House prices
Agree Flollo.
The cheap money has turbo charged the zombies. Borrow at historic low levels and re-buy your own stock.
Logic would dictate that extremes revert-to-mean, and for the corporate debt and zombies that would be seeya. That's not quite how we operate, however.
For an example of not clearing bad debts/zombies, back to Japan:
Some smarty has realised the BOJ is targeting 3 issues with it's policy, and has nearly bought them all. (Free market mwahaha!) What then?
https://www.zerohedge.com/markets/one-bank-makes-stunning-discovery-bank...
Anyway, rates are soon... I reckon it'll be 0.25% and overall way under the inflation
Russell Napier puts forward a case where they'll leave official rates lower than inflation in the hope of inflating away all the debt from this bubble; governments will take over monetary policy from central banks; and we'll enjoy a re-industrialisation in the West as well as 'financial repression' over the next 15 years. Similar to postwar till 1979. (This kind of answers Stu's question in the other thread of 'what now for capitalism', but at the same time he says inflation is now entrenched, vs the idea of it being a one-off supply problem) We might only see 2% real growth, but with government backstopping commercial bank loans in areas they want to see change (climate change, green homeshored industry, social policies) we might see overall 4-6% overall and hey presto all those debts become manageable. What does the Swellnet brains trust think of this? Can anyone here see evidence of govt guaranteeing massive loans to do work on major issues? TBH I don't know how to measure this at present. It all ends in stagflation as the system of 'picking winners' will (many years later) show a lot of inefficiency. Rather than trade rates which has been the underlying game, maybe traders pick govco winners... (sigh) That's my wrap of his idea, anyway, not financial advice as per usual..
https://www.zerohedge.com/news/2022-10-25/russell-napier-speaks-structur...
Haha, that's actually hilarious. If all bonds are owned by one owner then there is no market. And if there is no market then yields basically cease to exist. It's a controversial view but the data is actually leading in this direction. Crazy times!
Honestly, we are well and truly in the 'subsidise all' economy. You can't even have a surf event without government subsidies. Everything's taxed and everything is subsidised at the same time. I think your comment about supporting commercial loans in 'desired' areas is not just plausible but an entrenched necessity considering no one wants to even go 1% back. This is a new territory honestly, back in the past few things would crash, and the market would somewhat correct but not anymore. Someone sneezes and the government is throwing money on it. It kinda sucks as government cannot throw money on everything so they 1/3 a whole lot instead of focusing on those 4-5 key things (health, education...) and going big.
That seems to be the way it's headed. Stu also posted on the Australia thread his wife's work in renewables study had led to some solar farm jobs links, and I can totally see kids clearing 8K a month being both a great opportunity for them, great opportunity to clean up the grid and get to carbon zero (desired in electorate), great opportunity for the Spanish company providing the service, and a colossal bill for govco, probably funded by bonds... I'm of the opinion it's probably a good thing even if a lot of cream gets spilt. When the cream is spilling everywhere and is about a foot deep on the floor, in about 15 years, then a new Maggie Thatcher will rise to clean it up.
velocityjohnno wrote:... Russell Napier puts forward a case where they'll leave official rates lower than inflation in the hope of inflating away all the debt from this bubble; governments will take over monetary policy from central banks; and we'll enjoy a re-industrialisation in the West as well as 'financial repression' over the next 15 years. Similar to postwar till 1979. (This kind of answers Stu's question in the other thread of 'what now for capitalism', but at the same time he says inflation is now entrenched, vs the idea of it being a one-off supply problem) We might only see 2% real growth, but with government backstopping commercial bank loans in areas they want to see change (climate change, green homeshored industry, social policies) we might see overall 4-6% overall and hey presto all those debts become manageable. What does the Swellnet brains trust think of this? Can anyone here see evidence of govt guaranteeing massive loans to do work on major issues? TBH I don't know how to measure this at present. It all ends in stagflation as the system of 'picking winners' will (many years later) show a lot of inefficiency. Rather than trade rates which has been the underlying game, maybe traders pick govco winners... (sigh) That's my wrap of his idea, anyway, not financial advice as per usual..
https://www.zerohedge.com/news/2022-10-25/russell-napier-speaks-structur...
I think two different things are being discussed here.
1. Allowing higher inflation, nominal GDP and tax revenue to reduce (inflate away) the debt burden, combined with financial repression to hold down yields and hence debt servicing costs (Japan now).
But the problem is if inflation spirals out of control, what is the policy tool without monetary policy freedom - increasing taxes, reducing government spending and services? It's a very undesirable situation to be in.
I think avoiding this is the main reason highly indebted governments are going all out in a global coordinated effort with interest rate "front-loading", and is causing some confusion in the public, while Japan just tries to "hang in there" and hope for the best.
Right now governments are trying to get inflation under control in order to be able to lower rates/yields into next yr or 2024 before they have to roll over too much debt at higher yields and servicing costs, and get stuck in a debt spiral.
The public doesn't seem to realise just how close to the wind many countries are sailing (or that Japan is already at failure point). UK, US, the whole Euro area, Singapore, Canada, etc, are all very exposed and can really only sustain a short period of higher yields and debt servicing costs without getting into a debt spiral.
2. More government direction and control over investment and the allocation of resources in the economy, governments picking industry and company winners, re-industrialisation, increased domestic manufacturing, a focus on economic self sufficiency and security, states buying assets to reverse privatisation, etc.
Well that's basically China's model!
Actually I think we're starting to see elements of it in the US now with their new industrial policy, the CHIPS act, etc, where the government is starting to subsidise and direct large scale investment in the economy and try to pick industry winners.
I personally think there is scope in Australia for more government direction and investment in the economy, and for taking back over some private assets (like Vic energy assets), etc, in order to boost investment and steer the economy and country in desirable directions, instead of relying completely on the market.
...
Btw I'm not really sure if his argument stacks up that governments are now in control of monetary policy and central banks are impotent.
The ultimate goal is the introduction of a global CBDC.
Who is going to accept a global CBDC if sovereign fiat currencies are still viable? No one.
Therefore what needs to happen is….
I did notice all the semiconductor onshoring stuff in the US and the act, then went on a diversion into Intel falling behind Moore's Law and the cost it will take to get back on course, big bickies. Learned a lot about the semiconductors and who's who in that global market.
Agree, I can't see governments in control or circumventing central bank policy either, the UK getting roasted by the bond market when they went cuckoo recently being an example. Will look for signs of what he thinks will happen, though. Japan is the popcorn event... what wonderful deus-ex-machina can they pull to keep it going?
CBDC - if it comes after a failure of the fiat system, I guess it comes and we all take the conversion rate (or become pirates). Then we continue as before.
I would like to think a sufficient amount of us would just say no and go and trade the most simple and beneficial way we can away from such as system. But when you look at how much people already store on their phones financially/app wise, you just know they'll go with it.
Central banks already have the SDR (Special Drawing Right) which is used for much bigger transactions I think.
Oh yeah, on the semiconductors, that makes TSMC a very, very important company for both the US and China...
The flaring up of the Taiwan conflict is all about TSMC’s semiconductor technology and very little else
There’s an interesting discussion going on about air bnb on wallstreetbets
https://www.reddit.com/r/wallstreetbets/comments/yikig8/airbnb_earnings_...
Regarding the above discussion - obviously the market can't solve everything. The whole market discussion is seriously overblown, from both market lovers and market haters. It's neither a magic pill nor the poison. Market participants will always chase higher returns on invested capital. They are not there to solve all the society's problems (and I would even argue that they don't want to, it's better to pay the tax and let it be someone else's problem) and many problems can't even be quantified. So, leaving everything to the market makes zero sense. Quality public infrastructure is important even when it doesn't maximise return on capital. As I said before, some benefits can't even be quantifed but cannot be ignored. Most of these are monoplies anyway so they can only lose money if they are poorly managed (or someone is stealing from within - very popular in many countries). What would be the point of for example privatising Sydney Water? Is there ever going to be another 3-4 water providers to compete on price so the consumer gets a better deal? Like running paralel infrastructure next to each other? No chance.
What I would like to see more of in the future is the government taking the role of a shareholder over critical assets for a functioning society. Not a subsidiser but a shareholder. I don't like this dribs and drabs subsidies all over the place. Sort out energy, transport, communications, health and education before moving onto all these other bits and pieces.
Worth a read:
Estimating Downside Market Risk (stocks)
https://www.hussmanfunds.com/comment/mc221016/
The chart with the deep red stalactites half way through says it all in one image.
The current short term rally may continue for a while or, may end any moment, but history says we are very likely in phase 1 of a 3 phase bear market.
House prices are part of the same cycles to a degree.
gsco wrote:The flaring up of the Taiwan conflict is all about TSMC’s semiconductor technology and very little else
Yep sure is. Well done to that company btw, their rise to this position is incredible.
Fed tonight:
a)0.5%
b)0.75%
c)something else
0.75%. Just before the election to rub it in a bit.
I was actually thinking they'd 0.5% and we'd all YOLO, but the 0.75% outcome would be darkly appealing...
(My favourite book when I was a little kid was 'Famous Disasters', go figure)
I’ll take a punt with 0.5% and a wild night on the markets
I predict 0.75% with 100% certainty
flollo wrote:There’s an interesting discussion going on about air bnb on wallstreetbets
https://www.reddit.com/r/wallstreetbets/comments/yikig8/airbnb_earnings_...
This was a great read.
Air bnb still posted their best 1/4 ever. I hear from a few friends now not using air bnb and staying in hotels etc. The costs as add ons are getting crazy.
How uncanny is the roll call during the opening credits?
"The Federal Reserve on Wednesday raised interest rates by three-quarters of a percentage point as it continued to battle the worst outbreak of inflation in 40 years, but signaled future increases in borrowing costs could be made in smaller steps to account for the "cumulative tightening of monetary policy" it has enacted so far."
There's a pivot coming. Just watch the market reaction once it shows signs of pivoting.
Fed (at 3.75-4%) to RBA - "join me." RBA (which has housing bubble to protect) "Never!"
I am curious about something. Just before the call, some US politicians were raising issues that FED is moving too fast which will result in recession and job losses. As expected, it was coming from the left through Warren, Sanders...One would argue that they are legitimately concerned but I will argue something else.
I believe that high-interest rates have a direct impact on their own political programs so there is an element of self-preservation that is not very obvious. These politicians advocate for new or increased taxes to fund the social programs they are advocating for. Now you can get specific on which taxes, not on small businesses, people but on larger asses holders etc. But generally speaking, taxes are a hard sell that can only go through in 'rosy' times.
Now, it will be interesting to see how this plays out. The way monetary policy is going people will have less cash in their pockets. The pressure will then fall on the fiscal policy to provide relief (by lowering taxes) or as a minimum, don't increase or introduce any new taxes. If the pressure gets too hot the fiscal policy will have very little space to maneuver and it might even lead to some austerity measures (I hope it doesn't get to that but it's a possibility). And in parallel to that, their own interest payments are getting bigger.
So you can obviously see how politicians like Sanders, and Warren can get wedged with little room for maneuvering. They will probably use this as an opportunity to full-on pivot into MMT (BTW I would never trust these people with MMT). They will lay the blame on the central bankers which I personally reject. My position is that they severely stuffed up when they had the opportunity. We just lived through a decade of cheap money, record share market/asset values, and incredible creation of wealth. If there was any time to go big with taxes that was the one and the economy would be just fine. However, they failed and I cannot see better opportunities any time soon. These people are now very old and they should really retire. Create the space for someone younger who can see things through in the decade + as they won't be able to due to their age. In short, they missed the boat and it's time to go.
What do people think about this?
absolutely its time to go... pretty much the top ten dudes in the democrats are all around 70 - 80 yo (and very white) ...its a bloody disgrace, you cannot tell me there aren't more able minds being held at bay by these most corrupt of bench warmers... (excluding bernie)
conversely, the top ten-ish dudes in the republican party are all quite young with some quite 'latinx' (blaaaah!) sounding names in there...
aren't the republicans supposed to be the party of the old white dudes?
as to the rest, totally the democrats are totally in self preservation mode, they are so desperately desperate to stave off any talk of this recession (technical) ...that they are already in... they'll say and do anything...
they shouldn't be telling the fed at all what to do, ...at all! ...surely?
everything they've done has fuelled inflation - even as their own own warned em of what they were doing at the time...
they just keep pumping it, they are just plain bloody reckless
they're cooked for the mid terms I reckon
their rattling on about jan 6 etc. is just plain delusional, ...and their desperation to blame the pelosi attack on a MAGA nut, intolerance, violence, and 'white supremacy' etc. - when it was a blm supporting gayboy castro loving hippie - is just coming across as plain weird...
'...where's nancy?' ... '...where's nancy?
makes it all another jan 6 event.... apparently...
or maybe the dude was just looking for nancy? ...that's kinda what people generally say when they're looking for someone... ...that's if he even said that?!!
having said all that... berrnie is on the money ...and has been for months...
they need to talk about the economy!!!
but they cannot... biden cooked it... on so many fronts...
and plus, only nazis care about the economy...
the lies, obfuscation, and disgusting gaslighting of the public has gone beyond next level
democrats are a bloody disgrace
beyond redemption
flollo I think what you're describing is well encapsulated in the following graph of US govt spending and debt relative to GDP, and is also explained in nice detail in the above movie Inside Job (great movie by the way, brought back a lot of memories).
The way I see it is fiscal and monetary policy both tend to work with lags. In a financial/economic crisis like the tech/dotcom bubble, GFC and covid, the govt directly injected money into the economy and financial system, and financed this by ratcheting up more debt.
But then afterwards it may need to practice austerity to avoid borrowing even more, and ideally to try to pay it off. But after each crisis govt debt has tended to stay high (even possibly while practicing austerity).
Hence, each crisis recently has resulted in the govt ratcheting up debt due to bailouts, but it has been unable to pay it down over time, possibly while even practicing austerity.
So I think the concern these guys are expressing is legitimate in that if the Fed goes too far with front-loading interest rates and causes a recession and even worse a new economic/financial crisis, and if the govt then has to bail out the economy (again), it will ratchet up even more debt and likely have to practice even more austerity.
So even in the good times after a crisis when the economy is expanding again, the govt may be practicing austerity and find it hard to spend on things that the guys are referring too, particularly since it should really be trying to pay off the debt.
And we all know that raising taxes is very hard (the neoliberal ideology favours reducing taxes)...
It basically appears to be a broken system.
a broken system...
or broken dudes?
"...In a financial/economic crisis like the tech/dotcom bubble, GFC and covid..."
it seems all 3 of these should have been blips of sorts... rather than full blown designated crises...
two long overdue corrective blips - where the natural corrections should have been allowed to play out...
'correcting' stuff funnily enough...
and one totally overblown, leveraged to the absolute extreme, health blip - where 'natural' corrections should have been more allowed to play out...
it seems to me the cats in charge have a god complex, where they over engineer 'solutions', ...solutions to cover up and compensate for their own incompetence, hubris, and down right nefariousness....
the neoliberal project has only taken and taken from the public for forty years or more... then these 'crises' just take a little bit more...
with corona being the biggest transfer of wealth to the top ever!
'never let a good crisis go to waste'
I shudder to think what will come at a real crisis...
the big one, a real one, of many that appear to be on the horizon...
the good will and buffers are blown
on blips
Roadkill wrote:flollo wrote:There’s an interesting discussion going on about air bnb on wallstreetbets
https://www.reddit.com/r/wallstreetbets/comments/yikig8/airbnb_earnings_...
This was a great read.
Air bnb still posted their best 1/4 ever. I hear from a few friends now not using air bnb and staying in hotels etc. The costs as add ons are getting crazy.
Not only hotels... I recently went to book an airbnb for a property for 4 nights, managed to find they had their own website so I went direct. This allowed me to avoid the airbnb fees and saved $100 a night =$400 total saved.
Well the block auctions didn't disappoint...
https://twitter.com/MattBrady1980/status/1589187229616074753
The point of having a reserve is that the property is sold once it reaches the reserve.
— Margarine 😷 (@Buttermarg2) November 6, 2022
But the Block auctions were stopped before they got to Ch9’s reserve, in case they only went a tiny bit over reserve?
Ok, right.#theblock
He has shown himself up as a mean moron tonight n I hope this is the last we see of Danny n his dog on The Block! Of all the people he should NOT have ripped off it was Tom n Sarah Jane!! One has to wonder about the price paid for the one and only house bought at the Auction?? https://t.co/3QCdZfrCi9
— Trish (@TrishCharter) November 6, 2022
Australian television was surely the winner tonight.
Ha! I didn't watch any of the series but spotted the auctions on last night as I scanned the remote so tuned in. What a fucking shit show of a spectacle that was. That series is dead, without that weirdo who dropped ~$14mil buying 3 of them (and apparently he's done that 3 years running?!! ) then they have no real market to sell into. And I'm not surprised, who is dropping $4mil+ to buy those pop up houses in Gisborne...
Hilarious watching them all squeal 'pass it in' as the bid approached the reserves.
Blowin wrote:House prices - going to go up , down or sideways ?
Opinions and anecdotal stories if you could.
Cheers
It appears they went up, down and sideways all at once. Scott Cam is now demanding answers:
https://www.news.com.au/entertainment/tv/reality-tv/scott-cam-demands-an...
An interesting plot of house price growth broken down by property value:
Seems that high value properties are also the most volatile, and that's in percent terms so their actual dollar swings in prices must be huge.
Fair to say that that’s one severe regional bubble that’s not even come close to ever happening in previous 10 years.
velocityjohnno wrote:Blowin wrote:House prices - going to go up , down or sideways ?
Opinions and anecdotal stories if you could.
Cheers
It appears they went up, down and sideways all at once. Scott Cam is now demanding answers:
https://www.news.com.au/entertainment/tv/reality-tv/scott-cam-demands-an...
A reality TV show where holding a paint brush in one hand and a McDonald's latte in the other qualifies you as a renovator. Looks like the wheels finally fell of that wagon.
Some bright spark in a comments section suggested do the show differently: have single renovators looking for love amongst each other, going on dates/eliminations while renovating and having rooms judged; but all the while have one of them sabotaging the others.
I would watch that.
velocityjohnno wrote:Some bright spark in a comments section suggested do the show differently: have single renovators looking for love amongst each other, going on dates/eliminations while renovating and having rooms judged; but all the while have one of them sabotaging the others.
I would watch that.
Well in the adverts of the block auctions, I did spot a new upcoming finding love type show for ch9 called 'My Mum, Your Dad'. Maybe add that into the mix of your idea and you've got a ratings winner!
Australian free to air TV really is the absolute pits.
Dog shit.
Mindless garbage.
"Block Viewers Apparently Shocked That Some Dodgy Shit Goes On In The Construction Industry" - Betoota Advocate
Data reporting:
Business confidence collapses
https://www.macrobusiness.com.au/2022/11/aussie-business-confidence-coll...
Consumer confidence at covid lows
https://www.macrobusiness.com.au/2022/11/aussie-consumer-confidence-cras...
consumer sentiment collapses:
https://www.macrobusiness.com.au/2022/11/aussie-consumer-sentiment-colla...
Those lows are pretty low, but there's always the 90's to revisit! Heading for the 90's...
Gee there’s some sobering stats in that lot.
That's why I put in the catchy tune :)
Everything's flat tack around here at present, when will those stats arrive in this reality?
How's the market's reaction overnight to a slowing of the US CPI rise. Insane. Imagine how they'll react once CPI actually starts to roll over!!!!
Don't kid yourselves. It's a statistical adjustment. Wait for the "core PCE" https://wolfstreet.com/2022/11/10/services-inflation-spiked-to-second-hi...
https://www.smh.com.au/property/news/stunning-holiday-hotspots-where-hou...
The cream hasn't even been skimmed off, let alone any correction.
comments from freeride, donw, and vj above just confirm my observations - there's still plenty a money a flowing in certain circles...
not that surprising really, after 3 or 4 decades of extreme inequality inducing neoliberalism policies - then a corona period of the same extreme on steroids - certain sections of society are still doing very very well -and it ain't just the 1 percenters and their extreme windfalls... some mid level tricklers have done very well too...
and tbh, while there is some extreme housing stress at the bottom, even the plebs are still doing ok. ...there's none of that well entrenched, years long skills development, of basically living in poverty we saw in the 90's...
ir'll come no doubt, especially with the cb's strongly signalling such resolve about their intentions... but times aren't tough at all yet really...
it seems you could almost argue most of the stress atm is amongst pretty well to do, upper middle class-ish bogans, with million dollar houses, who took on big debt at the wrong time... their lifestyles are still pretty high end, with a lot of room to move / luxury to give up, before they become close to real mortgage moving stress
we now live in a very multi tiered society, where it would appear many crew still have enough space in their finances for a second home / investment properties / airbnb-ers - and it seems many are also waiting in the wings for an opportune time to jump back into stocks as well...
my guess is the holiday houses / sea changes will hold for considerable time, possibly for ever... in a fashion...
and it will be the high end / overpriced / overstretched mum n dad urbanites that will see the real stress and corrections
just be grateful most sydney / melbourne rich bastards aren't imaginative enough to look beyond the white shoe brigade heaven...
there's still some 'bargains' in good places to be had I reckon...
all relatively of course
House prices - going to go up , down or sideways ?
Opinions and anecdotal stories if you could.
Cheers