- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: Discussion of Fed Liquidity’s Impact on Equity Markets
Posted on 3/5/21 at 1:03 am to rocket31
Posted on 3/5/21 at 1:03 am to rocket31
quote:We’ve never seen hyperinflation, even when we struggled to keep inflation low. Now they’ve struggled even figure out how to get inflation to a target level, that is far lower than historical levels. We MIGHT finally overshoot that low target, with a baseline that was deflated due to a black-swan exogenous shock causing a temporary inflationary trend with a YOY comparison, but that’s still not even a certainty. So to expect hyperinflation, let alone hyperinflation when we the baseline comparison period normalizes, seems highly unlikely.
naa, its always deflation before hyperinflation
2
Posted on 3/5/21 at 6:34 am to buckeye_vol
Agree. I think we see some *cyclical* inflation over the next few months, particularly on the y/y prints, that people will mistake for *secular* inflation given all the preconditioning the Fed’s been doing. That will drive rates further up short-term, but long-term, the disinflationary / deflationary trend will remain the norm.
Whether we get any actual secular inflation will depend upon how the federal government and federal reserve react to that deflationary reality. If they go full-bore helicopter money and enable the Fed to actual spend directly, we could finally see some inflation.
Whether we get any actual secular inflation will depend upon how the federal government and federal reserve react to that deflationary reality. If they go full-bore helicopter money and enable the Fed to actual spend directly, we could finally see some inflation.
This post was edited on 3/5/21 at 6:36 am
Posted on 3/5/21 at 7:08 am to wutangfinancial
No I agree that this all amounts to malinestment and that overindebtness decreases the effectiveness of borrowed money in terms of spurring an economy.
I’m trying to wrap my head around your last point.
“The market doesn’t think it’s inflationary”
So yields are skyrocketing = high inflation
Gold prices falling = disinflation/deflation
DXY falling = inflation
Real estate prices rising = inflation
Equities falling = disinflation or just due to the attractiveness of yields.
What is it ? I’m seeing confusing signals all around.
I’m trying to wrap my head around your last point.
“The market doesn’t think it’s inflationary”
So yields are skyrocketing = high inflation
Gold prices falling = disinflation/deflation
DXY falling = inflation
Real estate prices rising = inflation
Equities falling = disinflation or just due to the attractiveness of yields.
What is it ? I’m seeing confusing signals all around.
Posted on 3/5/21 at 8:56 am to CorkRockingham
Look at the spread between the term structures of TIPS and Treasury Notes/Bonds. Might be too academic but most of the pricing pressures I'm seeing is either very local or it's a supply issue. Market expectations aren't pricing in some massive inflation rate.
Also the way they are rolling out the vaccine is absurdly slow so any backwinds you could see from retail and hospitality is going to be completely neutralized.
Also the way they are rolling out the vaccine is absurdly slow so any backwinds you could see from retail and hospitality is going to be completely neutralized.
This post was edited on 3/5/21 at 9:07 am
Posted on 3/5/21 at 9:09 am to buckeye_vol
quote:
Now they’ve struggled even figure out how to get inflation to a target level, that is far lower than historical levels.
cmon man
Posted on 3/5/21 at 9:14 am to rocket31
Now they're going to start talking about corporate tax increases 
Posted on 3/5/21 at 9:42 am to wutangfinancial
Well you aren’t explaining your thesis.
10YTIPS are negative therefore the real inflation would be deflation, however they are screaming up not quite on the same pace as the 10Y treasury.
So the break even rate is growing. How would you determine the actual risk premium?
Explain more to me but that all points to reflation/inflation?
10YTIPS are negative therefore the real inflation would be deflation, however they are screaming up not quite on the same pace as the 10Y treasury.
So the break even rate is growing. How would you determine the actual risk premium?
Explain more to me but that all points to reflation/inflation?
Posted on 3/5/21 at 9:52 am to CorkRockingham
Maybe the term structure changed but I'm seeing like 2/3% premiums as a proxy for inflation.
This post was edited on 3/5/21 at 9:53 am
Posted on 3/5/21 at 10:09 am to CorkRockingham
quote:
Explain more to me but that all points to reflation/inflation?
Yes you are right. The reflation trade is in full effect right now. I just don't see how on the other side of the pandemic, with Congress driving the bus, how we "survive." You will get more of the same on the spending side, higher taxes, rich boomers drawing down retirement funds, lower labor force participation rates, permamenent unemployment due to Covid, escaping white collar job cuts etc...this all while the rest of the world is easing to keep up with us. I should buy straddles/strangles on a pure play inflation premium trade.
This post was edited on 3/5/21 at 10:10 am
Posted on 3/5/21 at 10:14 am to wutangfinancial
No I’m with you there.
Posted on 3/6/21 at 11:07 pm to wutangfinancial
quote:
I should buy straddles/strangles on a pure play inflation premium trade.
Check out what the fund manager of IVOL has to say. She believes the swaption market is undervaluing inflation expectations relative to breakevens by an enormous amount (something like a 50bps spread vs 200bps for the breakevens, but that was as of a few months ago).
Posted on 3/10/21 at 7:39 am to RedStickBR
Mixed inflation prints this morning. Core CPI + 1.3% y/y, the lowest print since July 2020. CPI +1.7% y/y, the highest print since March 2020.
M/M prints still weak at 0.1% for Core and 0.4% for CPI.
Next report we should see some higher y/y prints on account of the first y/y comparisons to the lockdown periods.
This is shaking out as planned, in my view, with a pickup in cyclical inflation given weak year-ago numbers. Longer-term, we’ll still be in a disinflationary/deflationary world.
M/M prints still weak at 0.1% for Core and 0.4% for CPI.
Next report we should see some higher y/y prints on account of the first y/y comparisons to the lockdown periods.
This is shaking out as planned, in my view, with a pickup in cyclical inflation given weak year-ago numbers. Longer-term, we’ll still be in a disinflationary/deflationary world.
Posted on 3/10/21 at 9:02 am to RedStickBR
Ya March is more interesting because those prints will start playing into strong narratives. I'm watching the rate of change of CPI I'd imagine it increases until July timeframe.
Posted on 3/10/21 at 9:12 am to wutangfinancial
Yeah, if the CPI M/M stays around 0.4%, we will see 3%+ on the Y/Y this summer.
That will give juice to the inflation fears, even though it’s obvious the year ago periods were weak due to shutdowns
That will give juice to the inflation fears, even though it’s obvious the year ago periods were weak due to shutdowns
Posted on 3/10/21 at 9:49 am to wutangfinancial
Lyn Alden has been posting some fire recently. If she isn't on your regular reading list, she needs to be:
The Subtle Risks of Treasury Bonds
Quantitative Easing, MMT, and Inflation/Deflation: A Primer
"Fixing" the Debt Problem
A Century of Fiscal and Monetary Policy: Inflation vs Deflation
Banks, QE, and Money-Printing
Interest Rate Effects on Equities: Valuation Impacts
Economic Japanification: Not What You Think
The Subtle Risks of Treasury Bonds
Quantitative Easing, MMT, and Inflation/Deflation: A Primer
"Fixing" the Debt Problem
A Century of Fiscal and Monetary Policy: Inflation vs Deflation
Banks, QE, and Money-Printing
Interest Rate Effects on Equities: Valuation Impacts
Economic Japanification: Not What You Think
Posted on 3/10/21 at 9:52 am to RedStickBR
I have read her work obviously but Gammon bought the bottom with her. She's having quite the year.
You make any portfolio changes in Q1?
You make any portfolio changes in Q1?
Posted on 3/10/21 at 9:57 am to wutangfinancial
I've still got 25% in USD vs EUR and JPY to cover left tail deflationary risk.
In Q4, I put 5% in high Beta, asymmetric payout stuff to participate in any further bubble inflation. I've unwound some of that and transferred it into miners to cover right tail risk.
The balance is mostly in short-term money market type stuff.
With the rebound in the dollar and general weakness in the stock market, I'm flat to slightly up vs S&P Total Return YTD.
In Q4, I put 5% in high Beta, asymmetric payout stuff to participate in any further bubble inflation. I've unwound some of that and transferred it into miners to cover right tail risk.
The balance is mostly in short-term money market type stuff.
With the rebound in the dollar and general weakness in the stock market, I'm flat to slightly up vs S&P Total Return YTD.
This post was edited on 3/10/21 at 9:58 am
Posted on 3/10/21 at 10:40 am to RedStickBR
I just added US large cap equities earlier this week. I'm about 25% Int'l equities, 25% large cap US equities, 25% miners, and then the rest is GBTC and cash. There's some small REIT plays in there too for income that's small. I have really stopped trading as much unless I see something I like or get bored and have time to monitor everything.
I have really turned my eye to RE in low tax states (ex Texas and Florida). It might be too late in some of these places but long term I like the thesis.
edit: forgot to say I'm flat on the year after nailing some high beta options trades but got greedy and gave it all back
I have really turned my eye to RE in low tax states (ex Texas and Florida). It might be too late in some of these places but long term I like the thesis.
edit: forgot to say I'm flat on the year after nailing some high beta options trades but got greedy and gave it all back
This post was edited on 3/10/21 at 10:42 am
Posted on 4/5/21 at 12:24 pm to RedStickBR
Posted on 4/5/21 at 12:41 pm to RedStickBR
I just listened to the Rosenberg interview and it really confirmed my bias You have got to listen to DiMartino-Booth interview Lacy Hunt. It's so good.
@corkham - Listen to the Rosenberg interview and you will fully understand why I think inflation concerns are a joke.
RBR - the content creators are on a tear right as of recently.
You have got to listen to DiMartino-Booth interview Lacy Hunt. It's so good. @corkham - Listen to the Rosenberg interview and you will fully understand why I think inflation concerns are a joke.
RBR - the content creators are on a tear right as of recently.
This post was edited on 4/5/21 at 12:43 pm
Page 16 of 23
Popular
Back to top
Follow TigerDroppings for LSU Football News