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re: Tomorrow's CPI. Lower than expected?
Posted on 9/13/22 at 10:40 am to Bard
Posted on 9/13/22 at 10:40 am to Bard
If their goal is to get CPI down to 2% they will have to get income to go down to change consumer behavior. There's only one way to do that. A soft landing could have only been done by cutting rates to soften the blow of higher cost of living by keeping people employed. Commodity prices, rent and food and discretionary spending are not going to decrease without destruction in the labor force and no income supplements. Committing to policy decision based on 1 variable that gets the most media coverage is a very stupid game. Especially when the media and it's consumers don't understand it.
1
Posted on 9/13/22 at 10:46 am to wutangfinancial
I don't think the Fed has the resolve to increase rates high enough to get inflation back down to 2%. You'd be looking at 7-9% interest rates probably to force that. Not gonna happen.
Posted on 9/13/22 at 10:48 am to GeneralLee
quote:
You'd be looking at 7-9% interest rates probably to force that. Not gonna happen.
Higher rates would make CPI go up without a massive decrease in income/employment. That is the entire problem. They are reinforcing the price increase pressures.
Posted on 9/13/22 at 10:54 am to GeneralLee
quote:
You'd be looking at 7-9% interest rates probably to force that. Not gonna happen.
Three days ago I would have agreed with you. But after speaking to some private equity contacts and hearing JP this morning, I am starting to question that.
Posted on 9/13/22 at 11:21 am to GeneralLee
quote:
I don't think the Fed has the resolve to increase rates high enough to get inflation back down to 2%. You'd be looking at 7-9% interest rates probably to force that.
That depends on the timeframe you're looking to get back to 2% within. If you're wanting to get to that by the end of 2023, then you will absolutely need to raise rates by that much in such a short period. That's also going to likely cause another Depression (because we're talking about 5%-6% worth of rate hikes within a year and a half).
I think they are looking far more long-term, I haven't seen any mention of their expectation but I wouldn't be shocked to find out they aren't expecting 2% until at least sometime in 2024.
Posted on 9/13/22 at 11:26 am to I Love Bama
quote:
But after speaking to some private equity contacts and hearing JP this morning, I am starting to question that.
And what is their opinion?
Posted on 9/13/22 at 11:37 am to GeneralLee
Much higher rates. One guy thought 10%.
I think we go to 6%-7% and hold. 10% would destroy us.
I think we go to 6%-7% and hold. 10% would destroy us.
Posted on 9/13/22 at 12:31 pm to GeneralLee
quote:There's two sides to every trade, Einstein. You don't always have to go long on equities and do a rain dance in your back yard. I haven't traded an equity in over 15 years, and I also take long and short positions.
Let's see... market is down about 15-20% for the year so I think my dollars, even inflation adjusted, can buy more shares in the indices now than on 1/1/2022. My main holdings are cash, SpaceX, and ORGN. Will redeploy cash into the indices and more ORGN once S&P is in the 3,000-3,500 range here later this fall.
This post was edited on 9/13/22 at 12:38 pm
Posted on 9/13/22 at 12:50 pm to alpinetiger
quote:
There's two sides to every trade, Einstein.
This was the easiest bear market to see coming in several decades, the Fed literally telegraphed it for everyone to see last November. I've been clear since then that I thought there was more downside than upside in the indices for the near term. Doesn't mean that individual stocks can't go up even in a bear market though.
quote:
I haven't traded an equity in over 15 years
After making a 4 bagger in under a year with Standard Lithium, I can't go back to boring indices anymore. My curse to bear.
This post was edited on 9/13/22 at 1:02 pm
Posted on 9/13/22 at 12:50 pm to I Love Bama
quote:
Much higher rates. One guy thought 10%.
He's thinking the Fed Fund rate is going to 10%???? If so, the only thing going that high is your friend.
At this point, I don't see the Fed Fund going to even 5%.
Posted on 9/13/22 at 12:56 pm to Bard
quote:
I haven't seen any mention of their expectation but I wouldn't be shocked to find out they aren't expecting 2% until at least sometime in 2024.
Yeah, only recently have I seen the Fed speakers pushing back to 2024. But they have to be right this time. They've been inaccurate so far on everything so I'm sure they'll get it right this time.. Certainly not years behind the curve.
Posted on 9/13/22 at 1:05 pm to UpstairsComputer
quote:
Yeah, only recently have I seen the Fed speakers pushing back to 2024.
Has someone there actually stated that? I was basing my guess of 2024 off the belief they hadn't made such a statement yet.
If so, I might have to re-evaluate and say 2025/6.
Posted on 9/13/22 at 1:07 pm to GeneralLee
quote:Why are you bragging about your fiat bag then, Gekko? I'll tell you what I don't have. USD. There's no money in it.
After making a 4 bagger in under a year with Standard Lithium, I can't go back to boring indices anymore. My curse to bear.
Posted on 9/13/22 at 1:30 pm to Bard
quote:
Has someone there actually stated that?
I went and looked for it. The actual quotes are that they don't see interest rate cuts until 2024 because they want inflation back to the 2% target before they cut. It appears was extrapolating in my mind.
Posted on 9/13/22 at 1:47 pm to UpstairsComputer
quote:
The actual quotes are that they don't see interest rate cuts until 2024 because they want inflation back to the 2% target before they cut. It appears was extrapolating in my mind.
Fair enough. I'm going to revise my estimate to "December 2024". A broken clock...
If they bring up the word "transitory" again though, add another 5 years.
This post was edited on 9/13/22 at 1:48 pm
Posted on 9/13/22 at 1:49 pm to I Love Bama
quote:
Much higher rates. One guy thought 10%. I think we go to 6%-7% and hold. 10% would destroy us.
No one in their right mind thinks anything close to these numbers, and the only reason someone would say otherwise is to build pain to recommend their solution.
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