bringing long-term interest rates down by more than 1 per cent. Stocks have surged. Bitcoin blew past US$40,000 again and kept rising. Gold and silver are up, and meme stocks, the 2021 fad, enjoyed a resurgence. It seemed like almost everything and everyone was along for the ride, since even the little-loved (lately) German stock market enjoyed a stellar month, the DAX index rising by a whopping 10 per cent in November alone.”

“It was all driven by growing talk of a coming U.S. Federal Reserve ‘pivot,’ which was confirmed on Wednesday when Chair Jerome Powell said the institution was eyeing three rate cuts next year. Anticipating the rebound that would follow, they crowded in to snap up assets they expected to rally – which is to say, just about everything. Accompanying this was a rapid easing of financial conditions, as money began sloshing around freely again. By one measure, access to money had become as easy as it had been about a year ago, when central banks began their rate-hiking cycle.”

“All of this reveals how difficult a job central banks face: A whiff of hope and everyone breaks out the champagne. For all the supposed money central banks have sucked from the economy, there’s still loads of it about, ready to rush in at the first hint of good news. Central banks know this because they put the money there.”

“Although central banks will continue with the quantitative tightening they have been using to gradually reduce the money supply, the Fed has announced it’s prepared to pivot toward reducing interest rates in the new year. In other words, the Fed has decided to join the gamble, and endorsed the rally in markets. The new year will reveal if its judgment that it has won the war on inflation is correct.”

NBC Montana. “A rising cost of living is top of mind for many Bozeman residents, and the price of housing is of particular concern. Compared to last fall, average rental rates for a two-bedroom apartment decreased by approximately 23% – ringing in at $2458 per month in September 2022 and currently coming in at $1885. Increasing rental vacancy rates are another sign of improvement. The current vacancy rate in Bozeman is 8.2%, up from 1.3% in 2021. The hope is that as the housing supply continues to expand, rents will decrease.”

“But those figures are not music to everyone’s ears. Bozeman Mayor-elect Joey Morrison told NBC Montana, ‘Until we’re back at like 2010 rents, I don’t want to hear let’s sing praises and celebrate that our community is becoming more affordable again. I’m not really hearing, or myself experiencing, this sort of rent decrease, cost of living decrease that I hear folks saying,’ he said.”

Related Posts
This Post Has 91 Comments

  1. ‘agreed that rate cuts won’t solve major problems, such as if a developer overpaid for land’

    Oh that!

    1. ‘A sharp drop in price growth and a BSP easing could provide an upside to next year’s GDP result, ING said, but the ‘wild card … will be government spending, which is expected to be capped by elevated debt levels’

      Oh, that too!

      1. “government spending, which is expected to be capped by elevated debt levels’”

        Yeah, as it always is. Unless somehow the cap gets raised.

        Will they do this?

        /S

        1. One more oh sh$t for you to sleep on Jerry: there’s no way shack prices went up like they did during minor respiratory illness without massive fraud.

  2. ‘The UK is also ridiculously expensive. In short, I also hate it here. The weather is literally the worst and the food is averagely below par, unless you visit London and pay a million dollars for something nice’

    Zing!

  3. ‘I thought Powell was too early in discussing rate cuts, something he remarked as premature just two weeks ago’

    Wa happened Jerry, did you have a bad dream? I dislike so called fed watching. It’s like you have to learn an alternate language, dot plot, etc. Here’s David Rosenberg:

    ‘To showcase just how much the Fed underestimates it will go in a cycle, consider that ahead of the tightening program in December 2021, it was calling for the funds rate to be 2.125 per cent as of today — and here we are, at 5.5 per cent.’

    https://www.msn.com/en-ca/money/topstories/david-rosenberg-the-fed-just-woke-up-and-smelled-the-recession/ar-AA1lvFM3

    1. Powell knew he screwed up Wednesday with what he said. That’s why he sent his dog William’s out afterwards to say, “We aren’t really talking about rate cuts right now..” The market jumped to the conclusion that there was going to be 6 rate cuts of a quarter point which is just ignorant stupidity. (Btw, a Fed funds rate of 4 or even 3.5 percent doesn’t do sh#t.)

    2. “Wa happened Jerry, did you have a bad dream?”

      – In my view, since the Fed is just part of the Leftist machine hell bent on destroying (what’s left of) the middle class, the Fed’s just following the script and is bowing to pressure from the Brendan administration, who’s polling numbers for the 2024 election are (deservedly) abysmal. They’re goosing the stonk markets and economy ahead of the 2024 election, but the longer-term effect will be of course, higher inflation, which they want anyway.

      – There is no “independent” Fed.
      – See the 5th plank of the Communist manifesto by Karl Marx.
      – The USD has lost 97% of its purchasing power since the formation of the Fed in 1913 by the “Progressives.” They won’t be done until it’s at 100%.

      “The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.” – Vladimir Ilyich Lenin

      “The establishment of a central bank is 90% of communizing a nation.” – Lenin

  4. NPR — Inflation has cooled a lot. So why do things still feel so expensive? (12/16/2023):

    “So what does it actually mean when inflation is easing?

    Simply put, falling inflation, or “disinflation,” means prices are rising more slowly than they had been. That’s a good thing. Grocery prices have climbed less than 2% in the last 12 months, compared to a 12% jump the previous year, which gave many people sticker shock at the supermarket.

    What many people want to see, however, is “deflation,” when prices actually come down. Falling prices are not generally good for the economy, though.”

    Not good for who?

    “If deflation becomes entrenched, it can be a drag on the broader economy. While it’s always fun to get a discount, when prices are steadily falling across the board, it tends to discourage consumption — which is the biggest engine of U.S. economic growth. Why buy a washing machine today if it’s going to be cheaper next year?

    That’s why the Fed’s goal for inflation is not zero but 2%, with prices rising fast enough to avoid deflation but slowly enough that most people don’t spend much time thinking about it.”

    https://www.npr.org/2023/12/16/1219574403/economy-inflation-prices-wages-disinflation-deflation-interest-rates

    I paid $8.99 for a 12 pack of cans of Coke for a Christmas party yesterday.

    1. Kings has them on sale for $3.99, but you need a loyalty card, the app and you must use the app to “clip” the coupon. otherwise it’s $8.99, which is the price when not on sale.

      1. I do not want more “apps” because I do not like apps. My Kings shopper card was registered under a phone number I no longer have and I don’t feel like giving them a new one.

    3. “NPR — Inflation has cooled a lot. So why do things still feel so expensive? (12/16/2023):”

      \\

      “Inflation is the true opium of the people and it is administered to them by anticapitalist governments and parties.” – Ludwig von Mises

      “The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy.” – Ludwig von Mises

      “Inflation is the fiscal complement of statism and arbitrary government. It is a cog in the complex of policies and institutions which gradually lead toward totalitarianism.” – Ludwig von Mises

      “What people today call inflation is not inflation, i.e., the increase in the quantity of money and money substitutes, but the general rise in commodity prices and wage rates which is the inevitable consequence of inflation.” – Ludwig von Mises

      “Inflation has always been an important resource of policies of war and revolution and why we also find it in the service of socialism.” – Ludwig von Mises

    4. “NPR — Inflation has cooled a lot. So why do things still feel so expensive? (12/16/2023):”

      The usual gaslighting. Who are you going to believe, us or your lying credit card balance?

      “So what does it actually mean when inflation is easing?

      Simply put, falling inflation, or “disinflation,” means prices are rising more slowly than they had been. That’s a good thing.”

      Nonsense. Disinflation means the supply of goods and services is expanding faster than the supply of money. Of course, we likely haven’t had that in nearly a century, so it’s no surprise they managed to rewrite the definition. Same story with “the American Dream,” which used to mean living better than your parents. No one’s done that since the Boomers, so the NAR was able to hijack it.

      1. so it’s no surprise they managed to rewrite the definition

        Like how they redefined the definition of vaccine.

      2. “The usual gaslighting.”

        That’s why I post these articles.

        Real Journalists and economists want to quibble over the definition of inflation and scold the poors for talking about it.

        They NEVER acknowledge the New Normal base line of prices, and how it has destroyed the standard of living for hundreds of millions of people in this country.

  6. As it is, US inflation hasn’t quite reached the Fed’s target rate of 2% — in November, the Consumer Price Inflation rose 3.1% year-over-year.

    The CPI’s inflation numbers have about the same credibility as Biden’s 81 million votes.

  10. The Joe Biden Economy.

    NPR — Homelessness in the U.S. hit a record high last year as pandemic aid ran out (12/15/2023):

    “Homelessness in America spiked last year, reaching a record high, according to an annual count that provides a snapshot of one night in January. The report, released today by the department of Housing and Urban development, found more than 650,000 people were living in shelters or outside in tents or cars. That’s up a whopping 12% from the year before.

    Homelessness has been rising since 2017 in large part because of the country’s massive shortage of affordable housing. There was a pause during the pandemic, and Biden administration officials say that’s because of sweeping federal aid that kept people from getting evicted. But last year, in a triple whammy, that aid started running out. Inflation spiked to its highest level in a generation, and median rent hit a record high.”

    https://www.npr.org/homelessness-affordable-housing-crisis-rent-assistance

    It was the “aid started running out” it wasn’t the money printing, right.

      1. FINANCE REAL ESTATE
        The Californication of the country’s housing market

        How decades of policy failure led to California’s housing crisis—which now threatens the rest of the nation
        Record homelessness, sky-high rents, and homes affordable only to millionaires: A case study in how local control and a shifting national economy created today’s perverse housing market.
        BY ALENA BOTROS
        December 16, 2023 6:00 AM EST

        Something broke in California in the 1970s, and its housing market was never the same.

        In the decades since, the Golden State has grown into a gross exaggeration of every other state, complete with a housing crisis that is threatening to metastasize across the rest of the country. Its extremes are written across its largest city, Los Angeles, home to miles of posh gated communities where homes sell for hundreds of millions as well as the country’s largest skid row.

        With 39 million people powering an economy larger than that of France or Russia, California needs to build 180,000 homes per year to keep up with population growth, according to an estimate from the state’s department of housing and community development. Yet in this regard, its record is pathetic, averaging less than 80,000 homes a year over the last decade.

        To understand how we got here requires going back to the 1970s, an era when the postwar boom curdled into the double shock of “stagflation,” a nasty mix of stagnant growth and growing inflation, and when two of California’s legendary Republican politicians, Richard Nixon and Ronald Reagan, put their stamp on national and statewide housing markets. Generations of California Democrats would entrench those policies, many of them for supposedly environmentally friendly reasons. Yet more than anything, experts, economists, and activists told Fortune, something more fundamental snapped in the American mind that decade: A house became worth more as a financial asset than a place to live. And when it comes to the housing market, a bigger and bigger share of America has a California state of mind.
        …
        https://fortune.com/2023/12/16/california-housing-crisis-policy-failure-threaten-rest-of-the-country/in

        1. “Something broke in California in the 1970s, and its housing market was never the same.”

          No matter how one looks at the current situation the federally backed GSEs played a major role.

    1. Since Southwest doesn’t have assigned seat that is now an incentive to pay for early boarding. I’ve never understood why people love SW so much. Sure, luggage is still included with the fare, but I have found those fares to be high. And then there was the meltdown last year where thousands were left stranded.

      But to be fair, these days all airlines svck.

    2. “That last part is particularly worrisome, as it anticipates times when the “customer of size” policy compels Southwest to bump a normally-proportioned passenger to clear a second seat for a huge one.”

      The morbidly obese should be forced to purchase two seats, which would also solve the overbooked issue.

  12. Politico — 40 percent of student loan borrowers missed payments in October (12/15/2023):

    “The new data suggests that borrowers are experiencing a significantly higher level of delinquency and distress than they did before the pandemic. And the data confirms that millions of Americans are relying on a temporary, safety net program that the Biden administration created to help borrowers who struggle to make payments.

    The new data shows, for the first time, that millions of borrowers are availing themselves of the flexibility that the Biden administration has offered borrowers, which officials have dubbed the “on-ramp” to repayment.

    As part of that policy, the Education Department will not report borrowers as delinquent to credit bureaus through the end of next September, though interest will continue to accrue on their debt. The department is also postponing the most drastic tools it has to collect debt, such as garnishing wages or seizing tax refunds and Social Security benefits.

    Those forbearance policies mean that most federal student loan borrowers will not be deemed delinquent on their debts, even if they don’t pay, until the end of 2024, several months after the presidential election.”

    https://www.politico.com/news/2023/12/15/forty-percent-of-student-loan-borrowers-missed-payments-in-october-00132062

    Buying votes from the Free Sh*t Army, got it.

  13. Rudy G is not a nice person, but , being a normal lawyer , he prob has his assets all hidden away somehow….The Gimme Gimme bunch is all excited about this new revenue source ….we owe it to them , forget regular reparations….we been dissed…..

    1. Rudy G is not a nice person

      And you know this how? By his portrayal in the media? He did well by NYC taking down the mafia and cleaning up the city. He’s also been a good and loyal friend to Trump. And FWIW, lawyers aren’t paid to be nice.

      1. I can be your best friend or your worst enemy. I had a friend/co-founder who chose poorly. She lied to me about disclosing to her large pharmaceutical employer, as well as to her employer, about her involvement in our biotech startup. Her employer could have claimed our intellectual property because of this and no investor would touch us knowing this. In order to get her to resign, I threatened to tell her employer about the lie. Mind you, this would have ruined her career and she was in her mid-30s. I’m sure she doesn’t think I’m nice.

        1. I threatened to tell her employer

          I had a legitimate business reason to approach them and ask that they waive any claim to our IP.

        1. As am I. After being forced to exit the subway system at Chambers St. station after the first plane hit, I wasn’t too far from the WTC when the second plane hit.

        2. The neighborhood I grew up in got very badly hurt. One employee of ours died (just turned 21, he was ID’d from a tattoo he’d just gotten the week before.) His mother, also an employee, and her family were devastated. I was on the phone multiple times with another employee whose son went to Stuyvesant; she didn’t hear from him for hours. Ex-employee son also died there. Cop cousins were there. Customers. I was home with a cold. When I got back in the next few days, I talked to customers who were there; they were pretty freaked out. One told me she was jumping over bodies. In the French bros documentary, I saw another employee’s sister running like hell.

          Was at work in 1993 (first WTC attack) and suddenly people started arriving out of the subway with black under their noses.

          With my husband being at Mandalay Bay during the 2017 shooting, my daughter being at UNLV the other day, feel very lucky neither were close enough to be hurt.

  14. “Compared to last fall, average rental rates for a two-bedroom apartment decreased by approximately 23% – ringing in at $2458 per month in September 2022 and currently coming in at $1885.”

    Meanwhile I’m sure recent investors in said apartments are still paying $2000 plus in holding costs. I haven’t looked it up, but I’m sure those apartments are somewhere around 250 to 300K.

  15. News.com.au in Australia. “Living in Sydney has become a financial nightmare and the ever-rising cost of housing, food and bills is forcing more and more people to call the city quits, new data shows. A few years ago, Sydney businesswoman Renae Smith swapped her pokey two-bedroom house in Newtown in the city’s inner-west, which she rented for $500 per week, for a huge country home in Burgundy in the French countryside. The ‘massive”’ property with five bedrooms, sprawling grounds and a pool, cost her ‘peanuts’ compared to what she forked out back at home.”

    – This.

    – Globalism cuts both ways. Globalist pukes importing millions of low income, low information, future D voters. Dictating what I can use to heat my home, what I can drive, what I can eat. F’ them and the horse they rode in on.

    – Printing fiat currencies out the wazoo and intentionally causing high inflation (it’s a policy), high prices, and a commensurate high cost of living. All the while the quality of life is degraded by guberment policies going against the will of we the people. Well, those of means can simply pack up and leave. It’s not E. Germany (yet), but pretty soon they’ll be building a wall, not to keep people out, but to keep people in.

    – I’m considering living abroad as well, since the U.S. Guberment hates me as a white, conservative, Christian, middle class (male) citizen, who opposes the Leftist sh*tstorm. Some parts of Europe are attractive, and the cost of living is much lower there, and there are many other options as well. Brain drain indeed.

  16. ‘The shored-up sentiment among market participants has caused financial conditions to become the loosest they have been during the central bank’s tightening campaign, which is likely to create a renewed bout of inflation,’

    It might be interesting to compare the current situation to the 1970s, when an inconsistent Fed stance on inflation helped it ratchet up to over 10%, despite the Fed’s best intentions to contain it.

    1. The Fed’s rate-cut signals could prompt a fresh bout of inflation, economists say
      Huileng Tan
      Dec 14, 2023, 11:09 PM ET
      US Federal Reserve Chair Jerome Powell
      Liu Jie/Xinhua via Getty Images

      – The Fed signaled three interest rate cuts for 2024 even though inflation is running above its 2% target.

      – Some economists predict a fresh bout of inflation on the impending rate cuts.

      – Interest-rate cuts boost demand for loans, spurring investment and spending.
      …
      https://www.businessinsider.com/federal-reserve-powell-interest-rate-cut-signal-prompt-inflation-economy-2023-12?amp

  17. “Federal Reserve Chairman Jerome Powell announced on Wednesday that the Fed was keeping interest rates unchanged, and signaled it would make three 0.25 percentage point rate cuts next year.”

    WallStreetSilv is saying we’re headed for a repeat of the 1970s. I’m less optimistic. We’re already in the 1970s. If they turn the money printer back on, I’d say the next stop looks more like Weimar Germany.

    1. If they turn the money printer back on

      Given the quarterly trillion dollar deficits, they don’t have any other choice (other than to reduce spending, which won’t happen).

      The next few years are going to be “interesting”.

    2. “We’re already in the 1970s.”

      In 1967, Israel captured the Golan and the West Bank, but they couldn’t afford to hold it. In 1968, LBJ set the Great Society in motion. In 1971, Nixon decoupled the dollar from gold. In 1972, the Clean Water Act was passed without funding. In 1973, Yom Kippur war led to the Arab Oil Embargo.

        1. Martin believed in taking away the punchbowl when the party got too wild, which may not have agreed with politicians who loved drunken revelry.

        2. …
          Sarah Binder, a political science professor at George Washington University, said the president didn’t want to own up to the cost of the Vietnam War and the war on poverty. Low interest rates kept the cost of government borrowing down.

          “The worst would be high rates, making plain to everyone the cost of what the government was doing both domestically and abroad,” Binder explained.

          But Martin was worried the economy would overheat, then crash. He wanted to cool things down, slowing spending by raising rates again and making it harder for businesses and consumers to borrow money to spend. In 1965, Martin went public, saying there were “disquieting similarities” between the economy of the 1960s and the Roaring ’20s leading up to the Great Depression. Later that year, Martin cast the deciding vote in a Fed decision to raise interest rates again. Johnson was livid. He wanted to fire Martin, at one point telling his treasury secretary, Henry Fowler, in another recorded phone call to find a replacement.

          “Henry, you all got to think of … where we can get a real articulate, able, tough guy that can take this Federal Reserve place,” Johnson said.

          But Johnson was told a Fed chair can’t be fired just because he disagrees with the president. So instead, Johnson called Martin down to his Texas ranch. Johnson drove his Lincoln Continental convertible to the airport and gave Martin a lift to the ranch. But the charm offensive ended when they got there, and Johnson let loose on Martin.

          The tongue lashing wasn’t recorded, so Binder paraphrased: “My boys are dying in Vietnam, and you won’t print the money I need.”

          Gary Richardson, a professor of economics at the University of California, Irvine, and Fed historian, said the almost 6-foot-4 Johnson even shoved the much shorter Martin up against the wall.

          “Manhandling” the Fed chair

          He described the confrontation this way: “These grown men going at it. Johnson shouting, bullying, pushing, kind of physically manhandling the chairman of the Federal Reserve.”

          Richardson said Martin was shaken but stood his ground. Later, Martin suspected that Johnson wasn’t being honest about the true cost of the Vietnam War. Brigid Callahan Harrison, a professor of political science and law at Montclair State University, said Martin worried again that the economy would overheat with all of the spending by the government and consumers with money borrowed at interest rates that are still pretty low.

          “He says this great line: the key function of the Federal Reserve is to take away the punch bowl just as the party is getting good,” Callahan Harrison said.

          But, maybe not wanting to be Johnson’s punching bag again, Martin held his fire on interest rate increases for a couple of years. Then, in March of 1968, Johnson announced he’s not running for reelection. In the two months after that, the Fed raised interest rates by almost 1%.
          …
          https://www.marketplace.org/2020/10/27/a-president-and-his-fed-chair-clash-sound-familiar/

      2. “The side that tore down statues of the founding fathers is outraged that someone would destroy the statue of Satan” – Kevin Sorbo

        Well said, Kevin.

      3. I almost added that. Anyway, in the economic sense, as Mises said:

        “Inflation works as long as the housewife thinks: ‘I need a new frying pan badly. But prices are too high today; I shall wait until they drop again.’ It comes to an abrupt end when people discover that the inflation will continue, that it causes the rise in prices, and that therefore prices will skyrocket infinitely. The critical stage begins when the housewife thinks: ‘I don’t need a new frying pan today; I may need one in a year or two. But I’ll buy it today because it will be much more expensive later.’ Then the catastrophic end of the inflation is close. In its last stage the housewife thinks: ‘I don’t need another table; I shall never need one. But it’s wiser to buy a table than keep these scraps of paper that the government calls money, one minute longer.'”

        At this point, inflation expectations are already entrenched (see: “doom spending,”) and that’s hard enough to fix even if you have the will to do it, as they found out last time.

        1. Trying this on for size:

          “Then the catastrophic end of the inflation is close. In its last stage the housewife thinks: ‘I don’t need imaginary coins; I shall never need any. But it’s wiser to buy imaginary electronic currency than keep these scraps of paper that the government calls money, one minute longer.”

          Yup…the passage fits the cryptocurrency market situation very well!

          1. Are cryptocurrency investors like alcoholics who can find a reason to party every day of the year?

            Higher inflation? Buy crypto as an inflation hedge.

            Lower inflation? Buy crypto, as debt instruments will soon earn lower interest rates, making the price appreciation-only returns on crypto relatively more attractive.

            No matter what, there is always a good reason to trade your dollars for crypto.

          2. US Annual CPI Declines To 3.1%! Bitcoin Price Rebounds From $40K Low
            Author: Shayan Chowdhury
            Dec 12, 2023 19:25

            The crypto market recently received a bullish news as the United States reports a significant decline in its annual Consumer Price Index (CPI) to 3.1%. This news has rebounded the price of Bitcoin, rising from a concerning low of $40,000. With annual CPI now declining to the 2% target, there’s a hope for crypto investors to start 2024 on a bullish note.

            November CPI Comes At 3.1% Yearly

            In November, US inflation saw a slight decrease, strengthening the Federal Reserve’s determination to maintain interest rates steady into the spring season. The main consumer price index (CPI) recorded a 3.1% increase, a slight dip from October’s 3.2%. Meanwhile, the core index, excluding energy and food prices and often regarded as a key indicator of long-term inflation trends, stayed consistent at 4%.

            The Bureau of Labor Statistics’ latest figures were released just one day before the Federal Reserve’s decision on interest rates. Federal Reserve policymakers tend to focus on the Personal Consumption Expenditures (PCE) index, a less volatile measure of inflation, aiming for it to return to their 2% target. They are also looking for signs of moderation in service sector inflation, excluding rent hikes.

            However, with this month’s CPI data released over two weeks before the PCE figures, it may impact Federal Reserve Chair Jay Powell’s stance on adjusting market anticipations for potential rate cuts, which could be anticipated as early as March.

            Stocks are showing a slight increase in anticipation of the upcoming consumer inflation report, building on Monday’s gains and buoyed by a decrease in Treasury yields. S&P 500 futures, which enable investors to watch market movements before the official trading start, have climbed by 0.2 percent just before the data is released.

            Bitcoin Price Gains Momentum From $40K

            After the announcement, Bitcoin’s price experienced a robust recovery from its low of $40,000. Reacting to worldwide economic shifts, Bitcoin now sets its sights on surpassing the $45,000 threshold, currently trading at $41.9K.

            With inflation on the downtrend, there could be increased anticipation for a reduction in interest rates. This development might result in an uptick in the crypto market, as investors potentially seek out higher yields in more speculative assets like digital currencies.
            …
            https://coinpedia.org/news/us-annual-cpi-declines-to-3-1-bitcoin-price-rebounds-from-40k-low/

        2. “inflation expectations are already entrenched”

          Like ‘stock and real estate prices always go up’, for instance…

          1. Read the ones about Southwest’s obesity two-seat policy if you want to spit out your coffee! Some jokes in there are keepers.

            “Don’t pick on the obese, they have enough on their plate.” 😂

    5. and signaled it would

      I’ll believe it when I see it and I’ll be paying close attention because I’m heavily invested in $USFR.

      1. That’s a tough call. If the rate daters are correct, then the current opportunity to earn high returns on short-term Treasury debt will soon dry up. On the other hand, if the Fed’s pivot triggers higher-for-longer inflation above two percent in response, due to a resumption of drunken revelry among risk asset gamblers, then a renewal of higher-for-longer interest rates may be required as the cure. Fed decisions have to be made driving while looking through the rear-view mirror, which could make it difficult for them to follow their own forward guidance.

    1. 4,836 Comments
      Default profile photo
      Add a comment…
      @zkeletonz001
      @zkeletonz001
      15 hours ago
      It’s nice to see so many of us come together to express how disappointing and terrible just the concept of this is and how baffling it is that it was ever made.
      1.5K
      Reply

      37 replies
      @rogerrabbit3699
      @rogerrabbit3699
      19 hours ago
      This is absolutely insane. I can’t believe so many people thought this was a good idea.
      1.9K
      Reply

      127 replies
      @user-pv6rw3ls3p
      @user-pv6rw3ls3p
      22 hours ago
      This is an embarrassment for everyone involved. How do you even explain to someone that you agreed to be in this, make it, screen it… just wow.
      725
      Reply

      63 replies

      @mynewhobby6323
      7 hours ago (edited)
      I’m too scared to say anything because I don’t want my bank account frozen and my company to fire me.
      12
      Reply
      @josephupton3601
      @josephupton3601
      12 hours ago
      Hollywood’s plan. Step ONE. Give a name to a Hollywood trope (created by Hollywood) that is used over and over. “The Magic Negro” trope has been around for decades. But that term was mostly used by Hollywood people or movie critics. Step TWO. Convince yourself that the average movie goer wants to be accused of being racist and taught what the cure is. What a brilliant plan. They should make millions.
      6
      Reply

      1 reply

      @tovsteh
      2 hours ago
      Its just baffling to watch how the demographic and entertainment industry that complains the most about racism are at the same time also the ones pushing and publishing some of the most racist content and messaging we’ve seen in modern history.
      3
      Reply

      @TigerKhanTK
      1 hour ago
      I like how regardless if you’re white or black, you’re all are saying, “Umm.. wtf?”
      1
      Reply

  19. Yahoo
    Yahoo Finance Video
    Navigating the ‘everything rally’ with $6T cash on the sidelines
    Rachelle Akuffo and Nicholas Jacobino
    Fri, December 15, 2023 at 10:55 AM PST

    Investors are taking advantage of higher interest rates, parking nearly $6 trillion in money market accounts, according to data from the Investment Company Institute. With the Federal Reserve suggesting at least three interest rate cuts next year, many investors may move that cash back into the stock market. US Bank Wealth Management Investment Director Bill Northey joins Yahoo Finance to discuss the data and what it could mean for the stock market.

    Northey explains what signs to look out for: “Some of the factors that we need to be able to evaluate are those lagged effects of the cumulative monetary policy tightening that is already in place and even if that’s reversed as soon as March of next year, which is where the futures markets are pointing, we still have to chew through the prior actions and the impact across the manufacturing sector, which is showing more signs of weakness than we are seeing within the consumer and services sector.”

    RACHELLE AKUFFO: Give us some context here. Obviously, we have this everything rally here. A lot of investor hopes about just how much and how quickly the Fed is going to cut rates next year. But this money that’s been on the sidelines, what does that add to this?

    BILL NORTHEY: Great to be with you, Rachelle. And happy holidays. We’ve certainly seen just a furious rally since the October CPI print, which has been confirmed by subsequent data. And it’s lit a fire under the equity markets.

    We’ve seen the S&P 500 up 15%. Small caps, as you pointed out, in the prior segment up even more at 20%. And notably, it’s impacted bonds as well, where we’ve seen yields come down over 100 basis points on the 10-year Treasury.

    So the everything rally is certainly an apt description for what we have seen since that more favorable inflation data that has allowed the Federal Reserve to pivot. There’s a lot of cash on the sidelines. We see this trend likely intact, at least through the end of this year.
    …
    https://finance.yahoo.com/video/navigating-everything-rally-6t-cash-185526108.html

  20. Saturday night in small town Southern Colorado.

    There is no vibrancy here. There are deer on the sidewalks. Back in Denver, there are tents, needles, and feces on the sidewalks.

  21. Is metro Denver a sh!thole?

    Why yes, metro Denver is a sh!thole:

    COMMERCE CITY, Colo. — While three armed and masked people robbed a check cashing business in Commerce City, someone else stole their getaway vehicle, police said.

    Cue the Critical Drinker’s maniacal laugh. I wish I could have seen the looks on their faces when they realized their car was gone.

    The full article is on the 9News website.

    1. “While three armed and masked people robbed a check cashing business in Commerce City, someone else stole their getaway vehicle, police said.”

      🙂 Thanks, I needed a laugh.

      1. Last I heard Dumver is the car theft capital of the US. It is my understanding that about two cars per day are stolen from the pricey Denver airport parking lot.

        The robbers should have put a club on the steering wheel before robbing the check cashing place.

      1. …
        Narodny says bursting the commission bubble could lead to a surge in home listings.

        “We could make much more American dreams happen if commissions were lower, right? Because that fee is baked into the price of the home every time a home sells,” he explained. “That fee is 5% or 6% which is just crazy. It adds up really, really quickly. And we believe that if you actually lower that fee, you decrease the friction to buy a home or sell a home, more homes can change hands.”

Comments are closed.