Inflation

Pssst. Apparently the stock market "insiders" must've got wind of what the Fed's going to do tomorrow. It appears they're going to stand pat on interest rates, and they're apparently not concerned with inflation or Covid much, at least not at this point. I do not know this directly, but watching what investors were doing today gave a potential direction. If they were going to announce something big, you'd have seen a larger swing today in one direction or another. The trend appears to be a no-news is good news line.

It's purely speculation, but some of these heavy duty Wall Street pros usually tip their hand at the end of the previous day and the trend was up overall from the mid-day volatility. I think the Fed direction has been figured out. Remember, us little guys get the crumbs. It's the guys who rule Wall Street have the system rigged. Some of the big companies will be releasing earnings this week as well. Follow the big dogs' lead though and you can make a few bucks. Just probably not as much as them.

If I'm right, the markets will be up on the opening bell, then the Fed basically won't do crap tomorrow, and offer up some lame-brained excuse about inflation and Covid or whatever not being much of a factor going forward at least for the moment. Of course, if the Fed surprises everyone, that usually doesn't bode well with Wall Street and you'll see an abrupt pullback.

Inflation will be on people's mind for a while so we'll see if it's "transitory" or here to stay for a while.
 
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Pre covid GDP for the US was a bit over 21trillion.

Normal US govt spending for 2021 is about 7 trillion.

The pending "infrastructure bill" with all the hinted add on amendments in reconciliation is another 7 trillion.

Those facts should hint at whether inflation should be expected to stick around or not.
 
Pre covid GDP for the US was a bit over 21trillion.

Normal US govt spending for 2021 is about 7 trillion.

The pending "infrastructure bill" with all the hinted add on amendments in reconciliation is another 7 trillion.

Those facts should hint at whether inflation should be expected to stick around or not.

Doesn't that 7 trillion (both) count toward GDP?
 
From the sounds of it, most of you guys know way more about investing than I do. Only thing I know is that I'm not ready to retire yet (boo hiss) and the stock market will drop and rebound at some point. Just be prepared for it, willing to wait it out, and buy as much as you can the day AFTER it tanks. Give it a few years and you'll be sitting pretty 😁
 
Doesn't that 7 trillion (both) count toward GDP?
Sort of/not exactly? Different sets of numbers.

Point was, before covid GDP was just over 21 trillion. Last FY pre covid govt spending was 4.4 trillion. That would encompassed all of 2019.

This year spending appropriations are already 7 trillion, or, 75% above historic levels.

Now, they want to add yet another 7+ trillion to that. Think about those numbers.

When you're pumping that much extra cash into the economy you're going to have rampant inflation.

Going from 4 trillion to 14 trillion is massive in an economy that in its boom years pre covid only saw 21 trillion in value passing hands. It's a forced injection of 50% of the total of what was going on in a period of very rapid growth.
 
Let's not forget this little problem either...the Covid rebound has pretty much run its course, so the growth is going to slow way down going forward compared to the last 6-8 months. Thus, along with inflation pressures, regardless of how long they last, are going to keep people from buying stuff they would originally buy, as they start buying more essential stuff. It's going to happen. Future earnings are going to go flatter, thus stock investors will search for other things to put their money in.

Inflation is a tax that hits everyone up and down the financial-status ladder. I have a feeling that's part of the reason 84 H/O's didn't exactly fly off the dealer lots back then. When you pop a 20% package price on a 10K base price, that was considered a sizeable sum back in those days. It's headed that way again. When housing construction costs are up 6 or 7% from last year, it doesn't take a rocket scientist to figure out some people are going to get priced out of the housing market. But the only thing to beat high prices is high prices. They'll come down again, but how fast is the concern. A pop will suck, but if it deflates slowly, it won't be horrible. The "invisible hand" is getting pushed and pulled, and this makes it hard to gage what's going to happen.

Apparently there's other factors scaring investors out of the gate this morning. So I may be wrong about what the Fed may or may not do. Wouldn't be the first time. Maybe it's more Covid bad news, or treasury yields continuing to suck, or something. Like I said, it's simply speculative on what's actually causing the disruption. Maybe investors are starting to realize what's really happening. If the financial wizards don't do something, I think another recession is coming soon, but this next one would be caused by financial policy f**k-ups. They're usually reactive instead of proactive. Raise the rate by .25 and watch the brakes get pumped. Pumping the brakes always gets everyone in the car's undivided attention. It might shake things into perspective.
 
Let's not forget this little problem either...the Covid rebound has pretty much run its course, so the growth is going to slow way down going forward compared to the last 6-8 months. Thus, along with inflation pressures, regardless of how long they last, are going to keep people from buying stuff they would originally buy, as they start buying more essential stuff. It's going to happen. Future earnings are going to go flatter, thus stock investors will search for other things to put their money in.

Inflation is a tax that hits everyone up and down the financial-status ladder. I have a feeling that's part of the reason 84 H/O's didn't exactly fly off the dealer lots back then. When you pop a 20% package price on a 10K base price, that was considered a sizeable sum back in those days. It's headed that way again. When housing construction costs are up 6 or 7% from last year, it doesn't take a rocket scientist to figure out some people are going to get priced out of the housing market. But the only thing to beat high prices is high prices. They'll come down again, but how fast is the concern. A pop will suck, but if it deflates slowly, it won't be horrible. The "invisible hand" is getting pushed and pulled, and this makes it hard to gage what's going to happen.

Apparently there's other factors scaring investors out of the gate this morning. So I may be wrong about what the Fed may or may not do. Wouldn't be the first time. Maybe it's more Covid bad news, or treasury yields continuing to suck, or something. Like I said, it's simply speculative on what's actually causing the disruption. Maybe investors are starting to realize what's really happening. If the financial wizards don't do something, I think another recession is coming soon, but this next one would be caused by financial policy f**k-ups. They're usually reactive instead of proactive. Raise the rate by .25 and watch the brakes get pumped. Pumping the brakes always gets everyone in the car's undivided attention. It might shake things into perspective.
Housing data is looking worse for the construction industry stocks.

Last month inventory of new homes increased back up to a nearly 6 month supply. A few months back it was as low as 3 months.

This combines with sales of new homes tailing off. As prices continue to rise and the inve tory of "affordable" building lots shrinks further.

Mortgage rates went up .25 point. Rates are low, but with the hot prices that pushes lots of people out of the market.

Add it all together and the large building companies aren't looking as hot as they were. Softwood lumber is dropping. Used to be 300% above prior levels, it's back to 75% and falling. What's that mean? People who were riding those investments will be looking elsewhere as returns come back to earth.
 
Sort of/not exactly? Different sets of numbers.

Point was, before covid GDP was just over 21 trillion. Last FY pre covid govt spending was 4.4 trillion. That would encompassed all of 2019.

This year spending appropriations are already 7 trillion, or, 75% above historic levels.

Now, they want to add yet another 7+ trillion to that. Think about those numbers.

When you're pumping that much extra cash into the economy you're going to have rampant inflation.

Going from 4 trillion to 14 trillion is massive in an economy that in its boom years pre covid only saw 21 trillion in value passing hands. It's a forced injection of 50% of the total of what was going on in a period of very rapid growth.

Oh I'm aware of the effect on inflation, I just have to wonder if it isn't somewhat of a ploy to artificially boost the GDP when we aren't producing crap. Funny the way a debt based economy works. . .
 
Haven't been watching mortgage rates lately. The Fed wasn't pushing up bank rates, but with mortgage rates going up a tick anyway, sounds to me like the mortgage companies are trying to hedge a little on the impending pullback on housing sales and trying to keep more money on their side of the table. Or maybe they see the need for a softer landing than a pop of the bubble. I haven't been paying much attention to those things lately TBH, because up is down and down is up seemingly anymore. I'm kinda done worrying about it and just trying to survive retirement at this point. The economy is a gigantic, but fragile animal, and when the 1-per-centers start moving money around, the economy follows. Trying to guess which way it's going to go is kind of a fool's game at the moment.

One problem that's really huge is the gamble that trying to pay people to stay home and "back door" raising the minimum wage is blatantly empty-headed. And won't work. Why strangle your own economy to hold small business owners hostage to pry people off their couches with higher starting wages? Where the f*** do they think most of the business taxes originate?
 
I am far from a financial expert, but investment banks are confused now as to where to put their money so they are pumping it into the stock market due to lack of other options which makes the economy look good when it is probably meh.


Mortgage rates are so low that it's worthless putting their money into 30 year, 3% house loans when it doesn't even keep up with inflation. My mom refi'ed in 08 with a 15 year on her house for 2.875% and she was ecstatic because 20% was the norm when she was younger. Never thought that would be bested. Last fall my wife and I refi'ed our house for 2.375% for a 30 year. How that happened I don't know. Rarely best the bank but we did (and I am sure many others did too).

Younger people have increased financial smarts on credit and the use of 20% credit cards is down. They POUNDED into my high school personal finance class that credit cards=bad (probably one of the good things they taught) and the numbers show significantly less people use credit cards than they did 20 years ago. Not good for the investment bankers though.

New auto inventory is low due to parts shortages so people aren't replacing cars they might want to. Prices are up on used stuff but the auto fleet age keeps going up. Older stuff=cheaper so less loans to give out.

Sporting events and concerts are back but still wishy-washy and attendance is down, lots of money lost there

Business travel is still at a low which effects airlines, hotels, coffee shops, ect

Domestic travel for vacations is OK but international travel is still down.


About the only boom is home remodeling and new construction but inflation due to shutdowns and material shortages puts a damper on that. There is stuff I want to do but can't or won't due to stuff being out of stock or seriously expensive.
 

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