Higher for longer continues. With earnings struggling means it’ll be tough slogging for stocks at this valuation level.
Well the markets current path is retightening financial conditions, in turn making the possibility of a hard landing greater. I will be curious to see the market narrative by the next Fed meeting.
killing the economy and sending hundreds of thousands to the unemployment line so the price of eggs doesn't go up. seriously fuck off jerome
I would think so, it was 24% yesterday I’ll have to look later. But they don’t even need to raise .50 for markets to reverse course and tighten themselves case in point is mortgage rates. Which have gone from 7 down to 6 on hopes of a fed pause and now we are back north of 6.5%
I locked in 5.75% on a 30yr on 1/26, obviously sucks but all things considered I guess I’m okay with it
Housing market taking any significant hit. I was more or less furthering your point about refi in the next few years
Gotcha, yea I think for a refi there is a decent chance. As far as the housing market goes I think it gets more complicated to answer because there are more variables. I think generally it will vary by region, you are already seeing tech heavy job locations like the Bay Area and Seattle down close to double digits from the spring 22 peaks. I think a lot of those folk were also buying rental properties or covid escapes in places like Boise which has also gotten hit, same with the southwest. Where as the southeast, Midwest, northeast prices have held in more. Then, as much as there is talk of tight supply of existing homes (which there is) there is a large wave of new homes coming onto the market. We haven’t hit levels of building like this since prior to 08 and I think prices of new homes will ultimately set the market rather than existing. And lastly I think this rosier outlook over the past month or two on the housing market is just the result of markets thinking the fed would pivot and watching mortgages drop from 7% to sub 6% in a couple month span. As we reverse the other way I expect to see not as great data in the months ahead. As it stands mortgage payments are way to high for the average consumer and until it balances out I think the housing market will show some region specific weakness. This was a good thread on the topic I saw a week ago or so and how it ties into a potential soft landing too.
I’m in Bergen county NJ in an elite public school system, anything is possible but I haven’t seen the home value changes there
Home values in Florida in large part are barely moving. Granted there’s a hefty influx of people moving here but housing currently having any meaningful drop in price/value is extremely area specific. There’s no sufficient data available to suggest that’s going to change anytime soon. IMO the floor is established and slight variances up or down is the game in the foreseeable future (at least Florida based homes)
I think the book isn’t closed until affordability is rectified, that can happen in different ways that don’t include prices going down but for now those ways are headed in the opposite direction.
In central North Carolina and while homes are on the market a few more days, prices and general availability are not getting better.
Same in Raleigh. Prices dropped a bit last fall, but resisted anything since. Same with supply. I assume it’s just a growth thing, but I’m not a real estate market expert.
going to be interesting what happens here, we have an obscene amount of housing being built locally, including downtown units. hoping it drops housing value but not optimistic.
Im not selling but all my disposable income is going into a money market until QT stops. Then I’ll assess. Yes caveats are markets are forward looking and not always rational, but we have contracting earnings with stagnant inflation while the terminal fed rate keeps ticking up. Seems like a solid time to manufacture some diversification by getting a decent yield to see how things shake out.
You guys credit union, traditional bank or online bank people? I want to do online bank but I hate that feeling if I need more than the online bank atm withdrawal in cash for making it rain at the club. Or I got to time things right on escrow down payment day for purchasing a home, because online banks take days. So I guess credit union is the middle ground with their shitty app interfaces? I’m trying to take advantage of higher yields with online banking, but I hate having a minimum sitting in a traditional rotting just bc I need security for those traditional bank benefits.
Tbh most banks are sand bagging raising their yields in bank accounts or savings accounts, money market accounts and brokerage CD’s are yielding far more than your traditional online bank or brick and mortar
Wells Fargo is paycheck/direct deposit Ally was savings account but I don’t use it because of the post above^ (aka they yield 3.4 but I can get 4+ through my brokerage) Schwab they refund my atm withdrawals in areas you get hit with atm fees like vegas or international
I have a local checking account and Ally for most of my savings. I keep ~$3000 in the checking and put in enough money to cover bills that aren't paid with a credit card in it. The rest goes to Ally.
Thinking about dumping TGT today before earnings overnight. I don't expect blockbuster results and imagine investors will dump alot to drive the price down. I was hoping to see it get back to $200 but I will still make a healthy profit from the pandemic lows if I close out.
Spoiler: QT maybe already ended Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email [email protected] to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here. https://www.ft.com/content/64b3d0b6-e0be-4e8c-9b20-c595428267d5 It has been a bleak year for many investors. Global investors have lost $23tn of wealth in housing and financial assets so far in 2022, according to my estimates. That is equivalent to 22 per cent of global gross domestic product and uncomfortably exceeds the lesser $18tn of losses suffered in the 2008 financial crisis. Hopefully though, next year will not be so bad for assets, because the cycle of global liquidity is bottoming out. Part of my reasoning is that quantitative easing programmes by central banks to support markets are impossible to reverse quickly because the financial sector has become so dependent on easy liquidity. The very act of quantitative tightening creates systemic risks that demand more QE. We track the fast-moving, global pool of liquidity — the volume of cash and credit shifting around financial markets. The impact of the ebb and flow of this pool, currently about $170tn, can be seen in the central bank programmes to support markets through the Covid-19 pandemic — quantitative easing. The latter drove another “everything up” bubble through 2020-21. But as soon as policymakers hit the brakes in early 2022 and triggered a near-$10tn liquidity drop, asset markets collapsed. We focus on liquidity because the nature of our financial system has changed. The markets no longer serve as pure capital-raising mechanisms. Rather they are capital refinancing systems, largely dedicated to rolling over our staggering global debts of well over $300tn. This puts a premium on understanding collective balance sheet capacity to finance debt issues over analysis of the cost of capital. We estimate that for every dollar raised in new finance, seven dollars of existing debts need to be rolled each year. Re-financing crises hit us more and more regularly. Hence, the importance of liquidity. So, what now? According to our monitoring of liquidity data, we have just passed the point of maximum tightness. The two most important central banks driving the global liquidity cycle are the US Federal Reserve and the People’s Bank of China. Think of the Fed as mainly controlling the tempo of financial markets, given the dominance of the dollar, whereas China’s large economic footprint gives the PBoC huge influence over the world business cycle. In short, the stock market’s price-earnings multiple is determined in Washington and its earnings Beijing. The Chinese market enjoyed a large jump in liquidity injections in November, led by the start of an easier monetary policy from the PBoC. Contrary to the consensus view, latest data also show the US Federal Reserve adding back liquidity into dollar markets, despite its ongoing QT policy. Admittedly, the Fed has reduced its holdings of US Treasuries in seven of the past nine weeks as part of QT. But net liquidity provision, benchmarked by moves in the Fed’s “effective” balance sheet, has remarkably risen in six of these weeks. In fact, the Fed added an impressive $157bn to US money markets through its operations. Looking ahead, we project a further pick-up in global liquidity. China desperately needs to boost its lockdown-hit economy, so expect further policy stimulus in 2023. Two other favourable factors are the lower US dollar and weaker oil prices. We estimate that each percentage point fall in the dollar increases the take-up of cross-border loans and credit by a similar percentage amount. The US currency is already down a hefty 9 per cent from its recent peak. The fall in oil prices to below $80 a barrel should also help, reducing the amount of credit required to finance transactions. But there could be more. The US Fed plans to reduce its holdings of Treasury and government agency securities by $95bn per month. But other items are likely to offset some of, perhaps even, all of this. First, the $450bn Treasury General Account, the US government’s deposit account at the Fed, is likely to fall as bills are paid ahead of difficult upcoming debt ceiling negotiations. Second, the Fed’s $2.52tn “reverse repo” facility for providing short-term investment to parties such as money market funds could drop significantly. This is because there are hints that the Treasury will issue more bills, debt of less than one-year maturity, relative to bonds which have longer terms. Third, rising interest rates mean the Fed will pay out more on debt it has issued. This could amount to a whopping $200bn over 2023. The September turmoil in the UK gilt market was a reminder of the risks of financial instability when liquidity is withdrawn. Mindful of such forces, could the Fed be reluctant to push liquidity down too much? One could argue that by winding back its portfolio of Treasuries (“official QT”), but allowing effective liquidity provision to rise (“unofficial QE”), the Fed is trying to have its cake and eat it! Whichever, it surely shows that QT is harder to achieve in practice than in theory. Stealth QE may be back next year and make what looks to be a difficult year feel a tad better. https://www.ft.com/content/64b3d0b6-e0be-4e8c-9b20-c595428267d5 timing the markets is just too tough
Curious how everyone feels like they’re doing vs inflation. I’ve been doing my best to leverage credit card points, buy generic/bulk, and negotiate what I can. I feel like I’ve kept my grocery costs fairly even with the AmEx Blue Cash Preferred and switching to generic items where I can. Nothing too crazy or obsessive but does make a small difference for passive effort. Just had a nice “win” of keeping my rent the same vs the 3% increase my complex first sent. Merely took a single email. Since rent is 60% of my bare minimum expenses that really keeps inflation at a minimum. Car insurance was the one item that really skyrocketed last year, up 30% YoY. Tried to negotiate and Geico laughed at me.
Other than my rent increasing by 10%, I haven’t noticed it too much living in NYC. Everything has always been expensive so paying $2 more for a dozen eggs isn’t killing me. Not a great time to have to pay for a portion of my wedding though!
nothing bad here except in the LUXURY sphere, flights are more expensive dodged the rent chaos by buying at just the right time
I'll just say that your concern for all things fiscal as it relates to your life is impressive. I'm turning the corner on 50 and naturally more inclined to get my ducks in a row for the end game. I think you're mid/late 30's? Clearly, you are building a very strong foundation. (tips cap)