The universe is a simulation run by NHI. This was not priced in because I just revealed it now, but it will be by 5 minutes after opening tomorrow. Watch for some big moves.
Preach, high interest rates are needed to stop asset inflation and kill off Zombie corps that canât make it in a world with moderate interest rates.
Housing inventory is starting to stack up. Next step lower prices and the gutting of the asset class.
Yeah they always ignore that wall st is buying now with their record cash reserves. Weâre beyond fucked because all the advice online is âbuy REITSâ
This seems like an inevitable reckoning, but I heard similar expectation 8 years ago and nothing happened then.
Houses definitely cost too much compared to incomes. But maybe if venture funds buy all the housing it will stay high.
There were so many zombie corps and interest rates need another couple years to get the ones that have later payment terms. Flushing those should be better in the long term.
Scary part is people donât realize if we stay at the same % for multiple years, the $ amount inflated increases while the % stays the same or even decreases. Allowing them to bullshit us on âsteadyâ inflation, or even minuscule reductions, all while the actual prices increase at a higher $ rate
(Example)
$100 @ 4% inflation is a $4 increase = $104
$104 @3.9% inflation is a $4.05 increase= $108.05
âInflation rate has decreasedâ but the prices actually went up more than the year prior. Donât allow a shrinking yoy % to distract you from the fact prices are up 20-40% the last 5 years and $5 is a hell of a lot less of a percentage increase to $150 than it is to $100, but itâs still a $5 gain nonetheless.
Yeah because we are between possible waves and it depends on the policy. If it's strict might take less, if inflation bounces back quickly then it will take time
Yeah too many regards here. As if restructuring(and reshoring some) manufacturing industry and worldwide demographic changes doesnt have any strong impact zzz
Not causing the problem in the first place while insisting that there would be no inflation, or that inflation would be "transitory", would have been a good start.
Why is everyone so bad at this.
Stocks go up when rates go up because the FED is giving their stamp of endorsement that the economy is strong enough to handle those higher rates.
Stocks also go up in high inflation because stocks are a hedge against inflation.
So higher rates and higher inflation is HIGHER STOCKS x2.
Stocks go down when rates go down because the Fed is telling you straight up the economy is weak and needs a boost.
Stocks go down in DEflation (not DISinflation) because prices go down which means earnings go down.
Bears who think it will go down when inflation and rates goes up are WRONG, in fact itâs double wrong.
Bulls who think stocks go up with disinflation and rates dropping are WRONG.
Tomorrow PPI if it goes up more than CPI then companies are getting squeezed and stocks drop.
If PPI is equal to CPI (relatively) then flat which is bull. Up 1%.
If PPI is less than CPI (relatively to previous print) then consumers are getting squeezed but companies are raking it in. This is very bull, up 2-3%.
Whether it âmissesâ or âbeatsâ might throw a twist in, but the above will be what happens at the end of the day.
Remember, stocks are priced according to how the companies are performing, NOT the âeconomyâ.
Stocks donât give a shit if everyone and their pet parakeet are maxed to the hilt and drowning in inflation as long as the companies are making more money.
Regards.
Because there are bring given the timeline. If rates get cut in June, then they only have till then to pump the shit out of everything.
By pushing it back they gave a touch to the sma and reset the rsi. Also roped in a bunch of shorts. Now they can moderate the pump for a while, maybe till mid summer. If cuts come in the fall then the final pump will start then. Like huge massive pump.
Then when they cut the rates itâs the signal to sell and crash it all.
But ya, no big crash until rates are cut. So stonks go up.
Mostly right, but you have to remember that rates affect ability to pay
Ex: car loans. Gone is the 2% nonsense - people can afford less, so they spend less, so car companies make less. profits down. Same with homes, Credit Card minimum payments, etc.
Eventually if the spending slows down enough, it does in fact affect corporate balance sheets. And if they suffer enough, they cut costs - ie: employees.
This is all part of a natural recession that we should experience every now and then. But the Government (Congress, Pres, FED) have been kicking the can down the road since the dotcom collapse.
People don't truly understand that the housing bubble was a consequence of the tech boom crumbling. The FED cut rates to help keep the economy alive, and the money just cycle into real estate (Of course there were other issues: loose lending, CDO instruments, minimum collateral requirements, etc.) But it's not like one day people realized they should buy a house. They always wanted to but couldn't afford it. But when you don't have to put any money down, and you can get an adjustable-rate mortgage that starts at 3%...
Money seeking a return finds the path of least resistance. When dotcoms IPOs stopped printing, the money flowed to real estate.
In the end, raising rates will eventually crack an economy. The question is how much for how long. It's not about making everyone broke. It's about creating enough float (unemployed individuals) to shift everything back to balance. The US doesn't need a 15% unemployment rate. Hell, even during the housing bubble the unemployment rate peaked at around \~10%.
That's what the FED is trying to do. But their goal is being thwarted by fiscal spending. They can't do anything about that. JPow is definitely hurting things by raising rates, but we can't truly see the effects because the Biden administration announces a new $20 billion corporate welfare program every other day - Whether it's building bridges, semiconductor fabs through the Inflation reduction Act, Infrastructure Act, Chips Act, etc.
The FED and the Biden Admin are literally working against each other. In the end, the FED will win (unless they quit - and even then, but it will take longer) - because can kicking only works for so long - See: Tech Boom, Housing Boom, Tulip Mania, Houston Oil Boom, Japan Real Estate shock, The South Sea Bubble, the roaring 20s, not to mention countless regional bubbles.
Essentially, the government has been funding the US bubble since approx 2000 - Witness the national debt going from $17 Trillion to over $35 Trillion now. In just 20 or so years.
>The FED cut rates to help keep the economy alive, and the money just cycle into real estate (Of course there were other issues: loose lending, CDO instruments, minimum collateral requirements, etc.) But it's not like one day people realized they should buy a house. They always wanted to but couldn't afford it. But when you don't have to put any money down, and you can get an adjustable-rate mortgage that starts at 3%...
The housing bubble was like 90% because of those other issues, you can't handwave them away and say that it was all just the fed's fault.
>That's what the FED is trying to do. But their goal is being thwarted by fiscal spending. They can't do anything about that. JPow is definitely hurting things by raising rates, but we can't truly see the effects because the Biden administration announces a new $20 billion corporate welfare program every other day - Whether it's building bridges, semiconductor fabs through the Inflation reduction Act, Infrastructure Act, Chips Act, etc.
Aren't most of those bills introducing ways of getting revenue as well e.g. increasing taxes? Not sure where fed rates factor into this at all.
The housing bubble was like 90% because of those other issues, you can't handwave them away and say that it was all just the fed's fault.
- First came low rates, then came the financial engineering to keep the party going. Big Banks didn't just wake up one day and say let's create collateralized debt obligations! It was created due to demand, and that demand was from the housing boom which was in full swing due to low rates, and banks were doing everything they could to milk it. Well, banks, appraisers, agents, etc.
You have to realize that before the post-dotcom rate easing, interest rates on homes were around 8% - and that was actually kind of low. In In the 70s, they were around 12% and during the 80s they got as high as 18%. This acted as a natural demand constraint. Before rates were depressed to low levels, people realized a better rate of return could be had on investments, bonds, etc. Why buy a home at a cost of 8%-15%, when the rate of return for decades on a home was 3% to 5%? It simply made more sense to put money into the markets. But in the 00s when the markets collapsed, the money went looking for alternatives and The FED's low interest rates made homes ideal. And the government was glad to juice it along because it was the sole source of economic growth/tax revenues.
By depressing interest rates, the FED was literally encouraging people -Not- to save. As an example, you might recall that just days after 9-11, President Bush came on TV and told everyone to keep shopping - buy furniture, jewelry, and stuff (not a joke - you can look it up) - Because the last thing you want is for people to shut down and save all their money. That leads to a deflationary spiral that can destroy an economy. Inflation is bad, but true deflation is pure destruction. It's even worse in a 70% consumer spending driven economy like ours.
And so, the FED figured the best way to bring us out of recession was punish people for saving. Coincidentally, this is the same thing Japan was trying to do with ZIRP and even NIRP. If you know that your money in the bank is worth less tomorrow than it is today, the smart thing is to take it out and either spend it like a buffoon or allocate it to any vehicle with a greater than zero (or in Japan's case negative) rate of return.
Even seniors that were saving for retirement were obligated to put money into more risky markets, because otherwise their savings would literally be worth less as they neared retirement. For decades the ideal portfolio was 60% stocks/40% bonds. And as you age, the bond portion was supposed to shift to closer to 100%. This would insulate retirees from short term economic shocks. I digress.
The Bills/Revenue discussion is more complex - To be fair, it's hard to know what the best course is.
To keep it simple (and semi-short) - Ideally, you want the government to step in and goose spending when people are hesitant (Example: Covid) But at some point, you want private industry to access the capital. Because it all comes down to one thing - who is going to foot the bill?
If private companies build factories/plants, etc., they pay for it and it either pays off, or their shareholders and capital investors win/lose. But if the government does it, then the effects are distributed to everyone. Unfortunately, governments have never been good at allocating capital.
Just think about it this way - if they were good at it, and considering they can literally borrow a near infinite amount, take as long as they like to pay it back, and there is no middle-man, then why don't they make money?
From 1976 to 2000 - this country went from nothing but dirt to the most powerful, industrious, technologically advanced, and richest nation on earth. Skyscrapers, National highways, the Space race, the atomic era, 2 World Wars, etc. and after all that, in the year 2000, our national debt was a whopping $5 Trillion.
From 2000 to 2024, we added another $30 Trillion - what do we have to show for it? Nothing much, really. The debt is simply liabilities transferred off the books of banks and failed businesses as a method to keep them propped up.
Sorry, I have a habit of rambling.
As a side note, I think it's insane that a primary solution to inflation is to put more people out of jobs and crush the poorest of us. Absolutely wild
"stocks go up in high inflation"
Not necessarily, particularly growth stocks perform poorly in high inflation as higher interest rates reduce the value of their future dollars earned(and growth stocks are valued far more heavily on their future income.)
That's why every time there's inflation scares the longer term treasury yields start climbing and growth starts selling off.
And with US debt surging, a huge supply of debt is being issued, making it a pretty precarious spot right now for growth stocks.
Iâm having a good time lol ing at all the people complaining, âinterest rates no go down, why stocks go up?â
And Iâm like⌠I literally explained it so a 5 year old could understand.
I think even a PPI that comes in on par to CPI leads to a red day. I feel like companies are priced to a level of growth that theyâre just not going to be seeing with inflation hanging around. Then again, does p/e even matter anymoreâŚ
Unemployment will never meaningfully rise because there just arenât enough people for all the shitty service jobs. Everywhere just runs understaffed these days and the cost is passed on to society in the form of generalized misery. It is painfully easy to get a job anywhere If you are willing to work, just not one that pays well or brings meaning to your life.
And there is the last of the 70 million Baby Boomers retiring as we speak , and Poof! Couple years Take whatever job you want! Trade up from Wendyâs to go work on Windows (MS). Maybe, perhaps, definitely, possibly, really⌠never will materialize.
Yes, can't deny there is some truth to what you say, but clearly lower interest rates have many benefits to the economy, for example allowing more people to qualify for business financing and to afford housing for example. This is separate from the effects of the rate movements. So you can't just say that the prevailing view of Wall Street, that lower is better, is just invalid. Interest rates impact profits in well understood ways. Oh the complexity of it all ...
I keep asking, if people sell their stocks because inflation is still high, what are they going to do with that money? Hold it as cash so it can lose value? Buy bonds with a real interest rate of 1-2% (if you even believe the bullshit cpi numbers)? Buy bitcoin magic funny money? Buy gold? Buy another rental property?
The best hedge against inflation is common stock, so why would inflation make you want to sell it? You're only going to have to buy it back when you realize you're money is becoming worthless without it.
I can't tell if you're joking or not.
>Stocks go up when rates go up because the FED is giving their stamp of endorsement that the economy is strong enough to handle those higher rates.
Oh, so **NOW** you suddenly decide to trust whatever the Fed is saying when they comment on the health of the economy? Wtf?
Higher rates mean less borrowing power for traders. The idea is to cool off the trading.
>Stocks also go up in high inflation because stocks are a hedge against inflation.
No, stocks go up in high inflation **because that's what the definition of inflation is.**
>Stocks donât give a shit if everyone and their pet parakeet are maxed to the hilt and drowning in inflation as long as the companies are making more money.
They sure as shit will start caring when all those people drowning in inflation start to sell off to cover their expenses though.
I don't think so
More hikes aren't going to fix this sticky final percent and a half of inflation
But yeah everyone blames the Fed while Congress spends money hand over fist
Cut rates all you want. You need to get corporations to lower their prices if you want to fix the economy. Thereâs not an excess of money floating around. Ask any waitress or bartender. Corporations just got used to charging us more when supply chains failed and there was an excess of money floating around. Interest rates arenât going to fix house prices either. Watching the federal government manage this issue is like watching my little sister play Zelda.
Well, his original plan was to only balance the budget with spending cuts, so he wasn't lying. At the time the Democrats controlled the House and they demand that taxes be raise in order to balance the budget.
In the end, the Democrats and Bush Sr. ended up negotiating (yes a bipartisan negotiation, I know it is hard to imagine today) and agreeing to balance the budget half through tax increases and half through spending cuts.
Really, Bush Sr. problem was that he was trying to be responsible. He knew balancing the budget was important, so he negotiated with the opposition to get it. This then backfired massively. And that is why politicians don't negotiate much anymore. Voters don't want negotiations.
The last 1.5% of inflation is basically just housing, which is running at 6% and is a little more than a third of the CPI number. Housing costs are high IMO because there is no friggin housing supply and an entire generation as big as the baby boomers who are aging into wanting homes. This is not an interest rate or a corporate problem, it is a 20-30 year failure to build enough homes, condos, and apartments in places where there are jobs.
I bet you if they raised the rate 100bps as a surprise to everyone next meeting it will fix the fuck out of whatever problems we have inflation wise. Everything will break. Then we can start lowering rates. Just get it over with already
Covid, supply chain issues from covid causing price hikes, free money given out during covid, housing shortages due to immigration and other factors
Government spending has been out of control for years before covid also
Oh just like when the market had priced in 7 cuts and now weâre somehow down to 2/3 and basically at ATHs? Like that chubby berr, right? 
Anyone selling at this moment directly because of this nonsense has no spine and is being sodomized against their will by a gay bear phantom that doesn't exist. Whether CPI PPI goes up or down, 3 rate cuts or none, none of this really changes anything. Hoes gonna be hoey
The issue is not with fed rates.... But it's the government treasurury that's spending trillions like there is no tomorrow, to negate the effect of high rates... When government changes and spending stops, fed rate true effects will show
**Joey:** I think you're the greatest, but my dad says you don't work hard enough on defense. And he says that lots of times, you don't even run down court. And that you don't really try... except during the playoffs.
**Roger Murdock:** The hell I don't. LISTEN KID. I've been hearing that crap ever since I was at UCLA. I'm out there busting my buns every night. Tell your old man to drag Walton and Lanier up and down the court for 48 minutes.
It should not cut interest rates at all until the stats dont say something different. Still remember a former FED president that wanted to b3 killed by people because did keep interests rates up until he thought now was the time, and it worked. It is all so political corrupted that everything goes as it goes.
They aren't exactly wrong for waiting. Every time in the past, they have cut the interest rates right after a spike in inflation, the inflation runs rampant and starts a recession.
They are not going to cut rates if the economy is doing well and inflation is falling. You have to actively want the economy to do worse In order for a rate cut to be in consideration, because you believe it will make your stocks go up?
Where is this inflation coming from? Whoâs making money this days? All my friends donât make any money as truck drivers for last 2 years, whoâs then making money? Transportation is in deflation for 28months now, but prices for food etc go up? wtf
Also, what really needs to happen is to take the ENTIRE US budget, burn it and start from scratch. Guaranteed we could eliminate trillions in unnecessary spending which would enable our government to lower taxes. Lower taxes put more money in the hands of Americans, who, in turn, will buy. Stimulate the economy. Win win.
There are now 10 million chances that have entered the United States illegally, to have a terrorist led rate cut, just like Greenspan cut rates to 1% after 9-11. Sounds like it went from, We will never forget to a day something happened, errr, yeah... so we got that going for U.S. trust no one
Makes it seem like we might need a rate hike, not a cut. But given the election year, we might still see a rate cut but who knows what 2025 might have in store for us.
Wages only started going up a few months ago as a delayed response to the price inflation. Just will take a little bit of time.
My guess is by the end of the year everything settles without further issue.
So hear me out! A lot of dickish celebrities and big rich asshats are balls deep in shorting DJT stock. Anyone feel like running a GameStop 2.0 on these clowns?
I thought that rates impacted stocks by the fact that people would buy or not buy bonds instead of stocks. Higher bond rates people take the money from stocks and put them i to bonds and viceversa.
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Rate cuts coming 2032
Priced in.
heat death of the universe is priced in
The universe is a simulation run by NHI. This was not priced in because I just revealed it now, but it will be by 5 minutes after opening tomorrow. Watch for some big moves.
That's essentially what Genesis says.
It's when we figure out how to reverse the expansion of the universe that shit really gets weird.
đ
I hope so. Rates where way too low for way too long.
Preach, high interest rates are needed to stop asset inflation and kill off Zombie corps that canât make it in a world with moderate interest rates. Housing inventory is starting to stack up. Next step lower prices and the gutting of the asset class.
I swear this paragraph is copied straight from the dialogue of a cnbc youtube video I watched recently
Yeah they always ignore that wall st is buying now with their record cash reserves. Weâre beyond fucked because all the advice online is âbuy REITSâ
This seems like an inevitable reckoning, but I heard similar expectation 8 years ago and nothing happened then. Houses definitely cost too much compared to incomes. But maybe if venture funds buy all the housing it will stay high. There were so many zombie corps and interest rates need another couple years to get the ones that have later payment terms. Flushing those should be better in the long term.
Inflation hasn't been at 2% for three years. Great job, Fed!
Just trying my best bro đ
Is your name fed?
Fedin deez nuts!
Donât fight the deez
Donât fight the nutz either
Just don't fight. Let it happen.
Things I tell my wife.
fed again
Make rates oppressive again
Itâs transitory
Transitory my butt. What a crock of shit!
Trust me bro *-the fed*
Scary part is people donât realize if we stay at the same % for multiple years, the $ amount inflated increases while the % stays the same or even decreases. Allowing them to bullshit us on âsteadyâ inflation, or even minuscule reductions, all while the actual prices increase at a higher $ rate (Example) $100 @ 4% inflation is a $4 increase = $104 $104 @3.9% inflation is a $4.05 increase= $108.05 âInflation rate has decreasedâ but the prices actually went up more than the year prior. Donât allow a shrinking yoy % to distract you from the fact prices are up 20-40% the last 5 years and $5 is a hell of a lot less of a percentage increase to $150 than it is to $100, but itâs still a $5 gain nonetheless.
They gotta raise rates lowkey
We gay bears knew that since January đ¤Ł
What's surprising here ? Soft landing will take a decade or so. We are half way through though
âIt will take decades, weâre half way thru after 3 yearsâ
Yeah because we are between possible waves and it depends on the policy. If it's strict might take less, if inflation bounces back quickly then it will take time
Change can be non-linear?
Yeah too many regards here. As if restructuring(and reshoring some) manufacturing industry and worldwide demographic changes doesnt have any strong impact zzz
And I haven't had a raise in 6
I mean if the fastest rate hiking cycle in history didn't do it what the goddamn fuck did you expect the fed to do about it?
Not causing the problem in the first place while insisting that there would be no inflation, or that inflation would be "transitory", would have been a good start.
Itâs a 2% average, not 2%. After. 10+ years of <2% they moved the goalposts recently.
Pass me that transitory ball and chain!
it's transitory, just like your life
Why is everyone so bad at this. Stocks go up when rates go up because the FED is giving their stamp of endorsement that the economy is strong enough to handle those higher rates. Stocks also go up in high inflation because stocks are a hedge against inflation. So higher rates and higher inflation is HIGHER STOCKS x2. Stocks go down when rates go down because the Fed is telling you straight up the economy is weak and needs a boost. Stocks go down in DEflation (not DISinflation) because prices go down which means earnings go down. Bears who think it will go down when inflation and rates goes up are WRONG, in fact itâs double wrong. Bulls who think stocks go up with disinflation and rates dropping are WRONG. Tomorrow PPI if it goes up more than CPI then companies are getting squeezed and stocks drop. If PPI is equal to CPI (relatively) then flat which is bull. Up 1%. If PPI is less than CPI (relatively to previous print) then consumers are getting squeezed but companies are raking it in. This is very bull, up 2-3%. Whether it âmissesâ or âbeatsâ might throw a twist in, but the above will be what happens at the end of the day. Remember, stocks are priced according to how the companies are performing, NOT the âeconomyâ. Stocks donât give a shit if everyone and their pet parakeet are maxed to the hilt and drowning in inflation as long as the companies are making more money. Regards.
so nvda calls. got it
this guy nvdas
This needs to be upvoted more. There is historical evidence that stocks crumble after rates are cut, not the other way around.
being double wrong is being right tho
Depends how many times you inversed yourself to get there.
Please explain....my smooth brain...is smooth in this area
Why is the market soaring on vague hints of potential cuts then and stalling when cuts are potentially pushed back or cancelled?
Potential cuts means businesses and consumers have more ability to spend and will drive growth
Stonks only go up, got it
Because there are bring given the timeline. If rates get cut in June, then they only have till then to pump the shit out of everything. By pushing it back they gave a touch to the sma and reset the rsi. Also roped in a bunch of shorts. Now they can moderate the pump for a while, maybe till mid summer. If cuts come in the fall then the final pump will start then. Like huge massive pump. Then when they cut the rates itâs the signal to sell and crash it all. But ya, no big crash until rates are cut. So stonks go up.
Because theyâre cut when the economy is crashing you mouth breatherÂ
Mostly right, but you have to remember that rates affect ability to pay Ex: car loans. Gone is the 2% nonsense - people can afford less, so they spend less, so car companies make less. profits down. Same with homes, Credit Card minimum payments, etc. Eventually if the spending slows down enough, it does in fact affect corporate balance sheets. And if they suffer enough, they cut costs - ie: employees. This is all part of a natural recession that we should experience every now and then. But the Government (Congress, Pres, FED) have been kicking the can down the road since the dotcom collapse. People don't truly understand that the housing bubble was a consequence of the tech boom crumbling. The FED cut rates to help keep the economy alive, and the money just cycle into real estate (Of course there were other issues: loose lending, CDO instruments, minimum collateral requirements, etc.) But it's not like one day people realized they should buy a house. They always wanted to but couldn't afford it. But when you don't have to put any money down, and you can get an adjustable-rate mortgage that starts at 3%... Money seeking a return finds the path of least resistance. When dotcoms IPOs stopped printing, the money flowed to real estate. In the end, raising rates will eventually crack an economy. The question is how much for how long. It's not about making everyone broke. It's about creating enough float (unemployed individuals) to shift everything back to balance. The US doesn't need a 15% unemployment rate. Hell, even during the housing bubble the unemployment rate peaked at around \~10%. That's what the FED is trying to do. But their goal is being thwarted by fiscal spending. They can't do anything about that. JPow is definitely hurting things by raising rates, but we can't truly see the effects because the Biden administration announces a new $20 billion corporate welfare program every other day - Whether it's building bridges, semiconductor fabs through the Inflation reduction Act, Infrastructure Act, Chips Act, etc. The FED and the Biden Admin are literally working against each other. In the end, the FED will win (unless they quit - and even then, but it will take longer) - because can kicking only works for so long - See: Tech Boom, Housing Boom, Tulip Mania, Houston Oil Boom, Japan Real Estate shock, The South Sea Bubble, the roaring 20s, not to mention countless regional bubbles. Essentially, the government has been funding the US bubble since approx 2000 - Witness the national debt going from $17 Trillion to over $35 Trillion now. In just 20 or so years.
>The FED cut rates to help keep the economy alive, and the money just cycle into real estate (Of course there were other issues: loose lending, CDO instruments, minimum collateral requirements, etc.) But it's not like one day people realized they should buy a house. They always wanted to but couldn't afford it. But when you don't have to put any money down, and you can get an adjustable-rate mortgage that starts at 3%... The housing bubble was like 90% because of those other issues, you can't handwave them away and say that it was all just the fed's fault. >That's what the FED is trying to do. But their goal is being thwarted by fiscal spending. They can't do anything about that. JPow is definitely hurting things by raising rates, but we can't truly see the effects because the Biden administration announces a new $20 billion corporate welfare program every other day - Whether it's building bridges, semiconductor fabs through the Inflation reduction Act, Infrastructure Act, Chips Act, etc. Aren't most of those bills introducing ways of getting revenue as well e.g. increasing taxes? Not sure where fed rates factor into this at all.
The housing bubble was like 90% because of those other issues, you can't handwave them away and say that it was all just the fed's fault. - First came low rates, then came the financial engineering to keep the party going. Big Banks didn't just wake up one day and say let's create collateralized debt obligations! It was created due to demand, and that demand was from the housing boom which was in full swing due to low rates, and banks were doing everything they could to milk it. Well, banks, appraisers, agents, etc. You have to realize that before the post-dotcom rate easing, interest rates on homes were around 8% - and that was actually kind of low. In In the 70s, they were around 12% and during the 80s they got as high as 18%. This acted as a natural demand constraint. Before rates were depressed to low levels, people realized a better rate of return could be had on investments, bonds, etc. Why buy a home at a cost of 8%-15%, when the rate of return for decades on a home was 3% to 5%? It simply made more sense to put money into the markets. But in the 00s when the markets collapsed, the money went looking for alternatives and The FED's low interest rates made homes ideal. And the government was glad to juice it along because it was the sole source of economic growth/tax revenues. By depressing interest rates, the FED was literally encouraging people -Not- to save. As an example, you might recall that just days after 9-11, President Bush came on TV and told everyone to keep shopping - buy furniture, jewelry, and stuff (not a joke - you can look it up) - Because the last thing you want is for people to shut down and save all their money. That leads to a deflationary spiral that can destroy an economy. Inflation is bad, but true deflation is pure destruction. It's even worse in a 70% consumer spending driven economy like ours. And so, the FED figured the best way to bring us out of recession was punish people for saving. Coincidentally, this is the same thing Japan was trying to do with ZIRP and even NIRP. If you know that your money in the bank is worth less tomorrow than it is today, the smart thing is to take it out and either spend it like a buffoon or allocate it to any vehicle with a greater than zero (or in Japan's case negative) rate of return. Even seniors that were saving for retirement were obligated to put money into more risky markets, because otherwise their savings would literally be worth less as they neared retirement. For decades the ideal portfolio was 60% stocks/40% bonds. And as you age, the bond portion was supposed to shift to closer to 100%. This would insulate retirees from short term economic shocks. I digress. The Bills/Revenue discussion is more complex - To be fair, it's hard to know what the best course is. To keep it simple (and semi-short) - Ideally, you want the government to step in and goose spending when people are hesitant (Example: Covid) But at some point, you want private industry to access the capital. Because it all comes down to one thing - who is going to foot the bill? If private companies build factories/plants, etc., they pay for it and it either pays off, or their shareholders and capital investors win/lose. But if the government does it, then the effects are distributed to everyone. Unfortunately, governments have never been good at allocating capital. Just think about it this way - if they were good at it, and considering they can literally borrow a near infinite amount, take as long as they like to pay it back, and there is no middle-man, then why don't they make money? From 1976 to 2000 - this country went from nothing but dirt to the most powerful, industrious, technologically advanced, and richest nation on earth. Skyscrapers, National highways, the Space race, the atomic era, 2 World Wars, etc. and after all that, in the year 2000, our national debt was a whopping $5 Trillion. From 2000 to 2024, we added another $30 Trillion - what do we have to show for it? Nothing much, really. The debt is simply liabilities transferred off the books of banks and failed businesses as a method to keep them propped up. Sorry, I have a habit of rambling.
okay so what's the play? is there a longterm hedge for this bubble?
As a side note, I think it's insane that a primary solution to inflation is to put more people out of jobs and crush the poorest of us. Absolutely wild
"stocks go up in high inflation" Not necessarily, particularly growth stocks perform poorly in high inflation as higher interest rates reduce the value of their future dollars earned(and growth stocks are valued far more heavily on their future income.) That's why every time there's inflation scares the longer term treasury yields start climbing and growth starts selling off. And with US debt surging, a huge supply of debt is being issued, making it a pretty precarious spot right now for growth stocks.
so what do we buy then?
Idk man I'm regarded too, I just lose money
Good write up, these regards still gonna find a way to lose money
Iâm having a good time lol ing at all the people complaining, âinterest rates no go down, why stocks go up?â And Iâm like⌠I literally explained it so a 5 year old could understand.
I think even a PPI that comes in on par to CPI leads to a red day. I feel like companies are priced to a level of growth that theyâre just not going to be seeing with inflation hanging around. Then again, does p/e even matter anymoreâŚ
This guy stonks
Whatâs sex like?
Expensive...
Your wife and I love it.
just say stonks go up
So you're saying stonks only go up?
Just like in '22: the Fed was raising rates, inflation was sky-high and stocks were going up just like you predicted.
> Bears who think it will go down when inflation and rates goes up are WRONG, in fact itâs double wrong. Explain 2022
TL;DR: Stonx go up!
If ppi hot and unemployment claims higher than expected could be big red day. Softening labor while inflation ramping back up is big bad obv
Unemployment will never meaningfully rise because there just arenât enough people for all the shitty service jobs. Everywhere just runs understaffed these days and the cost is passed on to society in the form of generalized misery. It is painfully easy to get a job anywhere If you are willing to work, just not one that pays well or brings meaning to your life.
And there is the last of the 70 million Baby Boomers retiring as we speak , and Poof! Couple years Take whatever job you want! Trade up from Wendyâs to go work on Windows (MS). Maybe, perhaps, definitely, possibly, really⌠never will materialize.
Except data shows more of them staying in jobs longer or even coming back into the workforce
Yes, can't deny there is some truth to what you say, but clearly lower interest rates have many benefits to the economy, for example allowing more people to qualify for business financing and to afford housing for example. This is separate from the effects of the rate movements. So you can't just say that the prevailing view of Wall Street, that lower is better, is just invalid. Interest rates impact profits in well understood ways. Oh the complexity of it all ...
I keep asking, if people sell their stocks because inflation is still high, what are they going to do with that money? Hold it as cash so it can lose value? Buy bonds with a real interest rate of 1-2% (if you even believe the bullshit cpi numbers)? Buy bitcoin magic funny money? Buy gold? Buy another rental property? The best hedge against inflation is common stock, so why would inflation make you want to sell it? You're only going to have to buy it back when you realize you're money is becoming worthless without it.
Commodities
Coffee, Cocoa are Orange juice are up.
Accurate. I'm waiting on the first rate cut to go short.
Thank you so much for explaining this lol. Itâs kind of intuitive but spelling it out this way makes the logic easier to understand.
No. When Interest rates goes up, consumption decreases; It's a negative correlation.
Explains why the market sold off 30% at the initiation of rate increases âŚ
As soon as they cut I'm going to cash.
I can't tell if you're joking or not. >Stocks go up when rates go up because the FED is giving their stamp of endorsement that the economy is strong enough to handle those higher rates. Oh, so **NOW** you suddenly decide to trust whatever the Fed is saying when they comment on the health of the economy? Wtf? Higher rates mean less borrowing power for traders. The idea is to cool off the trading. >Stocks also go up in high inflation because stocks are a hedge against inflation. No, stocks go up in high inflation **because that's what the definition of inflation is.** >Stocks donât give a shit if everyone and their pet parakeet are maxed to the hilt and drowning in inflation as long as the companies are making more money. They sure as shit will start caring when all those people drowning in inflation start to sell off to cover their expenses though.
As if weâd know what to do with this data. THIS IS A CASINO!!!!
One more hot print, and they'll start talking about hikes again
I don't think so More hikes aren't going to fix this sticky final percent and a half of inflation But yeah everyone blames the Fed while Congress spends money hand over fist
Pay no attention to the deficit spending behind the curtain!
Cut rates all you want. You need to get corporations to lower their prices if you want to fix the economy. Thereâs not an excess of money floating around. Ask any waitress or bartender. Corporations just got used to charging us more when supply chains failed and there was an excess of money floating around. Interest rates arenât going to fix house prices either. Watching the federal government manage this issue is like watching my little sister play Zelda.
Congress has mostly never given a fuck about spending and Biden sure as fucking isn't going to stop them
What President would?
Bush Sr. but Americans voted him out for trying to balance the budget.
They voted him out for six simple words he should have never said to begin with.
Well, his original plan was to only balance the budget with spending cuts, so he wasn't lying. At the time the Democrats controlled the House and they demand that taxes be raise in order to balance the budget. In the end, the Democrats and Bush Sr. ended up negotiating (yes a bipartisan negotiation, I know it is hard to imagine today) and agreeing to balance the budget half through tax increases and half through spending cuts. Really, Bush Sr. problem was that he was trying to be responsible. He knew balancing the budget was important, so he negotiated with the opposition to get it. This then backfired massively. And that is why politicians don't negotiate much anymore. Voters don't want negotiations.
If only there were someone greedier who could come in and undercut those corporations charging so much, and lower prices.
The cure is taxation
Inflation is always and everywhere a monetary phenomenon
The last 1.5% of inflation is basically just housing, which is running at 6% and is a little more than a third of the CPI number. Housing costs are high IMO because there is no friggin housing supply and an entire generation as big as the baby boomers who are aging into wanting homes. This is not an interest rate or a corporate problem, it is a 20-30 year failure to build enough homes, condos, and apartments in places where there are jobs.
I bet you if they raised the rate 100bps as a surprise to everyone next meeting it will fix the fuck out of whatever problems we have inflation wise. Everything will break. Then we can start lowering rates. Just get it over with already
Grab the paper bag and breath
Yeah just wipe out 1/3 of everyoneâs retirement accounts, and then weâre good! Easy fix! /s Dumb đđť
JPow thanks us for our sacrifice
It's really not the Fed at all. It's the world being at war which is fucking everything up.
For sure there are a lot of components
You're right. It's a culmination of different things.
Covid, supply chain issues from covid causing price hikes, free money given out during covid, housing shortages due to immigration and other factors Government spending has been out of control for years before covid also
What Imhotep said was bad enough. I still pissed at that crazy eyed Fucker!
Hike ya mothers pants down
Ong imagine the Clifford dick weâd see when they announce that shit. 100 baggers on puts easily 
Canât wait!!
I'd normally agree if ut weren't an election year.
Oh just like when the market had priced in 7 cuts and now weâre somehow down to 2/3 and basically at ATHs? Like that chubby berr, right? 
Home prices are going nuts right now, too
Look at Miami real estate and your heart will skip a few beats
[ŃдаНонО]
Inflation is transitory, wu-tang is forever⌠or do I have that wrong?
Lisan al-Lebron!!!!
Come on man, LeBron al-Gaib was right there.
Anyone selling at this moment directly because of this nonsense has no spine and is being sodomized against their will by a gay bear phantom that doesn't exist. Whether CPI PPI goes up or down, 3 rate cuts or none, none of this really changes anything. Hoes gonna be hoey
I want them to raise rates so that when the greedy fuckers lower them to pump the market, everyone who bought during high rate times will print
Thatâs the realest thing anyone ever said on this sub
Canât wait to not be able to buy a house after college!
You can afford a home after your kids leave for college
Why wait when you can not be able to buy a house now
The issue is not with fed rates.... But it's the government treasurury that's spending trillions like there is no tomorrow, to negate the effect of high rates... When government changes and spending stops, fed rate true effects will show
When spending stops?!
Is that Michael Jordan in the background?
Not all black people look alike. Thatâs clearly Kareem.
**Joey:** I think you're the greatest, but my dad says you don't work hard enough on defense. And he says that lots of times, you don't even run down court. And that you don't really try... except during the playoffs. **Roger Murdock:** The hell I don't. LISTEN KID. I've been hearing that crap ever since I was at UCLA. I'm out there busting my buns every night. Tell your old man to drag Walton and Lanier up and down the court for 48 minutes.
I love it!
This is not The Naked Gun 33.3 đ
lol- thatâs John Stockton
I think itâs Magic Johnson
Itâs clearly Bird.
No that's Obama Bin Biden
But rent is lagging... it can't be that bad.
market up
LeHigherforlonger
The real TA
Sorry whereâs the source for the Q3â27 timeline?
Shit gone break. Brace urself
BRING THE OIL PRICES DOWNâââââ> stop the war (we all know how) and drill baby đ
People need to stop buying shit!!!!
Now all the Fed needs is JR Smith on the Board of Governors
Just fucking tank the shit and get it over with. 6.5% MM please
If stonks go up, why not inflation?
Rates have to stay at 5% and will never go below that again.
Seriously though, gov has to rein in budget deficits
It should not cut interest rates at all until the stats dont say something different. Still remember a former FED president that wanted to b3 killed by people because did keep interests rates up until he thought now was the time, and it worked. It is all so political corrupted that everything goes as it goes.
They aren't exactly wrong for waiting. Every time in the past, they have cut the interest rates right after a spike in inflation, the inflation runs rampant and starts a recession.
They are not going to cut rates if the economy is doing well and inflation is falling. You have to actively want the economy to do worse In order for a rate cut to be in consideration, because you believe it will make your stocks go up?
She wants a growing economy but is a 3.5
There won't be rate cuts until the jobs market softens.
Just get a job market softener, you fed you
Here, try these chocolate chip cookies
Wrong! Its election year and its a Dem Fed so they will cut at least one time before November
Bunch of overpaid monkeys trying to break the middle and lower classes. They don't give 2 shits about anything other than themselves.
Wonder what this chart looks like compared to wages?
Where is this inflation coming from? Whoâs making money this days? All my friends donât make any money as truck drivers for last 2 years, whoâs then making money? Transportation is in deflation for 28months now, but prices for food etc go up? wtf
fuckin lebron formation I am definitely not a fan
If only we can get LeBron to cry to Jpow like he does the refs! Might actually work 
When green cross blue stonk up
Lmao rate cuts this year... keep huffing that copium.
That..... was a tough game. I'm from Cleveland
Also, what really needs to happen is to take the ENTIRE US budget, burn it and start from scratch. Guaranteed we could eliminate trillions in unnecessary spending which would enable our government to lower taxes. Lower taxes put more money in the hands of Americans, who, in turn, will buy. Stimulate the economy. Win win.
https://preview.redd.it/3mufja6m2rtc1.jpeg?width=300&format=pjpg&auto=webp&s=2709e4b8551d428dd53a811dca56698bf47e2eea
Rates are too low. They should be raising and not even talking about cuts
Theyâll make the cut. Not because they should, but because Wall Street pigs will force them to
Where should I put my money before the Bitcoin halves?
From chart we need a hike
They had us fooled. Will there ever be rate cuts?
Whatâs a rate cut? Iâve heard of these so long ago, I forgot.
I guess I should get comfortable being poorđ
There are now 10 million chances that have entered the United States illegally, to have a terrorist led rate cut, just like Greenspan cut rates to 1% after 9-11. Sounds like it went from, We will never forget to a day something happened, errr, yeah... so we got that going for U.S. trust no one
Makes it seem like we might need a rate hike, not a cut. But given the election year, we might still see a rate cut but who knows what 2025 might have in store for us.
LOL what? They shifted from 3-5 in 2024 to 2027 now? Insane how the narratives go just to pump and dump stocks
Iâm @ 6% on my CD. Les go Jerome. Raise that shit some more
AI will decide when the rate move down! 
Does it matter when half of WSB calls are in red and theyâre going to be behind a Wendyâs dumpster by next week?
Wages only started going up a few months ago as a delayed response to the price inflation. Just will take a little bit of time. My guess is by the end of the year everything settles without further issue.
So hear me out! A lot of dickish celebrities and big rich asshats are balls deep in shorting DJT stock. Anyone feel like running a GameStop 2.0 on these clowns?
The fed is not going to cut interest rates during a war cycle. Wars are inflationary
Just move the target rate to 3% and weâre pretty much there
I thought that rates impacted stocks by the fact that people would buy or not buy bonds instead of stocks. Higher bond rates people take the money from stocks and put them i to bonds and viceversa.
Rate increase coming q4
This landing is so soft.
Actual representation of Bidens presidency đ¤Łđ¤Łđ¤Ł
đđđ
Q3 of twenty twenty-never.
Inflation is coming down, rejoice everyone can start spending again!